Manhattan Life Ins. Co. v. Burke
| Decision Date | 08 December 1903 |
| Citation | 70 N.E. 74,69 Ohio St. 294 |
| Parties | MANHATTAN LIFE INS. CO. v. BURKE. |
| Court | Ohio Supreme Court |
On rehearing. Reversed.
For former opinion, see 69 N.E. 1135.
The action below was upon a policy of life insurance issued October 25, 1897, by the Manhattan Life Insurance Company plaintiff in error, upon the life of one George Messmore, for $5,000, which policy was assigned November 24, 1897, by said Messmore to the defendant in error, plaintiff below, Joseph Burke. It was alleged in the petition that Messmore had deceased; that $2,000 had been paid plaintiff by the company on the policy May 31, 1899; and that $3,000, with interest remained due, for which judgment was prayed.
Two defenses were interposed by the company. One that the procuring of the policy and its assignment to plaintiff were a mere scheme, devised to cover a gambling transaction, the plaintiff having no insurable interest in the life of Messmore, and that, a controversy having arisen, the same was compromised for the amount credited. The second defense set up that, after the death of Messmore, plaintiff, claiming to be the owner of the policy, demanded of the defendant that it pay to him the sum of $5,000, which payment the defendant having been advised by its counsel that it was not liable therefor, refused to make, upon the ground, as then stated by it to the plaintiff, that the policy, having been taken out by him for his own sole use and benefit on the life of Messmore, in which he had no insurable interest, was a gambling policy, and that the plaintiff was not entitled to be paid or recover from the defendant any sum whatever under said policy. Thereupon the plaintiff and the defendant, the latter having been advised by counsel learned in the law that it was not liable to the plaintiff in any sum whatever on account of said policy, agreed to compromise and settle said disputed claim for the sum of $2,000, which sum the defendant, in pursuance of said agreement of compromise and settlement, paid to the plaintiff, which the plaintiff ever since has and still retains. In consideration of said payment and of the compromise and settlement of said disputed claim the plaintiff then and there delivered the policy to the defendant to be canceled, and also duly executed and delivered to the defendant the release, a copy of which is as follows:
‘ In consideration of two thousand dollars, this day paid and for good and valuable consideration thereto moving, the receipt whereof is hereby acknowledged, the annexed policy No. 108,540 on the life of George Messmore of or near Commercial Point, Ohio, heretofore issued by the Manhattan Life Insurance Co., of New York, is hereby surrendered canceled and annulled, and all right, title and interest therein of any nature whatsoever is hereby absolutely and forever relinquished; and the undersigned for themselves and their personal representatives hereby guarantee the validity and sufficiency of this instrument, and that no claim will ever be made against said company, under or by reason of said policy. Witness my hand and seal this twenty-third day of May, 1899.
For reply to the first defense plaintiff pleaded a general denial, and as reply to the second defense he averred that the writing of the release was obtained from him by the fraud of the defendant, its officers and agents; also by their false and fraudulent representations made to the plaintiff that the said policy had never in fact been issued and was not a legal and binding contract; that the same had not in fact been assigned to plaintiff; that the company had not in fact ever assented to such assignment and transfer; that a mistake had been made by the agents of the company in the writing of the policy and in the assignment thereof which rendered the same worthless and void, which were made to the plaintiff by the agents of defendant and others in its employ who were neighbors of plaintiff and professed to be his friends, which employment was then unknown to plaintiff, and were aiding defendant to cheat and defraud plaintiff out of the policy and the money due him thereon. They also urged and advised plaintiff that he should not consult lawyers respecting the policy and the assignment and other matters connected therewith, and they thus overcame and overreached plaintiff, and prevented him from consulting counsel, he being unskilled in business affairs wholly unfamiliar and unacquainted with such matters and the law. And plaintiff relying on such false and fraudulent representations, and believing them to be true, was overreached, and an unfair and unlawful advantage gained over him, and his signature obtained to a paper professing to surrender and cancel said policy.
The cause coming on for trial, the defendant, before the impaneling of a jury, moved the court for judgment upon the pleadings, both upon the ground of departure in the reply and that they disclosed the fact that the matter in controversy had been settled. This motion was overruled.
Testimony was then give to the jury by the plaintiff, over the objection of the defendant, tending to maintain the allegations of his petition. Testimony was then given by defendant tending to maintain its claim of settlement. Rebutting testimony was then given by plaintiff tending to establish the allegations of fraud in the reply.
At the conclusion of the testimony the defendant moved the court to arrest the case from the jury, which was overruled. Counsel for defendant then made this statement: ‘ I want the record to show that the defense has refrained from offering testimony upon any issue except as to the fact of a settlement, for the reason that the plaintiff is not entitled to recover or maintain the present litigation, in the event of a settlement having been effected, without a tender back of the amount paid.’
Counsel for defendant then requested the court to charge the jury that: ‘ If you find that there was a settlement of the Messmore policy by the payment and acceptance of two thousand dollars in full of all claims under it, your verdict must be for the defendant, whether it was a settlement procured by fraud or not, for the reason that Burke makes no offer to restore the money so received.’ This was refused, and the substance of it was not given in the charge. Exceptions were noted to that refusal and to the charge. A verdict was then rendered for the plaintiff for the amount claimed, and, motion for a new trial being overruled, judgment was rendered on the verdict. That judgment was affirmed by the circuit court, and the company brings error.
Where, in an action on a life policy, a contract of settlement is pleaded as a defense, a reply which alleges that the settlement was induced by fraud, but does not allege a payment or tender of the amount received, is insufficient.
Syllabus by the Court
1. Where, at the time of a compromise of a claim founded on a contract of life insurance, a dispute exists between the parties as to the liability of the company in any sum whatever, it denying that anything is owing, and an amount less than the claim is paid to the claimant in settlement of the controversy, and he executes a full acquittance and release, and surrenders the policy, an action at law on the policy cannot be maintained without a return or a tender of the amount received, even though the party's assent to the settlement was obtained by the fraudulent representations of the other party, and the amount received as the settlement is in the petition credited as a payment on the policy.
2. Where in such case the contract of settlement is pleaded as a defense, a reply which simply alleges that the settlement was induced by fraud, but does not allege a payment or tender of the amount received, is not responsive to the answer, and is insufficient in law. Insurance Co. v. Hull, 37 N.E. 1116, 51 Ohio St. 270,46 Am.St.Rep. 571, distinguished.
Maxwell & Ramsey and Robert Ramsey, for plaintiff in error.
M. A. Dougherty, for defendant in error.
SPEAR, J. (after stating the facts).
The judgment of affirmance announced after the first hearing of this case (68 Ohio St. 681,69 N.E. 1135) was not the unanimous decision of the court, three judges only concurring therein. The case having been more fully argued on the rehearing, and further considered by the court, is now for disposition as upon the original submission.
Counsel for the company at the trial rested its case upon two propositions, and they rest it upon the same propositions here. If their position is correct, then the judgments below are erroneous, and should be reversed; if not, then the judgments should be affirmed.
The propositions are that the reply is a departure not permissible under our rules of practice, and that under the facts as disclosed by the pleadings there could be no recovery, inasmuch as the plaintiff had failed to allege, as he had failed to prove, any return or tender back of the money received in the settlement. The two may be treated together, and, put in legal phrase, the proposition is: A compromise, although procured by fraud, is a bar to an action upon the original claim until rescinded by a tender back of the consideration paid. On the other hand, as an answer to this, it is claimed that where fraud has induced the agreement, the settlement is not binding, since fraud vitiates all contracts, and no tender back or payment is necessary to authorize a suit on the original contract where the judgment asked for will attain that result, which is this case.
In determining the vital legal question, however, it is important to keep in mind certain features of the controversy shown by the pleadings and the testimony. The plaintiff's suit was upon the original contract;...
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