Strong v. Phœnix Ins. Co.

• Decision Date: 31 January 1876
• Parties: GEO. P. STRONG AND THOS. T. GANTT, Appellants, v. THE PHŒNIX INSURANCE COMPANY, Respondent.
• Court: Missouri Supreme Court

62 Mo. 289

GEO. P. STRONG AND THOS. T. GANTT, Appellants,

v.THE PHŒNIX INSURANCE COMPANY, Respondent.

Supreme Court of Missouri.

January Term, 1876.

Appeal from St. Louis Circuit Court.

Geo. P. Strong, for Appellants.

I. The defendant had a common interest with the United States Insurance Company in the questions involved in the suit of Henning & Woodruff vs. The U. S. Ins. Co., and having had notice of the suit, and having participated in the defense of it, is concluded by the judgment in that case, and in this suit the record of the proceedings and judgment may not only be pleaded by way of estoppel, but it is conclusive (unless impeached for fraud and collusion) against the defendant upon the questions involved, to-wit; 1st, whether the U. S. Ins. Co. had a cargo risk for Henning & Woodruff in excess of $60,000, to the extent of $20,000, and 2d, whether they had become liable on account of the loss of the goods thus insured.

These questions, having both been decided in the affirmative, cannot be tried over again in this suit. The defendants here were in privity with the defendants in that suit, and were virtually parties to it. (1 Greenl. Ev., 7th ed., §§ 523, 539, 535; Costle vs. Noyes, 4 Kern. [14 N. Y.] 331-32; Beers vs. Pinney, 12 Wend., 359; Hamilton vs. Cutts, 4 Mass., 353; 1 Stark. Ev., 6th Am. ed., 220-21; 2 Phil. Ev. [Cow. & Hill, notes], pp. 8, 9, notes; 131, n.; Leather vs. Poultney, 4 Binn., 352-62; Littleton vs. Richardson, 34 N. H., 179, 187; Wells vs. Nicholls, 17 Pick., 543; State to use vs. Coste, 36 Mo., 438; 2 Phil. Ev., pp. 10, 12, 18, 27, 34, 37, 38; Clark vs. Carrington, 7 Cranch., 321 [2 Curtis, 550]; Kip vs. Bingham, 7 J. R., 173; Bender vs. Fromberger, in note, 4 Dall., 436; Walker vs. Ferrin, 4 Vt., 523-30; N. Y. Mar. Ins. Co. vs. Protec. Ins. Co., 1 Sto. C. C. R., 458-60; Herman Estop., 44-50, §§ 51-8; Bigelow Estop., 59, 61, 65, 66; Robbins vs. City of Chicago, 4 Wall., 657-660; Lovejoy vs. Murray, 3 Wall., 18; Doty vs. Brown, 4 Comst., 73; Id., 5 Denio, 517; Tarlton vs. Tarlton, 4 Maule & Sel., 20; Howard vs. Mitchell, 14 Mass., 241; Id., 17 Mass., 365; Rapelye vs. Prince, 4 Hill., 123.)

II. This is a contract of re-insurance; that is, the defendants have insured the United States Ins. Co. to the extent of $20,000, upon a risk or insurance taken by the United States Ins. Co. for Henning & Woodruff. Hence, if the United States Ins. Co. was liable, the defendant is also liable. That fact having been once found in a judicial investigation, of which defendants had notice, has become res adjudicata, and cannot be re-investigated or disputed by defendants. (See authorities above cited, especially, State, etc. vs. Coste, 36 Mo., 438; Id., 46 Mo., 448; Phil. Life Ins. Co. vs. Am. Life Ins. Co., 23 Penn. St., 67; Doty vs. Brown, 4 Comst., 73; Com. Ins. Co. vs. Globe Mut. Ins. Co., 35 Penn. St., 479.)

The judgment in the former case was properly pleaded, and it was error to strike it out. Though it might be given in evidence without being pleaded, yet, when pleaded, it operates by way of estoppel, and can only be defeated by showing that it was recovered by fraud or collusion. (2 Phil. Ev., 34-38; Kilhefew vs. Herr, 17 Serg. & R., 322; 13 Id., 246; Howard vs. Mitchell, 14 Mass., 241; 17 Id., 365; Church vs. Leavenworth, 4 Day, 274.)

It is pleaded in the following cases cited above: Barney vs. Dewey, 13 J. R., 244; Beers vs. Pinney, 12 Wend., 309; Kip vs. Bigelow, 7 J. R., 167, 173; Tarlton vs. Tarlton, 4 Maule & Sel., 20; Robbins vs. City of Chicago, 4 Wall., 657; Howard vs. Mitchell, 14 Mass., 241.

III. A re-insurer's contract is separate and distinct from that of the first insurer (it does not affect, or benefit the first party insured), and he is bound to pay the amount stipulated therein, whether the first insurer pays or not.

The party first insured has no interest in the contract of re-insurance. (Emeregon, pp. 13, 2, 276, 201-2; 1 Park Ins., 1, 46, (Ins. a Cont. of Indem.); 1 Arnold [Ed. 1849], 2, 268, 288; 2 Park Ins., 595-96, (an independent contr.); 1 Pars. Marine Ins., 297-300; Hastie vs. DePeyster, 3 Caines, 190; N. Y. State M. Ins. Co. vs. Prot. Ins. Co., 1 Sto. C. C., 460; The Eagle Ins. Co. vs. Lafayette Ins. Co., 9 Ind., 443; Home vs. Mut. Safety Ins. Co., 1 Sandf. [[[[[N. Y.], 144.)

Glover & Shepley, with Martin & Lackland, for Respondent.

I. The motion to strike out was properly sustained.

1st. There is no privity of contract between the original insured and the re-insurer. In an action against the re-insurer the latter has the right to make the same defenses which could have been made by the insurer. (Yonkers Fire Ins. Co. vs. Coffman, 6 Robertson, 316; N. Y. Central Ins. Co. vs. Nat. Pro. Ins. Co., 20 Barb., 468.)

2d. The original insurer is not bound to wait till judgment against him, or until he has paid the claim against him, before suing the re-insurer. (Home vs. M. L., 1 Sandf., 137; S. C., 2 Comst., 232; Eagle Ins. Co. vs. Lafayette Ins. Co., 9 Ind., 443; Herckenrath vs. Am. Ins. Co., 3 Barb., Ch. 63; Blackstone vs. Allemania, 4 Daly, 299; In re. Republic Ins. Co., 8 Bank Reg., 197; Norwood vs. Resolute, 47 How. Pr., 43.)

3d. The contract of re-insurance is not a contract of indemnity in any other sense than the contract of insurance is a contract of indemnity. It operates on the property covered by the original contract of insurance, and the interest of the original insurer in the property rests upon his contract of insurance. (New York Bowery Fire Ins. Co. vs. New York Fire Ins. Co., 17 Wend., 359; Phill. Ins., § 498; Flanders, Ins., p. 37; McKenzie vs. Whitworth, 3 Cent. L. J., 188.)

II. The record of judgment was properly excluded. The respondent was not a party to it, nor privy to it. (Rapelye vs. Prince, 4 Hill, 119.)

III. The relation which respondent bore to the contract of original insurance was not of such a character as rendered the judgment against the first insurer binding on the re-insurer. The re-insurer was not bound to come in and defend. Notice to the re-insurer of the pendency of the suit did not make the result of the action binding on the re-insurer. He was not a warrantor nor guarantor or surety. The cases cited in 2 Phill. Ev., 9, do not apply to the contract of re-insurance.

IV. The agreement to pay the judgment could possibly discharge the office of notice to the re-insurer; but notice did not make the re-insurer privy to the record. The record is competent evidence against the re-insurer only in an action on the separate and distinct agreement offered in evidence. But this action was not founded on the agreement. Therefore, the record was properly excluded.

WAGNER, Judge, delivered the opinion of the court.

This was an action upon a policy of insurance, brought by the plaintiffs as assignees of the party to whom the policy was issued. It appears from the petition, that in April, 1864, The United States Insurance Company, by its open policy, caused the firm of Henning & Woodruff to be insured, lost or not lost, upon all shipments made to them at and from all ports and places on the Mississippi river and its tributaries, against the perils of the seas, rivers, fires, jettisons, and assailing thieves; that on the 9th of June, 1864, the firm of William Butler & Co., a firm identical with Henning & Woodruff, shipped on the steamer Progress 700 bales of cotton, of the value of $280,000, at the mouth of Red River, to be delivered at Cairo; and that in the latter part of the same day the cotton was destroyed by fire, which was one of the perils insured against by the United States Insurance Company.

It is further alleged, that on the first of November, 1863, the defendant, the Phœnix Insurance Company, issued to the United States Insurance Company a policy of re-insurance, whereby it caused the United States Insurance Company to be insured, lost or not lost, in respect to all cargo risks taken or to be taken of the United States Insurance Company, from any point to any point on the Mississippi river and tributaries below St. Louis, as to any excess of such risks over $60,000, and not exceeding $80,000; that the risks, against which the defendant thus re-insured the United States Insurance Company were among other things, those of the seas, rivers and fires. There was an averment of loss by which the defendant became liable for the amount of the re-insurance, and that the fact of such loss was communicated to the defendant.

The petition then contained certain allegations relating to legal proceedings in the circuit court of the United States by Henning & Woodruff against the U. S. Insurance Company, which allegations were as follows: “And the said defendant then and there, to-wit, at St. Louis, on the 18th of July, 1864, did request and counsel the said United States Insurance Company to resist the demand of the said Henning & Woodruff against the said United States Insurance Company in respect of the said cotton so destroyed by fire as aforesaid on board of the said steamer Progress; and thereupon the said United States Insurance Company did resist the demand of the said Henning & Woodruff, and did defend the same, and after a tedious litigation, to which the defendant was from first to last privy, the said Henning & Woodruff, by their surviving partners, Henning & Pearce, did recover against the United States Insurance Company, on the 24th of September, 1872, by the judgment of the circuit court of the United States, for the district of Missouri, at the September term, 1872, thereof, as well the sum of one hundred and seventy-eight thousand two hundred and eighty dollars for their damages, as their costs in that behalf expended, on account of the said loss of the said cotton, so as aforesaid destroyed by fire on the steamboat Progress, on the 9th of June, 1864, all of which will and doth appear by the record of said judgment in said court remaining. And the amount so recovered as damages, as aforesaid, was made up and composed of the...