Marine Transit Corp. v. Switzerland Gen. Ins. Co. of Zurich

• Decision Date: 05 December 1933
• Citation: 263 N.Y. 139,188 N.E. 281
• Parties: MARINE TRANSIT CORPORATION v. SWITZERLAND GENERAL INS. CO. OF ZURICH.
• Court: New York Court of Appeals Court of Appeals

263 N.Y. 139

188 N.E. 281

MARINE TRANSIT CORPORATION

v.SWITZERLAND GENERAL INS. CO. OF ZURICH.

Court of Appeals of New York.

Dec. 5, 1933.

Action by the Marine Transit Corporation against the Switzerland General Insurance Company of Zurich. Judgment of Trial Term dismissing the complaint was affirmed by the Appellate Division (238 App. Div. 816, 262 N. Y. S. 928), and plaintiff appeals.

Judgment of Appellate Division and Trial Term reversed, and new trial granted.Appeal from Supreme Court, Appellate Division, First department.

Courtland Palmer, of New York City, for appellant.

Loring R. Lecraw and Forrest E. Single, both of New York City, for respondent.

KELLOGG, Judge.

The plaintiff undertook to carry a cargo of pig lead from Newark, N. J., to the American Metal Company at Bridgeport, Conn. It agreed with the consignee to procure insurance on the cargo against loss or damage through the perils of the sea. It obtained a policy from the Switzerland General Insurance Company, the defendant, insuring the cargo in the value of $53,500 on board the barge New Haven at and from Newark, N. J., to Bridgeport, Conn., the loss, if any, payable to the American Metal Company. The policy likewise insured the plaintiff against all risks of loss or damage, and for the cargo's proportion of any general average contribution. It contained provisions to the effect that in case of loss or misfortune it would be lawful for the assured to labor in and about the safeguarding and recovery of the cargo; that no act of the assured or of the insurer in recovering, salvaging, and preserving the cargo should constitute a waiver on the part of either; that any such act should be regarded as done in the interests of all concerned without prejudice to any; that ‘to the charges whereof the said company will contribute in such proportion as the sum herein insured bears to the whole value of the property.’ The cargo of lead, loaded upon the barge New Haven, arrived at Bridgeport, Conn. There, while alongside the docks, the barge sprang a leak and sank. Thereupon the plaintiff, acting pursuant to the provisions of the policy, employed the Merritt-Chapman & Scott Corporation to raise the barge and salvage the cargo. That company performed the necessary services; the barge was raised and the cargo, in its entirety, was recovered. For the services rendered, the Merritt-Chapman Company, in libel proceedings in the federal court, recovered a judgment against this plaintiff for the sum of $2,308.18. The plaintiff, having paid the judgment, brought this suit to recover from the defendant its proportionate share of the amount adjudged due.

The foregoing facts were set forth in the plaintiff's complaint, and, while many of them met with a formal denial in the defendant's answer, none of them were disputed by its proof upon the trial. The defendant relied entirely upon two affirmative defenses. The first defense was that the claim in suit was released by a written document executed by the parties, constituting a general release of all claims which each held against the other. The second defense alleged was that of res adjudicata in that the defendant was a party to the libel proceedings brought by the Merritt-Chapman Company against the plaintiff, having become such through the service by the plaintiff of a petition to interplead it, and that in such proceedings it was adjudged that the plaintiff's claim against the defendant should be dismissed. As to the first defense, the question whether or not the general release comprehended the claim now in suit, through contradictory proof, consisting of documents and testimony received in evidence, became a sharply contested question of fact. The trial court, acting by stipulation as the trier of both fact and law, did not determine the question. However, the defense of res adjudicata was upheld by the court which directed a verdict for the defendant, stating in its opinion: ‘In view of the fact that the plea of res adjudicata raised by the defendant has been sustained, it is unnecessary to consider the defense of release of the claim.’ The Appellate Division affirmed, two of the justices dissenting, and the case comes here for our decision. The sole question presented is whether or not the judgment in the libel proceedings estops the plaintiff and bars a recovery in this action.

The libel in the federal court proceedings against this plaintiff asserted the performance of work by the libelant Merritt-Chapman & Scott Corporation, at the request of the respondent therein, the present plaintiff, in pumping out and raising the barge New Haven when sunk in the harbor at Bridgeport, Conn., and salvaging the cargo, all of which was of the reasonable value of $2,308.18. The respondent, in its answer, admitted the performance of the services and the valuethereof, as alleged in the libel. Further, it alleged that in directing the services to be performed it was acting not for itself but as the agent of the Switzerland General Insurance Company, the present defendant; that such company was the insurer of the cargo; that it had directed the respondent to procure the services to be performed; that the respondent had advised the libelant of these facts and disclosed, in giving its orders to the libelant, that its principal, the Switzerland General Insurance Company, was responsible therefor. The answer also advised the libelant that the respondent was then filing a petition under the 56th Rule in Admiralty interpleading the Switzerland General Insurance Company as defendant. In its petition to interplead, served upon the Switzerland General, the respondent asserted that the Switzerland General had insured the cargo of the barge New Haven; that such barge sprang a leak and sank at the Bridgeport docks; that the Switzerland General had instructed the respondent to engage the services of the Merritt-Chapman Company to raise the barge and salvage the cargo; that these services had been performed by the Merritt-Chapman Company; that the Switzerland General was primarily liable to pay the charges therefor. The Switzerland General, thus interpleaded, filed an answer to the libel in which it denied information and belief as to the sinking of the barge and the services performed in raising the same, and further denied that such company had been employed by it to perform the services. It likewise served an answer to the petition for interpleader wherein it denied any information or belief as to the services performed by the Merritt-Chapman Company, and denied that such services were rendered under directions given by it. It also set up, as a general defense to any claim made by the respondent for a recovery over against it, the same general release which it has asserted in this action.

Viewing the pleadings as they stood at the opening of...