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Hackett v. Equitable Life Assurance Society of United States

Appellate Division of the Supreme Court of New York, First Department
Apr 1, 1900
50 App. Div. 266 (N.Y. App. Div. 1900)


April Term, 1900.

William B. Hornblower, for the appellant.

Charles N. Morgan, for the respondent.

The appellant contends that the conclusion reached by the Special Term is in direct conflict with the decision of the Court of Appeals in Greeff v. Equitable Life Assurance Society ( 160 N.Y. 19). In that case the essential allegations in an action by a policyholder to recover a share of the company's surplus were considered; and, as stated in the head note, "An action by a policyholder against a life insurance company, to recover a proportionate share of the company's surplus, brought without application to or approval by the attorney-general, and, therefore, prohibited by the Insurance Law (L. 1892, ch. 690, § 56), if regarded as an action for an accounting or as interfering with the prosecution of the defendant's business, cannot be maintained unless the complaint states facts sufficient to entitle the plaintiff to recover in an action at law upon the policy as an instrument for the payment of money, or to recover against the defendant for a breach of its contract."

The company in that case had paid to the plaintiff a certain sum which was all that it admitted to be due on the policy, and, in addition, entered into an agreement "that such payment should not prejudice the right of the plaintiff to claim that he is entitled under his policy to a further and greater sum by way of surplus or profits." Among the other provisions of that policy was one that the holder "shall be entitled to participate in the distribution of the surplus of this society by way of increase to the amount insured, according to such principles and methods as may from time to time be adopted by this society for such distribution;" and in the opinion it was said: "By its terms he possessed no legal right to any part of the defendant's surplus, except in that portion which its officers determined to distribute among the holders of its policies, and an action at law could not be maintained until that determination was made."

The allegations in the complaint before us show no such provision in the policy sued on, that the right of the plaintiff to participate in the distribution of the company's surplus was to be determined "according to such principles and methods as may from time to time be adopted by the company;" but, on the contrary, it is alleged that after the completion of the time fixed for the payment to plaintiff which had arrived, there was due on the policy out of the accumulated reserve a certain sum and out of the surplus another sum, "making the share of the assets of said defendant to which this plaintiff was then entitled under the provisions of said contract or policy of insurance, twelve thousand nine hundred dollars." Here the allegation is that "all surplus or profits derived," etc., "should and would be apportioned equitably," etc., which does not necessarily mean that the equitable apportionment should be one entirely within the discretion of the defendant's officers, since the word "equitably," taken in its ordinary sense, would be fairly, justly and impartially. As urged by the plaintiff, "all of it was to be distributed among the persons belonging to a designated class according to their several interests therein or contribution thereto, in such a manner that each should receive his fair just share." In other words, the surplus was not to be apportioned according to the principles and methods to be adopted by the defendant, but all the surplus was to be divided among a designated class. It is certain that the parties understood the word "surplus" in a different sense; but for the purpose of this discussion that meaning is to be assigned which plaintiff alleges and claims.

The plaintiff, therefore, does not here seek an equitable apportionment upon allegations that the surplus had not been apportioned; but seeks to recover as damages for breach of the contract of insurance, not alone the portion of the surplus to which she claims to be entitled, but, in addition, part of the accumulated reserve, both of which by the demurrer are admitted. In regard to the accumulated reserve no accounting is necessary, and with respect to the surplus it is not entirely clear from the allegations of the complaint whether this involves for its determination a mere mathematical calculation, as contended by the plaintiff, or an accounting, as insisted by the defendant. However, to the extent of the accumulated reserve, the plaintiff having alleged a breach, would be entitled to recover that amount.

In an action at law to recover damages for breach of contract, the fact that the plaintiff may assign many items of damages, all of which are not recoverable, would not make the complaint demurrable. In such an action a recital of the contract and its breach, together with allegations showing that some damages are recoverable, are sufficient to support the complaint. The fallacy as we view it of the argument of the appellant's counsel, lies in the fact that he marshals certain allegations of the complaint from which he insists the inference fairly rises that an accounting of the affairs of the company will be necessary to support a recovery for the amount claimed.

There are undoubtedly in the complaint many allegations which look as though plaintiff will require an accounting to obtain the full sum demanded, and upon the trial, if it should appear that an accounting of the affairs of the company is necessary, for instance, to show what share the plaintiff is entitled to receive out of the surplus fund, then it will be the duty of the trial judge to refuse to enter upon such inquiry because forbidden in such an action as this by the law of 1892. This, however, would not prevent a recovery of the plaintiff's share of the accumulated reserve, which, if the amount had been determined, as alleged, could be proved without such an accounting.

If it is a common-law action, averments looking to equitable relief may be considered as surplusage and disregarded. Here the demand for relief is for a sum of money only, the right to recover which is supported by proper allegations, and though these are to some extent obscured by averments adapted to a suit in equity or tending to show that an accounting may be necessary, this is not fatal to the complaint as one framed in an action at law. In O'Brien v. Fitzgerald ( 143 N.Y. 377) it was held, as stated in the head note, that "while the formal demand for relief with which a complaint concludes is not conclusive as to the character of the action, i.e., whether legal or equitable, yet where the complaint sets forth facts that may support equally an action at law or equity, the character of the action is determined by the relief demanded." And, as aptly said in Glenn v. Lancaster ( 109 N.Y. 642) "it is not for us now to determine that upon the facts alleged the plaintiff can succeed in the action as one at law to recover a sum of money only. * * * All that we determine is that in form and substance the action is based upon contract, express or implied, and is to recover a sum of money only, and that, therefore, under the section cited, it should have been brought to trial at a jury term."

The other grounds of demurrer assigned require no special comment, our attention being directed to the main point relied upon by the appellant, which we have briefly discussed, namely, the effect of the act of 1892, considered in the light of the allegations of the complaint; whilst it may be that the plaintiff will be unable to prove her cause of action at law without conflicting with the statute, we think that, disregarding some, there still remain sufficient allegations to support the complaint in form as an action at law.

The judgment appealed from, therefore, should be affirmed, with costs, with leave to defendant to withdraw demurrer and answer in twenty days on payment of costs in this court and in the court below:


Judgment affirmed, with costs, with leave to defendant to withdraw demurrer and answer in twenty days on payment of costs in this court and in the court below.

Summaries of

Hackett v. Equitable Life Assurance Society of United States

Appellate Division of the Supreme Court of New York, First Department
Apr 1, 1900
50 App. Div. 266 (N.Y. App. Div. 1900)
Case details for

Hackett v. Equitable Life Assurance Society of United States

Case Details


Court:Appellate Division of the Supreme Court of New York, First Department

Date published: Apr 1, 1900


50 App. Div. 266 (N.Y. App. Div. 1900)
63 N.Y.S. 1092

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