FIRST DEPARTMENT, MARCH TERM, 1875. which was past due, and which she set up as a counter-claim, and offered to prove. On the trial before the referee it was disallowed, and judgment given for the plaintiffs on the notes. * Two questions are presented on this appeal: First, did the agreement inure to the benefit of the plaintiffs? Second, was the set-off improperly excluded? The defendant received all the assets of the partnership, and, in consideration thereof, undertook to pay its debts to a certain limit. The plaintiffs' debt was included in the obligations assumed. The partnership property is primarily liable for the joint debts. It is the fund created and provided for them, although the creditors may not have any specific lien upon it. The receipt of it, therefore, constitutes a good consideration for a promise to pay the debts with which it is burdened. An action lies on a promise made by the defendant, on a valuable consideration, to a third party for the benefit of another, even where he is not privy to the consideration, † and it is not essential that the promise should be made directly to the person to whom the money is to be paid. It is made for his benefit. There is no difference in principle between the cases cited and this, except that (and it makes the plaintiffs' case stronger) there is privity between the defendant and the consideration, inasmuch as the property which formed the consideration was, as we have seen, primarily liable for the plaintiffs' debt. The set-off was properly rejected, because the plaintiffs were the holders of a negotiable note; and having taken it before maturity, and for value, it was not subject to existing equities, in the absence of notice, actual or constructive. The promise to pay the note held by the plaintiffs, was to pay it as it existed at the time it matured. It could not be affected by any arrangement between the defendant and the makers. The defendant assumed their obligation, which was to pay the note to a bona fide holder for value without notice, notwithstanding they might, were it in the hands of the payee, have a subsisting set-off or equity against it. This must be the rule in a case like this; more particularly where the equitable obligation to apply the joint property * Wilder v. Keeler, 3 Paige, 167; Kirby v. Carpenter, 7 Barb., 373; Ganson v. Lathrop, 25 id., 455; Sage v. Chollar, 21 id., 596. Lawrence v. Fox, 20 N. Y., 268. Delaware and Hudson Canal Co. v. West'r Co. Bank, 4 Denio, 97. FIRST DEPARTMENT, MARCH TERM, 1875. to joint debts is created by the law of the land. There is, however, another objection to the set-off, and that is, that it does not exist, apparently, in favor of the defendant in her own right. * It is not alleged that the note was transferred to the defendant; and the presumption is that it was part of the effects which she acquired as executrix of Austin Myers, deceased. There is nothing in the cases of Kelly v. Roberts,† Etna Nat. Bank v. The Fourth Nat. Bank, and Garnsey v. Rogers, § in conflict with the rule established in Lawrence v. Fox, and applied here. The binding force of a promise duly made, upon a valid consideration, to one person for the benefit of another, is recognized particularly in Kelly v. Roberts. The consideration here was the transfer to the defendant of the partnership property, already charged with its debts, upon the promise that the debts would be paid. The judgment should be affirmed. DAVIS, P. J., and DANIELS, J, concurred. Judgment affirmed. Judgment affirmed. MARX HARRIS, RESPONDENT, v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, APPELLANT. Policy of insurance — false statements — renewal of policy after forfeiture — Rescission of contract on account of fraud — when party must return what has been received under. On the 1st of June, 1869, a policy for $3,000 was issued by the defendant, payable to the plaintiff, upon the life of his wife; the policy provided that if any declaration contained in the application upon which the policy was issued, should be found false, then it should be null and void, and that, in case of a failure to pay the premiums at the times therein specified, the policy should cease and determine, and all payments made thereon should be forfeited to the company. The application, which was signed by the plaintiff and his wife, stated, among other things, that she had never had rheumatism or disease of the heart. * Merrit v. Seaman, 2 Seld., 168; Dale v. Cooke, 4 Johns. Ch., 13; Duncan v. Lyon, 3 id., 359; Root v. Taylor, 20 Johns., 137. +40 N. Y., 432. +46 N. Y., 82. § 47 N. Y., 233. Supra. FIRST DEPARTMENT, MARCH TERM, 1875. The premiums due September and December, 1869, and March, 1870, were not paid. In February, 1870, Mrs. Harris had a severe attack of inflammatory rheumatism, which resulted in disease of the heart, from which she died April third. On March 28th, 1870, plaintiff went to defendant's office, tendered the premiums then due, and asked to have the policy renewed; he stated that his wife was then in good health, and that she had not been sick since she was examined for insurance, and signed a paper stating that she was then equally well, and in as good insurable condition as when examined. The defendant accepted the money, and gave a receipt continuing the policy in force until June 1, 1870. In an action upon the policy, held, that the legal effect of the agreement of March twenty-eighth was precisely equivalent to the taking out of a new policy upon the terms of the old one, the only difference being, that the representations as to the condition of the health of the assured should be regarded as repeated at that time with such modifications as the parties then made and accepted; that as such representations were false, the policy became void, and the premiums were forfeited to the defendant. A party who has been defrauded in the making of a contract, and who wishes, by an action at law, to avoid the contract for fraud and reinstate himself in the possession of the property parted with, or to recover its value before the maturity of the contract, must return, or offer to return, to the other party, before commencing his action, whatever he has received under the contract, unless it be of such a character that its return at the trial, or in the progress of the suit, will leave such party in as good condition as the return or offer before suit would have done. Where, however, the party who has been guilty of the fraud brings an action to enforce the contract, the other party thereto need not return what he has received thereunder, but may set up such fraud as a complete or partial defense to the action. After the commencement of this action, the defendant served an offer to allow judgment to be taken against it, for the amount of the premium paid March twenty-eighth, with interest thereon, together with the costs of the action, which was refused. At the trial, the court held that the defendant should have disaffirmed the contract of March twenty-eighth on discovering the fraud, and returned or offered to return the premium then received, and that, as they had failed so to do, they were liable on the policy. Held (1), that defendant was not obliged to rescind the contract, but might set up the fraud as a defense thereto; (2), that even if a rescission of the contract was necessary, the offer of judgment made by the defendant was a sufficient compliance with the rule requiring a return of what had been received under the contract. APPEAL from a judgment in favor of the plaintiff, entered upon a verdict directed by the court. George De Forest Lord, for the appellant. Even in cases where the rescinding party is plaintiff, restitution before suit is not insisted FIRST DEPARTMENT, MARCH TERM, 1875. upon where justice can be otherwise secured. (Nellis v. Bradley, 1 Sandf., 560; Ladd v. Moore, 3 id., 589; Nichols v. Michael, 23 N. Y., 264; Fraschieris v. Henriques, 36 Barb., 276; Pearse v. Pettis, 47 id., 267, 282; Allerton v. Allerton, 50 N. Y., 670; Hawkins v. Appleby, 3 Sandf., 421; Anderson v. Sherwood, 56 Barb., 66.) It is a very noticeable fact, that almost every case in our reports, in which the rule requiring a return of the property received under the contract is laid down, is a case where the rescinding party was plaintiff. (Ash v. Putnam, 1 Hill, 302; Voorhees v. Earl, 2 id., 288; Masson v. Bovet, 1 Den., 69; Baker v. Robbins, 2 id., 136; Mattewan Co. v. Bentley, 13 Barb., 641; Wheaton v. Baker, 14 id., 594; Willis v. Bradley, 1 Sandf., 560; Ladd v. Moore, 3 id., 589; Nichols v. Michael, 23 N. Y., 364; Fraschieris v. Henriques, 36 Barb., 276; Pearse v. Pettis, 47 id., 267; Hinney v. Kiernan, 49 N. Y., 164; Cobb v. Hatfield, 46 id., 533.) But although the distinction never appears to have been drawn in any adjudicated case, there are reasons why the rule, requiring restitution to be made before commencement of the action, should not apply to cases where the defendant seeks to escape from liability on the ground of fraud, and why restitution at or before the trial should be sufficient in such a case. While a party seeking to rescind may choose his own time for commencing an action, so that he can always tender restitution before doing so, he cannot so control the time of an action being commenced against him. If, therefore, he must tender such restitution before suit, his rights and liabilities will depend only upon his advantages, speed or negligence. This should not be. While a party who becomes an actor upon the basis of the rescission of a contract should be required to do everything to establish his position before he claims any rights under it, the party who simply depends upon that ground should be entitled to put in his defense after the attack is made. A. R. Dyett, for the respondent. Never having offered to return the premiums, or rescind the contract by which the original contract was brought into existence again, the defendants had made their choice to affirm the contract, and were liable upon the policy. (Hutcheons v. Johnson, 33 Barb., 392; McNeven v. Livingston, 17 Johns., 437; Bruce v. Davenport, 3 Keyes, 474; Wheaton v. Baker, 14 Barb., 594, and cases there cited.) DAVIS, P. J.: FIRST DEPARTMENT, MARCH TERM, 1875. On the 18th day of May, 1869, the plaintiff made application to the defendant for an assurance of $3,000 upon the life of his wife. His application stated, among other things, that she had not had any of a long list of diseases, among which rheumatism, disease of the heart, of the urinary organs, or of any vital part, were specified. Mrs. Harris was examined by the medical examiner of the defendant, and found to be in such condition of health that he approved of and recommended the assurance. The application was subscribed by both plaintiff and his wife, and contained a declaration that the answers to the questions contained therein, were fair and true, and an agreement on their part that the statements therein should form the basis of the contract for assurance, and that any untrue or fraudulent answers, or any suppression of facts in regard to her health, should render the policy null and void. On the 1st day of June, 1869, a policy on this application was issued upon the life of Mrs. Harris for $3,000, payable to the plaintiff, in consideration of the premiums then paid, and of $26.16 payable quarterly, on or before the first days of September, December, March and June of each year. The policy states that it was issued and accepted by the assured upon the conditions and agreements indorsed thereon, among which were the following: "If the declaration made by the applicant for this policy, or if any statement respecting the person or family of the person whose life is hereby assured, submitted by such person to this society, and upon the faith of which declaration or statement this policy is issued, shall be found in any respect untrue, then and in every such case, this policy shall be null and void. And if the premiums as herein stipulated shall not be paid on or before the days herein mentioned for the payment thereof, at the office of the society in the city of New York *** then, and in every such case, this society shall not be liable for the payment of the sum assured, or any part thereof, and this policy shall cease and determine." In every case when this policy shall cease and determine, or become and be null and void, all payments thereon shall be forfeited to the society." The premium of $26.16, which fell due on the 1st day of September, 1869, was not paid; nor were either of the premiums |