240 N.Y. 37, Ocean Accident and Guarantee Corporation v. Hooker Electro-Chemical Co.

Citation:240 N.Y. 37
Party Name:OCEAN ACCIDENT AND GUARANTEE CORPORATION, Respondent, v. HOOKER ELECTROCHEMICAL COMPANY, Appellant.
Case Date:March 03, 1925
Court:New York Court of Appeals

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240 N.Y. 37

OCEAN ACCIDENT AND GUARANTEE CORPORATION, Respondent,

v.

HOOKER ELECTROCHEMICAL COMPANY, Appellant.

New York Court of Appeal

March 3, 1925

Argued January 28, 1925.

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COUNSEL

Edward E. Franchot for appellant. Any rights by subrogation possessed by an insurance company to a cause of action of its assured against a third party to recover damages arising out of a loss insured against are claims in equity as distinguished from rights of legal ownership, full legal ownership and power over the cause of action remaining in the assured. (McGrath v. Carnegie Trust Co., 221 N.Y. 92; Strickland v. McGoun, 119 A.D. 113; Platt v. R. Y. R. & C. R. R. Co., 108 N.Y. 358; M. S. Bank v. Pierce, 137 N.Y. 444; C., St. L. & M. R. R. Co. v. P. S. Car Co., 139 U.S. 79; N. U. Fire Ins. Society v. Standard Oil Co., 59 F. 984; Conn. F. Ins. Co. v. Erie R. R. Co., 73 N.Y. 399.) The Ocean Company, at the date of the general release herein, possessed no right of subrogation in any cause of action owned by the Wander Company against the Hooker Company. (Suttles v. R. M. Assn., 156 A.D. 435; Michael v. Prussian Ins. Co., 171 N.Y. 25; A. L. Ins. Co. v. Parker, 30 Tex. Civ. App. 221; Dilling v. Draemel, 16 Daly, 105; Brown v. V. M. F. Ins. Co., 83 Vt. 61; Gatzweiler v. M. R. & E. Co., 116 N.W. 633; Arnold v. Green, 116 N.Y. 571; Hall v. Ins. Co., 13 Wall. 367; Packham v. G. F. Ins. Co., 91 Md. 515; C. F. & T. Co. v. K. U. Ry. Co., 60 F. 794.) If, at the time of the settlement and release of the cause of action, the Ocean Company possessed any equitable rights in respect thereto, they were not such rights as prevented the trustee in bankruptcy

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from settling the same by a release binding upon the Ocean Company. (Packham v. G. F. Ins. Co., 91 Md. 515; Svea Assur. Co. v. Packham, 92 Md. 464; Merrick v. Brainerd, 54 N.Y. 208; Collins v. N.Y. C. & H. R. R. R. Co., 5 Hun, 503; Briggs v. N.Y. C. & H. R. R. R. Co., 72 N.Y. 26; Carpenter v. Eastern Transportation Co., 71 N.Y. 574; Dix v. Jaquay, 94 A.D. 554; Rogers v. Atlantic, G. & P. Co., 213 N.Y. 246; St. James Co. v. S. T. & L. Ins. Co., 82 A.D. 242; 178 N.Y. 560.)No claim that the release was ineffective as against the Ocean Company can be based upon alleged fraud upon its rights; on the contrary, it is itself estopped from asserting its invalidity. (Van Olinda v. Whitehead Bros. Co., 168 A.D. 589; Smith v. Satterlee, 130 N.Y. 677; Tennant v. Dudley, 144 N.Y. 504; White v. Old Dominion Steamship Co., 102 N.Y. 660; Wahl v. Barnum, 116 N.Y. 87; Post v. Thomas, 212 N.Y. 264; Minehan v. Hill, 144 A.D. 854; People v. N.Y. O. & W. Ry. Co., 133 A.D. 476.) The separate items of damage resulting from expenditures made by or on behalf of the Wander Company in respect of claims by third persons injured on the opening of cans of chlorinated lime did not give rise to separate causes of action; on the contrary, any breach of warranty or act of negligence claimed against the Hooker Company could give rise to only one cause of action, entire and indivisible. (2 Black on Judgments, § 735; Freeman on Judgments [4th ed.], § 240; Sutherland on Damages [4th ed.], § 106; Bracken v. Atlantic Trust Co., 167 N.Y. 510; Kennedy v. City of New York, 196 N.Y. 19; C. E. N. Bank v. Blye, 123 N.Y. 132; Atkins v. Trowbridge, 162 A.D. 161; Binns v. Vitagraph Co., 147 A.D. 783.) Neither the Wander Company nor the Ocean Company, by subrogation to its rights, possessed a separate cause of action by virtue of subrogation to the rights of each injured claimant directly against the Hooker Company. (N.Y. Cons. R. R. Co. v. Mass. B. & I. Co., 193 App.

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Div. 438; Union S. Y. Co. v. C., etc., R. R. Co., 196 U.S. 217; Cons., etc., Machine Co. v. Bradley, 171 Mass. 127; McPherson v. Buick Motor Co., 217 N.Y. 382; Groves v. Wander Chemical Co., 192 A.D. 948; 232 N.Y. 579; Stellwagen v. Wander Chemical Co., 192 A.D. 943; Hallenbeck v. Wander Chemical Co., 197 A.D. 855; Roth v. Nat. A. Mut. Cas. Co., 202 A.D. 667; 235 N.Y. 605; Schoenfeld v. N. J. Fidelity & Plate Glass Ins. Co., 203 A.D. 796; Farrell v. Merchants' Mutual Auto. Liab. Ins. Co., 203 A.D. 118; O'Connell v. N. J. Fidelity & P. G. Ins. Co., 201 A.D. 117.)

A. Lee Olmsted for respondent. The cause of action set forth in the complaint herein was not included in the action brought by the Wander Company against this defendant, nor could it have been so included under our practice. (Lord & Taylor v. Y. & T. Mfg. Co., 230 N.Y. 132; Moore v. Taylor, 175 A.D. 37; Svea Ins. Co. v. Packham, 92 Md. 464; Packham v. G. F. Ins. Co., 91 Md. 515.) The complaint in this action states a good cause of action against the defendant. Under the facts alleged in the complaint, the Wander Company had a good and enforcible claim against the Hooker Company for moneys expended in the defense of negligence claims for personal injuries and the Ocean Accident and Guarantee Corporation having paid such claims became subrogated to those rights. (N.Y. Cons. R. R. Co. v. Mass. B. & I. Co., 193 A.D. 438; O. S. Nav. Co. v. Campania Transatlantica E. Co., 134 N.Y. 461; Gray v. Boston Gas Light Co., 114 Mass. 149; Churchill v. Holt, 127 Mass. 165; Boston W. H. Co. v. Kendall, 178 Mass. 232; Washington Gas Co. v. District of Columbia, 161 U.S. 316; Union Stock Yards Co. v. Chicago R. R. Co., 196 U.S. 217; Lord & Taylor v. Yale & Towne Mfg. Co., 230 N.Y. 132; Western Union Tel. Co. v. Gest, 183 A.D. 548; Employers' Liability Assur. Corp. v. I. M. Products Co., 192 A.D. 88; Royal Indemnity

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Co. v. Hasslacher, 189 A.D. 935; W. & G. A. Ins. Co. v. Otis Elevator Co., 228 N.Y. 192.)The release obtained by the defendant from the trustee in bankruptcy of S. Wander & Sons Chemical Co., Inc., is not a bar to this action, nor does it relieve the defendant from liability to the plaintiff. (Conn. F. Ins. Co. v. Erie R. R. Co., 73 N.Y. 399; Munson v. N.Y. C. R. R. Co., 32 Misc. 282; Royal Indemnity Co. v. International R. R. Co., 95 Misc. 670; Lloyds Ins. Co. v. Vicksburg Traction Co., 106 Miss. 244; Matter of Woodward, 171 A.D. 736; Home Ins. Co. v. Western Transp. Co., 33 How. Pr. 102; C., B. & Q. R. R. Co. v. Emmons, 42 Ill.App. 138; P., etc., R. R. Co. v. Home Ins. Co., 183 Ind. 355; A., T. & S. F. R. Co. v. Home Ins. Co., 59 Kan. 432; H. F. Ins. Co. v. W. R. R. Co., 74 Mo.App. 106.) The defendant claims that this cause of action cannot be sustained for the reason that it constitutes a splitting of an indivisible cause of action. Under the facts of this case such a defense is not available. (Moore v. Taylor, 175 A.D. 37; Secor v. Sturgis, 16 N.Y. 548; Perry v. Dickerson, 85 N.Y. 345.) Public liability or employer's liability insurance contracts are indemnity contracts and rights of subrogation exist in the insurance companies to the same extent and under the same rules as have been so well settled for many years in the case of fire insurance policies. (Royal Indemnity Co. v. Hasslacher, 189 A.D. 935; Wanamaker v. Otis Elevator Co., 228 N.Y. 192; Royal Indemnity Co. v. International R. R. Co., 95 Misc. 670; Lord & Taylor v. Yale & Towne Mfg. Co., 230 N.Y. 132; E. L. Assur. Corp. v. I. M. Products Co., 192 A.D. 88.)

HISCOCK, Ch. J.

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