Regan v. N.Y. & N. E. R. Co.

• Decision Date: 04 March 1891
• Citation: 22 A. 503,60 Conn. 124
• Court: Connecticut Supreme Court
• Parties: REGAN v. NEW YORK & N. E. R. CO.

22 A. 503

60 Conn. 124

REGAN

v. NEW YORK & N. E. R. CO.

Supreme Court of Errors of Connecticut.

March 4, 1891.

Appeal from superior court, Tolland county; F. B. Hall, Judge.

E. D. Robbins, for appellant.

A. P. Hyde and C. Phelps, for appellee.

LOOMIS J. This is a complaint to recover damages for the loss of goods belonging to the plaintiff, which, on the 13th day of July, 1889 , were destroyed by a fire communicated by a locomotive engine belonging to and in the use of the defendant corporation. The action is predicated upon section 3581 of the General Statutes, which provides as follows: "When any injury is done to a building or other property of any person, by fire communicated by a locomotive engine of any railroad company, without contributory negligence on the part of the person entitled to the care and possession of the property injured, the said railroad company shall be held responsible in damages to the extent of such injury to the person so injured; and every railroad company shall have an insurable interest in the property for which it may be so held responsible in damages along its route, and may procure insurance thereon in its own behalf. "The defendant suffered a default, and a hearing in damages was had before the court. The court found all the facts essential to a recovery of compensatory damages, and assessed as such damages the sum of $13,091.95, and rendered judgment for the plaintiff to recover that sum of the defendant, and his costs. Upon the hearing, the counsel for the defendant inquired of the plaintiff, as a witness, if he had not received from insurance companies some compensation for the damages to said goods by said fire. This was objected to by the plaintiff, and excluded by the court. Was this ruling erroneous? In the first place, if we assume that, under proper pleadings, the defendant might be allowed a reduction equal to the amount of insurance collected by the plaintiff on the goods destroyed, we do not think it admissible, as the pleadings were at the time of the hearing. It is true that in this case there was no answer, but a default, which admitted the allegations of the declaration to be true; but an admission of the truth of the allegations could surely give no greater latitude of proof upon the subject of the damages than a denial. Both parties must be confined to such questions of damage, and such matters of aggravation or mitigation, as would naturally arise from the facts stated in the complaint. The plaintiff could not show special or consequential damages not averred and not naturally flowing from the cause of action described, nor could the defendant, on the other hand, have the benefit of a set-off, recoupment, or any cither ground for the reduction of damages, depending on some independent transaction between the plaintiff and a third person. The matter to be proved by the rejected evidence upon the defendant's assumption would be a complete defense, except for the default. If it equaled in amount the value of the goods, it would be an absolute bar to the action; otherwise it would be a bar pro tanto. But, irrespective of the pleadings, the ruling complained of was clearly right upon the merits of the question. Any other conclusion would seem to us utterly at variance with established principles and sound reason, and contrary to an unbroken line of decisions by the courts of England and the United States. If the defendant is entitled to have the insurance money deducted from the amount otherwise due, it must be because it owns or has some legal claim to the money. How happens it that the defendant corporation is entitled to this money? Not because it ever paid the premium or any part of it, nor because the policy was obtained for its benefit or upon its request, nor because there is any privity between it and the insurance company. Our own court in Connecticut Mut. Life Ins. Co. v. New York & N. H. R. Co., 25 Conn. 265, held that there was no privity between the defendant, whose negligence caused the death of the insured, and the insurance company, who issued the policy on the life of such person, and this position accords perfectly with the law in other jurisdictions. The defendant, instead of paying anything towards procuring the policy, by its extraordinary use of the dangerous element of tire in close proximity to the plaintiff's property rendered it necessary for him to pay a much larger sum to obtain his insurance than would otherwise have been required.

How, then, can the defendant claim, as it does, the exclusive benefit of the insurance? It came to the plaintiff from a collateral source, wholly independent of the defendant, and which as to him was res inter alios acta. The defendant, in our judgment, has no more claim to the insurance money than it would have to money obtained upon a subscription paper which the friends of Regan may have procured to make good his loss. How can the defendant make any distinction between money raised voluntarily after the loss, and that obtained from a contract of indemnity to which it was no party, and had paid no part of the consideration? The statute upon which the action is founded justly imposes an absolute primary liability on the defendant for having caused the loss. But the ruling which the defendant asked for would completely nullify the statute as applicable to such a case as this, by practically imposing the primary obligation on the insurer, who is innocent, and allowing the defendant, who caused the loss, and who alone could have prevented it, to go entirely free, at least to the extent of the insurance; for the insurer, having paid the money due the insured, could not get it back from him; and of course the insured, after such deduction from his damages, would have no remaining right to which the insurer could be subrogated to recover the money back again from the defendant. If the principles that underlie the defendant's position are correct, had the loss been paid in full in ignorance of the fact that the plaintiff had obtained insurance, the defendant might bring a suit against the plaintiff to recover the money so paid; or had the money due on the policy not been paid, the defendant, after paying the loss in full, could intervene to prevent the amount due on the policy from being paid to the insured or any other than itself.

What a strange subrogation that would be, to put the party who caused the loss in the place of the insured to enforce the contract between the latter and his insurer! And what a strange revolution would be made in the relation of the parties were we to adopt the defendant's contention! It has hitherto been established by a line of decisions reaching backward more than a century, and substantially unbroken by dissent, that there is no privity in such cases between one made primarily liable for such a loss and an insurance company: that the liability of the insurer is merely secondary; that the insurer's position is practically that of a surety; that insurance is personal, and does not inure to the benefit of one not a party thereto; and that, where the insurer has indemnified the owner of the goods lost, he is entitled to be subrogated to all the means of indemnity which the owner held against the party causing the loss, and primarily liable therefor.

The true relations of the parties and the law on the subject under discussion are very clearly shown by the opinion of the court delivered by Chief Justice Shaw in the case of Hart v. Railroad Corp., 13 Metc. (Mass.) 99, which was an action on a statute identical with our own, in that it provided that when' any injury was done to a building of any person by fire communicated by a locomotive engine of a railroad corporation, the corporation should be responsible in damages to the person so injured, and such liability, as in the case of our statute, was irrespective of any actual proof of negligence. The plaintiff's house was destroyed by a fire communicated by a locomotive engine of the defendants. and the underwriters paid to the owner of the house the amount of his loss, and it was held that such payment did not bar the owner's right to recover of the railroad corporation, and that the owner, by receiving payment of the underwriters, became trustee for them, and they could prosecute the suit against the railroad corporation in the name of the owner, who could not even release the railroad corporation so as to affect the rights of the underwriters to recover. In delivering the opinion Chief Justice Shaw said: "Railroad companies acquire large profits by their business. But their business is of such a nature as necessarily to expose the property of others to danger. * * * The manifest intent and design of this statute, we think, and its legal effect, are, upon the considerations stated, to afford some indemnity against this risk to those who are exposed to it, and to throw the responsibility upon those who are thus authorized to use a somewhat dangerous apparatus, and who realize a profit from it. * * * Now, when the owner, who prima facie stands to the whole risk and suffers the whole loss, has engaged another person to be at that particular risk for him, in whole or in part, the owner and the insurer are, in respect to that ownership and the risk incident to it, in effect one person, having together the beneficial right to an indemnity provided by law for those who sustain a loss by that particular cause. If, therefore, the owner demands and receives payment of that very loss from the insurer, as he may by virtue of his contract, there is a manifest equity in transferring the right to indemnity, which he holds for the common benefit, to the assurer. It is one and the same loss for which he has a claim of indemnity, and he can equitably receive but one satisfaction. So that, if the assured first applies to the railroad company, and receives the damages provided, it diminishes his loss pro tanto, by a deduction from, and...