20 A.D. 80 | N.Y. App. Div. | 1897
The conclusion stated in the findings and opinion of Spring, J., seem to be sustained by Leiter v. Beecher (2 App. Div. 577) and New Jersey & Pennsylvania Concentrating Works v. Ackermann (6 id. 540).
The attorney, C. Hagen, was also an underwriter, and, hence, the case differs from Farjeon v. Fogg (16 Misc. Rep. 220).
The logic of the Leiter case seems to indicate that the restrictive .language used in the policy is not void as against public policy ; and the opinion delivered by Spring, J.,
If the foregoing views are correct, the judgment entered thereon should be sustained.
All concurred, except Hardin, P. J., not voting, and Follett, J., not sitting.
. Judgment affirmed, with costs.,
The following is the opinion of Spring, J., at Special Term:
Spring, J.:
This action was tried without a. jury, and involves the question of the right .of the insured in a Lloyds policy to sue each of the underwriters to recover fora loss within the terms of the policy.
. The policy in suit was issued by twenty-five underwriters, and is signed, not by them personally, but by C. Hagen, their attorney. By the terms of the policy, the personal liability of each underwriter is limited to $300 in the event of loss, and is individual and several. Then occur the following clauses which .comprise the nub of the controversy in this action:
■ “No action shall be brought to enforce the provisions of this policy, except against the attorney and representing all of the underwriters, and each of the underwriters hereby agrees to abide the result of any suit so brought, as fixing his individual responsibility hereunder.” It is further provided that judgment shall . be first satisfied out of the unexpended premiums in the hands of the underwriters, and if necessary. “ then out of the individual liability of the several underwriters, as hereinbefore expressed and limited; but in no. case shall the ' judgment bind the property of the said attorney to a greater extent than his liability as an individual underwriter."
A loss occurred under the policy in question, and it has been adjusted, and ■. twentydive separate actions have been brought, one against each underwriter, and the attorney in fact, as such, has not been sued. '
The policy in controversy is a contract between the insured and the insurers, and its stipulations and agreements will be given full force and effect unless they contravene some constitutional provision- or are repugnant to public policy. The purpose of the requirement was obviously to prevent a multiplicity of actions, and in case there was a defense to be interposed, to have it fought out in one action. The aim or design is as important for the insured as for the underwriters. To compel the insured to begin twenty-five separate actions, each for a small sum, and against defendants widely scattered, and possibly in a Justice’s Court, and with the privilege to the defendant to litigate the merits in each case, would impose upon the insured an expensive and difficult mode of realizing for his loss and with much uncertainty, for he might succeed in some cases and be defeated in others. And the underwriters would likewise be subjected to the burden of a contest in each case with great liability as to costs. So the provision is a prudent and desirable one for all concerned to have the merits óf the controversy determined in one action.
The enforcement of this provision does not oust the courts of jurisdiction. It simply is a stipulation on the part of all the underwriters with the assured, that in the event payment is not made conformably to the terms of the policy, the insured may bring an action against Hagen, one of the underwriters,, and that action will be decisive in determining the plaintiff’s right to recover. That infringes upon no. constitutional provision. One fair trial on the merits before a
Possibly suit majr be necessary, but the merits cannot be retried. The stipulation must be taken in toto, and by it the underwriters expressly agree to abide the result of any action brought against the attorney, So that another suit would simply be a step in the procedure to enforce judgment like proceedings supplemental to execution, or any other remedy designed to -insure or aid in the collection of a judgment. In full liability corporations resort must first be. had to-the corporate assets, and in case of failure to realize out of these, then the members of the corporation become liable, but it has never been regarded in contravention of public policy that the creditor must first proceed against the body corporate. Perhaps the more troublesome .question is, even assuming the insured can proceed against the attorney, does that restriction absolutely inhibit suing the individual underwriters in separate actions? If force is to be. given to the ■restrictive clause at all, if must be, with the intent of carrying out the design of the parties to the insurance contract. Their agreement is that no action shall be
It seems to me that Hagen is not merely an agent or attorney in his contractual relations with the insured. He is one of the underwriters, and in this particular the case may be distinguishable from the celebrated case of Knorr v. Bates (14 Misc. Rep. 501). He is the particular underwriter who is designated in the policy-to bear the brunt of any litigation that may arise to enforce the provisions of the policy, and his ultimate -liability is like that of his associates.
These Lloyds policies have grown into extensive use recently, and clauses of like purport to the one here in controversy have been several times the subject of judicial construction, but unfortunately without unanimity of opinion.
In Knorr v. Bates (12 Misc. Rep. 395; 24 Civ. Proc. Rep. 377; affd., 14 Misc. Rep. 501) the clause was almost identical with the one in- suit, and the only distinction seems to be that in that case the attorney was not an underwriter, and the reasoning both of the judge at Special Term and of Judge Pryor lays considerable stress upon the fact that the attorney was not -a party to the contract. In that case the clause was held to be invalid. This has been followed in the City Court of New York. (See Ralli v. Hillyer, 15 Misc. Rep. 692.) And in case of Farjeon v. Fogg (16 id. 219), Judge Truax, in the Special Term of the Supreme Court, decided a similar clause to be invalid, putting his conclusion
In Letter v. Beecher (3 App. Div. 577) and in New Jersey & Penn. Concentrating Works v. Ackermann et al. (6 id. 540) the Appellate Division of the first department decided similar clauses to be valid, although an endeavor was made to distinguish those cases from Knorr v. Bates (supra).
The contention pressed by the counsel for the plaintiff, that the twelve months’ limitation in which actions must be commenced would operate to prevent the insured recovering against the underwriters at all, is not applicable to this case, as was well said in the case last cited. The limitation has reference solely to the action against the attorney in fact, and not to any proceeding to enforce an established judgment.
Again, it occurs to me that Hagen is a trustee of an express trust 'within the purview of section 449 of the Code of Civil Procedure. The contract was made with him, and, so far as the other underwriters are concerned, for their benefit. While that section, on. its face, is in terms permissive in allowing actions to be prosecuted, yet a similar provision of the Code was held to warrant suits to be maintained against the trustees. (Mead v. Mitchell, 5 Abb. 92-106; affd., 17 N. Y. 210.)
That is the general doctrine, that an executor, administrator or person expressly authorized by statute to sue can be prosecuted by action in pursuance of the same authority that accords him the privilege of invoking the aid of the courts.
The complaint must be dismissed, with costs. Ordered accordingly.