
    Moses Tanenbaum, Respondent, v. Isaiah Josephi and Others, Composing the Firm of Alfred Benjamin & Co., Appellants.
    
      Contract to furnish fire insurance at certain rates—what constitutes a rescission thereof by mutual consent— consideration therefor.
    
    December 34, 1896, a firm oí fire insurance brokers made an agreement in writing with a firm of merchants, by which the insurance brokers agreed to procure for the merchants all the fire insurance which the latter should require for a period of three years from February 1, 1897, at the rate of eighty-three cents, per hundred dollars in valuation.
    At the time the contract was made there was a tariff association composed of seventy per cent or more of the fire insurance companies doing business in the State of New York, which fixed uniform rates of insurance and from time to time changed the same.
    The rate specified in the contract was seven cents per hundred less than the rate fixed by the tariff association. The contract provided that if, during the term thereof, the rate should be reduced by the tariff association, the merchants should have the benefit of the reduction; that if the rate should be increased, the brokers should furnish the insurance at the contract rate.
    April 38, 1898, the tariff association was dissolved with the result that there was a decided lowering in the rates of insurance.
    After the dissolution of the tariff association, the merchants requested the insurance brokers to lower the rate of insurance specified in the contract, stating that one Tynberg had offered them insurance at the rate of twenty cents per hundred. The insurance brokers then informed the merchants that if they could get Tynberg to obtain the execution of an agreement and guaranty prepared by the insurance brokers, the merchants might give Ty.nberg their insurance.
    The merchants then, in the presence of the brokers, wrote a letter to Tynberg to the effect that if he signed the contract and obtained the guaranty inclosed therein, they would place their insurance with him', but, at the suggestion of the insurance brokers, the part relating to placing insurance with Tynberg was altered to read, “We will then take the matter seriously into consideration.”
    Tynberg having executed the contract, -and obtained the guaranty as suggested, the merchants notified the insurance brokers that they would give their insurance to Tynberg. The brokers then, for the first time, claimed that the contract with Tynberg should be for their account and claimed that the proposition made to Tynberg was simply for the purpose of convincing the merchants that Tynberg’s offer was not made in good faith.
    Thereafter, during the term of the contract, the merchants placed their insurance with Tynberg. The insurance brokers then brought an action against ther merchants to recover damages for the alleged breach of the contract.
    
      Held, that the dissolution of the tariff association did not dissolve the contract; That, notwithstanding that the merchants could procure insurance at a lower Tate than that specified in the contract, the insurance brokers could, if they ihad so elected, have required the merchants to take insurance and pay therefor at the rate specified in the contract;
    'That the evidence produced by the merehants, if true, established a rescission of the contract by mutual consent;
    That the consideration for such rescission was the release of each party from liability under the contract and the fact that the merchants were induced to negotiate with Tynberg.
    Ingraham, J., dissented.
    Appeal by the defendants, Isaiah Joseph! and others, composing the firm of Alfred Benjamin & Co., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 28th day of March, 1903, upon the verdict of a jury rendered by direction of the court after a trial at the New York Trial Term, and also from, an order entered in said clerk’s office on the 6th day of April,-1903, denying the ■defendants’- motion 'for a new trial made iipo.n the minutes.
    
      John Frankenheimer, for the appellants.
    
      Ernest Hall, for the respondent.
   Laughlin, J.:

The plaintiff’s assignors were general fire insurance brokers and he was a member of the firm. The defendants were merchants engaged in business in the city of New York and desired insurance upon their merchandise and fixtures. On the 24th day of Decernber, 1896, plaintiffs assignors and the defendants made an agreement in writing by which the former were to procure all insurance required by the defendants for three years, from the 1st day of February, 1897, at the rate of eighty-three cents per hundred dollars in valuation. The action is brought to recover damages for a breach of this contract.' The rate specified in the contract was seven cents per hundred lower than the rate fixed by the Tariff Association. The Tariff Association was an association composed of about seventy per cent or more of the fire insurance companies doing business in the city of Hew York. The association fixed uniform rates and from time to time changed the same. The contract provided that if during the term of the contract the rate should be reduced by the association the defendants should have the benefit .of the reduction, but if the rate should be increased the brokers were obligated to furnish the insurance without any increase in their charges therefor. On the 28th day of April, 1898, the Tariff Association dissolved and thereupon each insurance company in fixing and offering rates acted independently. The result was a decided lowering in the rates. Down to this time the brokers had procured the insurance required by the defendants pursuant to the contract. Early in May, 1898, the defendants informed the plaintiff that ' insurance was offered to them by other agents at a much lower rate than that specified in the contract. The defendants gave evidence tending to show that the brokers then, instead of standing upon their rights under the contract or asserting that defendants were not entitled to the benefit of the reduction in rates, manifested a willingness to furnish the insurance at fifty cents per hundred ; that defendants had been offered insurance as low as twenty cents a hundred and they informed plaintiff that they thought the insurance should be furnished for thirty or forty cents a hundred; that plaintiff representing his firm was unwilling to accede to this suggestion and insisted that no brokers could furnish the insurance as low as twenty cents per hundred ; that defendants then divulged the name of one Tynberg as the broker who offered them insurance. at that rate; that plaintiff, therefore, informed one of the defendants that if they would get Tynberg to obtain the execution of an agreement and guaranty prepared by the plaintiff, then the defendants might give Tynberg their insurance ; that prior to this time the plaintiff had prepared a contract and guaranty with a view to having defendants submit them to another broker who had tendered insurance at a low rate and he delivered this contract and guaranty to the defendants; that the defendants inclosed the same with a letter to Tynberg; that this letter was dictated in the presence of. the plaintiff and as first dictated was to the effect that if Tynberg would sign the contract and obtain the guaranty they would place their insurance with him; that at the plaintiff’s suggestion the part relating to placing insurance with him was altered to read, “ we will then take the matter seriously into consideration; ” that plaintiff also suggested that both- parties should sign a waiver of cancellation clause, but that defendants would not agree to this as they never asked or knew of an insurance broker to do this and the plaintiff acquiesced in this view; that Tynberg returned.a typewritten copy of the contract to the defendants executed by himself and guaranteed as suggested ; that thereupon one of the defendants telephoned the plaintiff informing him of this fact and stating that they would give their insurance" to Tynberg; that the plaintiff tlién for the first time claimed that this was all for his benefit and that the contract should be given for his account and that to this the defendants did not accede and subsequently placed the insurance with Tynberg. After the conversation over the telephone and before the insurance was actually placed with Tynberg, the plaintiff wrote the defendants asserting that the proposition to Tynberg was made merely to convince the defendants that Tynberg’s offer was not made in good faith and requesting that no insurance be given to Tynberg or any other firm without consulting him and claiming that if any orders were to be given to Tynberg that they , should be for the account of the plaintiff’s assignors and submitting new propositions for a reduction of the rate by his assignors to forty and fifty cents respectively. At the close of the evidence the court directed a verdict for plaintiff for the difference between the contract price of eighty-three cents per hundred and the rate at which the insurance was placed with Tynberg upon all insurance so placed for the balance of the contract period. Defendants excepted to the direction of a verdict and requested to go to the jury upon all questions of fact and also excepted to the denial of this request.

The appellants contend that the dissolution of the Tariff Association dissolved the contract, but this claim is not tenable. They obligated themselves to place all the insurance they required through the plaintiff’s assignors and to pay therefor at the rate of eighty-three cents per hundred. The only contingency in which the rate was to be different was the reduction of the rate by “ any body of fire insurance companies (similar to a combination at present in existence termed the Tariff Association of Hew York) or any similar body under any other name.” That event has not transpired. Therefore, the defendants were obligated to take the insurance and pay therefor the maximum rate, and plaintiff’s assignors could, if they had so elected, have held the defendants to their contract.

The testimony of the plaintiff controverts that offered by the defendants to the effect that if Tynberg would execute the agreement and obtain the guaranty they were at liberty to place their insurance with him. That question of fact should have been submitted to the jury if its determination would have been decisive of the rights of the parties. Assuming the evidence introduced on the part of the defendants to be true, as must be assumed in view of the refusal to submit the questions of fact to the jury, we think the contract was rescinded and the plaintiff was not entitled to recover. The rescission was by mutual consent. The consideration was the release of each party from his liability under the contract and there was the further consideration that the defendants were induced to and did write a letter to and have communications and negotiations with Tynberg for placing the insurance. The plaintiff’s assignors were not at liberty, after making this proposition to the defendants and after it was acted upon by the latter and all the conditions upon which the rescission of t'he contract was to take effect were complete, to withdraw the proposition even though the defendants had not then placed any of the insurance with Tynberg or legally obligated themselves so to do. They at least obligated themselves to consider seriously Tynberg’s offer, and they as business men could not honorably ask Tynberg to execute the contract and procure the guaranty on the representation that they would consider his offer if they were not at liberty to consider it at all in their own behalf.

It follows, therefore, that the judgment and order should be reversed and a new trial granted, with costs to appellant to abide the event.

Van Brunt, P. J., Patterson and McLaughlin, JJ., concurred; Ingraham, J., dissented.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.  