Security Insurance v. St. Paul Fire & Marine Insurance

Several insurance companies combined to defend against a claim for a loss by fire, agreeing that each should pay such proportion of the expense as the amount of its insurance bore to the whole amount of insurance, and appointing a committee to manage the defence with full power to incur all necessary expense. The plaintiff, one of the companies, was after-wards sued by a person employed by the committee, for his services in the matter; it did not plead in. abatement the non-joinder of the other companies, but the fact that the suit was brought was known to the present defendant, one of the companies, which did not request that such a plea he filed; and judgment was recovered against the plaintiff for the whole amount of the claim, besides which it was subjected to considerable expense and cost in the suit. The present defendant had objected to the claim made in that suit as unreasonable in amount and the present plaintiff defended against it on that ground, but it was admitted in the present suit to have been reasonable. The plaintiff afterwards brought a suit for contribution against the present defendant, which was the only company within the jurisdiction of the court, and the policy of which was of the same amount with the plaintiff’s. At this time several of the companies had become insolvent or were dissolved and were without assets. The plaintiff had collected a portion of the amount from some of the other companies. Held— 1. That by the agreement the signers subjected themselves to a joint liability to all persons rendering service to their agent, the committee. 2. That the provision that each company should contribute in proportion, to the amount of its insurance, operated only as a rule of apportionment among themselves, and did not affect an outside creditor. 3. That although the plaintiff when sued might have pleaded in abatement the non-joinder of the other companies, it was not bound to do so as against this defendant, without its request, it having knowledge of the suit. 4. That the companies that were insolvent were to be laid out of the case in determining the amount that the other companies were bound to contribute to the plaintiff. 5. That the defendant, being the only company within the jurisdiction of the court, might be sued alone for contribution, and, its policy being of the same amount with the plaintiff’s, was liable in the suit for half the amount remaining unpaid. 6. That the defendant was also liable to pay an equal share of the expense and cost to which the plaintiff was subjected in the suit of the creditor, the defendant objecting to the creditor’s claim as unreasonable in amount, and it being proper in the circumstances that the plaintiff should not pay it until it had been judicially investigated. 7. That it was not necessary that the defendant should be judicially concluded by that judgment, since, the claim being now admitted to be reasonable in amount, the defendant would have been holden if the plaintiff had paid it without a suit. 8. That the plaintiff and defendant were entitled to contribution from the other companies for what they had paid beyond their shares.

Suit for a contribution; brought to. the Superior Court. The principal allegations of the declaration were as follows :— 1. Prior to the 24th of April, 1874, the defendant with the plaintiff and other insurance corporations, had severally issued policies of fire insurance to Messrs. Taylor, Randall & Co., of Boston, Massachusetts, upon property on Central Wharf in said Boston, the policies of the defendant and plaintiff being each for the sum of twenty-five hundred dollars, and, prior to said date, said insured property had been destroyed by fire, and, on said date, claims were being made by the insured on said policies against the defendant and plaintiff and said other insurance corporations. 2. Prior to said April 24, 1874, the plaintiff and defendant, together with the German Insurance Company, of Erie, Pennsylvania, which had a policy of insurance on said property of $5,000, and the Mississippi Valley Insurance Company, of Memphis, Tennessee, which had a policy of insurance on said property of $5,000, the Mechanics and Traders Insurance Company of New York City, the Kings’ County Fire Insurance Company of New York, the Franklin Insurance Company, of Indianapolis, Indiana, the Franklin Insurance Company, of Wheeling, West Virginia, the Lafayette Fire Insurance Company, of New York City, the Adriatic Fire Insurance Company, of New York City, the Oswego & Onondaga Insurance Company, of Baldwinsville, in the state of New York, the Ben-Franklin Insurance Company, of Alleghany, Pennsylvania, the Hibernia Mutual Fire Insurance Companjq of Newark, New Jersey, the Globe Insurance Company, of Chicago, Illinois, and the Clay Insurance Company, of Louisville, Kentucky, all which said companies had severally policies on said insured property, each of $2,500, had determined that the claims made on said policies by the insured were fraudulent and invalid, and on said last mentioned date the plaintiff and defendant and said other insurance corporations mentioned in this article, entered into and signed the following written agreement with each other: “In re Taylor, Randall & Co. vs. St. Paul Fire & Marine Ins. Co. et als. The undersigned insurance companies having policies outstanding, issued to Taylor, Randall & Co., upon property on Central Wharf, Boston, upon which claims have been made against said companies, do, in consideration of one dollar by each paid to the other, and divers other good and valuable considerations, mutually covenant and agree to and with each other as follorvs, that is to say, the said companies will unite in resisting the claim made upon said policies, and on each thereof, and in the defence of any and all suits and legal proceedings that have been or may be instituted against any of said companies upon any of said policies, and will, when and as required by the committee hereinafter mentioned, contribute to and pay the costs, fees and expenses of said suits and proceedings pro rata, that is to say, each company shall pay such proportion of said costs, fees and expenses as the amount insured by said company shall bear to the whole amount insured on said property by all the companies subscribing to this agreement | the management and conduct of said resistance to said claims and defence of said suits and proceedings shall be and is fully entrusted to and devolvéd upon a committee to be composed of W. H. Brazier, of the city of New York, Charles W. Sproat, of the city of Boston, James R. Lott, of the city of New York, and L. S. Jordan, of the city of Boston; which committee shall have full power and authority to employ counsel and attorneys to appear for said companies and each thereof and defend said suits and legal proceedings, and to employ other persons for other services relative thereto, and to assess upon and demand and receive from such companies from time to time, as such committee shall deem proper, such sum or sums of money, for the compensation of such counsel and attorneys, and such other persons, and all other expenses of such defence of said suits, as said committee shall deem necessary and expedient; such assessment upon and payment by each of said companies, to be pro-rata as above mentioned. Each and every of said companies shall fully and faithfully adhere to this agreement, and shall refrain from any act or proceedings in reference to such claims or suit or the defence thereof, that can or may in anywise defeat, obstruct or interfere with the acts or proceedings of said committee relative thereto, and shall at all times furnish to said committee any and all papers, information and assistance in and about such management and conduct of such resistance and defence, as may be in the possession or power of said companies respectively and as may be desired by said committee. In witness whereof, the said insurance companies have subscribed this agreement, the 24th day of April, 1874.” 3. At the time of the execution of said agreement suits were pending in Massachusetts against the Franklin Insurance Company of Indianapolis,. and the Clay Insurance Company of Kentucky, and the defendant, and the caption of said agreement refers to such suits. .4. Mr. Edward T. Woodward, of said Boston, was duly employed, under said agreement, on behalf of the subscribers thereto, to assist in the defence of said suits as an expert on sundry matters therein involved and for other purposes, and in pursuance of such employment the said Woodward rendered great and valuable services in the defence of said suits. 5. After long and exhaustive trials the plaintiffs in those suits were beaten on the merits of the controversy, and it was established as the result of said suits that the plaintiffs therein would not be able to enforce their claims against the subscribers to said agreement. 6. At the close of said suits said Woodward presented to the committee mentioned in said agreement a bill for his services, amounting to the sum of $5,000, which bill was approved by said committee and was reasonable, and was so adjudged by the United States Circuit Court as below stated. 7. In a reasonable time thereafter said committee levied an assessment upon the companies who were parties to said agreement, to pay the bill of said Woodward and other expenses incurred in said suits, but no company paid its assessment; each of said companies, including the defendant, alleging the bill to be unreasonable in amount. 8. In the year 1879 said Woodward sued this plaintiff in said Boston, to recover for his said services, and thereafter such proceedings were had as that in the United States Circuit Court for the First Circuit, held in Boston, in January, 1880, said Woodward recovered judgment against this plaintiff for the value of his services so rendered as aforesaid, to the amount of $5,000 and interest thereon, the whole of said judgment being about the sum of $5,444.08. Each of said defendants knew of the existence of said suit, and during its progress claimed that said bill was unreasonable in amount. 9. On an execution issued on said judgment, this plaintiff, on March 26, 1881, paid the whole amount thereof, which with interest was the sum last above stated, and this plaintiff was further subjected to the payment of the additional sum of $943, being for expenses and legal services incident to the trial of said cause. 10. Since the signing of said agreement, and before March 26th, 1881, the said German Insurance Company, the said Hibernian Mutual Fire Insurance Company, and the said Globe Insurance Company, representing in all $10,000 of the insurance on said property, had utterly failed and there were in existence no assets of said companies or of either of them; and the said Oswego & Onondaga Insurance Company had been dissolved under the laws of the state of New York and could not be sued in law or equity in that state and is not within the jurisdiction of this court. 'll. On or about May 23d, 1881, the plaintiff made demand upon all the remaining signers to said agreement, including the defendant, that they should contribute according to the amount of their several policies to reimburse the plaintiff what would be legally and equitably due on the facts aforesaid. 12. Some companies, other than the defendant and other than said insolvent companies, have responded to the demand of the plaintiff, so that there remains unpaid of the sum of $5,444.08, the principal sum of $2,252.52, and of the sum of $943, the principal sum of $400, but the defendant has refused to pay to the plaintiff any sum whatever. 13. All the other signers to said agreement, except the defendant, are without the jurisdiction of this court. The plaintiff claims equitable relief, and that there be an accounting between the plaintiff and the defendant, and that of the sums paid by the plaintiff as aforesaid, and remaining unpaid, the defendant be decreed and ordered to pay the plaintiff one-half thereof, to wit: the sum of $1,750; and for such other relief as shall be equitable in the premises. To this complaint the defendant filed the following demurrer:— The defendant demurs to the plaintiff’s complaint and the matters therein contained: 1. Because it appears from the complaint that the plaintiff was not legall3 or equitably bound to pay said Woodward any sum of money whatever, upon the account of or for the benefit of the defendant; and that it further appears from said complaint that if the plaintiff paid any money to said Woodward or upon said judgment on account of or for the benefit of the defendant, it was paid by the plaintiff voluntarily, and without the request, knowledge or consent of the defendant. 2. That it appears from the complaint that the defendant was liable to pay said Woodward, either at law or in equity, the sum of about three hundred dollars and no more; and that if the plaintiff paid said Woodward said debt or said judgment, and had any claim either at law or in equity against the defendant and other parties mentioned in the complaint for contribution, it appears by the complaint that all except the defendant have repaid the same to the plaintiff. 3. That it appears from the complaint that the defendant’s liability upon said contract, either at law or in equity, is an individual and separate liability for the defendant’s pro rata part of the debt described in said complaint, and that the defendant is not liable to contribute for the insolvent companies’ liability mentioned in said complaint, and that the defendant is not a surety and did not become liable for any of the other companies’ liability mentioned in said complaint. 4. That it appears from said complaint that said contract was executed beyond the jurisdiction of this court with companies that were not then and never have been within the jurisdiction of this court, and that the facts alleged in paragraph thirteen of the plaintiff’s complaint give the plaintiff no right to contribution against the defendant. 5. That upon the facts alleged in the complaint the defendant is not liable to pay any part of the costs of the plaintiff’s defence against the suit of said Woodward. 6. That it appears from the complaint that the plaintiff was not liable to said Woodward upon said contract for more than its pro rata part, to wit, the sum of $300, and that the plaintiff without objection suffered judgment against itself for the defendant s liability to Woodward, and that the defendant was not a party to said action, and did not consent to it and is not liable to pay or contribute any part of said judgment. The case was reserved upon the demurrer for the advice of this court.