52 N.Y.S. 492 | N.Y. App. Div. | 1898
This action is brought to recover a policy of fire insurance issued by the defendants as attorneys in fact for fifteen individual underwriters, the defendants being among the underwriters. The policy is of the kind commonly known as a Lloyds policy, and contains provisions limiting the liability of the underwriters thereon. Each underwriter is liable only for bistro rata share of the loss, and in no event for the default of his associates. His liability was further limited by a provision that it should not exceed, on the policy issued and all policies then or thereafter in force after the application of the total unexpended premiums, the sum of $5,000 ; and if by reason of a fire or fires several risks insured under policies issued by the underwriters should become payable, then that all policyholders who sustain loss from such fire or fires should be entitled to recover as against each underwriter only that proportion of the adjusted claim oh each policy which the total liability of each underwriter should bear to the aggregate of such claims. The policy recites that each of the underwriters has deposited with the attorneys the sum of $1,500, amounting in the aggregate to the sum of $22,500, which sum, with all premiums expended and undivided, were to be held by the attorneys as a trust fund for the payment of claims under the policy in suit and under all other policies, and the attorneys were declared to be, with reference to such fund, trustees of. an express trust. It was further provided that, in the event of litigation, no action should be brought against the individual underwriters '‘ until after suit shall have been brought against the attorneys for the underwriters, and for the full amount of the loss or claim, or full and complete relief claimed under this policy, and each of the underwriters hereon hereby agrees to abide the final determination of any such action, suit or proceeding
The provisions and limitations of this policy are very complicated, and their meaning obscure and doubtful. As we construe it (and in this construction we follow the trial court), the policyholder is entitled to recover of the attorneys the whole amount of his loss, which, in the language already quoted from the policy, “ shall be satisfied out of such trust fund in the hands of said attorneys.” Then if the trust fund is insufficient to satisfy the claim, actions may be maintained against the individual underwriters. That no accounting is to be taken of the trust fund and of the claims against it, and that no apportionment is- to be had, is made plain by the fact that an execution against the underwriters as trustees must first be issued and returned unsatisfied in whole or part before an action can be brought against-the individual underwriters. The provision as to the issue of an execution is wholly inconsistent- with the idea that the action is to be one in equity to administer a trust fund. The real intent of this policy and the practice contemplated by the par
It is, however, insisted that as the contract provides for the determination in this action of the respective liabilities of the several-underwriters ; and as they have agreed that the final determination of the action shall fix their individual responsibilities, it was in cum-bent on the court to determine the existence and amount of those liabilities. The proposition is substantially this: That the agreement of the parties and the fact that other. persons not parties to the record have stipulatéd'to abide the judgment, renders it the duty of the court to decide issues not- relevant to, or necessary for, the determination of the particular claim or cause of action of the plaintiff against the defendants in the'suit before it. , It is said in Matter
In the case of Lawrence v. Schaefer (supra) Judge Spring expresses the opinion that the attorneys for the underwriters may be considered as trustees of an express - trust. I do not know how far these -Lloyd policies are alike. Where, as in the present case, there is a fund in the hands of the attorney, consisting of the original deposit and the accrued premiums, as to such fund the attorney may be considered as the trustee of. an express trust. It is on this theory that the judgment for the plaintiff in this action must be upheld. But as to the individual liability of the underwriters beyond the fund, there. can be no. trust; and, therefore, no trustee. Judge Story writes (Story Eq. Juris. § 964): " A trust in the most enlarged sense in which that term is used in English jurisprudence may be defined -to be an equitable right, title or interest in property, real or personal, distinct from the legal.ownership thereof. * * * Three things are said to be indispensable to constitute a valid trust: First,.sufficient-words to raise it; secondly, a definite subject, and,thirdly, a certain or ascertained object.” A subject or corpus of a trust is absolutely essential, not merely to the validity of a trust, but to its existence. Courts will supply a trustee; .in England at times under - the cy pres power,, they will select beneficiaries, but in no country will they furnish a trust estate. A trust may exist in a contract; where one. person agrees to pay moneys to another for the benefit of a third. There the corpus of the trust is the chose in action. Again, another person may agree that the principal obligor will, perform his obligation.; but this person is a guarantor or surety and not "a trustee. So, also; there are obligations for which
I know of but one case where, in this State, an action at law can be brought against a nominal defendant, and that is an action against a joint stock company or association. This is wholly by virtue of the statute, which directs that suits by or against joint stock companies shall be prosecuted in the name of the president or treasurer for the time being. But though the defendant, in such an 'action, is a nominal one, the judgment in the action is by no means formal or inoperative. On process issued on the judgment against the president or treasurer, the property of the company can be seized and ajiplied to the satisfaction of the claim. But, even in such an action, no issue as to the individual liability of the associates or members of the company can be litigated.' In suits against the associates to enforce their individual liability, the judgment against the company is insufficient to 'maintain the action. ( Witherhead v. Allen, 3 Keyes, 562.) Of course, the underwriters do not constitute a joint stock company or association within the statute. Their liabilities are several, not joint.
The judgment appealed from should be affirmed, with costs.
All concurred.
Judgment affirmed, with costs.