O'Connor v. Aetna Life Insurance Company

• Citation: 99 N.W. 845,67 Neb. 129
• Parties: ELLEN O'CONNOR v. AETNA LIFE INSURANCE COMPANY
• Decision Date: 18 May 1904
• Court: Supreme Court of Nebraska

99 N.W. 845

67 Neb. 129

ELLEN O'CONNOR v. AETNA LIFE INSURANCE COMPANY

Supreme Court of Nebraska

May 18, 1904

REVERSED AND REMANDED.

ALBERT C. FAWCETT and GLANVILLE, CC. concur.

OPINION

ALBERT, C.

Most of the facts necessary to a proper understanding of this case are set out in a former opinion, reported ante, page 122. A rehearing was ordered, and the cause submitted to this department for an opinion.

The recommendation in the former opinion is based exclusively on the ground that the action was barred by the statute of limitations, and that conclusion is based on the theory that the action is for damages resulting from the negligent performance of a contractual duty. That theory, we are now satisfied, is untenable. The principal case cited in the former opinion in support of that theory is Russell & Co. v. Polk County Abstract Co. 87 Iowa 233, 43 Am. St. Rep. 381, 54 N.W. 212. In that case the plaintiff had employed the defendant to furnish an abstract of title. A judgment lien was omitted from the abstract, and in consequence of such omission the plaintiff sustained damages for which the action was brought. The plaintiff's theory of the case was that his right of action did not accrue until he had been damaged by the mistake; the defendant's theory was that it accrued when the abstract was furnished. The court held with the defendant. But that case differs from this. In that case there was at least an implied undertaking on the part of the defendant to use due care and skill in making the abstract, and upon its failure to use such care and skill there was at once a breach of its undertaking. To say that the omission of the judgment from the abstract was negligence is only another way of saying that the defendant failed to keep and perform its undertaking to the plaintiff. In the case at bar the undertaking of the defendant, as set forth in the petition and shown by the evidence, was to pay off and discharge the Toncray note and mortgage, and "keep and save said Matthew O'Connor [the testator] and the plaintiff free and harmless of and from the same." It will be seen, therefore, that it was not an undertaking that the defendant would use due diligence in ascertaining the party to whom payment should be made, and in making payment to such party, but an absolute undertaking to make payment to the party entitled thereto, and to indemnify the O'Connors against the Toncray note and mortgage. In that view of the case, the question is not whether the defendant was negligent in the performance of its contractual duty, but whether it performed such duty, and the fact that the amount due on the Toncray note and mortgage was paid to Toncray, instead of to the lawful holder of the paper, has no bearing on the question as to the time when the breach of contract occurred.

As we have seen, the defendant engaged to do two things, namely, to pay off and discharge the Toncray note and mortgage, and to indemnify the O'Connors against such paper. The undertaking does not differ in principle from that involved in Wright v. Whiting, 40 Barb. 235. There, upon the dissolution of two firms, the defendant had entered into an undertaking with the plaintiff, who was one of the partners, to pay the debts of the two firms, and to save the plaintiff harmless from and against such debts. As to the first clause, the court held that it was an absolute and positive promise to pay the debts, and upon a failure of the promisor to keep and perform such promise, a right of action at once accrued in favor of the promisee, although he had paid none of the debts and had sustained no actual damage. The following cases are to the same effect: Dye v. Mann, 10 Mich. 291; In re Negus, 7 Wend. 499; ...