Brooks Realty, Inc. v. Aetna Insurance Company, 39330
| Decision Date | 24 April 1964 |
| Docket Number | No. 39330,39330 |
| Citation | 268 Minn. 122,128 N.W.2d 151 |
| Parties | BROOKS REALTY, INC., Respondent, v. AETNA INSURANCE COMPANY et al., defendants and third party plaintiffs, Relators, v. BROOKS UPHOLSTERING COMPANY, Inc., third party defendant, Respondent. BROOKS UPHOLSTERING COMPANY, Inc., Respondent, v. AGRICULTURAL INSURANCE COMPANY, et al., Relators. AETNA INSURANCE COMPANY, et al., Relators, v. BROOKS UPHOLSTERING COMPANY, Inc., Respondent. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
It is error to apply the rule of estoppel by verdict to prevent relitigation of issues that are claimed to have been previously adjudicated when it appears that such issues were not in fact presented and determined in a former trial.
Dorsey, Owen, Marquart, Windhorst & West and Henry Halladay and John Levine, Minneapolis, Clausen, Hirsh, Miller & Gorman, Chicago, Ill., for relators.
Robins, Davis & Lyons, Solly Robins and Sidney S. Feinberg, Minneapolis, for respondents.
Petition for a writ of prohibition directing the District Court of Hennepin County, Fourth Judicial District, and the Honorable Stanley D. Kane, one of the judges thereof, to refrain from proceeding with the trial of pending actions to recover for losses by fire as contemplated by pretrial orders which relators claim improperly limit the issues raised by the pleadings.
The question presented is whether the trial court erred in limiting the issues by holding that the insurance companies in three pending actions were estopped from relitigating the defenses of arson and increase of risk of loss. The trial court based its order upon the ground that the parties to the pending actions were bound by a verdict returned in a prior trial involving the same fire and the same issues, although not identical parties.
The undisputed facts essential to our consideration follow. On February 17, 1962, a building and its contents were substantially destroyed by fire. The building, owned by Brooks Realty, Inc. (hereinafter Realty), was occupied under lease by Brooks Upholstering Company, Inc. (hereinafter Upholstering). The contents owned by Upholstering consisted of equipment and supplies used in conducting a furniture manufacturing business. The risk of loss or damage by fire to the building and the contents and for the interruption of business then being carried on by Upholstering was covered by insurance. Thirty separate policies issued by 15 different insurance companies, all sold by one insurance agent, were in force at the time of the fire. Eight of such policies, issued by 8 different companies to Realty, covered the building, affording protection to a maximum of $250,000. Eleven of such policies covered the contents, and the remaining 11 policies protected against an interruption of Upholstering's business due to fire. The latter 22 policies were issued by 5 of the insurance companies which also afforded protection to the building and by 7 different companies which did not cover that risk. Only 3 companies afforded fire insurance protection to the building alone with no overlapping coverage. Proofs of loss for the building, contents, and business interruption were duly filed and rejected by all insurance companies.
Subsequently, three actions to recover for the damage to the building, to the contents, and for interruption of the business were instituted. Answers by the respective companies were interposed. Each answer alleged, among other things, the defenses of arson and increase of risk of loss. The latter defense was based upon the claim that the sprinkler system was intentionally or negligently rendered inoperable by agents of the insureds. In the Realty case for recovery of damage to the building, the answer alleged both defenses and also that Realty had conspired with Upholstering to intentionally burn the building and to increase the risk of loss. Also in that case, a third-party subrogation action against Upholstering was added upon the claim that if the insurance companies were found liable in the Realty case they had a right of indemnity against Upholstering for intentionally setting the fire and increasing the risk of loss.
Ultimately, after extensive preliminary proceedings which we deem it unnecessary to set out, all three actions appeared on the calendar for trial before the Hennepin County District Court. Thereupon, by arrangement of the insurance companies, common counsel undertook to represent them at trial. Before the cases were set for trial, all of the insurance companies joined in a motion to consolidate the actions for trial. This motion was opposed by counsel representing both Realty and Upholstering and was denied. The Realty case was ordered to be tried first, followed immediately by separate trials of the contents, business interruption, and third-party subrogation cases in the order directed by the judge trying the Realty case. The Realty trial lasted for 12 trial days and the transcript, which is neither printed nor settled, contains over 1,900 pages. The trial resulted in a general verdict for Realty, awarding $122,600 for damage to the building. The jury also answered special interrogatories as follows:
'No. 4.
On the day following the receipt of the verdict, a pretrial conference was begun concerning the trial of the contents case that was to commence upon completion of the conference. The eight insurance companies named as defendants in the Realty case had filed a motion for judgment notwithstanding the verdict or in the alternative for a new trial. At the conclusion of the conference, which was adjourned from time to time, the court filed a pretrial order, ruling that the jury verdict in the Realty case on the issues of arson and increase of risk was binding on all parties in the remaining cases. The court stayed commencement of the trials of the remaining cases to permit the defendant insurance companies to apply for relief to this court. Following such application and a hearing accorded to counsel for all of the parties, we issued the alternative writ of prohibition now before us. The return to the writ raises the issue of whether it was error to apply the rule of estoppel by verdict, thereby preventing the defenses of arson and increase of risk of loss from being relitigated in the remaining cases.
Mindful of the restraint which should be exercised in interfering with trial orders of the type presented, we are constrained to hold under the circumstances that it was error to conclude that the verdict in the Realty case was binding upon the parties in the remaining cases, and to therefore order that proof in the remaining cases be limited to the issues raised by the pleadings 'exclusive of the issues of arson and of increase of risk of loss.'
1. Under the doctrine of res judicata, it is well recognized that parties to an action may be estopped from relitigating issues in a subsequent action that were raised and determined in a prior action. 1 Apart from the general requirements regarding identity of parties and the finality of the adjudication, application of the rule of estoppel by verdict requires the party asserting it to establish that the precise question was in fact presented and necessarily determined by the verdict in the former trial. 2 As stated in Wolfson v Northern States Management Co., 221 Minn. 474, 479, 22 N.W.2d 545, 548:
'* * * The defense of Res judicata through estoppel by verdict is to be allowed with caution, and it must rest upon a more solid basis than mere speculation as to what was actually adjudicated in the prior action. * * *
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Travelers Ins. Co. v. Thompson
...determined in the former suit.' The principle of collateral estoppel has been expressed in varying terms in Brooks Realty, Inc. v. Aetna Ins. Co., 268 Minn. 122, 128 N.W.2d 151; Anderson v. Mikel Drilling Co., 257 Minn. 487, 102 N.W.2d 293; Lustik v. Rankila, 269 Minn. 515, 131 N.W.2d 741. ......
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...lower court has exceeded its jurisdiction and no other adequate remedy exists. See Wasmund, supra; Brooks Realty, Inc. v. Aetna Ins. Co., 268 Minn. 122, 128, 128 N.W.2d 151, 155 (1964). For example, a petition for a writ of prohibition is an appropriate means of obtaining review of a discov......
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Conwed Corp. v. Union Carbide Corp.
...precise question was in fact presented and necessarily determined by the verdict in the former trial." Brooks Realty, Inc. v. Aetna Ins. Co., 268 Minn. 122, 128 N.W.2d 151, 153 (1964). A determination of the identical issue must be "necessarily implied" in the verdict of the earlier action.......
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Ellis v. Minneapolis Com'n on Civil Rights, 81-944.
...as a general rule, a verdict does not operate as an estoppel until it becomes a judgment, see, e.g., Brooks Realty, Inc. v. Aetna Insurance Co., 268 Minn. 122, 128 N.W.2d 151 (1964); Smith v. Smith, 235 Minn. 412, 51 N.W.2d 276 (1952), exceptions to that general rule have been recognized "w......