Hastie v. De Peyster , 3 Cai. Cas. 190 ( 1805 )

Per curiam, delivered by

Kent, C. J.

Upon the first and most material question in this case, very little information can be found in the English books, as re-assurances are rendered unlawful in most cases, by the statute of the 19 G. 2. But re-assurances are valid and usual contracts in France, and from the general principles applied to them by the French writers, it appears that the contract of re-assurance is totally distinct from, and unconnected with, the primitive insurance, and that the re-assurer has nothing to contest or settle with the primitive assured. The insurer therefore, who makes re-assurance for his own indemnity, is obliged to prove the loading and value of the goods in the same manner as if he was the original insured. It is however, usual for the policy of re-assurance, to contain an express provision, that the re-assured shall only be obliged to produce the evidence of payment of the loss, and the re-as-surer will be bound to refund it. This special contract obliges the re-assured to act with good faith, but leaves him in all other respects to his own discretion and prudence, in admitting or contesting the claim of the first insured. Pothier, n. 153. 1 Emer. 247, 8. 250, 2. 336 to 340. But when no such special contract is made, and none was made in the present case, the re-assurer will be obliged to pay, all that the first insurer ought himself to pay ; and this will impose upon the first insurer the burthen of proving the existence and extent of the loss. When he has done that, he has done ail that v/as requisite to entitle him to his indemnity. The notion that he must give notice, or abandon to the re-insurer, as soon as the first insured has abandoned to him, does not appear to be well founded. There is no such ruh; that appears to be prescribed in any of the books, and it does not necessarily arise out of the nature of the contract. The re-insurer has no connexion, or concern with the first insurance, and is, at all times, bound to indemnify his own insured, when the other can shew that he has been damnified in consequence of the first insurance» The re-insured must take care, at his peril, that the claim against him be wellsup-ported before he admits and satisfies it : for the re-insurer will be entitled to avail himself of every defence, that the first insurer might have urged. This is a fundamental principle in the law of securities. And if the re-insured proves the original claim against him to have been valid, when he resorts over to the re-insurer, he then makes out a fair case for indemnity, and such a case is made out in the present instance. Warren abandoned the vessel during a total loss, and the plaintiffs were inevitably fixed with the payment of that loss.

The next question is, whether the defendants are bound to pay the costs that the plaintiffs were put to, in defending the suit brought against them by Warren f I am of opinion that they are. On the day that the suit was brought against the plaintiffs, they gave notice of it to the defendants, and the latter might have come forward, and prevented the suit, by payment of the sum demanded. As the plaintiffs were bound to know at their peril, that the claim against them was valid, and gave notice to the defendants as soon as the legal demand was made, they were justified in submitting the claim to the decision of a court of justice, and the costs which necessarily arose in that suit, might be considered as incurred upon reasonable grounds, and for the greater caution and safety. From the cases of Goddard v. Vanderheyden, 2 Black. Rep. 794, and Mayor v. Steward, 4 Burr. 2439, it would seem that such charges are allowed, as composing part of a claim for indemnity % and as interest upon all sums advanced, follows of course, I am of opinion the verdict as taken, ought to stand.

Livingston J.

This is a case of re-assurance. These contracts being prohibited in England., unless where the first insurer becomes insolvent or dies, we cannot thence expect any aid, in construing policies of this kind. A recovery is here resisted, because no abandonment was made-to tbe last insurer. From the nature of the contract, I think none was necessary-. We must not confound a re-assurance with the original policy, nor consider a party to the former as in the shoes of the first underwriter. This engagement is to make good all that the first underwriter shall lose or become liable to pay. “ Secundus assecurator,” says Roccus, “ tenetur ad solvendum omne totum, quod ■primus assecurator. solverit” The original insurer then, notwithstanding his precaution in obtaining this indemnity, has a right to • defend himself in any way he thinks proper against the party with whom he contracted, between whom and the re-insurer there is no privity at all. He is not bound even to consult the latter, which however, he will hardly fail to do, when in his power, and which I have no doubt was done here. He is not obliged to accept of an abandonment, and then, as was the case here, he can have nothing to abandon. In short, he may controvert the plaintiffs’ right to recover, or pay without suit, as he shall think proper ; only taking care to act with integrity and good faith. If he settles without suit, probably he would be obliged, as against his insurer, to shew that the loss was justly due. If doubtful of the solvency of the party to whom he must ■look, he may be desirous of reducing the loss as much as •possible ; or he may apprehend a bankruptcy not very distant, which may make it his interest, if satisfied that -the loss be fair, to pay it immediately, so as not to be delayed in his recourse against his underwriter. ' It would be to tbe disadvantage also of a re-assurer, to compel his assured, in ail cases, to accept of an abandonment, which would be necessary, if he himself be entitled to one. This species of contract, although not allowed in England, is permitted •by most of the commercial states of Europe, and when confined to its proper object, is reasonable and beneficial. We should not therefore impose on the assured in such a policy, a line of conduct unnecessarily strict or difficult to pursue. I prefer therefore, leaving him as much at liberty as if he had no ulterior responsibility in view, without compelling him to act in conjuuction with, or under the con-troul or advice of the second underwriter ; not permitting him however, which must be a matter of, course, to throw on tbe latter tbe expense of defending a suit brought by the briginai insured,vif he wiil, on notice of such action, which ought to be given as early as possible, pay* or tender the sum demanded by him. On the very day JVarren com-menees his action, the plaintiffs give notice of it to the defendants, who take no one step to prevent its progress to final judgment. All the costs, therefore, of that suit, both plaintiffs’ and defendants’, are a proper charge in this, especially as it is not pretended that its defence wac unnecessary or improper. The defendants’ counsel having conceded that interest is a proper charge,- if their clients be liable for íhe principal'sum, I am for the plaintiffs on all the points made, and they must have judgment accordingly.