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Smith v. Dotterweich

Supreme Court of New York, Appellate Division

May 5, 1909

SMITH
v.
DOTTERWEICH.

Appeal from Trial Term, Cattaraugus County.

Action by George N. Smith against Rudolph Dotterweich. From a judgment for plaintiff, and from an order denying defendant's motion for new trial, he appeals. Affirmed.

[116 N.Y.S. 897] Allen J. Hastings, for appellant.

William R. Daniels, for respondent.

Argued before McLENNAN, P. J., and SPRING, WILLIAMS, KRUSE, and ROBSON, JJ.

ROBSON, J.

Plaintiff has recovered judgment for the amount of four promissory notes, each for the sum of $913.75, made by defendant payable to the order of defendant; all of the notes being dated August 28, 1901, and payable six months after date with interest. These four notes were given as a renewal of a note for $3,740 made by defendant to plaintiff's order, dated February 28, 1901, and payable six months after date. Neither the original nor the renewal notes bore interest. The aggregate amount of the renewal notes is $3,655. The difference between this amount and the principal of the original note seems to be accounted for by an allowance of $85 to defendant for commissions, or services, in procuring an application for insurance on the life of his wife, though defendant disclaims any knowledge that such allowance was made. The original note represented the premium for one year on two policies of insurance on defendant's life for $70,000 and $30,000, respectively, issued by the John Hancock Mutual Life Insurance Company, of which company plaintiff was the agent at Buffalo, N.Y. At the same time the note was made, two receipts of the company were given to plaintiff with the policies of insurance acknowledging receipt of the premiums thereon for one year, reciting the premium as due February 19, 1901. The policies of insurance and premium receipts were retained by defendant until after the renewal notes became due-that is, for upwards of one year-when he offered to return them to plaintiff and demanded [116 N.Y.S. 898] the surrender of the renewal notes. Plaintiff declined to do this, and shortly thereafter began this action.

As a defense to this action defendant by his first answer alleged: That the taking out of the insurance and giving of the original note was a part of and pursuant to a contract made by plaintiff and himself, by which, in effect, plaintiff agreed within one year to procure for defendant a loan of $70,000 for as long a period as he might wish on the note of defendant with the policies of life insurance and certain shares of stock of a brewing company, as collateral for the purchase of which defendant alleged he then had an option, and to complete the purchase of which he desired to raise the $70,000. " That to enable the plaintiff more readily to negotiate and secure for the defendant said loan, it was agreed: That the defendant's application for said insurance policy should then be made; that on the same being issued the defendant would execute and deliver to the plaintiff his promissory notes for an amount equal to the first premium on said policy; that he should not be required to pay the said notes or premium until after the said loan was secured; and that, if said loan was not secured within one year, then that the notes should not be paid, but be returned and surrendered to him, and the said policy should be of no binding force or effect until said loan was so secured." That the policies were taken out and the note for premium given to carry out this agreement. That when this note became due the plaintiff had not secured the loan, but, he promising that he would do so within six months thereafter, and was then negotiating the same, the renewal notes were given under the same agreement as the original note, and that plaintiff failed to procure the loan. That the policy never was a valid or binding contract, and that the notes are without consideration.

In this state of the pleadings, the case came on for trial, and a motion was made for judgment on the pleadings, which was about to be granted apparently upon the ground that the alleged agreement set forth in defendant's answer was too indefinite to admit of enforcement. Defendant, however, was granted postponement of trial to permit him to move at Special Term for permission to serve an amended answer. Permission was obtained, and an amended answer served. The order permitting service of the amended answer was affirmed on appeal to this court without opinion. 118 A.D. 917,103 N.Y.Supp. 1142.The amended answer avoids the charge of indefiniteness as to the time for which the loan of $70,000 was to be secured by alleging that it was to be for a definite period of five years. The first answer stated the time to be " for as long as defendant might wish." With this exception this defense is practically the same as in the original answer. The new answer also sets up a counterclaim for damages alleged to have been occasioned by plaintiff's failure to procure the loan for defendant by reason of which he lost his opportunity to purchase the brewery stock. On the second trial defendant gave evidence as to the agreement he had with plaintiff in reference to procuring the loan, to the effect that he was to have the loan for five or ten years, or longer, if he wished. He states the agreement in several ways, but the net result is that he was to have it, not for any [116 N.Y.S. 899] definite time, but for a time to be determined by himself. This clearly leaves the contract as indefinite as it was under the statement of it alleged in his first answer. The defendant's statement of the agreement also leaves its terms indefinite beyond any possibility of enforcing it as a valid contract.

Accepting defendant's statement of the contract, the court must find and establish at least two essential elements of the contract not agreed upon by the parties, that is, an agreement on the part of the party borrowing the money at some definite time to repay it, and the right on the part of the party loaning the money at some time to compel repayment of it, and, in addition, the further terms as to security, etc., and the conditions upon which the money was to be loaned. Such a contract deficient in these and other essential features is void for uncertainty. Van Schaick v. Van Buren, 70 Hun, 575, 24 N.Y.Supp. 306.Citations to the same effect might be indefinitely multiplied. This disposes of defendant's contention that he was entitled to have the question of his counterclaim, which he based necessarily upon this agreement to procure the loan, submitted to the jury.

Of course, the attempt to establish any counterclaim for damages resulting to defendant by reason of plaintiff's failure to procure the loan necessarily presupposes that the policies of insurance were taken, and the premium note given, by defendant as valid contracts, and that the contract for the loan was also a valid and enforceable contract based upon a good consideration; but defendant in his other defense assumes an entirely opposite position, which is stated by his counsel in his request to go to the jury when the motion for direction of a verdict was under consideration by the court as follows:

" I ask the court to submit to the jury the question as to whether the insurance policies were accepted by Dotterweich and the note, the renewals of which are in suit, was delivered to Smith upon condition the same should be returned in case Smith did not procure a loan of $70,000 for Dotterweich with the insurance policies and the brewery stock as collateral within one year."

This request, of course, presupposes that there was evidence from which the jury might find that neither the policies nor the premium note ever were binding contracts, but were delivered upon a condition which plaintiff was to perform, viz., procure the $70,000 loan within the year before they could become vitalized as actual contracts. Without considering the question as to whether this request was not too broad in assuming that there was in fact evidence that the agreement defendant testified to included the stipulation that defendant was to put up the insurance policies and the brewery stock to be purchased with the proceeds of the loan, as collateral for the loan, of which there is no evidence in the record, it seems to me defendant's evidence fails to present sufficient basis either to require or permit the court to submit any question of fact as to any condition precedent or subsequent upon which the policies and note were made and delivered. The agreement as to the loan and the condition upon which plaintiff claims the policies were taken out and the premium note given is to be gathered in its entirety only from defendant's own statement of it, which must, of course, be here taken as true; but this testimony, it seems, falls far [116 N.Y.S. 900] short of establishing delivery of the policies and premium note upon a condition precedent. Defendant testifies (fol. 122):

" He (plaintiff) says, ‘ The boys have been talking. Mr. Larabee and Mr. Marvin have been talking to you about taking out an insurance for making a loan.’ And I said, ‘ Yes.’ He says, ‘ Do you want it?’ I said, ‘ I do provided you can make the loan.’ And Mr. Smith ...

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