Attorney-General v. Empire Mutual Life Insurance

By the Court : •

The policies in question were in force in June 1872. At that time the defendant made the arrangement with the Continental Insurance Company, by which the latter was to reinsure all the defendant’s policies and the defendant was to go out of business. This arrangement was carried into, effect, and the defendant did go out of business ; the Continental Insurance Company reinsured those of the defendant’s policyholders who desired, such reinsurance. After that time the present claimants made no payments of premiums on their policies and they did not accept the offered reinsurance.

"We think that the act of the defendant in thus going out of business and transferring its property and its business to the Continental Life Insurance Company excused these claimants from the obligation to pay future premiums. They were not bound to accept another company as their insurer. And they could not be bound to continue to pay premiums to a company which had ceased to do business. Practically the defendant had broken the contract, by putting itself in a condition in which it was disabled from carrying out the contract. Therefore the defendant was bound to compensate the claimants for the damages occasioned by this breach of contract. It is not claimed that the rights of these policyholders are barred by the statute of limitations. There is no reason therefore why they should not be paid out of the fund in question, as was reported by the referee.

We think, therefore, that the order of the Special Term should be reversed, and that the report of the referee should be confirmed, with ten dollars costs of appeal, and printing disbursements.

Bockes L, dissenting. -Present —Learned, P. J., Boardman and Bookes, «LL

Order of special term .reversed, and report of referee confirmed.