Barnes v. Hekla Fire Ins. Co
| Decision Date | 29 December 1893 |
| Docket Number | 8372 |
| Citation | 57 N.W. 314,56 Minn. 38 |
| Parties | S. M. Barnes v. Hekla Fire Ins. Co |
| Court | Minnesota Supreme Court |
Submitted on briefs November 17, 1893.
Appeal by defendant, the Hekla Fire Insurance Company of St. Paul from an order of the District Court of Ramsey County, John W Willis, J., made May 15, 1893, sustaining a demurrer to its second and third answers in the action.
The complaint of Mrs. S. M. Barnes stated that on April 10, 1891 defendant insured her house at Jonesboro, N.C. for three years against fire in the sum of $ 1,500, that the house was burned on March 11, 1892, that she had given notice and furnished proofs, but had not been paid, and she asked judgment for the $ 1,500.
The defendant answered admitting the insurance and the fire, but denying any knowledge as to the other facts alleged. For a second answer defendant alleged that the plaintiff was and is a citizen and resident of North Carolina and not of Minnesota and that the District Court has no jurisdiction of the parties to the action or of the subject matter thereof. For a third answer defendant alleged that the St. Paul German Insurance Company reinsured the property and agreed with the plaintiff and defendant before the fire to pay plaintiff any loss she might suffer under the policy. That the St. Paul German Insurance Company thereafter on April 14, 1892, being insolvent, made an assignment of all its property under Laws 1881, ch. 148 as amended, to Jacob F. Franzen in trust for its creditors and that plaintiff proved and filed her claim against it with him for payment in the due course of the insolvency proceedings.
The plaintiff demurred to the second and third answers and specified as ground of objection that they do not state facts sufficient to constitute a defense. The trial Court sustained the demurrer and defendant appeals.
Order affirmed.
C. D. & Thos. D. O'Brien, for appellant.
Subject to the opinion of this Court in Henry v. Bruns, 43 Minn. 295, we respectfully submit that the provisions of 1878 G. S. ch. 68, § 19 make the filing of a bond for costs by a non-resident plaintiff a condition precedent to his right to bring an action.
The third answer constitutes a defense to the extent of the dividend to be received by the plaintiff upon her claim in the insolvency proceedings.
B. H Schriber, for respondent.
Defendant may now be in equity but a surety for the St. Paul German Insurance Company. But a suit against a surety will not be delayed because the principal has been adjudged a bankrupt, and the claim has been filed in the bankruptcy proceedings. The surety should pay the claim and prove it against the estate of the principal. 1 Brandt, Suretyship, § 97; Gregg v. Wilson, 50 Minn. 490.
The plaintiff demurred to the second and third defenses set up in the defendant's answer, and this appeal is from the order sustaining the demurrer.
The action is brought upon a policy of insurance issued by the defendant to the plaintiff for a loss covered thereby. It is alleged, by way of defense, that subsequent to the date of plaintiff's policy the St. Paul German Insurance Company, a corporation lawfully doing business in this state, had "reinsured the said policy, and promised and agreed with the said plaintiff and this defendant to pay to the plaintiff any loss which she might suffer under said policy, and said agreement was in full force and effect at the time of the pretended occurrence of the fire described in the complaint, if any such fire did occur, and that said plaintiff had always full notice and knowledge thereof." It further appears that thereafter, and before the commencement of this action, the St. Paul German Insurance Company duly made an assignment under the insolvency laws of the state, and that the plaintiff has duly filed and proved her claim in the insolvency proceedings for the loss indemnified against by defendant, and so assumed by the German Insurance Company. It is claimed by the defendant in this action that, by electing to proceed against the estate of the German Insurance Company, the plaintiff has effectually waived her remedy against the defendant upon the policy sued on.
It will be conceded that the agreement between the two companies set out in the answer is not merely a contract of reinsurance, but also to pay, and assume the payment of, losses of parties indemnified by policies issued by the defendant company reinsured. Reinsurance is a mere contract of indemnity, in which an insurer reinsures risks in another company. In such a contract the policy holders have no concern, are not the parties for whose benefit the contract of reinsurance is made, and they cannot, therefore, sue thereon. But the agreement alleged in this case is not a mere reinsurance of the risks by the reinsurer, but it embraces also an express agreement to assume and pay losses of the policy holder, and is therefore an agreement upon which he is entitled to maintain an action directly against the reinsurer. Johannes v. Phoenix Ins. Co., 66 Wis. 50, (27 N.W. 414.)
This is not, however, a case where the insurer is put to an election between his remedies against the two companies.
Unless there was a substitution of debtors, in the nature of a novation, between the three parties, upon the...
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