
    Jane S. Avery, Resp’t, v. The Equitable Life Assurance Society of the United States, App’lt.
    
    
      (Court of Appeals,
    
    
      Filed December 3, 1889.)
    
    1. Reformation op written instrument—Insurance policy.
    Where a written contract is sought to he reformed, mutual mistake of fact, fraud or misrepresentation must he shown to entitle the party to the relief asked.
    
      2. Same.
    A mere memorandum estimate made hy officers of an assurance company of the sum which the beneficiary named in a policy issued under the “Tontine” plan is liable to receive, if living at the expiration of the term of insurance, given to insured before the issuing of the policy, is not such a misrepresentation as to justify a reformation of the policy.
    Appeal, on certificate, from order and judgment of the general term of the supreme court, second department, affirming an interlocutory judgment, which overruled defendant’s demurrer to complaint. The demurrer was on the ground that the complaint does not state facts sufficient to constitute a cause of action.
    
      Chas. B. Alexander, for app’lt; Phillips & Avery, for resp’t.
    
      
       Reversing 24 N. Y. State Rep., 441.
    
   Gray, J.

This action was brought by plaintiff to have a policy of insurance reformed in certain respects, and, as reformed, to recover thereupon against the defendant a certain sum of money.

The complaint alleges that in the year 1873 the plaintiff’s husband was solicited by the defendant to insure his life on a plan “ known as the Tontine Savings Fund Policy; ” that it was agreed between those parties that a policy was to be delivered assuring, for the sole use of the plaintiff, her husband’s life in the sum of $10,000 on these terms, viz: that sum was to be paid, if death occurred within fifteen years; but if the husband survived the plaintiff might elect to withdraw in cash, at the end of that period, $7,170; thereupon, defendant gave a certain memorandum, which the plaintiff incorporates with her pleading, and which stated the " options ” which would be available to her; that thereafter the policy in question was issued; and it also is incorporated in the plaintiff’s pleading. The complaint avers that before the acceptance of the policy and the payment of the first premium, it was again represented to plaintiff’s husband that the contract was that plaintiff would receive the amount of $7,170 if her husband survived the period of fifteen years, and that she would receive the sums and privileges stated in the memorandum referred to.

It further appears from the complaint that just before the expiration of the fifteen years the defendant notified plaintiff’s husband that 'he could surrender the policy and receive the cash sum of $5,076.80; that upon the expiration of the fifteen years’ period the husband surrendered the policy and with plaintiff declared an option to have from defendant the sum of $7,170 and demanded payment of that amount, which defendant refused to pay; that plaintiff thereupon received the aforesaid sum of $5,076.80, tendered by defendant, only on account, and still claiming the difference between the two sums. The plaintiff prays for a reformation of the policy in that portion wherein the options to the-holders are expressed so that it shall read as the first option that the amount to be withdrawn in cash is $7,170.

The memorandum which the complaint incorporates, and in fact rests upon mainly as embodying the preliminary agreements of the parties, is headed “ Tontine Savings Fund Policy ” and then follows over the body of the instrument the words. “ Estimated Results.” Those results, upon data covering the case at hand, among other items of estimates mention as the “total cash value ” the sum of $7,170. Then follows, beneath, three-paragraphs containing privileges to the assured; not necessary to-repeat, as the record simply states again as the total cash value of the policy the said sum of $7,170. The policy of assurance contained the following clause, viz.: “This policy is issued and accepted by the assured upon the following special agreements and conditions relative to Tontine Savings Fund Policies; first,, that this policy is issued under the Tontine Savings Fund Plan.” The fourth of the conditions mentioned states that “ all surplus or profits from such policies on the Tontine Savings Fund Assurance Plan as shall cease to be in force upon the completion of their respective Tontine dividend periods shall be apportioned equitably among such policies as shall complete their period.” The fifth paragraph of the special agreements and conditions is the one-sought to be reformed, and it provides “that upon the completion of the Tontine dividend period of the 30th of December, 1887,. * * * the legal holders shall have the option: First, to withdraw in cash this policy’s entire share of the assets, whether in the reserve fund proper or in the accumulated surplus.”

The question before us is whether these facts, if taken as true, as they must be under the demurrer, give to the plaintiff a cause óf action against the defendant for the reformation of the policy. The defendant is deemed to concede everything in the plaintiff’s favor as to the facts, but not her construction of the instruments, or her inferences and conclusions from the facts. In actions to-reform written instruments the rules are familiar and well established by repeated decisions of the courts. At the foundation lies the'general principle that, where equitable relief is sought, the-case must disclose facts which constitute an effective appeal to the conscience of the court and move it to interfere to mitigate the rigorous rules of the law. It is the province of a court exercising equity powers to administer justice between parties, where, for want of an adequate remedy at law, they would be without redress, in respect of matters where good ana cogent reasons exist for relief being granted. Such reasons, in cases like the one at bar, where it is sought to reform, that is to say, to alter, or change, the terfns and conditions of a written agreement between parties,, must exhibit the existence of a mutual mistake, whereby the agreement really states less or more than was intended by the parties, or of some fraud or imposition, whereby an unconscientious advantage is or may be had by one over the other. An agreement between parties is presumed to contain what they intended, and to comprise their whole sense of the subject matter, and, therefore, when it is made to appear that, by a mutual error, the contract varies from their intent; or that, by some fraudulent practices, there has been a suppression, or omission, or insertion of material matter which would operate as a surprise, or a fraud, upon a party, ground for relief is made. So, too, equity will relieve, where there has been a misrepresentation of some important fact, by which a party is misled to his disadvantage, or so entrapped as that an undue advantage is gained over him. It is unnecessary to cite authorities in support of these peculiar principles. They are found discussed in Judge Story’s work on Equity Jurisprudence, under title of Fraud and Mistake.

Mow the design and purpose of equity oeing to reconstitute an .agreement between parties, where some positive proof shows that it is not, in material respects, in truth, such as was intended by them, does the plaintiff make out an equitable case for the interference of the court ? I am unable to say that she does. We must consider the question as affected by the incorporation of the contract in the plaintiff’s complaint. She does not pretend that any fraud, or any imposition, was practiced upon her, by which she was induced to accept the policy; nor that there was any fraudulent suppression, or omission of any part of their agreements. She does not show that there was some mistake in the contract of insurance which was mutual, or which resulted in mutual error. Her whole subject of complaint is that the defendant’s representation as to the sum payable in a certain contingency was not contained as an agreement of the policy. But is that a well founded basis of complaint on her part? what was solicited of her husband to take out, and what he agreed to and did accept, was a peculiar form of policy, differing from the plain and ordinary con tract of life insurance; under which the defendant would become liable for a certain sum and only upon the death of the assured. Under the policy negotiated for, if the assured survived the stated period of fifteen years, the sum he might elect to receive in cash was, in its nature, uncertain and, in the nature of things, incapable of being exactly computed in advance. This appears from the language of the policy itself, which describes it as issued under the Tontine savings fund plan, and indicates its speculative possibilities, in declaring it entitled to an equitable apportionment, with other like policies, of the surplus or profits derived from such policies in the class as shall cease before the completion of their respective Tontine dividend periods. The plaintiff expressly alleges that such was agreed upon as the policy and the memorandum, which she rests upon as representing what was to be the defendant’s agreement of assurance, describes the proposed policy as of that nature.

These policies have been the subject of consideration in this court, and notably in the recent cases of Bogardus v. N. Y. Life Ins. Co., 101 N. Y., 328, and Uhlman v. Same Company, 109 id., 421; 16 N. Y. State Rep., 371.

The character of such policies is described in the opinions, in those cases, as involving the amount of the fund, out of which the dividend shall be paid to the surviving holder, in uncertainty,, and, hence, creating a liability on the part of the company to him under such a policy which was necessarily contingent and could only be determined when, at the end of the dividend period, the aggregate of the fund, from accretions, interest, etc., could be ascertained for division among the survivors.

When the assured accepted the policy he was chargeable with the knowledge of its terms and provisions. Ignorance is not pleaded and ignorance of the legal effect of the contract would not be an excuse. The knowledge imputable to him, and to the plaintiff, involves a comprehension of the contents of the policy, and, equally, of the contingent nature of the option available to the holder, upon the expiration of the Tontine period. The assured was bound to know that the liability of the company, on that plan of insurance, was contingent upon several elements and indeterminable in advance. This was indicated to him, not only by the nature of the engagement itself, but the preliminary memorandum only represented estimated results. His position here is at war with his position as defined by the complaint. He now argues as though there had been a mutual intent that a certain sum should be paid; while the complaint, on its face, makes out; a case of a contract of assurance, the outcome of which, in the respect discussed, was essentially contingent upon events not possible of forecasting. He engaged in a plan of insurance which presented the possible chance of a return to him of a dividend, in certain contingencies, which would represent considerably more than his payments of premiums, and which he entered into on certain estimates of results furnished him by the company. Now I think we may assume that the defendant’s officers made .these estimates as liberal as it was possible, and 'that they represented the chances in as favorable a light as they could. That is quite possible and probable; but that assumption would not affect the question. The results of -such a plan of assurance were matters of opinion, and they are not considered as important in equity. The avenues of inquiry were equally open to the parties, and probably the experience of the officers was of more use to them than to the general public.

Their statements of what the assured might possibly gain under that plan do not amount to misrepresentation; and, if the assured accepted the policy relying upon them, and the result is not as supposed, or estimated, that presents no ground for relief. It was, and in the very nature of the plan could only be, problematical or speculative. The figuring out of the chances of the assured, in the chances of all of his class, could only be based on hypothetical facts and figures.

The case of Maher v. Hibernia Ins. Co., 67 N. Y., 283, is inapplicable as an authority for the plaintiff. The proof in that action showed that both the plaintiff and the agent of the defendant meant to insure a building as occupied otherwise than only as a dwelling house; but terms' were used in the policy which were not apt to so describe it, while intending to properly describe its uses. Thq court there held that evidence of the mutual mistake, to the satisfaction of the jury, would, under the averments, even without a specific allegation of a mistake of fact, warrant the reformation of the contract. Folger, Ch. J., said: “Itis enough to authorize the reformation of a contract if it appears that through the mistake of both parties to it, the intentions of neither have been expressed in it.” That is not this case; for here the only mistake, predicable of the facts, is the mistake of the plaintiff, or of the assured, in supposing that, under that plan of quasi speculative insurance, exact estimates could be made of the dividend which, at the expiration of the period, would be declarable to a policy holder surviving in his class.

In addition to the absence of averments of facts making out any agreement, or disclosing any intention that the policy should contain an option for a withdrawal of the cash sum named, at the expiration of the fifteen years, the fact of the acceptance and retention of the policy during that period of time, without taking any steps for reformation, deprives the case of equitable features, anct seriously assails the good faith of the plaintiff in her present attempt to charge the defendant with a liability inconsistent with the terms of its contract.

If the views I have expressed are correct, it follows that the defendant’s demurrer should have been sustained, and that the judgment appealed from should be reversed, and a judgment ordered to be entered in favor of the defendant upon the demurrer, with leave to plaintiff to amend upon payment of the costs of the action in all the courts.

All concur.  