Leonard v. Charter Oak Life Ins Co.

• Citation: 65 Conn. 529,33 A. 511
• Court: Connecticut Supreme Court
• Decision Date: 08 February 1895
• Parties: LEONARD v. CHARTER OAK LIFE INS CO.

33 A. 511

65 Conn. 529

LEONARD

v. CHARTER OAK LIFE INS CO.

Supreme Court of Errors of Connecticut.

Feb. 8, 1895.

Appeal from superior court, Hartford county; Shumway, Judge.

On appointment of receivers for the Charter Oak Life Insurance Company, the superior court of Hartford county ordered all claims against the company to be presented to a special committee. From an order overruling a remonstrance by Ellie Leonard to the report of such committee on a claim presented by her, she appeals. No error.

William P. Henney and J. Aspinwall Hodge, Jr., for appellant.

Henry C. Robinson and Charles E. Gross, for appellee.

ANDREWS, C. J. The Charter Oak Life Insurance Company was put into the hands of receivers on the 22d day of September, 1880; and at a later date an order was duly passed, requiring the creditors of said corporation to present their claims to the receivers. On the 4th day of August, 1887, a committee was appointed to hear and decide upon all claims which had been or might thereafter be presented to the said receivers. Within the time limited, the present appellant presented to the receivers and to the said committee a claim against the said company predicated upon policy No. 36,775, dated December 7, 1868, on the life of Alexander Austin, for the sum of $10,000, payable to Margaret Austin, wife of the said Alexander. On the 16th day of February, 1801, the said committee reported to the superior court for Hartford county (in which court all the said proceedings were then pending) that they had allowed the said claim in favor of the appellant to recover the amount of $3,854.24, computed in this way: Original amount of policy, $10,000; scaled by agreement in 1877 to $6,000; less amount of premium notes, $3,348; leaving due $2,652; interest on this sum from September 21, 1886, $1,202.24, to be added, amounting in all to $3,854.24. The appellant appeared in the superior court, and remonstrated against the acceptance of such report A full hearing was had. The court made a finding of facts, accepted the report, and rendered judgment accordingly. From that judgment this appeal is taken.

There are in effect but two reasons of appeal: That the court erred in sustaining the action of the committee in holding that the amount of the appellant's claim was only the sum due after deducting (1) the amount of the scaling agreement, and (2) the amount of the outstanding premium notes.

In respect to the premium notes, we are very clear that there is no error. The policy of insurance under which the plaintiff claims contains no promise to pay the sum of $10,000, which is the sum insured, but only the sum insured, "deducting therefrom the amount of all unpaid notes given for premiums or loans by them on this policy, and all deferred premiums, if any, then existing." It certainly was not error for the committee or for the court to hold that the plaintiff could not recover a greater sum than the insurance company had, in any event, promised to pay. The amount of the premium notes was a limitation on the sum named in the policy. That amount was one of the elements from which the sum due on the policy was to be ascertained. While these notes were outstanding, the sum of $10,000 was not, and could not become, due. The amount of these notes was not properly an offset; for an offset involves the idea of two independent amounts, one of which is to be set over against the other. But the amount of these notes operated by the terms of the policy itself as an extinguishment of so much of the amount named in the policy. In the year 1877, Alexander Austin and Margaret Austin, both then in full life, entered into an agreement, called a "scaling agreement" with the said insurance company, by which, upon sufficient consideration, they agreed "that the amount originally payable by the terms of policy No. 36,775 * * * be, and the same is hereby, reduced two-fifths, to wit, from the amount of ten thousand dollars to the amount of six thousand dollars; and the said policy, when it matures, shall represent a claim only for said sum of six thousand dollars, together with such additions as may be hereafter made to said policy; and the remainder of the sum originally payable in and by said policy, and all rights of the insured in relation to the portion so released, are hereby fully and absolutely released, surrendered, and discharged. * * * And it is further agreed that said original policy and this agreement shall be treated as one instrument, but that said original policy remains in full force in every respect, except as varied by this agreement, and said policy is to be considered and taken, in all respects, as if it had been originally issued for the sum of six thousand dollars." Margaret Austin, to whom said policy was made payable, died in January, 1878, and by her will devised to said Alexander Austin all her interest in the same. Alexander Austin died on the 10th day of September, 1878. The present plaintiff claimed title to said policy by an assignment thereof to her from said Alexander, dated April 1, 1878. Obviously, she cannot possibly have any greater rights under that policy than the said Margaret and Alexander Austin had. As they would have been bound by the scaling agreement, it is difficult to see why she is not also bound by it and why the considerations applicable to the premium notes do not have equal force as applied to this agreement; that, strictly, the amount scaled is not an offset, but an extinguishment pro tanto of the amount named in the original policy.

The plaintiff's counsel have, however, urged another view with a good deal of force and with great apparent confidence. It is, perhaps, just to them that their claims should be considered.

As already stated, the insurance company was put into the hands of receivers in this state on the 22d day...