202 F. 648 | 6th Cir. | 1913
The issues in this case concern the distribution of money recovered by reason of a collision between the steamer Etruria (owned by the Hawgood Transit Company) and the steamer Amasa Stone (owned by the Mesaba Steamship Company), which occurred on Fake Huron June 18, 1905. The question of liability was disposed of by this court in Hawgood Transit Co. v. Mesaba S. S. Co., 166 Fed. 697, 92 C. C. A. 369, and the facts there involved appear in the report of the case. The collision resulted in the total loss of the Etruria, with her cargo and freight and the personal effects of her crew, and also in injury to the Stone. It was held that both vessels were in fault, and the damages were divided. Stated in a general way, the present controversy began when the one as to liability ended.
At the time of her loss, the Etruria was insured in 16 companies holding risks in varying sums amounting to an agreed valuation, and the shipowner was paid such value by the insurers. The cargo and pending freight were separately insured by 2 of these underwriters, and,these losses were likewise paid. Thereupon, as it now appears, 7 of these insurers (including the insurers of cargo and freight) requested, and 8 of them declined to request, the owner of the Etruria to bring the suit, which resulted in settling the question of liability,
The present issues were made up by intervening petitions of the nonconsenting insurers, answer of the original libelant, petitions of the requesting insurers, and a stipulation of facts, filed in the original cause after decree was entered below upon the mandates of this court. •By the decree now in question, the fund' was ordered to be distributed in substance as follows: (1) To libelant, the Hawgood Transit Company, its costs and expenses; (2) to such of the insurance underwriters as joined in the request to bring the suit, the amounts of insurance severally paid by them on account of cargo and hull, with interest; (3) to libelant, for the benefit of the crew, the amount of their losses; (4) after payment of such sums, which were declared to be “first claims and liens upon the damages,” the balance proportionately to the non-requesting underwriters. By this distribution the first three classes would each be paid in full, with interest; but the fourth class would receive only a comparatively small percentage of the sums they respectively paid as losses on the Etruria. The nonrequesting insurers appealed to this court, and the requesting companies are here as ap-pellees; and, for reasons appearing later, the names of all are given in the margin.
This controversy relates mainly to the second and fourth of the foregoing paragraphs. Of thé appellants, the Firemen’s Fund Insurance Company, the London Assurance, and the Union Insurance Society were insurers only of the Etruria. The other appellants were insurers of both vessels, but of the Stone in larger sums, respectively, than they were of the Etruria, except only the New Zealand Insurance Company, which had something over $700 more on the Etruria than on the Stone. It should be noted, too, that of the appellees, the Western Assurance Company and the British America Assurance Company were insurers of the Stone, as well as the Etruria; both having less insurance on the Etruria than on the Stone, even though the insurance of the former upon the pending freight of the Etruria be included. The other appellees had underwritten the Etruria alone.
Before filing its libel against the Stone, the owner of the Etruria caused notice to be given to all of its insurers that, upon request of some of them, it was about to proceed against the Stone, and also caused request to be made of all of them to notify it whether they
“The claim will be made against the Stone in the name of the insured for the entire damage, whether all of the insurers of the Etruria authorize the litigation or not. In the event litigation shall result in the Etruria being held solely at fault, the Etruria interests not authorizing the proceedings will not be asked to contribute to the expense incurred in prosecuting the claim; if, however, the action shall result in the Stone being held solely at fault or in a division of damages, the Etruria interests authorizing the proceedings will claim, before returning any part of the recovery to the Stone, or accounting to the Etruria interests not authorizing the proceeding for the share of the recovery which would otherwise fall to them, the right to deduct the expense of the litigation.”
To this an answer was made by one of appellants (the Federal Insurance Company) that it had insured 17% per cent, of the value of' the Stone as against its insurance of 9 per cent, of the value of the .Etruria, and that if the owner of the Etruria made claim for her entire value, and the Federal, as insurer of the Stone, were required to pay 17% per cent, of the Etruria’s value, it “would expect to receive, as insurer of the Etruria, 9 per cent, of the recovery without deduction for expenses.” It does not appear that the other appellants made specific answer to the request. Both the appellants and appellees having risks on the Stone contributed to the expense of her owner in the libel proceeding.
Most of the insurers obtained subrogation receipts from the owner upon paying their shares of its loss, some of which in terms provided for full subrogation, and others “to the extent only and as provided in” the policies, although the policies do not appear to have contained any provision for subrogation. Plowever, we do not regard this as important, nor do counsel for either side, because it is settled that such provisions are not necessary. The right of subrogation arises from the very nature of the contract of insurance as a contract of indemnity. Phœnix. Ins. Co. v. Erie Transportation Co., 117 U. S. 312, 321, 6 Sup. Ct. 1176, 29 L. Ed. 873; Liverpool Steam Co. v. Phenix Ins. Co., supra, 129 U. S. 462, 9 Sup. Ct. 469, 32 L. Ed. 788; North Eng
Was it necessary that these two appellees should place themselves on both#sides of the libel proceeding, in effect sue themselves, in order to avoid waiver of their subrogated rights respecting the Etruria? To say the least, it would be more consonant with well-known rules of procedure to defend one interest, with either a declared or an undeclared, though actual, purpose to hold the other, than to resort to the method adopted by 'these two appellees. After all, it is the existence of the interest in the vessel proposed to be libeled, rather than the declaration of purpose, that would seem to be the true basis of any right to defend the one interest and hold the other. Besides, the owner of the Etruria stated in its request that it knew the insurers of the Etruria were “in part at least also interested as insurers on the Stone,” and plainly both the owner and the consenting insurers knew that the suit could not benefit the insurers of the Stone, and that no opportunity to render services of any value to them through such a suit existed.
In view of the form of the request, can it be that waiver of vested’ subrogated rights like these is predicable either of the act of refusal or of defending such rights ? Apparently more reason might be found to justify the course taken by the insurers of both vessels, than is observable in respect of the refusal of the insurers of the Etruria only; for recovery would have to be met by the former, and simply received by the latter. Elowever, this case does not require us to pass upon the relative rights of these two classes of appellants further than to hold, as we now do, that the rights of the appellant insurers of the Stone are at least equal to those of the appellant insurers of the Etruria alone. Brown v. Merchants’ Marine Ins. Co., 152 Fed. 411, 413, 81 C. C. A. 553. True, the case of The Livingstone, 130 Fed. 746, 65 C. C. A. 610, there relied on, reversed the decision below, where a claim of waiver under circumstances kindred to those involved here was dis
The facts attending the libel proceeding in question show that the subrogated rights of all the insurers of the Etruria were intended to be enforced and preserved without exacting a surrender of any. It will be recalled that the request of the insurers of the Etruria was made by her owner, and was in terms to authorize the suit against the Stone and to share in “the expense of the litigation.” In the libel filed in the cause, and under which the question of liability was settled, it was averred, among other things, that:
“* *■ * Libelant proceeds as owner of the steamer and for the benefit of its insurers, and as bailee of the cargo laden on board said steamer at the time and lost with said steamer, and trustee for the owner and insurers thereof, and for the crew for their lost personal effects. * * * ”
Further, after stating the total amount of damages alleged to have been suffered, libelant says;
“Which [amount], in its own behalf and as bailee of the cargo and trustee of the owners thereof, and the insurers thereon, and as trustee for her officers and crew, it claims from the said steamer Amasa Stone.”
Learned counsel concur in the proposition that, where the value of destroyed property exceeds the insurance, the insurance company, on payment bf the loss, cannot in its own name sue the wrongdoer, but that the suit must be in the name of the owner of the destroyed property; the theory being that the “wrongful act was single, and indivisible, and gives rise to but one liability.” Ætna Ins. Co. v. Hannibal & St. Joseph R. R. Co., 3 Dill. 2, Fed. Cas. No. 96. Upon this it is urged for appellants that it was necessary for the Transit Company to sue upon the entire cause of action, and so, as trustee, to protect the rights, not merely of part, but all, of the insurers holding sub-rogated interests.
This gives rise to several questions touching the remedies open to a large number of holders of kindred subrogated interests- to enforce
“tlie Etruria interests authorizing the proceeding will claim, before * * * accounting to the Etruria interests not authorizing the proceeding for the share of the recovery which would otherwise fall to them, the right to cLe&uct the expense of the litigation.”
The owner sought to recover and did recover (to the extent allowed) the proportionate shares alike of all the insurers. True, it did so in its name as owner, .but at last in virtue of its trusteeship respecting such shares. And it was not until after the libel proceeding was concluded in the court below and affirmed in this court that any claim was made by either the trustee or the consenting insurers that, besides deduction for “the expense of the litigation,” the subrogated rights of the non-consenting insurers of the Etruria should be subordinated to the corresponding rights of the consenting insurers. With what .consistency, then, can either the trustee or the consenting insurers insist that this should be done? They, in effect, agreed that nothing more should be claimed than “the expense of the litigation.” True, it is suggested ■that, if no .recovery had been made, the owner itself would, so far as the nonconsenting insurers were concerned, have been required to pay •the expense of the litigation; but we have seen that the request provided that in such event—
“the Etruria interests not authorizing the proceedings will not be asked to contribute to the expense incurred in prosecuting the claim.”
We think the decisions relied on by appellees are distinguishable. It is enough to say of Woodworth v. Insurance Co., 5 Wall. 87, 18 L. Ed. 517, that it was not a representative suit. The unreported decision in the matter of the petition of the iEtna Insurance Company in the case of Hanna v. Steamer Manitoba differs in several material respects from the present case. While the suit brought by Hanna and Chapin, owners of the propeller Comet, was in form representative, the TEtna, as insurer only on a portion of the Comet’s cargo, declined to permit the owners of the Comet to represent the TBtna’s interest, and, on the contrary, intervened in its own behalf to secure its proportionate share of the recovery in the libel proceeding. _ It was entitled to pursue this course to enforce its subrogated right respecting the cargo (The New York, 175 U. S. 187, 209, 20 Sup. Ct. 67, 44 L. Ed. 126; The Beaconsfield, 158 U. S. 309, 310, 15 Sup. Ct. 860, 39 L. Ed. 993; The Atlas, 93 U. S. 302, 316, 23 L. Ed. 863; In re Lakeland Transp. Co. [D. C.] 103 Fed. 328, 330); but by bringing its own suit the TEtna destroyed the representative character of the libel suit as to itself and all possibility of a trust relation with the owners. It then failed to present its proofs seasonably, and Judge Baxter stated as one of his conclusions of law that:
“Whatever rights it [order of June 3, 1878] conferred on petitioner were waived hy petitioner’s application of July 18, 1878, and the order of the District Court made thereon.”
It is true that the /Etna was repeatedly requested to contribute to the expenses of the libel proceeding, and it was specially found that it “repeatedly and persistently refused to have anything to do with said suit or contribute thereto”; and the learned Circuit Judge further concluded that by -reason of such neglect and refusal and of the insufficiency of the damages recoverable to pay in full the damages due those who had contributed to the expense of the libel suit—
“petitioner ought not to be permitted to share in the moneys which may be realized by the libelants and said contributors.”
Whatever else may be said of this latter ground of the denial of the .¿Etna’s intervention, apart from the other grounds stated, it should be noticed that the .¿Etna’s refusals were but in accord with its right to maintain a separate suit, and it is -hard to see how they could have any other effect than to emphasize its purpose to seek recovery only in that way.
It is not necessary to dwell longer on the cases relied on by appellees. They are all lacking in the controlling features of the instant case. The distribution of the present fund must be governed by the representative character of the libel suit and the terms of the request under which it was commenced and maintained. It was not open to the consenting appellees, after the decree in that case was entered and on
“I have no doubt that the three complainants by whom the bill in this case was filed might have secured a priority by filing the same for their own benefit ; but they did not do so. By the very terms of the bill, they professed to he acting, not only for themselves, but ‘in behalf of, all and singular, the other judgment creditors of the respondent.’ The effect was to waive the advantage they might have obtained by moving in their own behalf. The result is that the suit, in contemplation of law, has from the beginning been prosecuted by the original complainants in behalf of all judgment creditors who might elect to come in and take advantage of what had been done in their behalf.”
The same principle was recognized by Justice Bradley in Johnson v. Waters, 111 U. S. 640, 674, 4 Sup. Ct. 619, 637 (28 L. Ed. 547), and by Justice Matthews in Freedman’s Savings & Trust Co. v. Earle, 110 U. S. 710, 716, 4 Sup. Ct. 226, 229 (28 L. Ed. 301), where he stated the rule thus:
“It is to be noted, therefore, that the proceeding is one instituted by the judgment creditor for his ovn interest alone, unless he elects to file the bill also for others in a like situation, with whom he chooses to make common cause.”
In Jones v. Fayerweather, 46 N. J. Eq. 235, 256, 19 Atl. 22, 25, when speaking of three creditors of an insolvent firm who had each brought a suit to subject property of the debtor in his own behalf alone, Chief Justice Beasley said:
“Such procedures hav.e no affinity with bills exhibited by complainants, not only for the benefit of themselves, but equally for that of all. other creditors who may be made parties; for the very form of such bills excludes the idea that any creditor, or any class of creditors, is to obtain any preference over the others.'”
See, also, Talcott v. Grant Wire & Spring Co., 131 Ill. 253, 254, 23 N. E. 403.
Appellants properly admit that the cargo underwriter should be paid in full, less cargo’s proportion of legal expenses. The George W. Roby, 111 Fed. 601, 616, 49 C. C. A. 481 (C. C. A. 6th Cir.); s. c. (D. C.) 103 Fed. 332, 333. The remaining items pertain to freight and crew, the former item having been included below with the claim for insurance paid on hull by the Western Assurance Company as insurer also of the freight. The contention is that the claims for freight and crew shall be placed on a parity with the claims of the insurers of the hull, subject to ratable apportionment of the legal expenses allowed. This method was pursued in the decree below, so far as the appellee insurers of the hull were concerned. The assignments respecting the former items have, therefore, been practically disposed of by the effect of our conclusion: That the claims of all the insurers of the hull (of the Etruria), appellees and appellants alike, must be placed on an equality; and the claims for freight and crew, will be placed on a parity with them.
The decree below is reversed, with costs, and the cause is remanded, with instructions to enter a decree not inconsistent with this opinion:
Appellants are Federal Insurance Company, Firemen’s Fund Insurance Company, London Assurance, Underwriters at Lloyds, Union Insurance Society of Canton, Limited, Indemnity Mutual Marine Assurance Company, Limited, Royal Exchange Assurance, and New Zealand Insurance Company. Appel-lees are Detroit Fire & Marine Insurance Company, Western Assurance Company, iEtna Insurance Company, British America Assurance Company, Providence Washington Insurance Company, Northwestern National Insurance Company, Commerical Union Assurance Company, and St. Paul Fire & Marine Insurance Company.
