Uhlman v. New York Life Ins. Co.

• Decision Date: 05 June 1888
• Citation: 109 N.Y. 421,17 N.E. 363
• Parties: UHLMAN v. NEW YORK LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

109 N.Y. 421

17 N.E. 363

UHLMAN

v.NEW YORK LIFE INS. CO.

Court of Appeals of New York.

June 5, 1888.

Appeal from general term, court of common pleas, city and county of New York.

Action by Frederick Ulhman against the New York Life Insurance Company for an account of the receipts, etc., under the tontine plan, of which plaintiff was a policy-holder. At the special term an interlocutory order was made directing an account. Upon appeal to the general term, this order was set aside, and a new trial awarded, from which judgment of the general term plaintiff has appealed.

Alex. Blumenstiel, for appellant.

Wm. B. Hornblower, for respondent.

PECKHAM, J.

The plaintiff commenced this action for the purpose of obtaining an accounting from the defendant in regard to matters stated in the complaint. It was therein alleged that on the 29th of December, 1871, the defendant issued to the plaintiff a certain policy of insurance, and that the plaintiff had duly complied with all the conditions of said policy; that it was a policy known as ‘The Ten-Year Dividend System Policy,’ and that the ten years expired in December, 1881; that all the premiums had been paid by the plaintiff during that time, and the policy was in force at the time of the commencement of this action. The plaintiff then alleged, upon information and belief, that the defendant, during this time, had wrongfully appropriated the surplus and profits, or a large portion thereof, belonging to the plaintiff under the policy, and had diverted the same to other purposes than the benefit of the plaintiff, and that it had not kept the fund and its accumulations separate, and that defendant refused, for dishonest and unlawful reasons, to furnish the plaintiff with an account, as demanded. Plaintiff also alleged that defendant became a trustee of the various moneys that were paid to it on account of the policies of the class to which the plaintiff's policy belonged, and that plaintiff, relying upon the terms of said policy and the supposed honesty of the defendant as a trustee of the funds above mentioned, took out the said policy, and paid the premiums required, and assumed the risks and conditions mentioned therein, and that he had in all things duly performed all the conditions of the policy. The plaintiff then prayed judgment that the defendant be compelled to render a true and just account to the plaintiff of the names of the parties insured by it under the system in which the plaintiff had been insured, the amount of each and every policy thus issued, a detailed account of premiums paid into and received by the defendant on account of said policies, the amount of surplus and profits which each of said policies had earned, together with a number of other details in regard to the accumulation and disposition of such fund. Judgment was also demanded that the defendant be compelled to make good and pay all such sums which it had unlawfully misappropriated or expended out of said fund, and that it be compelled to issue to the plaintiff an annuity bond of the amount to which he is entitled, or, at his option, to pay the value in cash to him; and that a receiver of the fund, and all the books papers connected therewith, be appointed, pending this action, as well as after judgment, if it is deemed advisable and proper. A copy of the policy issued by the defendant to the plaintiff was attached to and formed a part of the complaint, by which it appeared that on the 29th of December, 1871, the defendant insured the life of the plaintiff in the amount of $5,000, for the term of his natural life, commencing at noon on that day; that the policy was issued to and accepted by the assured ‘(1) on the special agreement and conditions relative to policies on the ten-year dividend system;’ and ‘(2) that the ten-year dividend period would be completed on the 29th of December, 1881; (3) that no dividend should be allowed or paid upon the policy unless the person whose life is assured shall survive until the completion of the ten-year dividend period, and unless the policy shall then be in force; (4) that all surplus or profits derived from such policies, on the ten-year dividend system, as shall cease to be in force before the completion of their respective ten-year dividend periods, shall be apportioned equitably among such policies of the same class as shall complete their ten-year dividend period; and that, previous to the completion of its ten-year dividend period, this policy shall have no surrender value in cash or in a paid-up policy.’ The defendant answered this complaint, and denied all the allegations of misappropriation or wrong-doing, and alleged the proper and equitable apportionment of the fund, and an offer to give to the plaintiff what he was entitled to therein, either in cash or in shape of an annuity bond. The issues thus joined came on for trial at a special term, and upon the trial plaintiff abandoned all allegations as to any misappropriation of all fund or any wrong-doing whatever in regard thereto, and based his cause of action upon his right to an accounting from the nature of the transaction, as appearing in the contract evidenced by the policy of insurance issued to him. The plaintiff claimed that, upon the mere proof of the issuing of a policy such as was issued to him, and that it had been kept alive during the 10-year period, and was in full force at the time the dividend was payable, gave him the right to demand from the defendant a full and complete accounting of the debit and credit items of what he terms the ‘Tontine Account,’ with a list of the members entitled to participate therein, and also all the details demanded in his prayer for judgment in the complaint. He maintained that it was unnecessary to prove any of the allegations of misappropriation or improper action, or even any mistake in relation to the principles upon which the apportionment had been made; but that, from the mere nature of the transaction itself, he had the right to maintain an action to compel the defendant to make a full accounting in regard to all the matters spoken of. The special term substantially held with the plaintiff, and granted an interlocutory judgment, providing for the taking of an account, and for the entry of a judgment thereon for the amount of cash which should be found to be due the plaintiff, or, at his option, an annuity bond for an equal amount. The defendant, under section 1001 of the Code, upon a case made, moved for a new trial at the general term, and, after argument of that motion, the general term granted the new trial, and vacated the judgment above mentioned. From the order granting a new trial the plaintiff has appealed here, giving the usual stipulation in such cases. He claims now to maintain the action, and to have the right to an accounting, upon the ground (1) that the relation between the plaintiff and defendant is not one solely of contract, but that, as to the participation in the profits of this tontine system, that relation is similar to one of trustee and cestui que trust; (2) on the ground that the account itself, although there is but one side to it, is of a nature so difficult and complicated that it cannot be properly tried in an action at law, and hence this action is the appropriate remedy. The right to maintain this equitable action, based upon either or both these grounds, will therefore be discussed.

As to the first. We are convinced, after a careful examination of the character of the relations existing between these parties, that it cannot be said that the defendant is in any sense a trustee of any particular fund for the plaintiff, or that it acts, as to him and in relation to any such fund, in a fiduciary capacity. It has been held that the holder of a policy of insurance, even in a mutual company, was in no sense a partner of the corporation which issued the policy, and that the relation between the policy-holder and the company was one of contract, measured by the terms of the policy. See Cohen v. Insurance Co., 50 N. Y. 610;People v. Insurance Co., 78 N. Y. 114. Upon the payment of the premiums by the various policy-holders embraced in the tontine class, the money immediately becomes the property of the company, and no title thereto remains in any of the policy-holders. Under such a policy as this, there is no obligation of the part of the corporation to keep the premiums paid on such policies separate and apart from its other funds. Nor is there any obligation on its part to invest such funds in any particular way, or at any particular time. The contract contemplates the fact that the funds will be invested; but the character of such investment is left absolutely to the discretion of the defendant, except as it may be limited by the laws of the state. This question of separate investment, and what use should be made of the money received on policies of this description, has been discussed in the late case of Bogardus v. Insurance Co., 101 N. Y. 328, 4 N. E. Rep. 522, in an opinion by RUGER, C....