New Amsterdam Cas. Co. v. Mandel

• Decision Date: 16 January 1934
• Citation: 170 A. 19
• Parties: NEW AMSTERDAM CASUALTY CO. v. MANDEL et al.
• Court: New Jersey Court of Chancery

170 A. 19

NEW AMSTERDAM CASUALTY CO.

v. MANDEL et al.

Court of Chancery of New Jersey.

Jan. 16, 1934.

Syllabus by the Court.

1. Equity is reluctant to exercise its inherent jurisdiction over fraud cases and will remain passive in those cases wherein it finds that there is an adequate, efficient and complete remedy at law.

2. A judgment creditor of an assured, whose execution has been returned unsatisfied, has no greater rights under the policy of insurance against the insurance company than the assured would have had if he himself had brought the suit, after having paid the judgment.

3. The assured's breach of the policy's co-operation clause is equally available to the insurance company as a defense to an action at law brought against it for a recovery upon the policy either by the assured or his judgment creditor, whose execution has been returned unsatisfied.

4. Where concurrent jurisdiction exists in a law court and a court of equity in adjudicating the rights of the parties to the law action, the law court, having first acquired jurisdiction over the parties as well as the subject-matter of the litigation and being possessed of adequate power to administer complete justice between them, will be permitted to proceed, without interruption or interference from this court, to a final determination and conclusion of such litigation.

Suit by the New Amsterdam Casualty Company against Louis Mandel and others.

Bill of complaint dismissed.

J. Chester Massinger, of Paterson, for complainant.

Isadore Rabinowitz, of Paterson, for defendants Haidak and Weiss.

Harry Laurence, for defendant Niserholtz.

LEWIS, Vice Chancellor.

Complainant issued to Louis Mandel its policy of insurance indemnifying him, within the limits thereof and for a period of one year from July 31, 1930, against any loss from liability which may be imposed by law upon him for damages on account of any personal injuries or death, or injury to or destruction of property, which may be suffered by any one, other than himself, as a result of his ownership, maintenance, or use of the automobile therein described.

This policy of insurance was subject to several conditions, one of which, Condition C, provides: "Whenever requested by the company the assured shall aid in securing information, evidence and the attendance of witnesses, in effecting settlements, in defending suits, and in prosecuting appeals. The assured shall at all times render to the company all co-operation and assistance within his power."

On July 7, 1931, defendants Haidak and Weiss sued the assured for damages by reason of injuries which they sustained on July 3, 1931, as a result of his negligent operation of the automobile in question, wherein they were then riding by his invitation. That action, which was defended and tried by complainant's attorney on behalf of the assured, resulted in the rendition of verdicts and the entry of judgments on February 2, 1933, in favor of both plaintiffs and against the defendant therein.

An execution against the assured having been returned nulla bona, defendants Haidak and Weiss thereupon brought a suit at law against complainant to recover from it the amounts of the respective unsatisfied judgments which they held against the assured. That action was based upon and brought in accordance with the so-called "bankruptcy or insolvency clause" found in the policy in question, which reads: "The bankruptcy or insolvency of the assured shall not release the company from any payment otherwise due hereunder and if, because of such bankruptcy or insolvency, an execution on a judgment against the assured is returned unsatisfied, the judgment creditor shall have a right of action against the company to recover the amount of said judgment to the same extent that the assured would have had to recover against the company had the assured paid the judgment."

On November 19, 1931, defendant Niserholtz, a daughter of the assured, also brought suit against him for damages alleged to have been suffered by her on July 3, 1931, as a result of his negligent operation of the automobile in question and in which she, too, was then riding by his invitation. That action is still pending, not yet having been reached for trial.

On March 28, 1933, complainant filed its present bill of complaint by which it seeks a cancellation of its said policy of insurance as of November 19, 1931, and an injunction against the further prosecution of the law action instituted against it by defendants Haidak and Weiss upon the theory of an alleged fraud and breach of the so-called "co-operation clause" on the part of the assured. Defendants Haidak, Weiss, and Niserholtz have noticed complainant and now move to strike the bill of complaint urging as reasons therefor that it lacks equity, fails to disclose an equitable cause of action or one for equitable interposition, and reveals the existence of an adequate remedy at law.

While it is sounded in fraud, the bill of complaint, however, fails to set out with certainty and particularity the facts from which the existence of the fraud may be reasonably deducted or inferred. In this respect, it must be held to be deficient and violative of the letter and spirit of that well-settled rule of equity pleading which is recognized and followed in Smith's Administrator v. Wood, 42 N. J. Eq. 563, 7 A. 881; Hageman v. Brown, 76 N. J. Eq. 126, 73 A. 862: and Kuser v. Cooke, 112 N. J. Eq. 553, 165 A. 292.

Nor is this defect remedied or overcome, as complainant contends, by the mere allegations of "unlawful conspiracy" or "fraud" which are to be found in the bill, for as was aptly stated by Mr. Chief Justice Beasley in Stephens & Condit Transportation Co. v. Central Railroad Co. of New Jersey, 33 N. J. Law, 229, "neither adjectives nor adverbs, no matter how numerous or sonorous, can fill the place of such substantial statements." Nor will this court, as was pointed out by Mr. Chief Justice Gummere in Marples v. Standard Oil Co., 71 N. J. Law, 352, 59 A. 32, 33, "in considering the sufficiency of the declaration * * * accept the conclusion drawn by the pleader," but will determine "for itself the legal force of those facts." Breese v. Trenton Horse Railroad Co., 52 N. J. Law, 250, 19 A. 204; Clyne v. Helmes, 61 N. J. Law, 358. 39 A. 767-; Redmond v. Dickerson, 9 N. J. Eq. 507, 59 Am. Dec. 418.

Although neither the accident nor the...