Sears v. Grand Lodge A. O. U. W. of New York

• Decision Date: 12 June 1900
• Citation: 57 N.E. 618,163 N.Y. 374
• Parties: SEARS v. GRAND LODGE A. O. U. W. OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

163 N.Y. 374

57 N.E. 618

SEARS

v.GRAND LODGE A. O. U. W. OF NEW YORK.

Court of Appeals of New York.

June 12, 1900.

Appeal from supreme court, appellate division, Fourth department.

Action by George H. Sears against Grand Lodge of the Ancient Order of United Workmen of the State of New York to recover on a beneficiary certificate. From a judgment of the appellate division (48 N. Y. Supp. 559) reversing a judgment of the trial term in favor of plaintiff, plaintiff appeals. Reversed.

Gray, j., dissenting.

George H. Sears, for appellant.

D. R. Cobb, for respondent.

BARTLETT, J.

This appeal presents rather a novel question. On the 31st of July, 1886, one Charles R. Baumgrass, residing in the city of Syracuse, became a member of a subordinate lodge of defendant, and received a certificate of membership, which provided, in the event of his death, the defendant would pay to his wife, Mary A. Baumgrass, the sum of $2,000. On September 28, 1886, Baumgrass disappeared, and was not seen or heard from thereafter until April 15, 1896, a period of nearly ten years. In the meantime important transactions and negotiations had taken place affecting the rights of the parties. Mrs. Baumgrass, the beneficiary, was advised to rest upon her rights until seven years had elapsed, when she might proceed under the legal presumption that her husband was dead. She waited about nine years, and then brought an action against defendant on the 23d of September, 1895, to recover $2,000 under the certificate of insurance. On the 26th day of March, 1896, and before the action was tried, she entered into an agreement of compromise with the defendant, under which her suit against it was discontinued, without costs. The agreement recited the facts, and provided for the settlement and discontinuance of the action; that the defendant should pay to the beneficiary ‘the sum of $666 in cash promptly’; that said $666 ‘is not to be returned in any event’; that $1,334 should be placed by defendant in the hands of a trustee, to be held by him until July 1, 1897, subject to the condition that if before that time the defendant should produce reasonable proof that the insured was alive the money so deposited was to be returned to it, but failing in such proof it was to be paid to the beneficiary, and, in the language of the agreement, ‘she shall take full title to the same.’ Twenty days after the execution of this agreement, and before the defendant had made the absolute payment of $666 as agreed, the insured was proved to be alive. Thereupon the beneficiary demanded payment of the $666, which was refused, and she assigned her claim under the agreement of compromise to the plaintiff. The facts are undisputed. The special term rendered judgment for plaintiff, which was reversed by the appellate division with a divided court.

The defendant rests its defense on the legal proposition that the agreement on which plaintiff seeks to recover was made while both parties thereto were laboring under a material mistake of fact, to wit, the supposed death of the insured, and is therefore unenforceable. The counsel for the defendant has cited us to many authorities to the general effect that where parties to a contract have entered into it under the impression that a certain state of facts existed, which proved to be error, equity will afford relief. This is a sound proposition of law, but it has no application to the facts in this case. The material facts may be briefly stated: The insured disappeared absolutely, leaving his wife as beneficiary under his certificate of insurance issued by the defendant. She waited nine years, and then sued to recover the total insurance of $2,000. In this situation the defendant seeks a compromise. It is not unreasonable to assume that the defendant regarded the chances of success in the litigation as decidedly in favor of the plaintiff. The legal presumption arising at the end of seven years that the insured was dead had existed for two years. What, then, was there to compromise in the action then pending? Clearly, but one thing was dealt with or could be in the agreement of settlement, to wit, the possibility that the insured should prove to be alive. That this was the basis of compromise upon which the agreement rested is perfectly apparent on the face of the instrument. The defendant said to the beneficiary: ‘Give us sixteen months' more time to prove the insured is alive and discontinue your suit at once. If you do this, we will make you a cash payment of $666, which is not to be paid back in any event, and, at the...