Grange Mill Co. v. Western Assurance Co. , 1885 Ill. App. LEXIS 331 ( 1885 )

Pillsbury, P. J.

On the trial of this cause in the court below no evidence was introduced by the plaintiff in error going to show that the insurance companies were originally liable upon the policies issued to Emison & Co., but it seemed to rely upon the fact that the companies had compromised the suits commenced by them, and had paid Emison & Co., upon such compromise, the sum of $2,500, with notice that the plaintiff in error had an equitable right to the money under dts contract with Emison to insure for its benefit.

We are not prepared to say that such ¡woof alone would authorize a decree for the plaintiff in error. Sufficient appears in this record to show that the defendants in error were in good faith litigating the suits brought by Emison & Co., upon the ground that they had made false and fraudulent representations in their applications for the insurance, concerning their interest in the property insured material to the risk, and although defeated in the trial court, had appealed the causes to this court for the purpose of obtaining a reversal of the several judgments rendered against them respectively. What the result of the appeals would have been had this court passed upon the merits involved, it is of course impossible to determine, as this record does not present for our consideration the record of those cases, but it seems that the parties to those suits preferred to compromise rather than to further litigate. The compromise was made, the judgments reversed and the controversy ended.

Emison & Co. can scarcely be said to have an abiding faith in the justice of their claim, for they accepted one half of the recovery below, and the same may be said of defendants in error concerning their defense, for they paid one half of the amount claimed and recovered.

The insurance companies had the undoubted legal right to settle and compromise an unfounded claim against them if they saw proper so to do; but it can hardly be claimed that they are thereby concluded from relying upon their defense in a litigation commenced by other parties.

The right of plaintiff in error to recover in equity upon the principle of subrogation, depends, of course, upon the validity of the policies and the right of Emison & Oo. to recover npon them at law; for if Emison & Oo. could not maintain a suit npon the policies because of their fraud in procuring the insurance, there is no ground upon which the plaintiff in error can stand either at law or in equity, and in such case must look to Emison npon its contract with him to insure for its benefit.

The defendants in error in their answer denied the liability to Emison & Oo., and no proof was offered by plaintiff in error npon that point aside from proof of the compromise as above stated. We think it should have given some evidence tending to show a liability of defendants in error upon the contract of insurance, to the benefits of which it desired to be subrogated, and as it did not no error was committed in dismissing its bill.

Decree affirmed.