Morrell v. . Irving Fire Insurance Co. , 33 N.Y. 429 ( 1865 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This action was brought to recover the amount of a policy issued by defendants upon certain premises of the plaintiff, whereby the defendants insured him against loss or damage by fire to the extent of $3,000. The building insured was destroyed by fire in January, 1857.

At the time of the fire, the plaintiff had another policy of insurance for $2,000 upon the same building, issued by the Excelsior Fire Insurance Company.

Each policy contained the usual clauses limiting the liability of the insurer "to such ratable proportion of the loss or damage happening to the subject insured as the amount insured by this company shall bear to the whole amount insured thereon," and making it optional with the company to rebuild or to repair the building within a reasonable time, giving notice of their intention to do so within twenty days after having received the preliminary proofs of loss, c." The two companies, on the happening of the loss, united in a notice to the plaintiff, stating "that we are prepared to rebuild the said building, and you are requested to furnish us with the plans and specifications of the same."

In pursuance of this notice, the companies proceeded to erect and repair the building, in accordance with the plans and specifications furnished, and claimed to have completed the same in conformity therewith. The plaintiff insisted that the building was not thus completed, and on the 4th day of November, 1857, he commenced this action upon the said policy of insurance, and claimed to recover the full amount thereof. On the trial the plaintiff had a verdict for the full amount of the policy and the interest thereon, and judgment thereon was affirmed at the General Term of the Supreme Court. On appeal to this court, the judgment was reversed and a new trial ordered. This court held, that the election to rebuild formed a new contract or agreement to build, according to the plans, and that such contract could be enforced as a building contract, without reference to the amount named in the policy, and that, if the insurer has not replaced the article or rebuilt the building in the manner agreed upon, the insured will be entitled to recover the damages which he has sustained by a breach of the contract or agreement, as in other cases of the breach by the builder of his agreement to build; that the action on this agreement to rebuild could properly have been against both companies; that, where they jointly elected to rebuild, they jointly agreed to rebuild, and were jointly liable in an action for a breach of the agreement. This court also held, that the plaintiff might, at his election, treat the contract to rebuild as that of each insurer, and, for a breach of the building agreement, maintain his action against either company, and recover full damages; that if the party undertaking to rebuild should fail to perform the contract, and the insured should recover and collect damages for the breach of the agreement, such party could recover of the other insurer a ratable proportion of the loss. Such insurer would, by the payment of the damages received by the insured, have satisfied the demand for the loss; the insured would have been fully indemnified; and the insurer, who paid nothing and did nothing, would be liable for contribution.

Upon the second trial, the counsel for the defendants moved to nonsuit the plaintiff, on the following grounds: 1. That the notice of election to rebuild and the testimony showed that the defendants and the Excelsior Company jointly elected to rebuild, and thereby jointly contracted to rebuild, and that the plaintiff's remedy for non-performance of that contract is by action against the defendants and the Excelsior Fire Insurance Company jointly. 2. That the contract to indemnify the plaintiff by payment of money was superseded by the joint contract of the two companies to rebuild, and the action should have been against both companies upon the joint contract. 3. That the two companies are united in interest in the damages claimed by the plaintiff in this action, and they must be joined as defendants. The court denied the motion. All these propositions embrace substantially but one idea, namely, that the action, being in the judgment of this court upon the agreement to rebuild, was necessarily a joint action against both companies, and could not be maintained against either separately. The court properly refused to nonsuit, as this court had distinctly held that the action could be maintained against either, and that the whole damage sustained by the plaintiff, on occasion of the breach of the contract, might be recovered against either party, and that the company against which the recovery was had might compel contribution from the other. The whole damage which the plaintiff had sustained by reason of the breach of the building contract or agreement might be recovered from either of the parties agreeing to rebuild, though it should exceed the amount named in the policy. The court thought the action might be maintained against the two companies, either jointly or separately; that, as between themselves, they were to contribute to the whole loss, in proportion to the amount insured by each.

This view of the law, as applicable to the case, disposes of the exception taken by the defendants to the refusal of the court to permit the defendants to read in evidence the policy of insurance made by the Excelsior Company, for $2,000, upon the same premises. It was wholly immaterial, in the action against these defendants upon their contract to rebuild. It could have had no other legitimate effect than to show that these defendants would have had a claim upon that company for contribution to the extent of two-fifths of the damages sustained by the plaintiff. It was, therefore, rightfully excluded.

In his charge to the jury, the learned judge who tried the action correctly stated the rule as established by this court to be, that the jury were to ascertain the difference in value between the building as it existed on the day it was destroyed by fire and the building which the insurance company furnished and delivered over to the plaintiff after this notice, and that such amount would be the damages which the plaintiff is entitled to recover. And the court further charged, that the plaintiff is entitled to interest from the time possession of the new building was delivered over to him. No exception was taken to this charge, or to any part thereof.

The counsel for the defendants requested the court to charge the jury that the Excelsior Fire Insurance Company, at the time of the fire, had a policy of insurance upon the building destroyed for $2,000, and the defendants a policy for $3,000, and by the fifth subdivision annexed to defendants' policy the defendants can be made liable only for three-fifths of the amount of plaintiff's damages. The court declined so to charge, and the defendants' counsel excepted.

The counsel for defendants also requested the judge to charge that it was the duty of the jury to ascertain the whole amount of the plaintiff's damages, and after having done so, to render a verdict for three-fifths of that amount. The court declined so to charge, and the defendants' counsel excepted.

For the reasons already suggested, these requests to charge were properly refused. The defendants were liable on their contract to rebuild for the whole amount of damage sustained by the plaintiff by reason of the non-performance of their contract. They were entitled to no deduction from that sum, because another party was also liable to pay a portion of it. That other party was liable to contribute its share or portion, as this court held on the former argument, and it also held that these defendants were primarily liable to pay the whole amount of damage. The proof offered of the policy of the Excelsior Fire Insurance Company having been excluded, and properly so, there was no foundation for these requests to charge. The jury, under the charge of the court, found the whole amount of the damage sustained by the plaintiff, by reason of the breach of the agreement to rebuild, at the sum of $2,300 and the interest thereon, for which sum judgment was perfected.

Previous to the last trial of this action, the defendants applied to the Special Term of the Supreme Court for leave to file an amended or supplemental answer, setting up as matter of defense in this action the recovery of a judgment by the plaintiff against the Excelsior Fire Insurance Company subsequent to the joining of the issue in this action for the same cause of action as is alleged in this action, the amount and date of said judgment, and the payment thereof. That motion was founded on an affidavit of the defendants' attorney, which stated that on or about the 25th day of September, 1857, the above named plaintiff commenced an action against the Excelsior Fire Insurance Company upon the policy of insurance mentioned and described in the defendants' answer in this action, to recover for the loss alleged and stated in the complaint in the action; that said Excelsior Fire Insurance Company defended said action, alleging substantially the same defense as that alleged in this action; the answer of said Excelsior Fire Insurance Company containing the following allegation: "And these defendants, further answering, state, that within a reasonable time after the said alleged loss or damage, they did, pursuant to a condition annexed to and made part of said policy, cause to be rebuilt the building lost or damaged, and that the building so rebuilt was of a kind or quality like that alleged to have been burned, and was erected upon the premises mentioned in the complaint, and that said plaintiff, upon the completion thereof, accepted the same, and entered into and took possession thereof, and has ever since continued to occupy and use the same; that the issues in said action came on to be tried, and a verdict therein was rendered in favor of the plaintiff for $446.66, upon which judgment was rendered against the said Excelsior Fire Insurance Company, December 8, 1858; that the plaintiff thereupon appealed from said judgment to the General Term; and that said Excelsior Fire Insurance Company has since paid and satisfied the same, and that said judgment was thereupon canceled and discharged of record."

The motion was granted at the Special Term to the extent only of permitting the defendants to set up in such supplemental answer, as matter of defense to this action, to the extent of the money paid, the fact of payment of the amount of damages included in the judgment in favor of the plaintiff against the Excelsior Insurance Company, on account of the plaintiff's damages in this action. Such terms were imposed by the order that the defendants did not avail themselves of the permission to put in the supplemental answer for the restricted purpose allowed by the order, and appealed thereupon to the General Term, which affirmed the order.

It is now claimed that this order is reviewable in this court on the appeal from the judgment. It is apparent, from the opinion of the justice at Special Term, that it was contended before him that the judgment against the Excelsior Company extinguished the claim of the plaintiff on the contract to rebuild. He thought it inequitable, as a defense beyond the amount paid under it, except as a payment on account of the plaintiff's damages. He said the recovery in that suit was only for a pro rata amount of these damages, and if his loss and damages in the present action are proved to be greater than the amount so paid, the plaintiff should not be barred by that judgment from the recovery of the excess in this suit; that it was equitable and right that the defendants should be allowed to show what the plaintiff had recovered from the other company towards the satisfaction of his damages, and be held liable for the balance only; but that, on the other hand, it would be inequitable to deprive the plaintiff from recovering his full damages on the technical rule, if such a rule should be held to apply to this case, that the judgment against the Excelsior Company and the payment of it operates as an extinguishment of the plaintiff's entire claim. The motion was therefore granted so far only as to allow the sum paid to be applied in reduction of the plaintiff's claim, and not in bar or extinguishment thereof. The General Term of the Supreme Court affirmed the order, holding that the defendants could not set up the new matter in extinguishment of the entire claim of the plaintiff; that it was not just it should be done, as the judgment was but for two-fifths of the damages according to the claim of the Excelsior Company on the trial. It is manifest, therefore, that both the General and Special Terms placed their refusal to the application to file a supplemental answer on the ground that the defendants then claimed that the recovery against the Excelsior Company was an entire bar and extinguishment of the plaintiff's claim. It is also apparent that if the application had been placed upon the true ground, namely, that the recovery of the judgment and payment thereof extinguished and barred two-fifths of the plaintiff's claim, it would have been granted, as it is clear it should have been. Such application would then have been to set up matter accruing subsequent to the putting in of the original answer, and which was material and necessary to the defendants' defense in part, and would have undoubtedly been granted.

Upon the last trial of this action, the counsel for the defendants produced and offered to read in evidence the judgment roll in the action against the Excelsior Company, which was objected to by the plaintiff's counsel and the objection sustained, and the same was excluded, to which the defendants excepted. The counsel for the defendants also offered to prove that the judgment against the Excelsior Company was for a loss on the same premises, sustained in consequence of the same fire as the claim in this action, and that the amount thereof had been paid.

As the recovery in the action against the Excelsior Company was limited, as appears by the record, to two-fifths of the plaintiff's claim, these offers must be regarded as an effort to show either a total or partial extinguishment and payment of the plaintiff's claim. In either aspect, the facts offered were inadmissible, without being pleaded. This precise point arose and was decided in the case of McKyring v. Bull (16 N.Y., 297). The conclusion of the court in that case was, that the provisions of the Code required the defendants in all cases to plead any new matter constituting either an entire or partial defense, and to prohibit them from giving such matter in evidence upon the assessment of damages when not set up in the answer. The judge at the circuit, therefore, rightfully excluded the evidence offered.

The remaining question to be considered is, whether the order of the General Term, affirming that of the Special Term, refusing leave to the defendants to put in a supplemental answer, is reviewable in this court. It is claimed that it is, under the last clause of subdivision first of section eleven of the Code, which declares that upon the appeal from the judgment in the action, the court shall have power to review any intermediate order involving the merits and necessarily affecting the judgment. If the order were reviewable in this court, I should not concur with the Supreme Court in its refusal to permit the defendants to file a supplemental answer, setting up what clearly they had a right to do, namely, the extinguishment and payment of two-fifths of the plaintiff's claim. If the defendants had based their application on this ground, I think it should have been granted. But the discussion of this question is now of no practical moment, as the General Term of the Supreme Court have given to the defendants all the benefit they could legally have derived if they had filed their supplemental answer, and had given the evidence offered by them, by confining the recovery of the plaintiff in this action to the remaining three-fifths of his claim. In relation to this, there is no pretense that it has ever been paid or extinguished, except by the ground assumed, that the recovery of the judgment by this plaintiff against the Excelsior Company extinguished also his claim against these defendants for the remaining three-fifths. That proposition cannot be maintained; and the results, which will be attained, are such as equitably attached to each of these companies. These present defendants were liable to pay and contribute three-fifths of the damage which the plaintiff sustained by the non-performance of their contract to rebuild. In the present action the jury, under an unexceptionable charge, have found such damage to be the sum of $2,300. We must assume this to be its extent; and the defendants being clearly bound to pay and contribute that sum, they have no just cause of complaint with the judgment appealed from, as modified and finally adjusted by the General Term of the Supreme Court. Their legal liability is not affected by the circumstance that the other company has extinguished its liability to pay two-fifths of the damage by the payment to this plaintiff of a less sum than its proper proportion. These defendants are not called upon to pay more than their proper portion of the damage as ascertained by the jury; and if they have any remedy, it is by a call on the Excelsior Company for contribution.

The judgment appealed from should be affirmed, with costs.