text:
    WILLIAM B. DUNCAN, Jr., Respondent v. THE NEW YORK MUTUAL INSURANCE COMPANY, Appellant.

      Marine insurance—Cancellation of policy by agreement of parties does not affect a loss of a ship prior to the cancellation that was unknown to both parties.

    The principal question in this case related to the effect of a cancellation of the policy after the loss of the vessel and before either party had knowledge of the loss. The parties intended to and did cancel the policy, not from the time of its original execution and delivery, but on and after December 3, 1888, the day of its cancellation. The defendant retained the premium for the risk to that time, merely returning the unearned premiums for the unexpired time of the policy. Held, that the vessel having been lost prior to the cancellation, the liability of the defendant had become fixed and irrevocable at the time of the loss. The plaintiff did not intend to release, nor did the defendant expect to be released from any liability already incurred and existing, but only from any liability that might occur thereafter.
    This action was in equity to set aside the cancellation and recover the loss. Held, that plaintiff required no equitable relief, assuming that the cancellation operated as to future liability only, but the plaintiff assumed that equitable relief was necessary to reinstate the parties to their position prior to the cancellation, but the defendant not having raised the objection in his answer that equitable relief was unnecessary, cannot raise it now, and, therefore, it may be assumed that the plaintiff was properly in equity in his action, and that branch of the court obtained complete jurisdiction in the controversy.
    Before Sedgwick, Ch. J., Freedman and McAdam, JJ.

      Decided May 2, 1892.
    The plaintiff recovered a judgment after a trial at the -equity term of the court, setting aside the cancellation of a policy of marine insurance, and awarding him $6,009.96 damages on the policy.
    The defendant appeals.

      North, Ward & Wagstaff, attorneys, and J. Langdon Ward of counsel, for appellant, argued:—
    No case is made, either by the evidence or the findings of fact in the court below, to justify the second conclusion of law of the court and the setting aside of the cancellation of the policy, (a.) The court below has found as matter of fact that the plaintiff applied to the defendant to cancel the policy in suit from and after noon of the 3d day of December, and to return the pro rata premium for the unexpired term of eight months, which the defendant agreed to do. That when the plaintiff applied to the defendant to cancel the policy he requested that it be canceled upon the terms stated in a paper then submitted by him to the defendant, as follows:

      “New York, December 3d, 1888.
    “ Clause added to Policy No. 31,466 of New York Mut. Ins. Co. issued to W. B. Duncan, Jr., Str. ‘ Samana.’ At the request of the assured this policy is hereby canceled at and from December 3d, 1888, at noon, pro rata premium to be" paid for eight months not used, $233.33.
    “ Approved.
    “ President,”
    and that the defendant then and there agreed with the plaintiff that he would cancel the said policy upon the terms mentioned in the said exhibit. But the court also found that, instead of such cancellation, the defendant’s president wrote across the face of the policy the following words: “ Canceled at request of insured K. P. for eight months, December 3, 1888, T. B. B., Jr., Pt.” and endorsed upon the policy. “ Pay $233.33 return premium and cancel policy December 3, ’88. $233.33. T. B. B., Jr., P.,” and did not sign the paper so presented as above noted. That before the payment of the return premium the agent of the plaintiff requested the defendant’s president to change the endorsement of the policy so as to conform to such written and printed paper, but that the defendant’s president refused so to do, and that thereafter the return premium due on the cancellation of the policy was paid to and accepted by the plaintiff. The court has further found that on the day of the , cancellation of the policy neither the plaintiff nor the defendant had received any information whatever concerning the steamer insured since she had sailed; and the plaintiff himself testified that there was at that time no possibility of hearing as to her arrival or non-arrival at Aux Cayes. It thus appears that before the payment and receipt of the return premium the form of the actual cancellation of the policy was known to the plaintiff, and that unless satisfied with it he was under no obligation to accept it. There is nowhere any finding, testimony or suggestion that there was anything included in it or omitted from it without the knowledge of the plaintiff’s agents. The court has also found that the cancellation of the policy was not induced by any act, deception or suppression of the defendant, and that it was a part of the contract of insurance that it would be terminated and a pro rata portion of the premium returned at the. will of the assured. The return of the premium and cancellation of the policy was, therefore, a performance of the contract. These facts bring this case precisely within Whittemore v. Farrington, 76 N. Y., 457. This was a case where on an exchange of lands the plaintiff had the right under - his contract to. demand from the defendant a warranty deed. He did demand it, but the defendant refused it. The plaintiff thereupon accepted a quit-claim deed. It subsequently appeared that the property conveyed was, at the time of the conveyance, unknown to either party, subject to an incumbrance. The plaintiff sued to rescind the agreement for the exchange of lands, and a reconveyance of the land deeded thereunder, or that defendant be required to remove encumbrance on the land deeded by him under the agreement. Bapallo, J., said: “ The question is then reduced to this: A party who under a verbal agreement for the conveyance to him of lands, is entitled to insist upon a good title, and a deed with covenants, pays the consideration and is then tendered a deed without covenants. He demands a deed with covenants and this is refused. He then accepts the deed without covenants and, believing the title to be clear, records it, and continues to occupy and improve the property. An incumbrance, unknown at the time to both parties, is afterwards discovered. Both parties are innocent of any fraud. It is conceded that no legal liability rests upon the grantor in such a case. Bates v. Delavan, 5 Paige, 300, 307 ; Burwell v. Jackson, 9 N. Y., 535. In the absence of fraud or covenants a purchaser takes the title at his own risk. Then do the facts stated entitle the plaintiff to any equitable relief ? We think not. The theory of the judgment is that the acceptance of the quit-claim deed in performance of the contract of exchange may he set aside on the ground of mistake, and the contract, treated as still executory and a new performance in a different manner, he decreed. The theory is ingenious, but is not founded upon any legal precedent or principle. In the first place, there was no mistake as to the character of the deed which was tendered and accepted. The grantee knew by accepting it he took the risk of any defect in the title which might be discovered. He was not led into accepting it by any deception or suppression on the part of the grantor. Secondly, the delivery and acceptance of the deed constituted a full execution of the prior parol contract. The title to the land passed under the deed, and the original contract was merged in it. After a contract has been thus fully performed there can be no jurisdiction in equity to decree a second performance. In a proper case equity has jurisdiction, on the ground of mistake, to reform the instrument or deed by which a prior contract has been executed or performed, hut to authorize the exercise of this jurisdiction there must have been a mutual mistake as to the contents of the instrument sought to be reformed, or else mistake on one part and fraud upon the other. Where both parties are innocent of fraud and both know the character and contents of the instrument, it cannot be reformed in equity merely on the ground that one of the parties would have exacted and would have been entitled to exact a different instrument had he been acquainted with facts rendering it to his interest to do so, or which, if he had known them, would have caused him to reject the instrument which he accepted. It is beyond the power even of a court of equity to make contracts for parties. The jurisdiction to reform written instruments free from fraud is exercised only where the instrument actually executed differs from what both parties intended to execute, and supposed they were executing or accepting, and this mistake will be corrected in equity only on the clearest proof, and that only by making the instrument conform to what both parties intended. But an instrument or covenant, the nature and contents of which are fully comprehended by both parties at the time of its execution, cannot be altered in its terms by the courts, see Wilson v. Deen, 74 N. Y., 531, and authorities there cited.” (b.) The court has found, and the fact is, that the defendant had no choice under the terms of the policy but to cancel it when requested. An application to cancel was on the part of the assured a warranty that the vessel had arrived in safety, and that there was no claim under the policy. May v. Christie, Holt, 67. (c.) The cancellation of the policy was not the result of such a mistake of fact as will justify a court of equity in interfering. Properly speaking, there was no mistake'of fact in the matter. There can be no mistake,, properly so called, as to a fact concerning which the party making the alleged mistake neither has, nor by possibility can have, any knowledge, information or reasonable grounds for belief. The fact is that there is nothing in the case to show that the question of the safety or loss of the vessel ever presented itself to the mind of any one connected with the matter.
    The case is precisely within the principle laid down by Judge Story in his work on Equity Jurisprudence, where he says : “ § 150 : In like manner where the fact is equally unknown to both parties ; or where each has equal and adequate means of information; or where the fact is doubtful from its own nature; in every such case if the parties have acted with entire good faith a court of equity will not interpose. For in such cases the equity is deemed equal between the parties; and, when it is so, a court of equity is generally passive, and rarely exerts an active jurisdiction.” “ | 151: The general ground upon which all these distinctions proceed is, that mistake or ignorance of facts in parties is a proper subject of relief only when it constitutes a material ingredient in the contract of the parties, and disappoints their intention by a mutual error; or where it is inconsistent with good faith, and proceeds from a violation of the obligations which are imposed by law upon the conscience of either party. But where each party is equally innocent, and there is no concealment of facts which the other party has a right to know, and no surprise or imposition exists, the mistake or ignorance, whether mutual or unilateral, is treated as laying no foundation for equitable interference. It is strictly damnum absque injuria.”

      Wheeler, Cortis & Godkin, attorneys, and Everett P. Wheeler of counsel, for respondent, argued :—
    I. (1.) Was the agreement to cancel the policy made upon the terms stated, as follows:
    Str. “ Samana.”
    New York, December 3, 1888.
    Clause added to policy No. 31,466 of New York Mutual Insurance Co., issued to W. B. Duncan, Jr. :
    At the request of the assured this policy is hereby canceled at and from December 3, 1888, at noon, pro rata premium to be paid for eight months not used, $233.33. Approved.
    President.
    (2.) Was the steamship “ Samana ” seaworthy when she sailed from New York ? (3.) Was she lost before noon of December 3, 1888 ? On these points the learned judge found in favor of the plaintiff. Judgment was rendered for the full amount of the policy, $5,000, less the return premium, $233.33. When the agreement to cancel was made, December 3, 1888, the plaintiff had a valid claim upon the policy for a total loss, and there can be no question of the validity of the plaintiff’s claim at the time. According to the defendant’s contention, the agreement for cancellation was to relinquish a valid claim for $5,000 in consideration of the payment of $233,33. It is well settled that such an agreement is invalid, even though accompanied by the payment of a portion of the demand. Bunge v. Koop, 48 N. Y., 225; Coe v. Hobby, 72 Ib., 141; Smith v. Kerr, 108 Ib., 31.

    II. The defendant argued that in order to constitute a mistake for which a court would rescind a contract, it was necessary to show a positive and erroneous belief, and also to show that this mistake was .mutual; or, in other words, that it existed in the minds of both parties. Neither of these propositions is applicable to the case of an action to rescind a contract. The facts in this case are undisputed. Mr. Duncan testified, referring to the cancellation of the policy: “ I believed the steamship ‘ Samana ’ to be at that time in a place of safety.” Mr. Bleecker testified that he “had no supposition on that subject.” In the mind of one there was a positive error; in the mind of the other ignorance, which was equally an error. “ The general rule is, that an act done or contract made under a mistake or ignorance of a material fact is voidable and relievable in equity.” 1 Story, Eq. § 140. See also §§ 134, 141, 143, 143a. In section 142 it is said that in such a case equity relieves upon the ground that both parties intended the purchase and sale of a subsisting thing and implied its existence as the basis of their contract. Both Judge Story, in section 209, and Chancellor Kent, 2 Comm. 468, quote from the civil law, as an illustration, the sale of a house and lot under the supposition that the house was still in existence, whereas in point of fact it had been destroyed by fire. The rule thus stated is supported by the authorities. Belknap v. Sealey, 14 N.Y., 143; Marvin v. Bennett, 26 Wend., 169; Bank of Commerce v. National Mechanics’ Bank, 55 N. Y., 211; Martin v. McCormack, 8 Ib., 331; McKay v. Barber, 37 Geo., 423; Young v. Cole, 3 Bing. N. C., 723. Martin v. McCormack cites with approval the case of Hitchcock v. Gridding, 4 Price, 135, which was a bill to rescind, a contract for the conveyance of a remainder in fee expectant upon an estate in tail. A recovery which barred the entail had been suffered at the time of the contract. Both parties were ignorant of this, and the court held that this mutual mistake was a ground for rescission. Rheel v. Hicks, 25 N. Y., 289. Held, that money paid under a mistake as to the existence of a material fact could be recovered back. The court quote with approval the language of Chief Justice Savage in Mowatt v. Wright, 1 Wend.,355. “Error of fact takes place,” says the same learned judge, “ either when some fact which really exists is unknown, or some fact is supposed to exist which really does not exist.” The section in Story’s Equity cited by Mr. Ward must be taken in connection with section 152, which treats of the reformation of a contract. In such case undoubtedly it must be made to appear that the contract as reformed does express the real intention of the parties. Equity will never make a contract for parties. But this is quite a different thing from rescinding the contract, leaving the parties to stand in the same position as they did before the agreement was made. The rule is this, equity will not reform a contract unless the mistake is proved to be the mistake of both parties, but may rescind and cancel a contract upon the ground of mistake of facts material to the contract of one party only. Diman v. Providence R. R. Co., 5 R. I., 130.
   By the Court.—McAdam, J.

Many of the legal principles affecting the rights and liabilities of the parties under the contract of insurance, have been settled adversely to the defendant, in an action by the plaintiff on a similar policy on the same vessel, issued by the China Mutual Insurance Company. See Duncan v. China Mut. Ins. Co., 39 State R., 248, affd. 41 State R., 368. The new phase now presented is as to the effect of a cancellation of the policy after the loss of the vessel, and before either party knew of the fact. It is manifest that the parties intended to cancel the policy—not from the time of its original delivery, but on and after December 3, 1888, the day of the cancellation. The defendant retained the premium for the risk up to that time, and returned merely the unearned premium for the time unexpired. The vessel having been lost prior to the cancellation, the liability of the defendant had at that time become fixed and irrevocable. The plaintiff did not intend nor did the defendant expect to be released from any actual liability already incurred and then existing, but from any that might occur thereafter. The acts of the parties demonstrate this. If it had been intended to rescind the policy in toto, the entire premium would have been returned, for this was the consideration of the defendant’s agreement. For here, as in Baker v. Citizens’ M. I. Co., 51 Mich., 243, the policy was not canceled until after the loss and right of action accrued, and as was held in that case, “ There is nothing in the mere act of cancellation to operate retroactively so as to cut off the claim for damages already existing.” Perhaps the plaintiff required no equitable relief, if the surrender of the policy was intended to operate as to future liability only, but the plaintiff acted on the assumption that equitable relief was necessary to reinstate the parties to their former position, and the defendant not having raised the objection in its answrer that equitable relief was unnecessary, cannot raise that question now. Town of Mentz v. Cook, 108 N. Y., 504; Ostrander v. Weber, 114 Ib., 95. We will assume therefore that the plaintiff was properly in equity, and that that branch of the court obtained complete jurisdiction over the controversy. The plaintiff did not seek for reformation, so that the court was not called upon to' make a new contract for the parties, but to rescind the cancellation, so as to reinstate the parties where the contract itself placed them. . While equity will not reform a contract unless the mistake is proved to be the mistake of both parties, it may rescind and cancel a contract upon the ground of mistake of facts material to the contract of one party only. Diman v. Providence R. R. Co., 5 R. I., 130. That is this case. Story lays down the general rule, “ that an act done or contract made under a mistake or ignorance of a material fact is voidable and relievable in equity.” (Story’s Eq., §§ 134, 140, 141 to 143); and Pomeroy, in treating of the same subject, says the mistake or ignorance “ must concern a fact material to the transaction, as that a certain matter or thing exists at the present time, which really does not exist: or that a certain matter or thing existed at some past time, which did not really exist.” Pomeroy’s Eq., § 854. Chief Justice Savage in Mowatt v. Wright, 1 Wend., 355, on the same topic said, that error of fact takes place, either when some fact which really exists is unknown, or some fact is supposed to exist which does not.” In the present instance, both parties evidently acted on the supposition that the vessel was in existence, and hence contracted with reference to a subsisting thing, which in fact had no existence at the time. Neither party knew nor had any reason to believe that the vessel had foundered prior to the time of canceling the policy, and must have contracted without such knowledge or belief, and on the implication that it was still afloat and had an existence. In such a case—mutual mistake going to the essence of the contract, equity may relieve however innocent the parties may he (Story’s JEq., § 142), and the same principle is carried into all contracts of whatever character, based on the existence of the subject matter thereof. Thus, if an article intended to be sold has no existence, there can be no contract of sale. If A. sells his horse to B., and it turns out that the horse was dead at the time, though the fact was unknown to the parties, the contract is necessarily void (2 Kent’s Com., 468), and the rule is in no way limited by the nature of the subject matter involved, but extends to anything capable of existence, and which the contract implies has an existence at the time it is made, Dexter v. Norton, 47 N. Y., 62 ; Kein v. Tupper, 52 Ib., 550. The setting aside of the cancellation seems warranted on equitable principles by the facts established. The insured certainly never intended to discharge an existing liability of $5,000, in consideration of the return of an unearned premium of $233:33, leaving in the possession of the insurer the premium for the risk up to and' after the time the liability itself accrued, and effect should not be given to such a result where it is contrary to the manifest intention of the parties. Sperry v. Miller, 16 N. Y., 407; McGregor v. Bd. of Education, 107 Ib., 516, 517. The policy was surrendered, it is true, but there is no claim that it was destroyed or intended so to be, and the surrender in view of the facts, is consistent with the theory that it was made because customary, and as evidence that the liability kept alive till December 3,1888, was not to continue after that date. Thé intention of the parties must characterize the act and interpret its meaning. The evidence as to seaworthiness, loss of the vessel prior to December 3, 1888, and damages, sustain the findings made by the trial court, and as there is no merit in the exceptions, but one question— that of interest—remains to be considered; The remedy invoked by the plaintiff was founded on' the postulate that he had no action at law, until the cancellation was set aside. Following this supposition to its natural conclusion, the item of $312.99 for thirteen months’ interest should not have been allowed. Interest is in the nature of damages after default by the defendant, Hanley v. Crowe, 19 State. JR., 828, and the theory of the suit (by which the plaintiff is of course bound), implies that he had no present cause of action until the cancellation was set aside. For the reasons stated, the judgment must be modified as to the item of interest, and affirmed as to the residue, without costs.

Sedgwick, Ch. J.—I concur in the result.

Freedman, J., concurred.


source: Caselaw Access Project

author: By the Court.—McAdam, J.

license: Public Domain

text:
    CLARK R. GRIGGS, Appellant v. MELVILLE C. DAY, et al., as Executors, Etc., Respondents.

      Referee's fees under the Code, when changed by the consent of parties, etc.

    The stipulation of the parties in writing provided “ That the referee shall not be limited to the statutory fee of six dollars per day for his services in this case, but may charge such fees therefor as he deems proper.
    The referee’s charges in the ease were objected to on taxation, on the ground that the stipulation failed to specify any specific rate of compensation, and, therefore, was not “ a different rate of compensation fixed by consent of the parties," as provided by the Code. The clerk, as taxing officer, sustained the objection, and the special term judge, on appeal, sustained the clerk’s ruling. Held, that this decision must be affirmed, under the construction of the Court of Appeals in First National Bank v. Tamajo, 77 H. T., 476, and Mark v. City of Buffalo, 87 H. T., 184, although the court in its opinion in this case considers the decision and construction of the Supreme Court in Burt v. Oneida Community, 59 Hun, 234, to be preferable for reasons cited in the opinion of the court, which fully sets forth the facts and points in this case.

      Before Sedgwick Ch. J., and McAdam, J.

      Decided May 2, 1892.
    On the taxation of plaintiff’s costs, the defendants objected to the item of $7,500, the fee paid to the referee before whom the action was tried:
    The plaintiff claimed the right to tax said charg’e, under a stipulation whereby it was agreed “ That the referee shall not be limited to the statutory fee of six dollars per day for his services in this case, but may charge such fees therefor as he deems proper.” The stipulation was reduced to writing and subscribed by the parties to be charged. The case involved large interests and was calculated to consume much of the referee’s time, and was of such exceptional character that it was next to impossible to determine in advance what a reasonable compensation would be. The referee rendered his services, and the plaintiff paid the sum fixed by the referee, in good faith and in reliance upon the stipulation.
    There is nothing to show that the charge is unreasonable. On the contrary, the nature of the litigation, the magnitude of the interests, the amount involved, the importance of the case, the voluminous testimony to be considered, the intricacy of the questions presented, all indicate that the sum charged is not extravagant, but fair compensation commensurate with the labor expended.
    Indeed, the only objection urged against the charge, is that it was not taxable because the stipulation failed to specify any specific rate of compensation. The clerk sustained the objection, and the special term judge, on appeal from the clerk’s ruling, affirmed the action of the clerk. From the order of affirmance the plaintiff appeals.

      John McDonald, attorney, and Robert G. Ingersoll and John H. Post of counsel, for appellant.

      William R. Bronk, attorney and of counsel, for respondents.
   By the Court.—McAdam, J.

It is a maxim of the law, that that is certain which may be made certain ; cerium est quod cerium reddi potest (Co. Litt, 43; 1 Bouvier, p. 214, subd. 3), and an agreement that the value of work done shall be fixed by a third person is valid and the amount so fixed recoverable. See Del. & H. C. Co. v. Pa. Coal Co., 50 N. Y., 250. The circumstance that the parties agreed that the value should be fixed by the referee would apparently lead to the conclusion that the sum so fixed was equally obligatory, unless the statutory provision as to referee’s compensation, or the judicial nature of the position of referee, make it improper that he should determine the question.

Section 3296 of the Code, provides that a referee shall be paid six dollars for each day spent in the business of the reference, unless a different rate of compensation is fixed by consent of the parties. The Court of Appeals construed this section in First National Bank v. Tamajo, 77 N. Y., 476, and in Mark v. City of Buffalo, 87 N. Y., 184, by holding that the parties could not agree to leave the referee to decide the measure of his compensation, as that left the subject open and indefinite, and did not fix the different rate authorized by the Code provision before referred to. It has been urged that the determination of that point was unnecessary to the decision of either of those cases, and the remarks in reference thereto merely dicta. The suggestion is not without reason, yet the proposition decided is so clearly enunciated in the first case, and plainly reiterated in the second, that it would seem almost going counter to our appellate tribunal to hold that that court did not intend to do precisely what it did in language too plain to be misunderstood. Good faith, however, would seem to require that where parties have deliberately entered into a written stipulation, and one has been induced on the faith thereof to part with $7,500, that the other party to the contract should be rigidly held to its terms, for if not so held in this instance, the appellant must lose $7,500 by the bad faith of the defendants in successfully repudiating their solemn obligation. None of the. cases intimate that the agreement is contrary to public policy, and good morals would appear to require that it, like other contracts, be enforced according to its terms. It does seem that where parties have by a written agreement, stipulated that the referee shall fix the amount of his fees, they have expressly waived the statutory limit of six dollars per day, and have substituted a different rate of compensation, one not fixed by the Code, but equally certain, because the amount was to be determined in a mode agreed upon by the parties, and which was equally as specific when once fixed as if the exact amount had been specified in the agreement itself.

This view of the law was sustained by a majority of the court in Burt v. Oneida Community, 59 Hun, 234; S. C., 36 State R., 765; 20 Civ. Pro. R., 167, 12 N. Y. Supplt., 806, which would be followed, but for the fact that the rulings made by the Court of Appeals, in the two cases cited, are so clearly opposed to the decision in Burt v. Oneida Community, supra, that we feel constrained to respect its instruction by affirming the order appealed from, with costs.

Sedgwick, Ch. J., concurred.


text:
    THE SIXTH NATIONAL BANK OF THE CITY OF NEW YORK, Appellant v. THE LORILLARD BRICK WORKS COMPANY, et al., Respondents.
    Promissory note, defence thereto ; that it was made and endorsed without consideration for the accommodation of one Simmons, and diverted by him from the purpose for which it was entrusted to him, and the evidence fully supported that position and required the plaintiff to show that it paid value for the paper, and the single and main point in the case was whether, upon the evidence, the plaintiff was entitled to go to the jury upon the question as to whether it parted with value upon the faith of the note.

      Held, that the evidence established that the plaintiff neither paid nor surrendered anything of value on the faith of the note in suit, and there was nothing to go to the jury on any of the questions involved in the action, and the verdict for the defendants was properly directed.
    Before Sedgwick, Ch. J., and McAdam, J.

      Decided May 2, 1892.
    Appeal from a judgment entered on the verdict of a jury directed in favor of the defendants, and from an order denying a motion for a new trial.

      Barlow & Wetmore, attorneys, and Francis C. Barlow of counsel, for appellant, argued :—
    I. Getting the notes discounted, and applying the cheques drawn against the proceeds in the way that these cheques ivere applied, has at least the same effect as though the notes had been applied directly for the same purpose. In' fact, however, as shown in Point Third infra, our position is much stronger than it would be if the notes had been applied directly to the overdraft of Satterlee & Co. Therefore the question is whether the plaintiffs would have parted with value if they had taken $21,210 worth of the notes in payment of the overdraft of John Satterlee & Co., and if they had taken $6,413.46 worth of the notes in payment of the two Meyer notes and the Cochrane note. First as to the cheque for $21,210, which was applied to the payment of the overdraft of John Satterlee & Co. Notwithstanding some apparent confusion in the cases, it is the settled law of this state that a person who takes negotiable paper in payment and satisfaction of an antecedent debt has parted with value and becomes the holder of the paper for value. This is held in the leading case in this State, Coddington v. Bay, 5 Johns. Chan., 57 and 20 J. R., 637. That case held that taking negotiable paper merely as security for an antecedent debt did not make the taker a holder for value, but, as the Court of Appeals says at p. 339 of 123 N. Y., “ it was explicitly conceded in Coddington v. Bay that taking paper in payment of an antecedent debt, makes one a holder for value.” What Judge Finch refers to in the case in 123 W. Y. is the statement at p. 646 of Coddington v. Bay, that if “ some existing debt be satisfied thereby * * * this would be paying value.” Without going into all the cases, we refer to Mayer v. Heidelbach, 123 N. Y., 332, where, at p. 339, the court sums up the law as follows : “ The respondents rely upon two propositions: (1) That the actual payment and absolute discharge of an antecedent debt is a valuable consideration for the transfer of commercial paper, and cuts off prior equities * * * I have no doubt as to the soundness of the first proposition. It was explicitly conceded in Coddington v. Bay, 5 Johns., 57; 20 Ib., 637, which originated the difference between the courts of this state and the concurring views of the federal court and those of England. While it was in that case ruled that the transfer of negotiable paper as collateral security merely for an an antecedent debt did not make the creditor a holder for value within the rule cutting off' prior equities, it was yet asserted that such result followed where, among other things, some existing debt was satisfied thereby. And that, I think, was a natural and logical conclusion from the reasoning upon which the decision rested. The argument was that the holder of the paper merely as collateral lost nothing by its failure, since his debt all the time remained, his original position was unchanged, and he had simply failed to get an added security, himself parting with nothing. It is apparent that the reasoning fails, whenever, as a result of the new contract, the original debt has been actually extinguished, when the paper received has been both transferred and accepted as payment, and the debt has been discharged within and by force of the acts and concurring intention of both parties. And so we have steadily decided (citing cases). These cases, and many more like them, however differing in their facts, and although the earlier ones have been more or less criticised, yet agree, as I read them, in the doctrine that where the pre-existing debt is actually and absolutely extinguished in consideration of the negotiable paper transferred, the transferee is protected against prior equities.” The confusion upon this subject has arisen chiefly from some careless and obiter remarks of Chancellor Walworth in Stalker v. McDonald, 6 Hill, 93, in the Court of Errors. In that case the paper was received merely as security for an antecedent debt, and not in payment of the debt. See Statement of facts at p. 94, and by the chancellor at foot of p. 111. But all doubt (if there ever were any), upon that subject is now set at rest by Mayer v. Heidelbach, 123 N. Y., 332 and at p. 339, from which an extract is quoted above. Now in the case at bar the cheque for $21,210 was applied “ in payment ” of the overdraft of Satterlee & Co., and was so entered on the plaintiffs’ books.

      The cheque for $21,210 was charged to the account of Simmons the drawer, going, with the cheque for $6,413.46, to make up the whole of the proceeds of the discount, and on the same day the cheque was credited to John Satterlee & Co. on their overdraft. Mr. Jordan acting for Simmons directed that the cheques should be applied as they were applied. There is no contradiction about the facts in the matter, but if there had been we were entitled to go to the jury upon the facts. Our request to go to the jury was improperly refused unless it be the law that taking negotiable paper in absolute payment of a debt, does not make the taker a holder for value.
    II. There remains to be considered the fact that the plaintiffs did not give up to Satterlee & Co. the $30,000 cheque the return of which produced the overdraft. The fact is that the cheque was given to the United States Attorney to be used in the criminal proceeding, but apart from that fact it is utterly immaterial whether the $30,000 cheque was surrendered or not. All that can be said is that it is a circumstance which the jury might consider in determining whether the overdraft was really paid. If the jury believed on the whole evidence that tha cheque for $21,210 was taken in payment, it would make no difference whether the $30,000 cheque was surrendered or not. When a debt is paid by taking paper, it is absolutely gone, and if the paper cannot be enforced the debt is lost. When the paper instead of being taken in absolute payment of the debt is taken merely as security, of course the rule is otherwise, since the debt is not gone. If this debt were in fact paid as we prove, by the check, the plaintiffs can never enforce it against John Satterlee & Company, nor could they collect the $30,000 check. If, in considering the question whether new paper is taken in absolute payment or satisfaction of the old paper, or merely as additional security, the fact that the creditor retains the physical custody of the old paper conclusively shows (instead of being a mere circumstance), that the transaction was not payment, it must also be held that surrendering up the old paper conclusively shows that the transaction was a payment. But this is not the law. In Olcott v. Rathbone, 5 Wend., 491, a bank upon receiving a cheque surrendered up the old note, but it was held that the surrender did not show that the cheque was taken in absolute payment of the note, and that, the check not being paid, the bank might recover upon the surrendered note. The rule is that where the creditor receives paper of a person other than the debtor on account of the debt, the debt is not satisfied and extinguished by the paper unless the parties shall so agree, and the burden is upon the debtor to show that the paper was taken in absolute payment. Noel v. Murray, 13 N. Y., 167. As the surrender of the old paper does not conclusively show that the new paper was taken in absolute payment, so the failure to surrender the old paper does not conclusively show that the new paper was not taken in absolute payment. Olcott v. Rathborne has been repeatedly followed. Bank v. Morgan, 6 Hun, 346, affirmed 73 N. Y., 593 ; Bank v. Webb, 39 N. Y., foot of p. 330 and topp. 331; Powell v. Charless, 34 Mo., 485, and at p. 495; Hubbard v. Surney, 64 N. Y., 467. And the Auburn City National Bank v. Hunsiker, 72 N. Y, 252, shows that retaining the old paper does not conclusively show that the new paper was not taken in absolute payment of the old. There, upon the delivery to the bank of the new note, the old note was retained by the bank, and it was marked “ paid,” and entered as paid in the books of the bank. A controversy arising whether the new note was taken in absolute payment of' the old note, the Court of Appeals held that it was a question of fact for the jury upon all the circumstances.
    III. We have discussed the case as Simmons, instead of getting the note in suit and the other six notes discounted, and using the proceeds as he did, had taken these notes directly to the plaintiff’s bank and delivered 021,210 of them to the bank in payment of the overdraft of John Satterlee & Co. We claim that in that case it would have been for the jury to say whether the bank did not take the notes in absolute payment and satisfaction of the overdraft, and if this were found to be the fact, we claim that the bank would be a holder of the notes for value paid. In the case supposed, the plaintiffs would have taken the notes of third persons in payment of an antecedent debt (the overdraft), due to it from a customer, and it would be for the jury to say whether the transaction was payment of the debt. But Satterlee having got the notes discounted, and having delivered to the bank his cheque upon itself in payment of the overdraft, and the bank having accepted it as such payment and charged it against the account of the drawer and credited it to Satterlee & Co., there is a series of decisions in the Court of Appeals which conclusively establish that the transaction ipso facto extinguished the debt of the bank to Simmons and acted as a satisfaction of the debt of Satterlee & Co. to the bank upon the overdraft. The Court of Appeals say that such a transaction is precisely the same in its effect as though Simmons had drawn out this 021,210 in money and had then brought it to the bank to pay the overdraft, in which case no one could deny that the bank had paid out that amount of the proceeds of the discount. And the same is true in regard to the cheque for 06,413.46 which went to pay the two Meyer notes and the Cochrane note. In Pratt v. Foote, 9 N. Y., 463, the plaintiff (a bank), held a note made by the defendants and endorsed by one Scudder, and a few days before it became due the defendant got Seudder’s cheque for the amount drawn upon the plaintiffs’ bank and delivered it to the bank to take up the note. The bank accepted it and credited it as a payment of the note, but after-wards erased the credit (applying to other purposes the deposit of Scudder, who had become insolvent), and then sued Foote the maker upon a new note which he had given in place of the old one upon being told by the bank that the old one had not been paid. The bank contended that Scudder’s cheque had not paid the note because it was not proved that the bank had accepted it in absolute payment, but the court distinguished between the effect of a bank’s taking the cheque or paper of a third person on account of a debt (which would have been the case if Simmons had delivered the discounted notes directly to the plaintiff in this case), and the bank’s taking a cheque drawn upon itself in payment of a debt due to itself, and the court holds that in the latter case it is not necessary, as it would be in the former, to show by evidence aliunde that the cheque was taken in absolute payment, but that the legal effect of the transaction was the same as it would1 have been had the money been drawn out upon the cheque and paid in satisfaction of the paper. In Mayer v. Heidlebach, 123 N. Y., 332, the court approves and follows Pratt v. Foote. In Oddie v. Bank, 735, Pratt v. Foote is approved and followed, and near the foot of p. 741, the court say: “ The legal effect of the transaction was precisely the same as though the money had been first paid to the plaintiff and then deposited,” or, as in the case at bar, paid by Simmons on the overdraft.
    IV. What has been said applies to the cheque of $6,413.46. That cheque was given by Simmons in payment of the two Meyer notes for $2,500 each, and in part payment of the Cochrane note for $3,000. And it was charged against the account of Simmons, together with the cheque for $21,210. Under the doctrine of Pratt v. Foote the application of the cheque for $6,413.46 rests upon precisely the same ground as the application of the other cheque, that is, it is the same in legal effect as though Simmons had drawn out the amount of the cheque and paid the money on the three notes, on two of which he was an endorser prior to the Meyers. And even if, instead of procuring the seven notes (including the note in suit), to be discounted, and paying the proceeds to the extent of $6,413.46 on the two Meyer notes and the Cochrane note (which is unquestionably a payment of those three notes under the doctrine of Pratt v. Foote), Simmons had applied the notes which were discounted, to the extent of $6,413.46, directly to pay or take up the Meyer notes and the. Cochrane note, there could ■ have been no question that the plaintiffs would have been holders for value of the former notes, provided the two Meyer notes and the Cochrane note had been actually surrendered to Simmons. The plaintiffs then would have come directly within a long line of cases. See Young v. Lee, 12 N.Y., 551; Park Bank v. Watson, 42 Ib., 490; Brown v. Leavitt, 31 Ib., 113, and at p.114; Pratt v. Cowan, 37 Ib., 440; Paddon v. Taylor, 44 Ib., 371; Clothier v. Adriance, 51 Ib., 322; Day v. Saunders, 1 Abb. Ct. App. Decisions, 495. But we have sought ■ to show above, that the mere fact that the Meyer notes were not given up does not conclusively show that they were not paid, or that the cheque for $6,413.46 was not taken in lieu of the three notes. The cheque for $6,413.46 was, as directed by Simmons through Jordan, applied to the payment of the two Meyer notes and in part payment of the Cochrane note for $3,000. This was certainly sufficient to go to the jury, and whether the cheque for $6,413.46 is to be considered as a payment of the two Meyer notes and a part of the Cochrane note, or as a substitution of the cheque for these notes, is wholly immaterial. And in the case at bar the Meyer notes stand as business paper, paper given for a valuable consideration, as is above pointed out. But the result would be the same even if the Meyer notes were accommodation paper, so long as they had not been diverted. Accommodation paper is of course always made or endorsed without consideration between the immediate parties, but unless its use is restricted the person for whose accommodation it is made or endorsed may use it in any manner that he sees fit, and when the accommodation party issued upon it it is no answer for him to say that he got no consideration for it, unless it has been diverted. The person to whom it is given may pledge it as security for an antecedent debt, and yet the creditor can enforce it. Robbins v. Richardson, 2 Bos., 248; Seneca County Bank v. Neass, 3 N. Y., 442; Grocers’ Bank v. Penfield, 69 Ib., 502; Freund v. Bank, 76 Ib., 352. There is no evidence that at the time the plaintiffs took the cheque for $6,413.46 they had any knowledge or suspicion that the note in suit was diverted accommodation paper, or accommodation paper at all, and if the plaintiffs had taken the note in suit directly in payment of or in place of the Meyer notes, it could not be pretended that the Meyer notes were not a sufficient consideration for the note in suit. And, under Pratt v. Foote, supra, the case is still stronger.

      Glover, Sweezey & Glover, attorneys, and Richard L. Sweezey of counsel, for respondents, argued :—
    I. Defendants having shown accommodation and diversion of the note, the burden was upon plaintiff to prove that it took the note in due course of business without notice, and actually parted with value upon the ' faith thereof. Comstock v. Hier, 73 N. Y., 269; Canajoharie Nat. Bk. v. Diefendorf, 123 Ib., 191.
    II. The mere formal discounting of the notes and passing the proceeds to the credit of Simmons upon the books of the bank did not make the bank a holder of the notes for value as against an accommodation maker and endorser of diverted paper. The bank must have actually paid out and parted with the proceeds of the discount. Central Nat. Bank v. Valentine, 18 Hun, 417; Platt v. Chapin, 49 How., 318. Practically, all the plaintiff did in the case at bar was to take two cheque from Simmons to its own order, together aggregating the amount of the proceeds of the discount. One of these it credited as a nominal book-keeping payment to the account of John Satterlee & Co. Under the well settled law of this state such a book-keeping entry constituted no parting with value, Phoenix Ins. Co. v. Church, 81 N. Y., 218; McQuade v. Irwin, 39 Supr. Ct., 396; Burnham v. Baylis, 14 Hun, 608. But it may perhaps be urged that a different presumption as to payment arises in respect to the receipt and crediting by a bank of a cheque drawn upon itself. Conceding that such may be the fact in certain cases, the one at bar is clearly not such a case. The debit balance of the Satterlee account was produced by the act of the bank in charging against this account a cheque for $30,000 of some third party deposited by Satterlee & Co. on the 28th of January, 1890, which came back through the clearing house on the 29th unpaid. If the $21,210 cheque was intended to be accepted by plaintiff in absolute payment of anything it was the amount remaining unpaid upon this returned cheque for w’hich it held Satterlee & Co. responsible by reason of the firm’s endorsement thereof at the time of its deposit. But while nominally crediting the Simmons cheque to the unpaid balance of the Satterlee account, it took pains to hold on to the returned cheque, thereby retaining its claim against Sat- ■ terlee & Co. if the Simmons cheque should not prove to be good to the bank by reason of failure of the title of the bank to the notes discounted for Simmons’s account and negativing any possible presumption that the crediting of this Simmons cheque was intended to be an absolute payment of the returned cheque. The tentative character of the transaction further appears from the fact that the bank never canceled the two Simmons cheques upon its iron file, according to the custom of banks respecting paid cheques, and kept these cheques also in its possession. Furthermore, there is really no evidence in the case that Satterlee & Co. ever had anything to do with this transaction. The cheque for $21,210 was payable, not, to Satterlee & Co., but directly to plaintiff. That Conrad N. Jordan, who handed the cheque to plaintiff, had any authority or claimed to have any authority to represent Satterlee & Co., there is not a particle of evidence. That the hank intended to part with nothing but to hold on to everything and to its claims against everything is too apparent for dispute. The other Simmons cheque for $6,413.46 the bank, in order to make some excuse for its possession, entered as a nominal payment of three notes included in this very discount and none of which had yet matured. The utter sham character of this pretended payment is shown by the fact that the bank retained all three notes, collected one at maturity and brought suit on the other two, which suit is still pending. Although it was claimed that the commencing of this suit was a mistake, it appeared that after the discovery of the alleged mistake the suit was noticed for trial, and no offer has ever been made to surrender these notes. But if the hank had surrendered the notes under the circumstances it would have constituted no parting with value. If a hank discounts a note and passes the proceeds to the credit of its customer and then takes a cheque back from the customer for the amount of the proceeds and surrenders up the note, wherein does such surrender of the note constitute any parting with value ?
    III. Defendant was entitled also to a direction upon the ground that plaintiff failed to prove want of notice of the character of the notes in suit. The burden was on plaintiff to prove not only that it parted with value, but that at the time it so parted with value it had no notice of the equities, Canajoharie Nat. Bk. v. Diefendorf,
      supra. If the bank parted with any value it was not at the time the discount was made, but on the 6th of February when it received the cheques. There is not a particle of evidence in the case to show that at this time the bank did not havé notice of the facts respecting- this paper. The persons then in charge of the bank had certainly acquired knowledge of the rascally character of the parties who had been in possession of the bank at the time the paper was taken.
    IV. Plaintiff’s paying-teller was clearly right when he testified that plaintiff had parted with nothing upon the faith of the note in suit, and the judgment and order appealed should be affirmed, with costs.
   By the Court.—McAdam, J.

The action is on a past due promissory note for $5,000 made by the Lorillard Brick Works Company to the order of James A. Simmons and endorsed by him and by Jacob Lorillard and passed before maturity to the credit of said James A. Simmons on the books of the plaintiff. The evidence established the fact that the note was made by Lorillard in the name of the Brick Company (he being its President) and endorsed by him individually, all for the accommodation of Simmons, and that it was diverted by him from the purpose for which it was intended. This made it necessary for the plaintiff to show two things. First. That the plaintiff paid value for the paper. Second. That the plaintiff had no notice that the paper had been diverted. Comstock v. Hier, 73 N. Y., 269; Vosburgh v. Diefendorf, 119 Ib., 357; Canajoharie Nat. Bk. v. Same, 123 Ib., 191. The plaintiff proved want of notice of the diversion, and the contest narrowed itself down to the single question, whether the plaintiff paid value for the paper within the meaning of that term as declared by the courts. The mere formal discounting of the note, and passing the proceeds to the credit of Simmons upon the hooks of the bank did not make the plaintiff a holder for value as against the accommodation maker and endorser of diverted paper. The plaintiff must have actually paid out and parted with the proceeds of the discount before it could acquire an indisputable title thereto. Central Natl. Bk. v. Valentine, 18 Hun, 417; Platt v. Chapin, 49 How., 318. The plaintiff concedes the proposition stated, but claims to have paid out the proceeds within the meaning of that term as decided by the cases of Pratt v. Foote, 9 N. Y., 463, and Mayer v. Heidelbach, 123 Ib., 332. Those cases hold substantially, that where a pre-existing debt has been actually and absolutely extinguished in consideration of the transfer of negotiable paper, the transferee is a holder for value within the rule protecting such holder against prior equities. In Pratt v. Foote, supra, it appeared that the Prattsville Bank (owned by the plaintiff) held the defendant’s note for $1,000 and interest, payable to and endorsed by Samuel Scudder. That five days before the note matured, the defendant called at the bank with Scudder’s check on the bank for the amount of the note and interest (payable on the day the note fell due), and proposed to the cashier that he should take the cheque and give up the note which the latter declined to do. It was then agreed that .the cheque should he left, that the cashier should pin it to the note, and if Scudder’s account was made good on the day both fell due, the cheque would pay the note. Five days after the note matured several sums were credited to Scudder, more than sufficient to meet the cheque, which was thereupon charged to Scudder’s account, and the note posted in the bill-book and tickler as paid, and the charge of the cheque to Scudder was posted from the cash-book into the ledger. The maker of the note in that case interested himself in its payment, and could on the day the credit was made, have withdrawn^ the money from the bank on Scudder’s cheque, and returned it in extinguishment of the note, if the bank had required him to do so, and the court held that in legal' effect the same result Avas produced by the mode Aviiich the bank adopted.

In Mayer v. Heidelbach, supra, the proposition decided, Avas that where a depositor in a bank, having sufficient funds standing to his credit, teriders to the bank a cheque in payment for negotiable paper it has for sale, and the bank accepts the cheque, charges it against the deposit, cancels and files it as a voucher, and delivers over the paper purchased, the purchaser is a holder for value, the antecedent debt of the bank being pro tanto actually and in fact extinguished.

In the present instance, there was no agreement whereby any other obligation was to be paid with the moneys credited to Simmons, as in the Pratt case, and no delivery up of other securities as in the Mayer case. Practically all the plaintiff did in the case at bar, was to take two cheques from Simmons to its own order, together aggregating the amount of the proceeds of the discount. One of these it credited as a nominal bookkeeping payment to the account of John Satterlee & Co. (a firm in which Simmons was a member). The debit balance of the Satterlee account was produced by the act of the bank in charging against this account a check for $30,000 of some third party deposited by Satterlee & Co. on January 28, 1890, which came back through the clearing house on the 29th unpaid. While nominally crediting the Simmons cheque to the unpaid balance of the Satterlee account it held on to the return cheque, thereby retaining its claim against Satterlee & Co. if the Simmons cheque should not prove good to the bank by reason of failure of the title of the bank to the notes discounted for Simmons’ account, thereby negativing any presumption that the crediting of this Simmons cheque was intended to be an absolute payment of the returned cheque. The tentative character of the transaction further appears from the fact that the bank never canceled the two Simmons checks upon its iron file, according to the custom of banks respecting paid checks, but kept these checks also in its possession. In short, the plaintiff surrendered nothing on the faith of the note in suit, its position will not in a legal sense be changed for the worse by its failure to recover anything upon it, and it cannot by its own volition on any ex parte system of credits or debits conjure up a theory of payment or satisfaction, not manifested or intended by the other parties to the transaction. The book-keeping entries constitute no parting with value within the rule making a plaintiff a bona-fide holder, so as to exclude existing equities between the parties. Phoenix Ins. Co. v. Church, 81 N. Y., 518; McQuade v. Irwin, 39 N. Y., Superior Ct., 396; Buhrman v. Baylis, 14 Hun., 608, and other cases before cited. There was nothing to go to the jury on any of the questions involved, and the verdict in favor of the defendant was properly directed, and the judgment entered thereon, and the order denying the motion for a new trial, must he affirmed with costs.

Sedgwick, Ch. J., concurred.


text:
    LOUISE MULLER, Respondent v. THE ORDEN GERMANIA, Appellant.

      Representations and warranty of applicant for health and life insurance —Certificate of death by Health Board and attendant physician, how far evidence of facts therein stated beyond that of death.

    Plaintiff is the beneficiary named in a certificate of membership issued by plaintiff, by the terms of which $1,000 became payable to plaintiff on the death of her sister. The decedent was admitted to membership December 26, 1888, and died March 24, 1890. In her application for membership she represented herself to be in good health and not suffering from cancer. There was a breach of the warranty contained in the application, as claimed by defendant, based upon the certificate of death that was furnished by Dr. Lewis, her attendant physician, on March 24, 1890, which stated that the chief cause of death was cancer of the uterus, and the duration of the disease two years, which would indicate that the decedent had been troubled with that disease .prior to and at the time of her application and admission as a member of defendant’s society. The main question in the case, is whether such certificate, unimpeached and uncontradicted, conclusively established the breach of warranty claimed by the defendant.

      Held, that the statement in the certificate must be taken rather as an expression of opinion of the physician, and as such, in no sense conclusive evidence of the fact stated. There is nothing in the act of 1882 (§ 604) requiring the physician to certify to the “ duration of the disease,” so that his opinion that the duration of the disease was two years was not called for by article 9, section 1, of the constitution and by-laws of the defendant, interpreted in the light of the statute ; hence such opinion does not rise to the dignity of evidence prima facie or otherwise. Upon the submission to the jury of this question upon the evidence and the verdict, finding there was no misrepresentation by the decedent, and that she was not in ill health at the time she joined the order, the judgment and order appealed from must be affirmed. No error found in the case.
    Before Sedgwick, Ch. J., and McAdam, J.

      Decided May 2, 1892.
    Appeal from judgment in favor of the plaintiff on verdict of a jury, and from an order denying a motion for a new trial.

      Meyer Auerbach, attorney, and Lewis Sanders of counsel, for appellant, argued:—
    I. Plaintiff’s decedent warranted the truth of the representations contained in her application for membership. Smith v. Ætna Life Ins. Co., 49 N. Y., 213. “ I warrant that all añswers in this application for membership are true and correct.” “ I am satisfied that such a (false ?) statement shall be sufficient for the withholding of the benefits and all obligations of the Orden Germania.” And she warranted that she was “ in good health and not suffering from cancer.”
    II. The admissions contained in the Health Board’s certificate are fatal to plaintiff’s case. Plaintiff, by decedent’s express contract with defendant, was required to furnish a certificate from the board of health before any claim against defendant accrued. The certificate showed that the deceased died of cancer of the uterus, and that the duration of the disease was two (2) years. That the certificate in question was the identical one furnished defendant by plaintiff’s husband is not denied by him, and is positively sworn to by defendant’s grand financial secretary as the only certificate from the board of health which he received in this case. The contract required the same to be furnished and the certificate of death thereby became prima facie evidence of the truth of the facts herein stated. “ The preliminary proof presented to an insurance company in compliance with the conditions of the policy of insurance are admissible as prima facie evidence of the facts • stated therein- against the insured and in behalf of the company.” Insurance Co. v. Newton, 22 Wall., 32.

      Charles Steckler, attorney, and Alfred Steckler of counsel, for respondent, argued:—
    I. Good standing and part payment proven. It was proven and conceded that the deceased member was in good standing at the time of her death, and that $200 was paid by the defendant to the plaintiff on account of the claim herein. In order to make out a prima facie case, all that was necessary for the plaintiff to prove was: (1.) The membership of the deceased. (2.) The designation-of the plaintiff as the beneficiary. (3.) The death of the member. (4.) That the member at the time of death was in good standing. (5.) Part payment and recognition of the claim by the defendant. These facts having been proven, the burden was shifted to the defendant to prove that at the time of the member’s admission she falsely represented her condition of health, and it, therefore, became unnecessary to produce the certificate of death issued by the board of health. By the defendant paying a part of the claim it recognized its validity and waived a strict compliance of its constitution and by-laws. An insurance company may waive any of the provisions of its policy. So can a benevolent corporation waive any portion of its by-laws and constitution. Bodine v. Exchange Fire Ins. Co., 51 N. Y., 117; Goodwin v. Mass. Mut. Life Ins. Co., 73 Ib., 490; Hotchkiss v. Germania Fire Ins. Co., 5 Hun, 100; Shaft v. Phoenix Life Ins. Co., 8 Ib., 632 ; Sheldon v. The Atlantic Fire Ins. Co., 26 N. Y., 466; Whitehead v. Germania Fire Ins. Co., 76 Ib., 416.
    II. As to the statement in the death certificate that the deceased died of cancer of the uterus, and that the disease was of two years’ duration. The certificate issued by the board of health is not evidence of the cause of death, but only of the fact of death (see Buffalo Loan, etc., v. Knights Temp. Assn., 56 Hun, 303). This case distinctly decided that where the by-laws require notice of death the statement in the certificate of the physician as to cause of death is inadmissible, even where such cause voids the policy. The by-laws of the defendant provide only for the delivery of the certificate of death. They do not provide that the entire contents of the certificate shall be evidence in their favor, nor do they provide that the certificate shall be used for any other purpose than to prove that death has actually occurred. The certificate is simply a notice of death and so intended to be by the by-laws. The certificate exercises no other function and is evidence of nothing else. But, if it should be held as proving the cause of death, its statements contained therein, viz., that the deceased died of cancer of the uterus and that the disease was of two years’ duration, are rebutted by the evidence of Conrad Muller. He testified that Dr. Lewis (he it was who made the certificate from which the hoard of health issued the certificate) never attended the deceased before her last illness; that he never treated her before that. This evidence raised an issue of fact whether Dr. Lewis had certified to the truth that the disease was of two years’ duration. This statement was evidently untrue, for the doctor had never seen or attended the patient before the 18th of October, 1889, and her death occurring five months later, and on the 24th of March, 1890. And besides, Doctor Lewis in the board of health certificate corroborates Conrad Muller. For in the certificate he certifies that he attended the deceased from October 18th, 1889, to March 24th, 1890, the day of death. Whether or no these statements set forth in the certificate were competent evidence, the defendant has had the benefit thereof, for this was the only evidence tending in any way to show that the deceased had been afflicted with cancer, and the jury having found on that issue in favor of the plaintiff, the defendant cannot now complain.
   By the Court.—McAdam, J.

The defendant is a benevolent corporation, and the plaintiff the beneficiary named in a certificate of membership therein, issued to her sister, by the terms of which the sum of $1,000 on her death became payable to the plaintiff.

The decedent was admitted to membership December 26, 1888, and died March 24,1890. In her application for membership, she represented herself to be in good health and not suffering from cancer.

It is claimed that there was a breach of the warranty, because it appeared by the certificate of death furnished by Dr. Lewis, her attending physician, on March 24, 1890, that the “ chief cause of death was cancer of the uterus, and the duration of disease two years,” which would indicate that the decedent had been troubled with that disease for about nine months prior to her admission as a member of the order. The certificate was offered in evidence by the defendant, and the question presented is whether such certificate, unimpeached and uncontradicted, conclusively establishes the breach of warranty pleaded by the defendant. Dr. Lewis, the physician who gave the certificate, never attended the decedent till October 18, 1889, five months preceding her death, so that the statement in the certificate that the duration of the disease was two years, was not founded on actual knowledge of the fact, and must be taken rather as an expression of opinion, and as such in no sense conclusive evidence of the fact stated.

True, the plaintiff was required as a condition precedent to the enforcement of her claim, to present a certificate of death issued by the board of health. The purpose of this certificate was to establish the death of the member, proof in this form being alone acceptable. There is nothing, however, in this requirement making the mere opinion of the attending physician conclusive evidence, as to the duration of the disease he was professionally called upon to heal.

The preliminary proofs presented to an insurance company in compliance with the conditions of the policy of insurance are admissible as prima facie (not conclusive) evidence of the facts stated therein against the insured and in behalf of the company. Ins. Co. v. Newton, 22 Wall., 32. The Court of Appeals in commenting upon this case said, ce It may be inferred that the whole (proofs) were verified by the claimants, and that they were called for by the contract of insurance.” Goldschmidt v. Mutual Life Ins. Co., 102 N. Y., 493. If so verified they might be considered as admissions made by the claimants, and as such evidence of the facts presented.

In Buffalo L. T. & S. D. Co. v. K. T. & M. M. A., 126 N. Y., 458, it was held that the statute and ordinances requiring attending physicians in Buffalo to furnish certificates setting forth the cause, date and place of death of any person under their charge, were police regulations, and the records required for local and specific purposes, not public records in such sense as make them evidence between private parties of the facjfcs recorded.

The Consolidation Act of 1882 (§ 604) applicable to the city of New York, requires that Physicians who have attended deceased persons in their last illness shall, in the certificate of the decease of such persons, specify, as near as same may be ascertained.....the direct and indirect cause of death of such deceased persons.”

There is nothing requiring the physician to certify to the “ duration of the disease,” expressio unius, exdusio alterius, so that the opinion of the attending physician that the duration of the disease was two years, was not called for by Art. IX,, § 1, of the constitution and bylaws of the defendant, interpreted in the light of the statute before referred to. Hence such opinion does not rise to the dignity of evidence prima facie or otherwise. Certificates given by public officers are evidence only of the facts which they are required to record; as to other matters, they are extra-judicial and must be rejected. Greenl. Ev., § 498. In Buffalo L. T. & S. D. Co. v. K. T. & M. M. A. A., 56 Hun, 304, the court held, that “ there is no rule making the records or books of the board of health evidence as to the cause of death on the trial of an action at law where that question is material. Nothing but common-law evidence would defeat a recovery in the absence of a statute or constitutional provision malting other evidence competent.” So, in Hoffman v. N. Y. C. & H. R. R. R. Co., 46 N. Y. Superior Ct. R., 526, Affd. 87 N. Y., 23, it was held, that records kept at a police station and hospital showing injuries received by plaintiff by an accident, are not admissible in evidence against him in an action for damages for such injuries, it not appearing that the entries therein were made by persons having knowledge of the facts, or from statements of the plaintiff

The defendant on the motion to dismiss the complaint objected to the absence of certain evidence which was afterwards supplied, so that any possible error in the ruling was effectually cured. Bartholomew v. Lyon, 67 Barb., 86 ; Barrick v. Austin, 21 Ib., 241; S. & S. P. R. Co. v. Thatcher, 11 N. Y., 102 ; Colegrove v. H. & N. H. R. R. Co., 6 Duer, 382.

The defendant recognized the validity of the plaintiff’s claim by paying $200 an account thereof before suit brought, and the litigation concerned $800, the balance due. Upon the conclusion of the proofs, the trial judge sent the case to the jury under a clear and concise charge whereby he instructed them, that if they found that the decedent in her application for membership made any false statement or representation regarding her then state of health, or if she was afflicted with disease at that time, they should find for the defendant. The burden of proving the breach of warranty pleaded was on the defendant, and the submission of the question to the jury was put as strongly in favor of the defendant as it could expect or language make it. The jury found that there was no misrepresentation and that the decedent was not in ill health when she joined the defendant’s order, and found a verdict in favor of the plaintiff for the balance due with interest.

We find no error, and the judgment and order denying the motion for a new trial must be affirmed, with costs.

Sedgwick, Ch. J., concurred.