Cary v. Phcenix Ins. Co.

• Decision Date: 16 December 1910
• Citation: 83 Conn. 690,78 A. 426
• Court: Connecticut Supreme Court
• Parties: CARY et al v. PHCENIX INS. CO. et al.

78 A. 426

83 Conn. 690

CARY et al

v. PHCENIX INS. CO. et al.

Supreme Court of Errors of Connecticut.

Dec. 16, 1910.

Error from Superior Court, Fairfield County; Joel H. Reed, Judge.

Bill by the Phoenix Insurance Company against Sarah Cary and others to restrain the collection and payment of a judgment recovered by defendant Cary against the New York, New Haven & Hartford Railroad Company for the destruction of certain buildings by fire on which the insurance companies had written and paid insurance, in which the railroad company filed a cross-bill of interpleader against the other parties and other insurance companies. From a decree ordering interpleader and directing payment of part of the fund to the insurance companies and the balance to one Caleb A. Morse, assignee of the judgment, defendants Cary and Morse bring error. Affirmed.

William B. Stoddard, for plaintiffs in error.

Leonard J. Nickerson, for defendants in error.

HALL, C. J. The record of the action of interpleader, made a part of this writ of error, shows the following proceedings in the superior court:

In July, 1905, the Phoenix Insurance Company brought an action to the superior court, alleging in its complaint that on the 16th of June, 1904, it paid to Sarah Cary the sum of $1,500 under a policy of insurance issued to her by said company for the loss she had sustained by the burning of her hotel property through the fault of the New York, New Haven & Hartford Railroad Company; that on July 2, 1904, Sarah Cary brought an action against said railroad company for damages to said property by such fire, and in 1905 recovered judgment for $5,719.04, which was still unpaid; that the Royal Insurance Company also paid Sarah Cary $600, the Commercial Union Assurance Company $600, and the Continental Insurance Company $1,500, as insurance on account of said loss; that said Cary is insolvent, and is endeavoring to defraud said plaintiff insurance company of their interest in said judgment by assigning it to Caleb A. Morse, one of the plaintiffs in error. Said complaint of the Phoenix Insurance Company asked for an injunction restraining the collection and payment of said judgment and for an order of interpleader. Upon said action of the Phoenix Insurance Company, a temporary injunction restraining the collection and payment of said judgment was issued, and afterwards, upon the cross-complaint of the New York, New Haven & Hartford Railroad Company, the four named insurance companies and the plaintiffs in error, Cary and Morse, were ordered to severally interplead concerning their rights to the sum of $5,728.78 ordered to be paid by said New York. New Haven & Hartford Railroad Company into the hands of the clerk of the superior court.

Said insurance companies thereupon severally filed their claims in the superior court, each claiming to be subrogated to the rights of Cary to said judgment, to the extent of the amount of the insurance paid to her by such company. Each of the policies under which such insurance was paid contained the following provision:

"If this company shall claim that the fire was caused by the act or neglect of any person or corporation, private or municipal, this company shall, on payment of the loss be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment."

Each of the insurance companies further alleged in its pleadings and statement of claim made under said order to interplead that in April, 1903, it notified the New York, New Haven & Hartford Railroad Company of its claim to such part of said fund; that in May, 1905, it applied to the superior court to be made a party to said action against the railroad company, which application was refused; that Sarah Cary is insolvent; and that she has endeavored, in connection with said Morse, to obtain the amount of said judgment, and has pretended to assign the same for the purpose of defrauding said insurance companies.

The claims, answers, and other pleadings filed by Sarah Cary and Caleb A. Morse, filed under such order, are substantially alike. Each alleged in substance in paragraphs 13 and 14 that on May 15, 1905, for a valuable consideration, said Cary sold and assigned all her interest in said judgment to said Morse, of which the railroad company had notice, and that Morse is the actual bona fide owner and holder thereof by such assignment, that Morse is an attorney at law, and that he incurred all the expense necessary to the bringing of said action against the railroad company, and employed counsel to aid him, and that he had a lien and claim upon said judgment, for such services and expenses, to the amount of 50 per cent. of such judgment prior and superior to the claim of any of the insurance companies, as was known to the insurance companies, and in which lien Sarah Cary acquiesced. Morse also alleged in paragraph 13 of his claim and answer that the assignment was made to him before the insurance companies claimed to be subrogated to the rights of Cary. Both Morse and Cary asked that the entire amount of the judgment be paid to Morse by virtue of said alleged lien and assignment, and each asked for costs in defending the suit of the Phoenix Insurance Company. To these claims of Cary and Morse the insurance companies replied, denying the averments of paragraphs 13 and 14 of the pleadings of Cary and Morse, excepting the allegation therein that Morse appeared for the plaintiff in the suit of Cary against the railroad company, and further averring in paragraphs 3, 4, and 7 of their replies that Morse had no authority from the insurance companies to prosecute said action against the railroad company, that Morse was employed by Cary under an agreement that he should pay all the expenses and receive 50 per cent. of what he obtained of the railroad company, and that the alleged assignment to Morse was fraudulent, and concocted and arranged by Morse and Cary to defraud the insurance companies of their interest in said judgment of the existence of which they knew, and that for the same purpose Morse on July 24, 1905, assigned his interest in the judgment to the Metropolis Manufacturing Company, which company, after the commencement of the present action, reassigned it to Morse.

Cary and Morse filed rejoinders denying the averments of paragraphs 3, 4, and 7 of said replies.

The judgment file, under date of January 5, 1909, states, among other things, that the court found the issues "in favor of each of the insurance companies and the interplea and statement of claim of" each of the named insurance companies "proven and true," and also finds "that, as between Sarah Cary and Caleb A. Morse, the balance remaining after the payment of the sums to be paid the insurance companies should be paid said Caleb A. Morse." The court thereupon adjudged that there should be paid to each of said insurance companies the amount of the insurance so paid by such company, with interest received on said sum, and that the balance of $1,528.78, with such interest, should be paid to said Morse, and that no costs be taxed for or against either of said parties.

The seven errors of law assigned in the present action are in substance these:

(1) In holding that the provision of the insurance policy, above quoted, was not a valid contract governing the rights of the parties, and in not holding that it only provided for an assignment by the insured at the time of the payment of the insurance.

(2) In holding that the Insurance companies might repudiate said contract of insurance, and claim an interest in the judgment obtained by Sarah Cary against the railroad company, at her own expense, and...