FOURTH DEPARTMENT, JULY TERM, 1896.

[Vol. 3.

made no statement in regard to the health or condition of Simon, or that he was sick at home, and he, Koch, had no knowledge at the time but that Simon was in perfect health. Simon died on the evening of the sixteenth of March. The complaint in this action, originally, was upon the policy, but upon the trial it was amended so as to allege that the provision in the policy that it should be delivered to the assured in his lifetime and in good health was waived.

The defendant's answer alleged that the policy was not issued or delivered to Simon during his life and while in good health, but while he was dangerously ill of typhoid fever, and that it was never, in fact, delivered to Simon.

The plaintiff seems to concede, as she must, that unless she can stand upon the alleged waiver she must fail. The act of waiver was not performed by the deceased. As we have seen, he died within a few hours after the policy was delivered to Newman, and had no knowledge of the facts of the delivery upon which the alleged waiver is based so far as the case discloses. So there was no ratification by the deceased of the acts of Newman, nor has there been any such ratification by any representative of the deceased, but a ratification is claimed by a stranger to the contract, the beneficiary thereof, the plaintiff. It is an elementary principle that a party cannot ratify what he could not originally authorize. The beneficiary could not, during the lifetime of Simon, have authorized Newman to take the delivery of this policy and pay the premium. Can she ratify it after the death of Simon? This is a serious question that meets the plaintiff upon the threshhold; but, in view of other decisive questions in the case, it is not necessary to determine that question. Assuming that the agent Koch had the power to waive for the defendant, as claimed by the plaintiff, was there, under the circumstances of this case, a waiver upon which the plaintiff can stand? The policy provided that it should be delivered to the assured in his lifetime and in good health, and should not take effect until the first bi-monthly payment was made. It was not delivered to the assured. He was dangerously ill when the policy was delivered to Newman. He did not make the first bi-monthly payment, and the plaintiff's whole case hinges upon what occurred with Newman, to which we have referred.

This leads us to the consideration of what a waiver is, and we

App. Div.]

FOURTH DEPARTMENT, JULY TERM, 1896.

find an excellent definition in Bishop on Contracts (ed. of 1887, 8792) as follows: "Waiver is where one in possession of any right, whether conferred by law or by contract, and of full knowledge of the material facts, does, or forbears the doing of, something inconsistent with the existence of the right or of his intention to rely upon it; thereupon he is said to have waived it, and he is precluded from claiming anything by reason of it afterward." The waiver then must be made "with full knowledge of the material facts." It cannot be claimed that the agent Koch acted in the light of all the facts or of the material facts. He was simply told that Maloney was sick at home. He was not told that he was dangerously sick; that he had a disease often fatal, and recognized as among the most dangerous of diseases, or that Simon had been dangerously ill and confined to his bed for two weeks; from what was said the agent might well have inferred that it was a temporary ailment and no wise affected his right under the policy, and such as people frequently have, which means nothing but a few days' detention at home. There was nothing in the statement to point to the death of Maloney, although he was then at the point of death and within a few hours of his death, or to indicate that the defendant might soon be called upon to pay $2,000 if it accepted the trivial sum of $4.50. If Newman was acting as the agent of the deceased, so that the plaintiff can avail herself of his acts, then he should have fully informed the agent of the truth and not suppress the important fact of the real condition of the assured. It is true that he says that he did not know what his true condition was. If that were so no amount of inquiry, on the part of the agent of Newman, would have elicited the fact.

Waiver belongs to the family of estoppel, and often in such cases they are convertible terms. The waiver is a defense, when the party insisting upon the contract has done something which in equity prevents the party from enforcing the contract, and if permitted to do so it would operate as a fraud upon the other party. Here at least there was a suppression of a most vital fact, by the representative of the insured, from the insurer, and to permit an estoppel in such a case would operate as a gross fraud upon the insurer. The agent had no reason to suspect from what was said at that time, on the sixteenth, that the deceased was dangerously ill, when but two

FOURTH DEPARTMENT, JULY TERM, 1896.

[Vol. 8.

days before he had been assured by a statement that appeared to have been signed by the assured that he was then in good health and capable of performing his contract, receiving his policy and paying the first premium, because the latter there affirms under date of March fourteenth, in his letter, wherein he corrects his age, the statements as to his health and his freedom from disease, which is made a warranty under the contract.

The agent would naturally conclude from this statement on the fourteenth that the illness was not serious, and be diverted by such statement from making further inquiries. If it be claimed that there was no intentional suppression of the facts from the agent by Newman, and that, therefore, no fraud was practiced upon the defendant, we then have a condition quite as fatal to the plaintiff's right to recover as if such fraud existed, because then the waiver was made in ignorance by both parties of the conditions which, if known, would have prevented the delivery of the policy and the acceptance of the premium. Waiver is an equitable defense as well as estoppel, and cannot be predicated upon a mistake of facts.

It seems clear, therefore, that there was not a waiver under the circumstances of this case which will permit the plaintiff to

recover.

The defendant contends that the agent had no power to bind the company by the assumed waiver.

In view of the conclusions reached upon the other questions, it is, perhaps, unnecessary to consider this question at length. The extent and the limitations of this agent's authority to act for the defendant clearly appear in the evidence, and we fail to discover any such authority. The agent had power to deliver policies and collect premiums in cases where the condition imposed upon the assured by the contract had not been violated. He could only deliver a policy to an assured in health, and he could only take a premium from a person fulfilling those conditions. He could no more deliver a policy to a man stricken with a fatal disease and at the point of death and take a premium from him, which would bind the company as a waiver, than he could make such delivery to the personal representatives of a deceased.

In no aspect of this case can the plaintiff recover.

App. Div.]

FOURTH DEPARTMENT, JULY TERM, 1896.

The motion for a new trial should be denied, with costs, and judgment entered upon the verdict in favor of the defendant.

All concurred.

Exceptions overruled and motion for a new trial denied, with costs, and judgment on the verdict ordered for the defendant, with

costs.

THE BAGLEY AND SEWALL COMPANY, Appellant, v. CHARLES EHRLICHER and Others, Respondents.

Injunction restraining a multiplicity of creditors' suits, brought against the stockholders of an insolvent corporation - the liability of the stockholders is a legal liability.

Where many creditors of an insolvent corporation have brought separate actions against stockholders who are severally individually liable for its debts, the Supreme Court has power, at the instance of a creditor suing on behalf of himself and of all other creditors, to secure an accounting and an adjudication as to the respective liabilities of the respective stockholders, to restrain the creditors who have brought individual actions from the further prosecution of their actions, to the end that the rights of all the creditors and the liabilities of all the stockholders may be adjudged in one action.

The liability of a stockholder for the debts of the corporation, under the Stock Corporation Law, is a legal liability.

APPEAL by the plaintiff, The Bagley and Sewall Company, from an order of the Supreme Court, made at the Jefferson Special Term and entered in the office of the clerk of the county of Jefferson on the 18th day of April, 1896, vacating an injunction granted by the county judge of Jefferson county, restraining the creditors of the Globe Paper and Fiber Company from commencing actions against the stockholders of said company, and from prosecuting actions already begun.

Elon R. Brown, for the appellant.

Purcell & Carlisle, for the respondents.

WARD, J.:

The plaintiff is a manufacturing corporation organized under the laws of this State, having its principal office at Watertown, N. Y.,

FOURTH DEPARTMENT, JULY TERM, 1896.

[Vol. 8. In the latter part of 1895, and in the fore part of 1896, the Globe Paper and Fiber Company became indebted to the plaintiff for work and labor done, and merchandise sold and delivered, in the sum of eight hundred fifty-eight dollars and seventy-eight cents ($858.78). The Globe Paper and Fiber Company was a manufacturing corporation, created under the laws of this State about April 27, 1894, and transacted its business at Brownsville, N. Y., until February 25, 1896, when it was dissolved as insolvent under a judgment rendered against it in an action by the People of this State, and a permanent receiver was appointed to distribute its assets to those entitled thereto. Such assets would pay about fifty per cent of the unsecured indebtedness of the concern.

The usual injunction in such cases had been granted restraining its creditors from commencing or maintaining actions against it to recover their debts. This injunction was served upon the plaintiff.

There were upwards of one hundred creditors of the Globe Paper and Fiber Company whose claims were unpaid. The capital stock of the concern was fixed and limited at three hundred thousand dollars ($300,000), composed of three thousand shares (3,000) of one hundred dollars each; twenty-two hundred and sixty-nine shares were issued, and a large percentage of the stock issued was not paid up either in part or in whole, and a large portion of the same was issued for fieticious values, no real value having been received therefor by the corporation, and the stock so issued was issued before the incurring of the debt of the plaintiff, or the other debts now outstanding and due from or by the company.

About fifteen creditors have brought separate actions at law against the stockholders to recover their debts, representing the aggregate amount of claims of one hundred thousand dollars. Many more actions are liable to be brought; twenty-nine stockholders hold the twenty-two hundred and sixty-nine shares issued.

There were many transfers of stock during the period when the debt of the plaintiff and other outstanding debts of the company, for which the stockholders have an individual liability, were incurred, and the debts, or parts of debts, were incurred at different times, and the liabilities on stock are in some instances divided as to such debts between two or more stockholders, and some of the stockholders are insolvent.