Merrill v. Anderson

The Continental Life Insurance Company insured the life of Albius C. Merrill in the sum of $10,000, payable at his death to *606the petitioner, Betsey A. Merrill. The insured died in September, 1876, and the company adjusted the loss with the petitioner at $7,820,67, and delivered to her a check for that sum, of which the following is a copy :

“(No. 792.)

“ Continental Like Insurance Company oe New Tore, ) New Tore, October 14, 1876. J

“ $7,820.67. United States Trust Oonvpcmy. (Claim 14,214.)

“ Bay to the order of Betsey Ann Merrill seventy-eight hundred and twenty dollars and sixty-seven cents.

“CONTINENTAL LIFE.

“R. C. Frost,

“Actmg President.

“ J. P. Rogers, Secretary.

“ $7,820.67.”

On the back of this check was the following indorsement:

“ This check is accepted as full payment of all claims on policy No. 14,214.

“MERRILL.”

At the time this check was drawn, the insurance company had $21,074.94 on deposit with the trust company, but before the check was indorsed by the petitioner and presented for payment, a receiver of the company had been appointed, and the funds had been withdrawn, and when the check was presented for payment it was refused for want of funds. Now the petitioner asks to have this sum paid to her by the receiver, and an order has been made at Special Term that it be so paid. From that order an appeal is now taken, and we have to determine whether this money which was so appropriated to the payment of this claim can be taken by the receiver and placed in the common fund, and used for the payment of the debts of this insolvent corporation, and the petitioner thus be compelled to take her share of her claim the same as the other creditors.

The statement of the case shows that the company had settled with the petitioner and adjusted her claim, and had a special deposit with the trust company to secure that settlement, which was *607intended to be appropriated by tbe check drawn against it. An equitable claim upon this fund was thus created in favor of tbe petitioner, and tbe receiver took tbe fund subject to tbis equity. In fact, tbe receiver never should have withdrawn tbis money from tbe trust company. Tbe insurance company was bound by tbe settlement, and be was bound in tbe same manner, and to tbe same extent. After tbe delivery of tbe check to tbe petitioner, both equity and fair dealing would forbid tbe withdrawal of tbe fund out of which tbe check was to be paid, and we cannot give our sanction to such a course of conduct.

Tbe order appealed from must be affirmed, with costs.

Order affirmed, with costs and disbursements.