245 A.D. 357, Sturm v. Truby

Citation245 A.D. 357
Party NameJESSE STURM, Respondent, v. CHARLES TRUBY and Another, Appellants.
Case DateOctober 02, 1935
CourtNew York Supreme Court Appelate Division, Fourth Department

Page 357

245 A.D. 357

JESSE STURM, Respondent,


CHARLES TRUBY and Another, Appellants.

Supreme Court of New York, Fourth Department.

October 2, 1935

Page 358

APPEAL by the defendants from an order of the Supreme Court, entered in the office of the clerk of the county of Erie on the 16th day of March, 1935.


George W. Holt, for the appellants.

Richard H. Wile, for the respondent.


This action is brought to recover the unpaid balance of the premiums upon various fire and casualty insurance policies issued to the defendants by different insurance companies through the procurement of the plaintiff, or his assignor, J. & A. Sturm Co., Inc., both of whom are authorized and licensed insurance agents, and which said premiums it is alleged the defendants promised and agreed to pay to the plaintiff or to his assignor.

As an affirmative defense to said cause of action, the defendants allege that, as an inducement to them to purchase said insurance through the plaintiff and his assignor, the plaintiff, acting for himself and as agent of his said assignor, promised and agreed to pay or credit to the defendants certain commissions or refunds on the premiums of such insurance, and that, acting upon and in reliance of such promise and agreement, said policies were issued to the defendants, and the agreed rebates or refunds were allowed and credited by the plaintiff or his assignor upon the premiums charged for such insurance. It is further alleged that said agreement is in violation of the provisions of the Insurance Law of the State of New York, and is illegal and void, and that the plaintiff is consequently deprived of his legal remedy to collect the unpaid premiums on said policies.

Plaintiff moves, under subdivision 6 of rule 109 of the Rules of Civil Practice, to strike out this affirmative defense as insufficient

Page 359

in law. His motion has been granted at Special Term, and the defendants appeal.

We have reached the conclusion that the new matter which has been stricken out, if proven, would constitute a complete defense to plaintiff's cause of action. We feel constrained, therefore, to reverse the order, and to deny plaintiff's motion.

The Legislature has spoken in very emphatic terms upon the subject of discriminations and rebates of insurance premiums. Section 65 of the Insurance Law declares that no insurance corporation, officer, agent, solicitor or representative shall directly or indirectly pay or allow to the insured named in the policy, as an inducement to such insurance, any rebate from the premium which is specified in the policy. Any person or corporation who disobeys the mandate of the statute is avowed to be guilty of a misdemeanor, and is made to forfeit to the People of the State the sum of $500.

A contract made in violation of a criminal or prohibitory statute is an unlawful undertaking, and is void and unenforcible, even though one of the parties has enjoyed the benefits of the agreement. The court will not allow itself to become the means of enforcing such an agreement, but will leave the contracting parties where it finds them. ( Morgan Munitions Co. v. Studebaker Corp., 226 N.Y. 94, 99; Hart v. City Theatres Co., 215 id. 322, 330; Johnston v. Dahlgren, 166 id. 354, 360; Goodrich v. Houghton, 134 id. 115; Leonard v. Poole, 114 id. 371; Hull v. Ruggles, 56 id. 424; Swing v. Dayton, 124 A.D. 58; affd., 196 N.Y. 503; Sirkin v. Fourteenth Street Store, 124 A.D....

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