Opinion
Submitted October 7, 1924
Decided November 25, 1924
Appeal from the Supreme Court, Appellate Division, Fourth Department.
Thomas F. Rogers for appellant.
James O. Sebring for respondent.
In January, 1921, the plaintiff purchased of the defendant a used automobile for $1,300. He paid $800 in cash and gave a note for $500. He then applied to the Springfield Fire and Marine Insurance Company for a policy of insurance representing that he had paid for the car in question $1,765 and obtained a policy for that amount, the loss payable to himself and to the defendant. He says now that he had added to the price of the car $465 for improvements. When he comes to enumerate these additions, however, it becomes evident that this statement was far too optimistic. On July 22d in the same year the car was partially destroyed by fire and a few days later the note for $500 was paid.
At the time plaintiff was nineteen years of age but he seems to have been engaged in business as some reference is made to a truck owned by him, and apparently he was of normal intelligence. As to what occurred when he attempted to adjust the fire loss we take his own story. Proofs of loss were prepared and sworn to by him in which he stated that he had paid $1,765 for the car and he made a claim for that amount. Accompanying these proofs of loss was a statement by one Decker, the defendant's president, not sworn to, confirming the plaintiff in this regard. This is said by Decker to have been signed by mistake. Thereupon an insurance adjuster called upon the plaintiff and demanded an original bill of sale. The plaintiff knew that he could not obtain his insurance until this bill of sale was secured and he also seems to have known that if the true facts were stated he might get nothing. He had been warned by Decker that he could not collect, as things were, the $1,765. Apparently too when the note had been paid a bill of sale stating the price for which the car had been purchased as $1,300 had been given to the plaintiff by the defendant. So knowing that before he could collect his insurance a bill of sale was required showing that the purchase price was in fact $1,765 the plaintiff went to Decker and asked him to make out a bill of sale for that amount. Decker at first refused saying that he had only received $1,300 and he was afraid to sign a false bill of sale. He finally consented to do so, however, if the plaintiff would pay him $430. That would make a total of $1,730 and the balance between that and $1,765 was represented by certain tires and accessories which the plaintiff had purchased. Decker promised that as soon as the insurance matter was settled he would return the $430 to the plaintiff.
Matters being so arranged the plaintiff handed to Decker the $430 and received the fraudulent bill of sale. This he turned over to the company and as a result collected on the policy $1,175 and received the wrecked car which he sold, as he finally admits, for $400. He then demanded the $430 of Decker but Decker replied that it did not belong to the plaintiff but to the insurance company and to the company he finally paid it. This action to recover the sum in question resulted based upon the contract of Decker to return it.
It is certain that Decker and the plaintiff entered into a conspiracy to defraud the insurance company. The object of the plaintiff was clear. He had committed perjury in making out his proofs of loss and he must have known that if the insurance company discovered not only this perjury, but the misrepresentation in his application for the policy as to the amount paid for the car, he might receive nothing. Decker's object is perhaps less clear. He himself says that he was actuated purely by altruistic motives believing that if the insurance loss was settled on the basis of what was actually paid for the car and the $430 was returned by him thereafter to the insurance company the result would be equity between the parties. More probably he was actuated by a desire to oblige a customer and by the hope that the plaintiff would purchase from him a new car if he obtained his insurance money. There was at least some talk to that effect.
The court is asked to complete the successful fraud which has so far been perpetrated and to restore the $430 to the plaintiff. Such has been the result in the courts below. The jury was allowed to say and did say that the plaintiff was not engaged consciously and intentionally in an attempt to cheat the insurance company because of his youth, his ignorance, his lack of experience and the fact that his mind was intent upon getting what he supposed was his own. Upon the evidence before us the jury was entitled to draw no such inference. Consciously, appreciating that he might not recover his insurance if the truth were known, believing that it was necessary for him to get a bill of sale fixing a price high enough to justify the false representations which he had made to the insurance company, he knowingly entered into this conspiracy. He it was who requested Decker to make the fraudulent bill of sale so that he might complete his fraud. Decker was equally guilty but there is no evidence from which the inference can be drawn that his was the directing mind and that the plaintiff simply yielded to his persuasion. As one of the plaintiff's witnesses says in relating a demand for the return of this money, "I told him I thought they were both up against it a little."
We have, therefore, the payment of money in consideration of the undertaking of Decker to join the plaintiff in an attempt to defraud the insurance company and on the promise of Decker to return the money when the fraud has succeeded. Where an agreement consists of a single promise based on a single consideration if either the promise or the consideration is illegal the agreement is void and the courts will not enforce it. Where the direct object of the parties is to do an illegal act the same rule applies. ( Hull v. Ruggles, 56 N.Y. 424; Woodworth v. Bennett, 43 N.Y. 273; Duval v. Wellman, 124 N.Y. 156; Sirkin v. Fourteenth Street Store, 124 App. Div. 384.)
The judgments appealed from should be reversed and the complaint dismissed, with costs to the defendant in all courts.
HISCOCK, Ch. J., CARDOZO, POUND, McLAUGHLIN, CRANE and LEHMAN, JJ., concur.
Judgments reversed, etc.