Ogilvie v. Knox Insurance Company (59 U.S. 577)/Opinion of the Court

The complainants, by bill in equity, claim an indemnity for losses upon policies issued to them by the company. They allege that the company by its charter, were authorized after their organization, to increase the amount of their stock by further subscriptions thereto. That in virtue of the authority of this permission, several individuals who are made defendants to the bill, did in June, 1850, subscribe for shares in the company; that they had paid in cash a portion of those shares, and had executed for the residue securities which were still unpaid. The bill further alleges, that the company are destitute of funds or property which can be reached by execution, and prays that the amounts subscribed by the individual defendants as stockholders, and which are still unpaid, may be applied to the satisfaction of the demand of the complainants.

The answer of the company, which is not made a part of this record, is stated to contain a general admission of the charges in the bill. The individual defendants, whilst they do not deny their subscription to the stock of the company, nor their execution of the securities for the payment of that subscription, deny their liability to payment thereof upon the ground that their subscription, and the execution of those securities, were obtained from them by fraudulent representations by the agent of the company, as to the amount of the stock actually subscribed, and as to the funds possessed by the company. The depositions of three of the individual defendants were offered in evidence on behalf of others, who were co-defendants, to prove the fraud in the agent of the company alleged in the answers, and were excepted to as incompetent evidence. But the facts stated by these witnesses are not set forth in the record. At the hearing the following order was made by the court, viz: And now at the May term 1855, under the pleadings and on the facts above set forth, the following questions occurred:--

1. Are the depositions of the defendants, Savitz, Cullom, and Schwartz, under the circumstances of this case and to the effect above stated, competent as evidence for their co-defendants?

2. Will the fraud of the agent of the Knox Insurance Company in procuring said subscriptions, notes, and bills, if sufficient to avoid the said subscriptions, notes, and bills, as against the said insurance company, be a defence against the complainants in this suit?

Upon the first question propounded by the certificate in this case, we deem it unnecessary to express an opinion, because, whatever might be the opinion of this court as to the degree of interest which shall disqualify a witness, we consider the solution of any such question as irrelevant, under the considerations by which our opinion upon this case as presented to us must be controlled.

The foundation of the case certified is, first the assumption of fraud practised by the agent of the insurance company; and, secondly, an inquiry as to the liability of the company resulting from the connection of the company as principal with their agent, and from the character of the fraud assumed as above.

The question of fraud or no fraud, is one necessarily compounded of fact and of law; and without a correct and precise knowledge of the facts from which the legal conclusion should be deduced, it is not easy to perceive how any legal conclusion can be reached.

In this case, as certified, there is no fact shown by which the precise connection of this alleged agent with the company is established; or the character or extent of any representations said to have been made by him, and upon which it is assumed that the company may be bound. There is nothing then before us upon which this court could deduce any inference or conclusion properly applicable to the case as it really exists. The question propounded, therefore, appears to be one that is entirely general and abstract, and which can admit of no answer but one which is equally abstract and general, and which may in truth have no application to the case. We therefore think that this certificate admits of no other answer than an order that the case be remanded to the circuit court to be proceeded in according to law.