
    D. McLean Shaw, Respondent, v. Thomas L. Cornell, as Executor, etc., of Sidney Cornell, Deceased, Appellant, Impleaded with Another.
    
      Life insurance policy — assigned to secure a debt and subsequently to secure a second debt of the owner, each creditor thereafter paying a proportionate pourt of the premiums—proper division of the proceeds of the policy.
    
    July 18, 1873, the owner of a policy of life insurance assigned the same to one Shaw as collateral security for the payment of a §600 note. Shaw paid the full premiums during the years 1873 and 1874. In November, 1874, the owner of the policy assigned it to one Cornell to the extent of $1,300, and since that time, until the policy matured in 1899, Shaw paid one-third of the premiums and Cornell, or his estate, paid two-thirds thereof. The premiums paid by Shaw, together with his loan and the interest thereon, exceeded the amount which became payable upon the death of the party insured.
    
      Held, that as it was evident from the correspondence of the parties that the policy was kept in force for their mutual benefit and that it was not contemplated that Cornell’s payments should he used to keep alive Shaw’s security, the-proper method of dividing the proceeds of the policy was to give back to each of the parties, the premiums which each had paid, with interest, and then to-apply the balance upon the debt due to Shaw.
    Appeal by-the defendant, Thomas L. Cornell, as executor, etc.,, of Sidney Cornell, deceased, 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 13th day of' February, 1901, upon, the decision of the court rendered after a trial at the New York. ■ Special Term.
    
      Lawrence E. Brown, for the appellant.
    
      William West Shaw, for the respondent.
   Van Brunt, P. J.:

On the 18th of July, 1873, one George Davis, being the owner-by assignment of a policy of insurance issued by the New York Life Insurance Company upon the life of Sophronia Randall,assigned the said policy to the plaintiff as collateral security for the-, payment of a note for $600 and interest, and from that time the-policy, with the assignment attached, remained continuously in the possession of the plaintiff until its maturity in 1899. During the* years 1873 and 1874 the plaintiff paid the full cash premiums due* upon the policy, and from. 1875 to 1899 he paid one-third of the amount of each annual premium. In November, 1874, said Davis-executed and delivered to one Sidney Cornell, of whom the defendant is executor, an assignment of said policy to the extent of $1,300,., and since that time said Cornell or his estate has paid two-thirds of said annual premiums, the said two-thirds having been given to the * plaintiff, who added thereto his óne-third and paid the -premiums, .- The insured lived so long that the premiums paid by the plaintiff together with the loan ’ and interest thereon, exceeded the amount which became payable upon the death of the party insured, and the* court held that the plaintiff was entitled to the payment of $1,865.80* of the amount due upon the policy.

This judgment, we think, was erroneous.- It appears from the* correspondence which was offered in evidence that the keeping .of.: this policy alive was a joint undertaking upon the part of the plaintiff and Cornell. Certainly the plaintiff, when he wrote the letter of August 16, 1886, telling Cornell, “You better send me check for $500 and take my interest. Think what a sacrifice,” did not dream that Cornell was paying premiums for the purpose of keeping alive his (plaintiff’s) security, because at that time it seems to have been the belief of the parties that by 1890 the policy would fall in; and yet, for all the premiums that the plaintiff had paid from 1873 to-1886, and for the principal sum and interest secured by the policy, he is willing to take the sum of $500. The other letters show that the keeping alive of the policy was for their mutual benefit, and that it was not contemplated between these parties that Cornell’s payments were to go for the purpose of keeping alive the plaintiff’s, security.

Tinder these circumstances, what are the equitable rights of the-parties in this security ? It seems to me that the equitable division of the proceeds of this policy was to give back to each of the-parties the premiums which they had paid with interest, and then to apply the balance, whatever it might be, upon the debt due to* the plaintiff as security for which the policy had been assigned. This is as favorable a view to take of the situation for the plaintiff' as the facts admit of. It might very well be claimed that after the; payment of the premiums the balance of the policy should be divided, one-third to the plaintiff and two-tliirds to the defendant... There is strong reason to infer that that is the way these parties looked at their interest, because the plaintiff’s claim was $600 and Cornell’s was $1,300, and the premiums were paid after 1874, one-third by the plaintiff and two-thirds by the defendant. It is to be. observed that at the time Cornell received his assignment of the* policy, the amount of the plaintiff’s debt, the premiums paid by him, and the amount of Cornell’s debt exceeded the face of the policy, and long prior to the death of Sophronia Randall, the life insured, the amount of the plaintiff’s debt with interest and the premiums paid by him with interest had nearly exhausted all' possible recovery upon the policy, and, therefore, if the plaintiff’s theory is correct, Cornell kept on paying his two-thirds of the premium upon that policy for the sole purpose of enabling the plaintiff to-recover substantially the whole amount when it fell due. This is. not only not reasonable, but the necessary interpretation of the correspondence leads to a different conclusion.

We think, therefore, that the judgment should be reversed aüd a new trial ordered, with costs to the appellant to abide the event.

O’Brien, Ingraham and McLaughlin, JJ., concurred.

Judgment reversed, new trial oi’dered, costs to appellant to abide event.  