Simons v. Supreme Council A.L.H.

• Decision Date: 26 April 1904
• Parties: SIMONS v. SUPREME COUNCIL A. L. H.
• Court: New York Court of Appeals Court of Appeals

178 N.Y. 263

70 N.E. 776

SIMONS

v.SUPREME COUNCIL A. L. H.

Court of Appeals of New York.

April 26, 1904.

Appeal from supreme Court, appellate Division, Second Department.

Action by John H. Simons against the Supreme Council American Legion of Honor. From a judgment of the Appellate Division (81 N. Y. Supp. 1014), affirming a judgment for plaintiff, defendant appeals. Reversed.

Henry A. Powell, for appellant.

John T. Booth and George P. Breckenridge, for respondent.

PARKER, C. J.

Defendant insists that it should have had judgment against plaintiff, on the ground that plaintiff's claim grows out of a situation which was included in an accord and satisfaction; that there was a dispute between plaintiff's assignors and defendant as to the amount due the former from the latter-an honest dispute-which resulted in the proposition by defendant to pay a given sum, and no more, in settlement of the matter, for which sum a draft was accepted. Now it is the settled law of this state that, if a debt or claim be disputed or contingent at the time of payment, the payment, when accepted, of a part of the whole debt, is a good satisfaction, and it matters not that there was no solid foundation for the dispute. The test in such cases is, was the dispute honest or fraudulent? If honest, it affords the basis for an accord between the barties, which the law favors, the execution of which is the satisfaction.

The father of the assignors of plaintiff obtained a benefit certificate, or policy of insurance, issued by defendant, whereby the latter agreed to pay to the beneficiaries, plaintiff's assignors, $5,000 upon proof of the death of insured. Insured died October 2, 1900. Had he died two days earlier, this controversy could not have arisen, as then, according to the policy and defendant's by-laws, the beneficiaries would have been entitled to $5,000 beyond dispute, and a payment of a less sum would not have prevented the beneficiaries or their assignors from maintaining an action to recover the balance. But defendant had amended its by-laws months before, so as to reduce the amount payable on all policies maturing after October 1, 1900; $5,000 policies being reduced to $2,000. Defendant's by laws-made a part of the policy-authorized amendment. So, when insured died, this policy represented but $2,000, according to the by-laws. This court recently held that such an amendment is without power, and therefore ineffective. Weber v. Supreme Tent of K. of M., 172 N. Y. 490, 65 N. E. 258,92 Am. St. Rep. 753. But that was not the position of the courts of this state prior to the amendment. Indeed, nearly seven years before the amendment, the General Term of the Fifth Department, in Hutchinson v. Supreme Tent of K. of M., 68 Hun, 355, 22 N. Y. Supp. 801, held that defendant had power to make an amendment substituting for a disability benefit an annuity of 10 per cent. thereof. Therefore defendant's amendment-in addition to being sustained by the authorities in some other jurisdictions-was supported by the only decision of importance in this state at that time bearing upon the subject.

It is not pretended that defendant's representative fraudulently represented to plaintiff's assignors that the policy had been reduced to $2,000. It had been so reduced by the formal action of defendant, and according to a decision in this state its action was legal. When, therefore, its representative insisted that the policy had been reduced to $2,000, he stated the contract as defendant understood it and believed it to be. And hence, when he said that, after deducting 5 per cent., as to which there is no controversy, there would remain but $1,900 due the beneficiaries, he stated defendant's belief accurately. The beneficiaries asked for the $5,000. They were disappointed at the reduction. Here, then, was the dispute. The beneficiaries could have refused to accept the $1,900, and brought suit for the entire amount. But the only decision of moment in this state upon the subject held that defendant's action was authorized and legal. The only other course open was to settle. The law wisely favors settlement, and where the parties are in a position to deal with one another at arm's length, as these parties were, the law will support their settlement. How is the settlement in this case evidenced? By the acceptance of the draft for $1,900 by the beneficiaries after they had been told by the defendant's representatives that such sum would be paid only on condition that the beneficiaries sign the blank surrender form and give up the policy. About this there is no controversy whatever. The beneficiaries had the policy, upon which they could bring action for $5,000, and they surrendered it to get a draft for $1,900, when they were told that that was all that was due and all they could have, and that they should not receive that unless and until the surrender certificate was signed and delivered up with the policy. The deneficiaries accepted the terms when they signed the surrender certificate, delivered the policy, and accepted and used defendant's draft for $1,900. It is not disputed that this transaction took place.

The beneficiaries would have it now that one of them protested. But there is no protest in the papers. The surrender, which was indorsed upon the certificate of insurance, was signed by both beneficiaries, and reads: ‘Undersigned beneficiary, named in the within benefit certificate, acknowledges having received the amount herein agreed to be paid, and this certificate is...