126 N.Y.S. 555 | N.Y. App. Div. | 1910
Lead Opinion
This is the second appeal in this case from a judgment in favor of the plaintiffs. After our decision on the former appeal (132 App. Div. 241) the complaint was amended, and the record now' presents the plaintiffs’ claim of waiver, estoppel and breach of contract. At the close of the evidence on the trial under review the defendant moved to dismiss the complaint., The plaintiffs asked the court to submit certain specific questions to the jury and to reserve the direction of a general verdict until the finding of the special verdict. The court submitted a single question, hereinafter referred to, which was answered in the affirmative, whereupon the court directed a verdict for the plaintiffs for $7,139.91, comprising three items, viz., $5,000 of the Bernard Johnston judgment, $898.33 expenses in defending the suit on that judgment, and $1,241.58 interest. Except for a request to charge on a specific point, hereinafter referred to, the defendant did not ask for the submission of any question to the jury. In effect, the case was submitted to the court by the parties, except with respect to a single question of fact upon which the verdict of the jury was taken for the. information of the court.
The history of the different litigations involved in this case was . quite fully stated by Mr. Justice McLaughlin on the former appeal, and I shall state herein only such additional facts as may be necessary to elucidate the questions now presented.
The first question is whether the plaintiffs’ loss is covered by the policy. . By the-terms of the policy the .defendant agreed to indemnify the plaintiffs “against loss from- liability for damages on
The case of Tolmie v. Fidelity & Casualty Co. (95 App. Div. 352; 183 N. Y. 581) is not in point. There, the plaintiff sought to
Much confusion of thought will be avoided by determining the precise time when this cause of action arose and when the limitation period, provided in the policy, expired, points which were not decided upon the former appeal.
The defendant’s agreement was to indemnify against loss from liability for damages. The assured, “ upon the occurrence of an accident, and also upon receiving information of a claim on account of an accident,” was to give written notice thereof to the defendant. Then follow these provisions:
“ 3. If thereafter any legal proceedings are taken against the assured to enforce a claim for damages on account of such accident, the company will defend the.same at its own cost, in the name and on behalf of the assured.
“4. The assured shall not, except at his own cost, settle any claim, nor incur any expense, nor interfere in any negotiation for settlement or in any legal proceedings, without the consent of the company previously given in writing, * *
The defendant then was to defend any legal proceedings taken against the assured to enforce a claim for damages on account of an accident — not simply an accident covered by the policy as is the provision of some policies of indemnity insurance. (See Cornell v. Travelers’ Ins. Co., 175 N. Y. 239.) And the assured was not to settle any claim or even interfere in any legal proceedings without the written consent of the defendant. The defendant, of course, was at liberty on its own account to compromise a claim before final judgment. But the fair import of the contract is that the assured could not call upon the defendant to pay the stipulated amount of indemnity for a loss until that loss had actually been sustained as the result of the rendition of a judgment against the assured; and so the limitation clause provided that an action might be brought within thirty days after final judgment against the assured. If the defendant refused to defend an action, it may be that a cause of
If the plaintiffs had11 not been notified to defend the Bernard Johnston suit, the rendition of judgment therein would have given them no cause of action on the policy; and it seems to me that the fact that notice was given cannot in and of itself determine the question, but that the policy must govern, and that the same rule will apply in either case. The defendant has contended throughout this litigation that the suits against the bridge company were not suits against the assured within the meaning of the policy, although the latter had notice to defend them; and it must be conceded that the judgments against the bridge company were in no sense judgments against the assured, who were not harmed by them, until claims were asserted thereon. Liability and loss are not the same. The contract was to indemnify against loss from liability. The loss was not sustained within the meaning of the. contract until the liability was established- by a judgment. The fact of notice to defend the Bernard Johnston suit merely had the effect of making the judgment in that suit conclusive evidence with respect to the issues actually litigated. (Corning v. Spelman, 130 App. Div. 767.) lino notice had been given, the question, settled by the judgment, could have been established by independent evidence. As a matter of fact, the judgment in the Bernard Johnston suit was not-conclusive even as to these- plaintiffs’ responsibility for the accident, because that question was res aclgudicata as between the parties to the suit, and the bridge company was apparently unable to prove that these plaintiffs "had notice to defend the Kate Johnston suit, else they would have done so in action FTo. L. While this point does not appear to have been raised in action Ko. 2, this defendant cannot complain because it had notice to defend. Moreover, it was at least a fair question whether the bridge company had the right to indemnity in view of the, fact that it had been held liable for its
When was the action barred by the terms of the policy ? The limitation clause is as follows: “ 12. No action shall lie against the company after the expiration of the period within which an action for damages on account, of the given injuries or death might be brought by such claimant or his representatives against the assured, unless at the expiration of said period there is a suit arising out of such accident, pending against the assured, in which case an action may be brought in respect to the claim involved in such action against the company by the assured within thirty days after "final judgment is rendered in such suit, and not later.” . Obviously, the purpose of that provision was to require an action to be brought within the time during which an action on account of the accident might be brought against the assured, or within thirty days from the final judgment in such an action. If the case were one of first impression I should. say that, applying the rule of construction applicable to such a contract (See Gillet v. Bank of America, 160 N. Y. 549), the letter of the clause would have to yield to its spirit and purpose and that it would not be permissible to adopt a construction which would bar an action before it arose. (See Mayor, etc., v. Hamilton Fire Ins. Co., 39 N. Y. 45; Hay v. Star Fire Ins. Co., 77 id. 235; Steen v. Niagara Fire Ins. Co., 89 id. 315; Barnum v. Merchants' Fire Ins. Co., 97 id. 195.) Very likely the draftsman of that clause did not think of the contingency which has arisen in this case; and it may be that the case is nob covered by it, in which event the statute would apply. It seems
For the purpose of this appeal it must be deemed settled that no action could be brought on the policy after the expiration of three years from the happening of an accident unless a suit was then pending against the assured. The only suits pending against the assured on the 6th of June, 1899, were the two suits brought by Kate and Bernard Johnston, which never resulted in judgments, but were discontinued,- and, for the present, I shall eliminate them. It is immaterial that the plaintiffs had notice to defend the suits against the bridge company, for, as has already been observed with respect to the time when the plaintiffs’ cause of action arose, the rulé of limitation must be the. same whether notice to defend those suits was given or not. Upon the construction of the contract which this court has adopted, those suits were not pending against the assured.'
. Either the spirit of the instrument is to govern, if it covers this
This defendant assumed the defense of the Johnston suits against the bridge company, pursuant to a policy of indemnity insurance which it had issued to the defendant therein. On March 24, 1899, its counsel wrote one of the plaintiffs under the defendant’s letter head, but nominally on behalf of the bridge company, notifying him of the Kate Johnston suit, and that the bridge company would look to him for indemnity. Clause 13 of the defendant’s policy provides:
“ 13. In case of loss under this policy, the company shall be subrogated to all claims or rights of the assured in respect to such loss against any third party or parties, and the assured shall execute any and all papers required to secure to the company said rights.”
There is a dispute as to what occurred after the giving of that notice. 'The jury have accepted the plaintiff Creem’s version of the transaction, and we do not feel justified in interfering with their verdict. Said plaintiff then, upon receipt of said notice, took the policy to the defendant’s counsel and was told that it would protect the plaintiffs against any claim of the bridge company for indemnity. Said counsel'showed to said plaintiff the summonses and complaints in both of the Johnston suits, and requested him to assist in the defense of these actions, and, in response to his question as to whether he needed a lawyer, promised to act as his lawyer and to protect him to the full amount of his policy at any time. That promise and counsel’s authority to make it on behalf of the defendant must be considered with reference to the defendant’s obligations under the contract, the existing situation and the purpose which counsel desired to accomplish. While it is said that the counsel had authority to represent the defendant only in the particular matters intrusted to him, this matter had been intrusted to him, and his promise was in the line of his diity and in fulfilment of the
The promise referred to two possible claims which might be made against these plaintiffs, one by the bridge company for indemnity, the other by the Johnstons in case they were defeated in the pending suits. Both contingencies were referred to in the conversation. Counsel desired to defend the pending suits on the ground that the negligence causing the injury was that of these plaintiffs, independent contractors, and it' was certain that, if that defense prevailed upon the trial but should fail on- appeal, as happened, final judgment would not be obtained against the bridge company within the three-year period, which then lacked only two months of expiration. The promise, therefore, necessarily involved an agreement to waive the limitation clause, and it was supported by sufficient consideration'because it was. made to obtain the co-operation of these plaintiffs in the defense which counsel desired to make and to induce them not to employ other counsel who might .have insisted upon a different defense.
However, we do not need to rest the decision on the ground of an agreement to waive the limitation clause, supported d>y a sufficient consideration, because a case of technical waiver, as well as estoppel, is established, not by reason of the promise alone, because no forfeiture had then occurred, but- by reason of the promise together with the subsequent conduct. When the plaintiffs were given notice of the pending suits they had the right to assume the defense of them if they were to be bound by the judgments. If they had then been well advised they would not have hazarded their rights on a judgment of. dismissal granted on the ground that 'their negligence had caused the accident, but in view of the short time remaining in which to bring an action on the policy they would have insisted on a defense on the merits, which would have resulted either in a judgment virtually ending both litigations or in one against the bridge company on April 7,1899, and in, time to enable. them to preserve their rights under, the limitation clause of the policy. While the defendant had the right under the policy to
Moreover, it amounted to an estoppel. The judgment of dismissal in the Kate Johnston suit was reversed after the three-year period had expired, and without any notice to the plaintiffs the defendant gave a stipulation for judgment absolute and appealed to the Court of Appeals. Ko competent lawyer would have allowed the plaintiffs to take that chance if their rights under the policy were forfeited. The result was that the plaintiffs were subjected to liability without ever having a day in court on- the merits. Unless the defendant recognized its obligation under the policy its duty was to turn the case over to these plaintiffs, who then had the right to decide wlie'ther such a step should be taken, and by going ahead without a word to the plaintiffs the defendant estopped itself to deny its obligation under the policy. '
The pendency of. the Johnston suits against these plaintiffs on June 6, 1899, presents another aspect of the case. The defendant’s counsel appeared for these plaintiffs in those suits. When the suits were brought by the bridge company on June 4, 1902, plaintiff, Creem, took the summonses and complaints to said. counsel, who refused to defend, whereupon written notice was given to the defendant that it would be held responsible for any judgments
It thus appears that, at the expiration of the three years after the accident, there were suits “ arising out of such accident, pend- . ing against the assured.” This action is brought “ in respect to the claim involved in such” actions, i. e., the liability of these plaintiffs for damages on' account of personal injuries sustained by Kate Johnston, which was in fact the claim involved in every one of the suits hereinbefore referred to. Therefore, but for the discontinu- - anee of those suits, this suit would have been brought in time within the strict letter of the limitation clause, if hot within its spirit. And the defendant cannot insist upon the letter of one sentence and the spirit of the next.
While- the plaintiffs in those suits had the right to discontinue them, these plaintiffs had a right to notice of such discontinuance and would have had it but for the fact that they had intrusted their rights to the defendant, pursuant to its promise of protection. As a matter of fact the suits were discontinued on the motion of the defendant’s counsel, who assumed to act on behalf, of these plaintiffs. Thus, as late as July 1, 1902, the defendant assumed to act on behalf of these plaintiffs, as it had no right to act except perforce of the policy and of its promise. That action, therefore, was a disr tinct recognition by the defendant of its liability under the policy and was a technical waiver of any forfeiture, and that was more than thirty days- after final judgment - in the Bernard Johnston action against the bridge Company.
Moreover, the purpose of the defendant in procuring those orders of discontinuance is apparent, and it requires no argument to- show that, while pretending to act for the plaintiffs, the defendant could not secretly cause their rights under the policy to be barred nor could it conceal the fact that an event had occurred which would set the short limitation period running. Such conduct should estop it to deny that those suits are still pending.
With respect to the defendant’s claim of breach of warranty, upon which it requested the court to charge the jury, it is sufficient
The plaintiffs ask us to modify the judgment by increasing the amount so as to include the expenses incurred-by them in the successful defense of action ’¡No. 1, brought by the bridge company. Our power to do that is, to say the least, doubtful, even if we were not concluded on the point by our-former decision. It seems to us, however, that the case was both difficult and extraordinary, and that the motion for an extra allowance should have been granted.
The order denying the motion for an extra allowance is reversed. and the motion granted, allowing the plaintiffs five per cent of the recovery as an additional allowance, on the ground that the action is difficult and extraordinary, and the judgment as thus modified and the order denying motion for a new trial are affirmed, with costs.
Laughlin and Dowling, JJ., concurred; Ingraham, P. J., and McLaughlin, J., dissented.
Dissenting Opinion
(dissenting):
When this case was before this court on the former appeal (132 App. Div. 241) it was expressly held that the action was not commenced within the time provided in the policy, and I do not see that any additional facts have been presented upon this trial which question the conclusion there arrived at.
The accident which was the basis of this litigation occurred on June 6, 1896, and an action to recover for that-accident was barred by the Statute of Limitations three years thereafter. (Code Civ. Proc. § 383, subd. 5.) By the terms of the policy no action would lie against the defendant after June 6, 1899, unless at that time there was a suit arising out of such accident pending against the plaintiffs, in which case an action can be brought against the defendant within thirty days after final judgment was rendered in such action and not later. On June 6, 1899, there were actions pending against the plaintiffs on account of the accident, and the time within which this action could be brought was thus extended until thirty days after a final judgment was rendered in such actions and not later. These actions, however, were not prosecuted to
I think- the plaintiffs were barred from commencing this action on June 9,1902, but by no possible construction of this policy could that time be extended for more than thirty days from the date of the entry of judgment in the case of the Phoenix Bridge Company against the plaintiffs, entered January 26, 1904, which would be February 25, 1904. There was no question of estoppel, for before the time had actually expired the defendant expressly repudiated its obligations to defend either the Bernard Johnston action against the Phoenix Bridge Company or the action brought by the Phoenix Bridge Company against these plaintiffs.- Plaintiffs then knew that the defendant had repudiated its obligation, and they must look out for themselves, and the defendant was entitled to the benefit of the provisions of the policy which limited the time within which an action could be commenced against it under the policy.
I think, therefore, that upon the former appeal in -this action in 132 Appellate Division, 241, and upon the facts as they appear upon this trial the defendant was entitled to a dismissal of the complaint, and the judgment in favor of the plaintiffs should, therefore, be reversed.
Dissenting Opinion
(dissenting):
I dissent for the reasons stated by me in Creem v. Fidelity & Casualty Co. (132 App. Div. 241), and also on the authority of Tolmie v. Fidelity & Casualty Co. (95 id. 352; affd., 183 N. Y. 581).
Judgment modified as directed in opinion and as modified affirmed, with costs. Settle order on notice.
