Sullivan v. Traders' Insurance Co. of Chicago, 169 N.Y. 213

Sullivan v. Traders' Insurance Co. of Chicago

169 N.Y. 213 | NY | 1901

Lead Opinion

This action was brought to recover damages, occasioned by fire upon plaintiff's premises, upon an alleged contract of insurance. The answer, among other defenses, alleged that after the fire the parties entered into an agreement in writing by which they selected appraisers to determine the amount of loss sustained by the plaintiff, and that the appraisers estimated and appraised the sound value of the property and the damages sustained by the fire, and agreed that the damage to the property was the sum of $49.60, and thereupon they made, executed and delivered their appraisal and award in writing at that sum. The plaintiff replied thereto, denying upon information and belief that there was any appraisal made, executed or delivered by the appraisers as mentioned in the answer, and further, that if any appraisal had been made, it was obtained by fraud and artifice and was a false, fraudulent and void appraisement, nugatory and of no account.

Upon the trial the case was opened on behalf of plaintiff by her counsel, and then the defendant moved for a judgment on the pleadings on the grounds that the complaint did not state facts sufficient to constitute a cause of action, and that there was no allegation that notice of loss had been served on the defendant. Leave was then granted to the plaintiff to amend the complaint in these particulars. Thereupon a discussion took place with reference to the effect of the award alleged in the answer, after which the written award was produced and marked as an exhibit in the case. The court then dictated to the stenographer what purports to be an offer on the part of the plaintiff to show that the award was inadequate; that the arbitrators awarded but forty-nine dollars, and the actual damages were over one thousand dollars; that one of the arbitrators was induced to sign the award without actually knowing what he was doing, and that two days afterwards he signed another award for eight hundred and fifty dollars damages; that there was fraud in the execution of the arbitration because the arbitrators did not examine the property before making the award; that the award does not represent the honest *216 judgment of the arbitrators; and that their acts were wrongful. The court thereupon excluded the evidence and dismissed the complaint, holding that the award being regular upon its face it was binding upon the parties, and that the claim that it was procured through fraud and artifice could not be litigated in this action. Exceptions were taken by the plaintiff to these rulings.

It is contended on behalf of the respondent that the award could not be annulled, except by an action brought for that purpose. It is conceded, however, that in an action brought to vacate and annul the award on the ground of fraud, an action upon a contract of insurance may be united therewith and a recovery had thereon in case the award is vacated. In this case the plaintiff's complaint is based upon the contract, and demands judgment for the damages sustained by reason of the fire. In her reply she has specifically denied that any award was ever made by the appraisers, and has also alleged that if such an award had been made, it was procured through fraud and artifice. It will thus be seen that by taking the complaint and the reply together all of the matters are alleged necessary for the obtaining of the relief to which the plaintiff may be entitled. It is claimed, however, that the reply served was unnecessary and improper. Assuming that it was unnecessary, it is not apparent that the defendant was injured thereby or deprived of any of its rights. It accepted the reply and did not return it or raise any question upon the trial with reference to its contents. The allegations of the answer in reference to the award were in the nature of a defense and not a counterclaim. No reply thereto was necessary unless the court in its discretion required the plaintiff to reply thereto. (Code C.P. § 516.) "Each material allegation of the complaint, not controverted by the answer, and each material allegation of new matter in the answer, not controverted by the reply, where a reply is required, must, for the purposes of the action, be taken as true. But an allegation of new matter in the answer, to which a reply is not required, or of new matter in a reply, is to be deemed controverted by the adverse party, *217 by traverse or avoidance, as the case requires." (Code C.P. § 522.) "There is only one form of civil action. The distinction between actions at law and suits in equity, and the forms of those actions and suits, have been abolished." (Code C.P. § 3339.)

In the case of Bates v. Rosekrans (37 N.Y. 409) the action was brought upon several promissory notes. The answer interposed what is claimed to be an equitable defense of payment. Upon the trial defendant insisted that he was entitled to judgment on the ground that the plaintiff did not reply to his answer. It was held that no reply was necessary, and that the plaintiff had the right to show that his notes had not, in fact, been paid. In the case of Arthur v. Homestead Fire Ins. Co. (78 N.Y. 462) an action had been brought based upon a policy of insurance, and the defense interposed was that the property insured was incumbered by a mortgage which was not mentioned in the application for insurance. Upon the trial the plaintiff offered to show that the defendant's agent who made out the application was informed of the existence of the mortgage, and that it was omitted by him from the application by mistake. The court excluded the evidence and the plaintiff was nonsuited. This action was then brought to reform the application. It was held that the evidence excluded in the first action was proper and should have been received; that the nonsuit was improper, and that this action was unnecessary. In the case of Smith v. Salomon (7 Daly, 216) the complaint was for the balance of the contract price of goods sold and delivered. The answer alleged a composition agreement to accept 50 per cent of the contract price as full payment, and that the amount agreed upon had been paid. Upon the trial plaintiff offered evidence to the effect that the compromise agreement was procured and induced by fraud. Upon motion the complaint was dismissed, the court holding that the plaintiff must proceed by separate action to set aside the agreement. Upon review the judgment was reversed. DALY, Ch. J., in delivering the opinion of the court, said: "I can see no reason why *218 he (plaintiff) should be put to an equitable action. He is seeking no remedy as against the trustee, or as against the assigned property. He is merely seeking in this action to enforce the payment of the whole debt upon the ground that the defendants have never been discharged from it, they having by false and fraudulent representations induced the plaintiff to sign the composition deed. As between the plaintiff and the defendants this question of fraud may as well be passed upon in this action as in any other. The court has all the necessary parties before it that will or can be affected by the judgment whether it is rendered for the plaintiff or for the defendants, and I see no reason why the plaintiff should be turned over to an action for deceit, or any other form of action, but the one brought to determine whether the defendants are, as between them and the plaintiff, discharged from the payment of the residue of the debt."

Under the provisions of the Code to which we have alluded new matter set forth in the answer by way of defense is deemed controverted by the adverse party by traverse or avoidance, as the case requires. It, consequently, was the privilege of the plaintiff not only to show that an award had not been made, but, if made, to also show any facts which would avoid it. No reply was necessary unless the court required it, but this provision does not deprive the plaintiff of the privilege of replying if he so desired, and thus in advance advising the defendant of the claim that will be made to the new matter alleged in the answer. There is but one form of action. The distinction between actions at law and suits in equity has been abolished.

It is now claimed that the award could not have been set aside if the evidence offered had been received. We have already stated the offer as dictated by the court; counsel for the respective parties appear to have taken but little part in the trial. The conduct of the case was taken in hand by the trial judge, who assumed to make up a record for the plaintiff. Under the circumstances, we do not feel called upon to construe the offer too strictly. As we have seen, the offer was *219 to show not only that the award was inadequate, but that one of the arbitrators was induced to sign it without knowing its contents, and that two days thereafter he signed another award for $853; that the arbitrators did not examine the property; that their acts were wrongful and their judgment not honest. If their acts were wrongful and their judgment not honest, there must have been fraud and a case presented which called for a trial.

We are of the opinion that the plaintiff had the right in this action to establish, if she could, that the award was procured through fraud and artifice, and that the judgment should be reversed and a new trial granted, with costs to abide the event.

Dissenting Opinion

I dissent. While the equities suggest a reversal, the law requires an affirmance. The object of pleadings is to apprise the opposite party of what he has to meet. The complaint sets forth a strict action at law for the recovery of money only upon a policy of fire insurance. The answer alleges no counterclaim, but sets forth new matter constituting a defense by way of avoidance. No reply was required and the one served was irregular and might have been stricken out on motion. While the court, in its discretion, could have required a reply, it would, in that event, have been "subject to the same rules as in the case of a counterclaim." (Code Civ. Pro. sec. 516.) Those rules limit a reply to a denial, direct or indirect, when the answer does not allege a counterclaim. (Sec. 514.) While they permit the allegation of "new matter, not inconsistent with the complaint, constituting a defense to the counterclaim," they do not permit the allegation of new matter to prop up the complaint. Such a pleading would be illogical and subversive of the primary rules governing the subject, for it would in effect be an indirect amendment of the complaint. A reply can perform no such function. It cannot set forth a new cause of action, however closely related it may be to the one alleged in the complaint for its province is not to obtain affirmative *220 relief, but to act by way of defense. It would be inconsistent with the complaint, for it would be a departure from the cause of action set forth therein. A recovery must be based upon the cause of action alleged in the complaint, and a reply setting up a different cause of action from that so alleged "is bad for departure." (6 Enc. of Pl. and Pr. 461.) "The office of a replication or reply is to meet the allegations of the plea or answer, and it cannot, in ordinary cases, introduce, as a basis for affirmative relief, matter enlarging the grounds upon which recovery was originally sought." (Id.) "After a plea of `no award,' if a defendant rejoins impeaching the award as incomplete, or confessing and avoiding it, or claiming that the award was not properly tendered, the rejoinder will be bad for departure from the plea." (Id: 464.) In an action at law upon a written instrument for the payment of money only when the answer is in avoidance, a reply cannot be lawfully served unless required by the court, and then it must be consistent with the complaint and cannot set forth an action in equity to aid the action at law by setting aside an award, which, unless set aside, would be fatal to a recovery. That would be a new cause of action to be set forth in an amended complaint, for it has no place in a reply.

Section 522 does not enable a plaintiff, without any pleading, to convert an action at law into a suit in equity, nor allow evidence to be given which would permit the court to set aside an award for fraud, because it was an obstacle to recovery on an instrument in writing, upon which alone the complaint was predicated without any suggestion of further relief. That section simply provides that new matter in an answer to which a reply is not required "is to be deemed controverted by the adverse party," without further pleading. Its object was to put at issue, by operation of law, all allegations of new matter contained in the answer, but not to enlarge the complaint by incorporating the reply therein, and by thus uniting the two pleadings to set forth a cause of action not even suggested in the complaint.

While the affirmance of the judgment may mean final *221 defeat to the plaintiff, I cannot vote for reversal, because it would bring confusion to the law of pleading and lex citiustolerare vult privatum damnum quam publicum malum.

O'BRIEN, BARTLETT, MARTIN and LANDON, JJ., concur with HAIGHT, J. VANN, J., reads dissenting opinion. PARKER, Ch. J., takes no part.

Judgment reversed, etc.