Gorrell v. Home Life Ins. Co.

• Decision Date: 01 October 1894
• Docket Number: 158.
• Citation: 63 F. 371
• Parties: GORRELL v. HOME LIFE INS. CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Seventh Circuit

63 F. 371

GORRELL v. HOME LIFE INS. CO. OF NEW YORK.

No. 158.

United States Court of Appeals, Seventh Circuit.

October 1, 1894

W. A Shaw, John Stirlen, Samuel B. King, and C. M. Hardy, for plaintiff in error.

Weigley Bulkley & Gray, for defendant in error.

The circuit court directed a verdict and gave judgment against the plaintiff in error for $6,088.57. Besides the common counts in assumpsit, the declaration contained a special count, in support of which the following promissory note was adduced in evidence:

'$7,500.00.

March 19, 1891.

'On demand, after date, I promise to pay to the order of Home Life Insurance Co. seventy-five hundred dollars, at its office, 254 Broadway, N.Y. City. Value received, with interest at six per cent. per annum. And I further agree to allow all renewal commissions accruing to my account on and after January 1st, 1892, to be retained by said company, to be applied to the liquidation of this obligation.

William F. Gorrell.'

Indorsed: 'Dec. 14/91, interest paid to December 19/91, $337.5u. Dec. 14/91, paid on account $112.50. Jan. 4/92, paid $1,000. Feb. 29/92, paid $1,000.'

To the special count the plaintiff in error presented four special pleas: First (in substance). That the Home Life Insurance Company is a corporation of New York, and does insurance business in Illinois without being organized under her laws or the laws of the United States as a banking institution, and that the note sued on was executed in Illinois for money loaned to the plaintiff in error in Illinois. Second. That the defendant in error was organized in New York as a life insurance corporation, and not as a banking corporation: that by the law of New York no corporation not expressly incorporated for banking purposes possesses the power to discount bills, notes, or other evidences of debt; and that this cause of action arises out of the fact of the defendant in error having discounted the note in suit. Third. That the defendant in error, organized under the laws of New York for the purpose of insuring lives, and to grant, purchase, or dispose of annuities, giving policy holders an interest in the profits of the company, was authorized to loan to policy holders a sum not exceeding one-third of the annual premium of the policies held by each, and to secure the loan by the pledge of the policy and the profits accruing thereon, and to invest other funds and accumulations in such manner as then was or might be thereafter prescribed by law; that when the note in suit was made it was the law of New York that life insurance companies might loan surplus moneys upon the security of mortgages of real estate in New York, or within fifty miles of the boundary thereof; that the note sued on was never secured by mortgage on realty, or in any manner except as shown upon its face; and that the money so loaned exceeded by more than one hundred times the one-third amount of the annual premium of any policy of the company held by the plaintiff in error. Fourth. That the note was without consideration because the plaintiff in error was the general agent of the defendant in error, and received the money upon an agreement that it should be expended in soliciting business for the company; that it was so expended; and that the note was to be paid only out of renewals which should accrue to the credit of the plaintiff in error. To these pleas a general demurrer was interposed and sustained, whereupon the plaintiff in error pleaded the general issue. The evidence in the case consisted of the note described in the declaration, and a verified computation of the amount due upon it, and of the following correspondence offered in defense:

'New York, March 11, 1891.

'W. F. Gorrell, Chicago-- Dear Sir: We do not wish to make loans on farm lands. If we were to do so, we could soon place all the money we have in that class of securities. We will loan you to the extent of $7,500 at 6 per cent., taking your note secured by your renewal interest, leaving you free to use the money as may appear advantageous to you. This is the same offer as was made to you on January 26, last, when you proposed getting an application for $10,0u0 insurance, which afterwards fell through; and, if you should not succeed in getting some applications by those means, we wish to remind you of the conditions then named as to the necessity of a full and rigid examination by some allopathic physician of high standing.

'Yours, truly,

Charles A. Townsend, President.' March 16, 1891.

'Mr. W. F. Gorrell, Chicago-- Dear Sir: We had expected that the money asked for would only be required as you gave us the specific amounts of the mortgages you might from time to time think it desirable for yourself to invest in, but nevertheless will send the $7,500, on your signing and returning us the inclosed note, which, as you will see, we have made payable from your renewal commissions maturing from and after the first of January next. As a matter of record, we ask you to furnish us a statement of location and description of the property in which you invest.

'Yours, truly,

Charles A. Townsend, President.

'The date is to be filled in before signature.'

'August 19, 1891.

'W. F. Gorrell, Chicago, Illinois-- Dear Sir: As to the payment of interest on your note, we will receive it at any time you choose to send it, but can make no conditions as to its payment before it is due. We have so much money to invest that we can make no discounts for prepayment of any funds due us. * * *

George H. Ripley, Vice President.' 'Chicago, Illinois, December 16, 1891.

'C. A. Townsend, President, New York-- Dear Sir: According to the terms of my note for $7,500, most of which I have loaned at six per cent. interest, I am to pay it out of the renewals after January 1st, 1892. I have given the matter considerable thought the last few days, and it does seem to me that this will cause a good deal of extra clerical work both here and there. I would like to pay it a thousand dollars at a time, if it would suit just as well. That is, every time I get a thousand dollars I will send you check for same, and it would not take long this way to pay it off entirely. I will have a thousand dollars in a very few days, and will be glad to hand it to you, if you will accept it. Please advise me. I can now place $3,000, at 6 per cent., on a good farm in Champaign county; but I do not have the fund to do it myself, and I wish you would furnish that, as I will be responsible for every dollars. * * *

'Respectfully,

William F. Gorrell.' 'New York, December 18, 1891.

'Mr. W. F. Gorrell, Chicago-- Dear Sir: With regard to your personal note for $7,500, you can, if you prefer, send us, as you propose, the $1,000 on account of it; and we will then take a new note for $6,500, putting the clause as to its reimbursement from renewals further ahead, as suits your convenience. For the present this is all we can do in this direction.

'Yours, truly,

Charles A. Townsend, President.' December 21, 1891.

'C. A. Townsend, President, New York-- Dear Sir: I note what you say in your kind favor of the 18th, and I thank you, indeed, for the favor. I will send you a thousand dollars in a short time, and will then advise you what to do.

'Respectfully,

W. F. Gorrell.' 'January 2, 1892.

'Mr. C. A. Townsend, New York,-- Dear Sir: I enclose you check for $1,000, for which please give me credit on my note, and please let it stand just as it is now. I will have it paid in a very short time, and it will save making any new note, as I don't want to do that.

'Respectfully,

W. F. Gorrell.'

It was also shown that Gorrell had been the agent at Chicago of the Home Life Insurance Company, and that on the 27th of June, 1892, the agency ceased; that the note in suit was sent him by the president of the company with the letter of March 16th, and was signed by him on the 19th,-- the date having been inserted by him in a blank left for that purpose; and that the amount of the credits indorsed on the note, $2,112.50, contained all his renewal commissions received from January 1, 1892, until he ceased to be the agent of the company. The court refused to admit proof of conversations between Gorrell and the president of the insurance company, had on January 26, 1891, and in February following, to the effect and to show 'that it was agreed that Mr. Gorrell should borrow $7,5u0 of the defendant in error, and invest the same in the west in such manner as to procure policy holders for the company; that Gorrell expressly stated to the president that he would not take the money unless it should be repaid out of renewals collected by him as agent out of the business; that the president agreed to this condition; and that the plaintiff in error would not have made investments which he did with this money, excepting upon the faith of this agreement.'

Before HARLAN, Circuit Justice, and WOODS and JENKINS, Circuit Judges.

WOODS Circuit Judge (after stating the case).

It is insisted that the court below erred in three particulars First, 'in sustaining demurrers to defendant's special pleas;' second, 'in refusing to permit petitioner to prove, on the trial of the cause, conversations and correspondence between plaintiff in error and C. A. Townsend, the president of the Home Life Insurance Company, in relation to the note in controversy;' third, 'in directing the jury to find for the defendant in error. ' Waiving any question of these specifications meeting the requirements of our tenth and twenty-fourth rules, that 'an assignment of error shall set out separately and particularly each error asserted and intended to be urged,' and that when the error alleged is to the admission or rejection of evidence the assignment 'shall quote...