Argued February 8, 1881
Decided March 1, 1881
George N. Kennedy for appellant. R.W. Peckham for respondent.
The principle is well established in this State that where an assignee takes a chose in action by assignment, with the debtor's assent, and on the faith of a representation made at the time, the debtor is estopped from impeaching it by any defense inconsistent with his declaration. And it is adjudged, by repeated decisions of this court, that the doctrine of an estoppel in pais may be interposed in such a case against the defense of usury. ( L'Amoreux v. Vischer, 2 Comst. 278; Mason v. Anthony, 3 Keyes, 609; Payne v. Burnham, 62 N.Y. 69. ) The statement in the certificate of Allen Munroe and Julia T., his wife, to the effect that to the bonds and mortgage therein mentioned, the last of which is the subject of foreclosure in this action, there was no legal or equitable defense, was evidently made for the purpose of inducing a belief that such statement was true. And if the bond and mortgage was received upon the strength and by reason of such statement and certificate, no valid reason exists why the parties who made the same, and all persons claiming under them, are not estopped from urging to the contrary, or asserting that the representation is untrue and different from the fact actually existing. It appears, in this case, that, at the time and concurrent with the execution of the bond and mortgage, an instrument was executed by the mortgagors consenting to the assignment of the same to the superintendent of the insurance department of this State, and that the papers were taken and deposited with said superintendent, and the findings of the court show that the bond and mortgage was received by him relying upon the truth of the statements contained in the certificate. The presumption of law, in view of the purpose for which the bond and mortgage was assigned and the fact that it was received, in accordance with the customary routine of business of that department, is that ordinary caution was used, and the proof shows that it was the practice to require a certificate of the same tenor and effect in all transactions of a like character. In fact, such a course was indispensable to the safety and security of those for whose benefit bonds and mortgages might be assigned; and a public official, having charge of securities of this description, would be delinquent in the performance of this duty and as a business man who failed to exact proof that the obligation received was valid and legal and not tainted by a usurious consideration. Taking into account that the official duty of the officer absolutely required this degree of vigilance and care, as well as ordinary business rules, and the presumption, which is always to be indulged, that a public officer acts in good faith until the contrary is proved, it must be assumed that the representation made by the certificate was a very important and essential part of the transaction, as well as an inducing cause for taking the bond and mortgage; and without this, the superintendent would never have parted with the bond in his possession of the same amount and of equal value. The claim, therefore, that there is no evidence that the certificate was ever shown to, or seen by, the assignee or superintendent, or that he had heard of its existence at the time of the assignment, is not well founded. The evidence shows that it was the custom of the department to require, before accepting the assignment of any bond and mortgage, such a certificate; that the certificate with the other papers was carried to the superintendent's office; and to say that it was not looked at, examined and understood, and did not constitute the very essence of the matter, is contrary to all reasonable inferences to be derived from the object in contemplation, and the nature and purpose of the transaction. The evidence relied upon by the appellant's counsel to sustain the position contended for is susceptible of a different construction. A literal reading would make the witness testify to the existence of the certificate of an affidavit of regularity, which is not proved; and as it does not appear that there was any other certificate introduced upon the trial except the one signed by the mortgagors, the fair and reasonable intendment is that the witness included the latter, as well as the affidavit of regularity and that of the appraisers, which are mentioned. This interpretation comports with the usual course of business, and with the inference to be drawn from the fact that a certificate had been taken, and that it must have been executed for the purposes for which it was used. Although the evidence relating to the custom as to requiring a certificate is contained in a stipulation, yet it was manifestly sufficient to establish such custom and properly admitted upon the trial. The claim that the certificate alone is not sufficient to create an estoppel in pais, and that it must be shown that the acts, declarations or omissions, out of which the estoppel arises, influenced the conduct of the superintendent, and that he acted in reliance upon the same, is answered by the remark that it is entirely clear that he would not have taken the assignment of the bond and mortgage and parted with the bonds he held, unless this certificate had been given. It was not only a rule and regulation, but a necessity; and the only way in which he could fully obtain knowledge of the facts, and protect the public against loss by mortgages which were usurious and void. Under these circumstances, it cannot, we think, be questioned, that the superintendent believed and relied upon the statement in the certificate as true, and that his action was dictated thereby, within the principle of the decisions cited by the appellant's counsel. (See Malloney v. Horan, 49 N.Y. 111; Wilcox v. Howell, 44 id. 399.)
The fact that Mrs. Munroe was a married woman when the certificate was executed does not aid the defendants; and the finding of the court, to the effect that she had no knowledge of its purpose, and in the absence of such knowledge she signed the same without any knowledge or information of the use which was to be made of it, is adverse to the inferences to be drawn from the certificate itself, and from the circumstances attending the transaction. All of these bear witness that the design was to assign the mortgage to the superintendent, and that this was to be done upon the strength of the statement made as to the validity of the mortgage. It is a presumption of law that a party executing an instrument does so with knowledge of its contents; and as Mrs. Munroe was not examined as a witness, and there is no proof that she did not know its contents, it must be assumed that she did. Without any proof of fraud or want of knowledge, it certainly would not be safe, or in accordance with any sound principle, to hold that a married woman is exonerated from the statements she has made by reason of her ignorance. In Payne v. Burnham ( supra), the doctrine of estoppel in such a case was upheld. So long as she intrusts such a statement in the hands of her husband with power to use it, she makes him her agent and is bound thereby. The finding referred to is not material, as the court also found that Mrs. Munroe was estopped by the certificate from setting up the defense of usury, and this should control. The claim that it was not executed with a view to influence the action of the assignee is in opposition to the finding last stated, which is fully sustained by the evidence. It is clearly evident that it did influence the superintendent; and without the certificate of both the mortgagors the assignment would never have been accepted. Nor is there any valid reason why the plaintiff cannot avail himself of the doctrine of estoppel against the mortgagor. He holds the securities as trustee for the benefit and for the security of the policy-holders, under the act of April 8, 1851. Upon the insolvency of the insurance company and its dissolution and the appointment of a receiver, it is his duty to keep those securities, convert them into money, and distribute the funds among the cestuis que trust. ( Ruggles, Receiver, v. Chapman, 59 N.Y. 163; S.C., 64 id. 557; Matter of Guardian M.L. Ins. Co., 13 Hun, 115; 74 N.Y. 617.)
At the time of the commencement of this action the New York State Life and Trust Company, to whom the mortgage was executed, was insolvent, as the records of this court show, and a receiver appointed to take charge of its effects, and to wind up its affairs. Under the circumstances, the knowledge of the company of the existence of the usury could not well be imputed to the superintendent.
But aside from this view, under the statute, by virtue of which the superintendent holds the securities, he is primarily a trustee for the policy-holders. (Sess. L. of 1853, chap. 463, as amended by Sess. L. of 1862, chap. 300, § 2.) The intention of the law evidently was to place these securities beyond the reach of the company until the policy-holders are fully satisfied, and the superintendent could not be chargeable with the knowledge of the company that usury had been taken, even if the proof was clear that such knowledge existed. As already indicated, there was no error in the admission of the evidence contained in the stipulation, and we think that the plaintiff had a right to show the custom of the department in the transaction of business of this description. Nor was there any error in the refusal to find as requested upon the trial, or in the conclusion arrived at, that the defendants were estopped. As the estoppel precluded the defendants from interposing the alleged usury as a defense, it is not necessary to consider whether any usury was proved of which the insurance company had knowledge, or which of itself would defeat the collection of the bond and mortgage.
The judgment was right and should be affirmed.
All concur, except ANDREWS, J., taking no part.