Globe & Rutgers Fire Ins. Co. v. Hines

• Decision Date: 19 May 1921
• Docket Number: 212.
• Citation: 273 F. 774
• Parties: GLOBE & RUTGERS FIRE INS.CO. v. HINES, Agent.
• Court: U.S. Court of Appeals — Second Circuit

273 F. 774

GLOBE & RUTGERS FIRE INS.CO. v. HINES, Agent.

No. 212.

United States Court of Appeals, Second Circuit.

May 19, 1921

Macklin Brown, Purdy & Van Wyck, of New York City (Pierre M. Brown of New York City, of counsel), for appellant.

Harrington Bigham & Englar, of New York City (Leonard J. Matteson, of New York City, of counsel), for appellee.

Burlingham Veeder, Masten & Fearey, of New York City (Chauncey I. Clark and Homer H. Breland, both of New York City, of counsel), for Pennsylvania R. Co.

Before WARD, ROGERS, and HOUGH, Circuit Judges.

ROGERS Circuit Judge.

This is a suit in admiralty, brought by the libelant, as insurer of the Central Railroad Company of New Jersey float No. 47, and on behalf of the owner and operator of said float, against Walker D. Hines, as agent of the United States Railroad Administration, operator of the New York Central steam tug No. 27 in a cause of collision, civil and maritime.

The libel alleges that libelant insured the United States Railroad Administration, as operator of the Central Railroad Company of New Jersey float No. 47 against loss or damage, that it has paid the loss for which it was liable as such insurer, has become subrogated to the rights of the owner and operator of the float arising out of the collision which occasioned the loss insured against, and that the action is brought on behalf of itself as such insurer and on behalf of the owner and operator of float No. 47, and it is alleged in the libel that on August 24, 1918, a collision occurred between float No. 47 and the New York Central Railroad's steam tug No. 27, off the Battery in the East River, and that at that time the railroad and its equipment, together with the steam tug No. 27, were maintained, operated, and controlled by the United States Railroad Administration, and that respondent Hines was the agent of the said Administration, having been duly appointed as such by the President of the United States pursuant to the acts of Congress. The libel also sets forth the circumstances of the collision, and that the collision and the resulting damage were not caused by any negligence on the libelant's part, or on the part of those in charge of float No. 47, but were caused through the negligence of the New York Central tug No. 27.

The respondent, as the agent duly appointed under the Transportation Act of February 28, 1920 (41 Stat. 456), against whom suits may be brought for matters arising out of the operation and control of the various railroads by the United States Railroad Administration, duly appeared and excepted to the libel on two grounds. The substance of the first is that the cause of action, if any, which arose out of the collision, can only be against the Railroad Administration (otherwise, the Director General of Railroads), and that, as libelant's assured was the Railroad Administration itself, no cause of action accrued to libelant's assured, inasmuch as there could be no right of action by the United States Railroad Administration against itself, and that for this reason, no cause of action having ever accrued to libelant's assured, the libelant could take by subrogation no greater rights than its assured possessed, and is therefore no more able in its own name to sue the United States Railroad Administration than the Railroad Administration would be able to sue itself.

The libelant also claims to recover on behalf of its assured the portion of the damage sustained by reason of this collision which was not covered by the insurance. The second exception is based on the fact that libelant is not entitled to sue on behalf of its assured for those items, and further that the reasoning under the first exception applies with equal force to any claim set up on behalf of the Railroad Administration against itself.

The court below, after argument, sustained the exceptions and dismissed the libel.

It is, of course, conceded that an underwriter of marine insurance, by payment of a loss, becomes by operation of law and without assignment subrogated to all the rights of the insured in regard to that loss. Phoenix Insurance Co. v. Erie Transportation Co., 117 U.S. 312, 320, 321, 6 Sup.Ct. 750, 29 L.Ed. 873; Kaltenbach v. Mackenzie, 4 Aspin. 39; The Sydney (C.C.) 27 F. 119; Hogan v. Manselly, Fed. Cas. No. 6,584. It has even been held that the fact that the underwriter might have successfully resisted payment under the policy does not affect his right to subrogation upon payment of the loss. Nord-Deutscher Lloyd v. Insurance Co. of North America, 110 F. 420, 49 C.C.A. 1.

But the general rule is that the underwriter stands in no better position than the insured, and can have no recovery against third persons, except such as could have been had by the insured. Simson v. Thompson, 3 App.Cas. 279, 3 Aspin. 567; The Catskill (D.C.) 95 F. 700; The Livingstone (D.C.) 104 F. 918. In Joyce on Insurance, vol. 5, Sec. 3538, p. 5883, the rule is correctly stated as follows:

'The insurer stands in no relation of contract or of privity with such persons. His title arises out of the contract of insurance, and is derived from the assured alone, and can only be enforced in the right of the latter. In a court of common law, it can be asserted only in his name; and even in a court of equity or of admiralty it can be asserted only in his right. In any form of remedy, the insurer can take nothing by subrogation but the rights of the assured.'

The insurers stand by subrogation in the shoes of the insured, and can claim no more than the insured could claim. It follows that there can be no right of subrogation, if the ship which is injured and the ship which commits the injury are owned by the same party. In Phoenix Insurance Co. v. Erie Transportation Co., supra, the court, speaking through Mr. Justice Gray, said:

'For instance, if two ships, owned by the same persons, came into collision by the fault of master and crew of the one ship and to the injury of the other, an underwriter, who has insured the injured ship, and received an abandonment from the owner, and paid him the amount of insurance as and for a total loss, acquires thereby no right to recover against the other ship, because the assured, the owner of both ships, could not sue himself.'

The principle is a general one in the law of subrogation that a surety, paying off a debt, can acquire no greater rights than the creditor had at the time of payment, as the surety cannot be placed in a more favorable condition than the principal. We must therefore start with the proposition that the libelant is not entitled to maintain this suit, if the party insured, declared in the libel to be 'the United States Railroad Administration,' as operator of the said railroad and said float No. 47 (the Central Railroad Company of New Jersey float No. 47), could not itself maintain a suit against the respondent herein to recover for the injury insured against. If such a suit had been brought, and the right to maintain it had been seasonably challenged, could this court have sustained it? That, as it appears to us, is the question we must determine. If such a suit could not be maintained, the libel was properly dismissed in the court below; otherwise, not.

It is elementary that the same person cannot be both plaintiff and defendant at the same time in the same action. It is incongruous that the same person should direct and conduct both the prosecution and the defense of the same suit, no matter in what capacity he may appear. Swope v. Swope, 173 Ala. 157, 164, 55 So. 418, Ann. Cas. 1914A, 937. And the rule has been applied where the same person sues and defends in different capacities. Thus a town treasurer has been held incapable of maintaining an action in his individual capacity against himself in his official capacity on a claim against the town. Barber v. Barber, 32 R.I. 266, 79 A. 482.

And in such cases it is the general rule that the jurisdiction of the court depends upon the character of the party to the record, and the court does not inquire as to who may have an equitable interest in the suit. Sharps' Rifle Manufacturing Co. v. Rowan, 34 Conn. 329, 91 Am.Dec. 728. In Osborn v. Bank of the United States, 9 Wheat. 738, 6 L.Ed. 204, Chief Justice Marshall, referring to the provision of the Constitution giving jurisdiction of the federal courts of controversies between citizens of different states, said:

'Does this provision depend on the character of those whose interest is litigated, or of those who are parties on the record? In a suit, for example, brought by or against an executor, the creditors or legatees of his testator are the persons really concerned in interest; but it has never been suspected that, if the executor be a resident of another state, the jurisdiction of the federal court could be ousted by the fact that the creditors or legatees were citizens of the same state with the opposite party. * * * Why, then, is it universally admitted that this interest in no manner affects the jurisdiction of the court? The plain and obvious answer is because the jurisdiction of the court depends, not upon this interest, but upon the actual party on the record.'

In that view of the case it would seem unimportant to inquire in what capacity the Director General sues or is sued, and as to whether he represents the United States, or whether he represents the particular railroad company or companies operating.

It is however, earnestly urged upon the court that, as between the Railroad Administration and the underwriters, it should be held that during the period of federal control the railroads were operated by the Director General as separate entities, and that courts of admiralty, recognize a party's dual relationship, and that courts of...