Fish v. Vanderlip , 156 N.Y.S. 38 ( 1915 )

Laughlin, J. (dissenting):

The plaintiff alleges that the defendant and ninety-nine other firms and individuals as separate underwriters, doing business together under the name and style of “At United States ' Lloyds ’” of Hew York city, through their attorneys, Higgins & Cox, issued and delivered to the plaintiff their certain policy of insurance in writing, a copy of which is annexed to the complaint and made a part thereof, insuring plaintiff’s auxiliary schooner yacht Senta, among other things, against loss or damage by fire for the term of one year from the 15th day of April, 1910, in the aggregate amount of $15,000; and that on the 25th day of October, 1910, the yacht was totally destroyed by fire, and plaintiff gave due notice of the loss as required by the policy, and that defendant’s proportionate share of the loss as a separate underwriter is the sum of $150, which became due and payable from defendant to plaintiff on the day of the fire, and no part thereof has been paid although payment thereof has been duly demanded, and judgment is demanded for $150 and interest, together with costs.

The policy provided, in effect, that the insurance was made by the firms and individuals signing the policy " as Separate Underwriters,” each represented by the firm of Higgins & Cox as attorneys, and further provided, with respect to the liability of the underwriters, as follows: “ And the assurers are contented, and do promise and bind themselves severally and not jointly, nor any one for any other, their respective executors and administrators to the assured, their executors, administrators or assigns, for the true performance of the premises, each one for his own part of the whole amount herein assured only;” and under the heading “Subscribers” and before the signatures of the underwriters appears the following: “ Equal proportions of $15,000 Insured by Each.”

In the defense to which the demurrer was interposed, it is alleged that in an action duly brought in the Municipal Court of the City of Hew York, wherein this plaintiff was plaintiff and one Cox, one of the underwriters and a member of said firm of Higgins & Cox, was defendant, and wherein the complaint contained the same allegations upon the same policy and for the same loss, and wherein the answer raised the same issues and presented the same defenses as are interposed in the preceding parts of the answer herein, a verdict upon the identical issues and defenses herein presented was duly rendered in favor of said Cox, and on or about the 20th day of May, 1913, judgment upon the merits was duly entered in favor of said Cox and against the plaintiff in that action, and that judgment therein was duly docketed in the office of the clerk of the county of Hew York on the 31st day of May, 1913, which was prior to the commencement of this action, and that said judgment has never been reversed or modified, and that the time to appeal therefrom has expired; that said Cox was at all of said times duly authorized to act for and in behalf of each and all of the underwriters “ as to any matter covered by the said insurance of all of which the plaintiff herein had due knowledge;” that the interest of this defendant in the said action against Cox was identical with that of the said Cox, and that the said Cox defended the said action brought against him “under and by the direction of and at the expense and in the interest of each and all of the said subscribers, including this defendant, and had the plaintiff recovered judgment in the said action against Cox this defendant would have been obliged to pay his proportionate share thereof, which facts were known to the plaintiff at the time of the trial of the said action, and that the said judgment is a bar and an estoppel to this action, because it is an adjudication against the plaintiff’s right to recover for said alleged loss under said policy, and because it deprives this defendant of his right of contribution against the said Cox, and because it is an adjudication that the plaintiff was the culpable cause of the loss sued, for.” The defenses set forth in the precéding parts of the answer, which it is alleged are the same as those interposed by Cox in the action brought against him, are in substance that after the policy was issued and prior to the loss, the yacht was sold, assigned, transferred and pledged by the plaintiff without the consent in writing of the defendant or of any of the underwriters, in violation of an express provision of the policy pleaded; that the making of the policy was induced by material false representations which were relied upon; that the loss of the yacht was not caused by any of the risks insured against, but “solely by the negligence and connivance of the plaintiff;” and that the loss of the yacht “was caused by the wilful, malicious and fraudulent acts of the plaintiff.”

Under the policy, the liability of the underwriters is several, and, therefore, on a recovery against one he would not be entitled on the theory of subrogation to any right of the plaintiff to recover against a co-underwriter, which is the theory upon which it has been held in some cases that a judgment against the plaintiff in an action against one primarily liable as between him and another would bar an action by the same plaintiff against the other. (See Featherston v. N. & C. Turnpike, 71 Hun, 109.)

It is a general rule that judgments are conclusive only between the parties and their privies, and that estoppel by judgment must be mutual (Moore v. City of Albany, 98 N. Y. 409; Remington Paper Co. v. O’Dougherty, 81 id. 490; Mitchell v. First National Bank of Chicago, 180 U. S. 471; Litchfield v. Goodnow, 123 id. 549; Bigelow v. Old Dominion Copper Co., 225 id. 111); and that where the liability is several only, the mere fact that one severally liable, but not sued, who contributes to the defense of the action does not become a privy. (Rumford Chemical Works v. Hygienic Chemical Co., 215 U. S. 156.) Although in the case at bar the liability is on the same instrument, it is undoubtedly several and not joint. (Straus v. Hoadley, 23 App. Div. 360.)

There are, however, many exceptions to the general rule that a judgment to be good as an estoppel must be mutual. Among the many well-recognized exceptions are that a judgment involving the merits of the plaintiff’s cause of action is a bar to another action thereon (1) against a principal after a judgment in favor of his agent or surety or his servant, even though it would not be binding upon him if against the agent, surety or principal (Emma Silver Mining Co. v. Emma Silver Mining Co. of New York, 7 Fed. Rep. 401; Portland Gold Mining Co. v. Stratton’s Independence, 158 id. 63; Jacob v. Town of Oyster Bay, No. 2, 109 App. Div. 630; Stearns v. Shepard & Morse Lumber Co., No. 1, 91 id. 49); (2) a judgment in favor of one on a joint and several obligation is a bar to an action against another obligor on the same instrument (Spencer v. Dearth, 43 Vt. 98; Cowley v. Patch, 120 Mass. 137); and (3) a judgment in favor of one whose act caused the damages or injury is a bar by estoppel to an action against another for the same act even if the judgment, if the other way, would not have bound the defendant in the second action. (Portland Cold Mining Co. v. Stratton’s Independence, supra ; Featherston v. N. & C. Turnpike, 71 Hun, 109; Atkinson v. White, 60 Maine, 396; Hill v. Bain, 15 R. I. 75; Black Judgments [2d ed.], § 781.) It requires but a slight extension of this rule, I think, to render the judgment pleaded in the answer a bar to this action. Although the underwriters have stipulated that their liability shall be several only, this was primarily for the purpose of fixing and limiting the liability of each underwriter. They necessarily all have a common interest in the question as to whether the loss falls within the risk covered by the policy, and according to the allegations in that part of the answer to which the demurrer is interposed, they, with the consent and acquiescence of the defendant, sued and, to the knowledge of the plaintiff, joined in the defense of the action and succeeded. The adjudication in favor of Oox on the issues presented necessarily was an adjudication that the risk was not covered by the policy. The plaintiff had his day in court, and principles of sound public policy, I think, forbid that he should be permitted to litigate the same questions over again in ninety-nine cases against the other underwriters. There is considerable authority in support of this view in judicial opinions in cases in which the point was not necessarily presented for decision. (See Emma Silver Mining Co. v. Emma Silver Mining Co. of New York, supra ; Portland Gold Mining Co. v. Stratton’s Independence, supra; Atkinson v. White, supra; Emery v. Fowler, 39 Maine, 326; Spencer v. Dearth, supra; Fulton County Gas & E. Co. v. Hudson River Tel. Co., 200 N. Y. 287, 296; Featherston v. N. & C. Turnpike, supra; Greenwich Ins. Co. v. N. & M. Friedman Co., supra; Ashton v. City of Rochester, 133 N. Y. 187; Stearns v. Shepard & Morse Lumber Co., No 1, supra; Hill v. Bain, supra.) But it is unnecessary to decide in "the case at bar that the adjudication would be available to the defendant without the allegations with respect to his participation in the defense of the other action with the consent of the defendant therein and to the knowledge of the plaintiff, for in a case not distinguishable on principle, and where the several liability was on different policies of insurance, it has been held that such a judgment is binding on the principle of equitable estoppel. (Greenwich Ins. Co. v. N. & M. Friedman Co., supra; approved by denial of writ of certiorari, 200 U. S. 621.) I am, therefore, of opinion that the defense to which the demurrer was interposed is good, and that the demurrer should have been overruled.

I, therefore, vote for reversal.