Fish v. Vanderlip

• Decision Date: 18 April 1916
• Citation: 112 N.E. 425,218 N.Y. 29
• Parties: FISH v. VANDERLIP.
• Court: New York Court of Appeals Court of Appeals

218 N.Y. 29

112 N.E. 425

FISH

v.VANDERLIP.

Court of Appeals of New York.

April 18, 1916.

Appeal from Supreme Court, Appellate Division, First Department.

Action by J. Albert Fish against Frank A. Vanderlip. From an order of the Appellate Division (170 App. Div. 780,156 N. Y. Supp. 38), affirming an order sustaining a demurrer to the fifth separate defense in the amended answer, defendant, by permission, appeals on a certified question. Affirmed, and question certified answered in the negative.

The action is brought to recover $150 upon a ‘United States Lloyds' policy of insurance covering the yacht Senta, which is alleged to have been destroyed by fire on October 25, 1910, while lying in the harbor of Edgartown, Mass. The defendant, together with 99 other individual subscribers, signed the insurance contract, each obligating himself to the payment of $150. The aggregate amount of the insurance was $15,000, and was effected through the subscriber's attorneys in fact, Higgins & Cox, ‘by the undersigned firms and individuals, as separate underwriters, each represented by the above attorneys.’ By the terms of the policy the subscribers bound ‘themselves severally and not jointly, nor one for the other, * * * for the true performance of the premises, each one for his own part of the whole amount herein insured only.’

The plaintiff seeks to recover against the defendant the amount of his individual subscription. In the separate defense demurred to it is alleged that in a previous action brought in the Municipal Court of the city of New York by this plaintiff against one Douglass F. Cox, one of the subscribers to the policy, upon the same policy, for his proportionate part of the same loss, the same issues as are presented by the answer herein were tried and decided, and a judgment on the merits was rendered against this plaintiff; that the said Cox is a member of the attorneys in fact, who represented all the subscribers in the issuance of the policy and was authorized ‘to act for and on behalf of each and all of the said subscribers; * * * that the interest of this defendant in the said action against the said Cox was identical with that of the said Cox, and that the said Cox defended the said suit in which he was defendant as aforesaid under and by direction of and at the expense and the interest of each and all of said subscribers, including this defendant, and, had the plaintiff recovered judgment in said action against Cox, this defendant would have been obliged to pay his proportionate share thereof, which facts were known to the plaintiff at the time of the trial of said action; and that the said judgment is a bar and estoppel in this action, because it is an adjudication against the plaintiff's right to recover for said alleged loss under said policy, and because it deprives this defendant of his right of contribution against the said Cox, and because it is an adjudication that the plaintiff was the culpable cause of the loss sued for.’

The court at Special Term held that the judgment in the former suit set up in this separate defense was not res adjudicata and sustained the plaintiff's demurrer. The order entered upon this decision was affirmed at the Appellate Division. That court has allowed an appeal and certified the question whether the defense above set forth is sufficient in law upon the face thereof to constitute a defense to the plaintiff's cause of action.

Chase, Collin, and Pound, JJ., dissenting.Irving G. Vann, of Syracuse, for appellant.

Jesse W. Tobey, of New York City, for respondent.

BARTLETT, C. J. (after stating the facts as above).

[1] The obligation assumed by the underwriters toward the assured was a several liability. Not only was this expressly declared in the contract of insurance, but the assumption of any joint liability was distinctly negatived therein. It has been held that the insured under such a contract cannot maintain a single action against all the insurers to recover the aggregate amount of the policy. Straus v. Hoadley, 23 App. Div. 360,48 N. Y. Supp. 239.

[2] Reference is made in the brief of the learned counsel for the appellant to the contents of the agreement between the underwriters themselves, which provides that the losses are to be paid out of the premiums, and in case the cash assets are insufficient to meet the obligations and advisory committee has power to levy an assessment; but we cannot take cognizance of this agreement in passing upon the defense attacked by the demurrer, as it forms no part of the record. According to that defense the plaintiff has been defeated in another action which he brought against another one of the underwriters to enforce his individual liability, and a judgment upon the merits was rendered against him after a trial of the same issues as are involved in the present suit. He is now met with the defense of res adjudicata based upon such former judgment. This defense is predicated solely upon the ground that the defendant here, together with his cosubscribers, had, with the knowledge of the plaintiff, joined in defending the former suit and contributed to the expense thereof, and that he will lose the proportionate part of such expenses contributed by him unless the former judgment is held to be an estoppel.

[3] The appellant contends that the rule of estoppel by former judgment extends, not only to the parties to the former suit and their privies, but also to persons not parties of record, who to the knowledge of the opposite party participated in the defense for the protection of some interest of their own. It is conceded that no case in the New York state courts has gone as far as we are asked to go in this case, but it is insisted that there is no decision to the contrary by the New York courts and that there is ample authority to be found in federal cases for taking this desirable step in advance. The federal decision which gives most support to the position of the appellant is Greenwich Ins. Co. v. Friedman Co., 142 Fed. 944, 74 C. C. A. 114, decided by the Circuit Court of Appeals for the Sixth Circuit. In that case a store belonging to the insured parties at Grand Rapids, Mich., had been destroyed by fire, and a large loss was sustained. Some 30 insurance companies had issued policies covering the property destroyed. Payment was refused by the companies upon the ground that a substantial part of the loss was occasioned by the fall of the building prior to the fire. The assured recovered judgment against two of the companies in actions where the issue thus raised was decided against the companies. These former judgments were set up by the assured as conclusive upon the liability of the Greenwich Insurance Company, and the claim thus set up was sustained. The court's decision was based upon the finding of fact that the Greenwich Insurance Company had for the protection of its own interests joined with the defendants in the other suits, and that the said joinder was open and avowed and was well known to the assured. The Circuit Court of Appeals, in sustaining the decision of the lower court, rested its decision upon the rule announced in previous cases to the following effect:

‘The doctrine is well settled that one who, for his own interest, joins in the defense of a suit to which he is not a party of record, is as much concluded by the judgment as if he had been a party thereto, provided his conduct in that respect was open and avowed, or otherwise well known to the opposite party.’

The rule thus stated was quoted from Penfield v. Potts, 126 Fed. 475, 61 C. C. A. 371, which was one of several patent infringement suits in which several parties, who were charged as infringers of the same patent, had joined together in making defense. In one of such suits the complainant was defeated, and the judgment therein was held to be conclusive upon him in another suit against another alleged infringer. The court there, after stating the rule as above quoted, said:

‘Thus the question in respect of the infringement of the third claim was in each of these two cases identical, and, if the appellants were privies with the Anderson Machine Company in such sense that they would have been concluded * * * in each case, it must follow, from the mutuality of an estoppel, that the patentees, who were plaintiffs in both cases, would be also concluded, for an estoppel by judgment or decree must be mutual.’

The court there in effect held that the defendant there had become privy to the defendant in the former action by its conduct in joining in the defense of the former suit with the knowledge of the plaintiff. Similar decisions have been rendered in other cases in the federal courts, of which the following are examples: Theller v. Hershey (C. C.) 89 Fed. 576;Lane v. Welds, 99 Fed. 286, 39 C. C. A. 528.

There are other cases, however, decided by the federal courts, where a contrary doctrine seems to have been laid down, and in which it was held that where a party, to protect some interest of his own, aids and contributes to the expense of a suit, he does not thereby become bound by the judgment in a subsequent litigation where he is a party and the same issues are involved. Helm v. Zarecor (D. C.) 213 Fed. 648, 654;Merchants' Coal Co. v. Fairmont Coal Co., 160 Fed. 769, 777, 88 C. C. A. 23. The cases holding otherwise are all patent infringementcases, except the Greenwich Insurance Company Case, supra, which does not appear to have been since cited or followed. It is true...