Shotwell v. The Jefferson Insurance Co.

Again: The clauses as to a consent for the assignment of the policy, or to an alienation, did not come into consideration in that case. The bearing of such provisions upon the present case, in any view, has been already stated fully.

The contract was with the mortgagee, explicit and absolute, without regard to the sufficiency of the bond or solvency of the debtor. He had an insurable interest in the property to the amount of the policy, because his interest or his debt exceeded or equaled it. It was an insurance of the property, not of his demand. The Company merely altered a former Policy in favor of Kernochan, by adding the word "mortgagee."

The view thus taken involves the result that the judgment was wrong in allowing more than $1,500, the unpaid purchase money, omitting for the present the consideration that this sum has been paid since the action was commenced.

The counsel for the defendants insists, that had they paid that amount, they would have been entitled to resort to Strohecker to recover the unpaid balance from him, upon the doctrine of subrogation.

This rule of subrogation rests upon the foundation of a clear natural equity, and can only exist when it is just, both that the party claiming it should be indemnified, and that the party against whom it is asserted should answer the demand.

When a surety pays the debt, both of these requisites exist. When an underwriter pays a general average, this is equally the case. (16 Wend., 398.) When, as in The Quebec Fire Insurance Company v. St. Louis, (7 Moore's Pr. Coun. C., 236,) the insurers pay a demand covered by the policy, for which an action could have been sustained against others, whose wrong caused the loss, the rule in its full extent is justly observed.

The French writers are full of disquisitions upon this subject.

In supposed analogy to the rule in marine insurances, the question has been raised and much discussed, whether the insurer against fire, who has paid a loss to the assured, is entitled to all the actions he possessed against tenants, neighbors, &c., under article 1733 of the Code.

The question is presented in two forms: one whether the right of subrogation exists absolutely without agreement or cession,

Shotwell v. The Jefferson Insurance Co.

(de plein droit :) the other, when the assured has stipulated to cede, or has actually ceded, such rights.

Article 1733 of the Code gave a right of action to the owner against the tenant for damage caused by fire, unless it arose from inevitable accident, superior force, fault of construction, or was communicated from a neighboring building.

Against an incendiary, or the neighbor in whose building a fire has originated through his fault or negligence, all the writers agree that there is a right of subrogation upon a principle of equity, and the insurer succeeds to the privileges of the assured. The reasoning of M. Pardessus on this point is admitted universally. (Alauzet Traite Des Assurances, tom. 2, arts. 477, 478.)

But it seems to be equally settled that, as between the tenant, responsible under the article of the Code before cited, and the insurer, there is no such right of subrogation given as matter of law.

The contested point appears to have been, whether the insurer could lawfully stipulate in his policy for the acquisition or cession to him of this right against a tenant. (Grun & Folliat Des Assurances Terrestres, art. 296.)

The discussion of this point is very interesting, and the strength of the argument is, in my judgment, with those who deem such stipulations void. The liability of the tenant is by force of a rigorous law, which great views of public policy dictated, but is often harsh and inequitable in its application. It is a purely personal liability to the owner. There is no mutual engagement of the tenant with the insurer, or joint contract with the creditor. They are strangers to each other. The tenant is no more primarily responsible than the insurer, and, in an equitable view, is less so. The contract of insurance has its full effect between the parties by payment of the damage, and cannot survive to assume a new face against a third person.

It appears, however, that a decision was given by the Tribunal of Montdidier, and affirmed on appeal by the Court of Amiens, supporting such stipulations, and sustaining an action by the insurers against the owner of an adjoining house in which the fire originated. (Grun & Folliat, p. 247, n.)

Even in this view of the law, we find a substantial distinction between the rule there stated and the present case. The insurer makes it part of his contract that he shall have these privileges,

Shotwell v. The Jefferson Insurance Co.

แ

and in that view undertakes the risk and graduates his premium. There was no such stipulation here. The precepts of equity, so far from approving such a substitution, are hostile to it. would add to the affliction of one, already an innocent victim of misfortune."

The result is, that the defendants had no right to a subrogation had they paid the $1,500 upon the commencement of the suit.

3. One question remains, viz.: the effect of the payment, during the pendency of the action, of the $1,500, the amount of the purchase money unpaid at its commencement.

It seems to me that the following considerations may dispose of this point. It is perfectly equitable that, as between the plaintiff and Strobecker, the insurance money should go to the latter. Had the Policy been assigned to him after the loss, and before the suit, he could have brought the action in his own name. (Mellen v. The Hamilton Fire Insurance Company, 5 Duer, 101; 17 N. Y. R., 609.) On payment of the note to the plaintiff he could have required an actual assignment of the Policy, and recovered the amount of the insurable interest which the plaintiff had at the time of the loss and institution of the suit. By the agreement between him and the plaintiff, she was to keep the property insured for his benefit; and it is in evidence that he paid the last premium to the plaintiff, which she paid to the defendants in February, 1856, and which continued the Policy in force to the time of the loss. We think that the payment of the remaining debt during suit, coupled with the agreement and payment of the premium, has operated as a virtual equitable assignment of the plaintiff's interest in the Policy; and as she had a clear right of action at its commencement, we see no reason why the Court should act upon proof of such payment, not even brought before it by any pleading, to defeat what is a just demand against the Company.

The result is, that the judgment must be reversed, and a new trial ordered, with costs to abide the event, unless the plaintiff consents to a reduction of the amount so as that the judgment shall stand for $1,500, with interest from the 2d of February, 1857, being sixty days after the 4th of December, 1856. If the plaintiff so consent, the judgment will be affirmed for the reduced amount, and reversed as to the residue.

Hall v. Merrill.

HALL, Plaintiff and Respondent, v. MERRILL, Defendant and Appellant.

1. An unconditional agreement between an insolvent debtor and part of his creditors to accept his notes for a designated portion of the amount he owes to them severally, in satisfaction of the whole, is obligatory upon such creditors.

2. The relinquishment of a part of their demands by those signing the agreement, and the surrender of their right to enforce them in full, is a sufficient consideration to uphold it.

3. Such an agreement implies, though it does not in terms contain, a promise of each of the creditors signing it to and with every other of such creditors to accept the composition stipulated for, and to abstain from all efforts to collect more.

4. Where such an agreement bears date December 15th, 1857, and provides that the notes to be accepted in satisfaction shall be for equal amounts at six, nine and twelve months, from January 1st, 1858, it is not indispensable to the continuing validity of the agreement, that such notes be delivered or tendered on said first day of January. If no demand of them be made, they must be tendered within a reasonable time.

(Before HOFFMAN, WOODRUFF and MONCRIEF, J. J.)

Heard, May 12th; decided, July 28th, 1859.

THIS is an appeal by the defendant from a judgment entered against him for the sum of $690.81. The case was tried before Mr. Justice SLOSSON, without a jury, on the 15th of November, 1858.

The complaint states the sale and delivery of goods by the plaintiff to the defendant on credit, at various times, and in various parcels, between the 11th day of April, 1857, and the 26th day of March, 1858, amounting in the aggregate to the sum of $577.82, for which sum, with interest on the amounts respectively, as the several periods of credit expired, judgment was prayed. All the sales, except one for $5.25, were made before the 26th of October, 1857. This one was made on the 26th of March, 1858.

The answer first denies every allegation of the complaint except as therein "admitted or avoided."

It then alleges that on the 15th day of December, 1857, the plaintiff executed and delivered, together with other creditors of the defendant, a certain instrument in writing, (called in the state

Hall v. Merrill.

ment of facts found, a release,) under his hand and seal of which instrument and the signature of the plaintiff the following is a copy:

"Whereas, in consequence of sundry losses and misfortunes, Benjamin B. Merrill has become unable to pay his debts in full, we, the undersigned, in consideration of one dollar to us in hand paid, receipt of which is hereby acknowledged, agree to receive, in full payment and settlement of our respective claims against him, his three notes for equal amounts at six, nine and twelve months from January 1, 1858, at forty cents on the dollar. "In witness whereof, we have hereunto set our hands and seals this 15th day of December, 1857.

"ELIZUR HALL. [L. S.]"

The answer then alleges the execution by the defendant of three promissory notes, each for $78.18, at six, nine and twelve months respectively, dated the 1st of January, 1858, to the order of the plaintiff, the proffer of such notes to him on or about the 1st of February, 1858.

That these notes were given for the composition of the demands mentioned in the complaint, and that the action for the same is thereby barred.

It then alleges, as a set-off as to the item of $5.25, a purchase of goods to the amount of $13.25, on the 26th of March, 1858, by the plaintiff from the defendant.

In another part of the answer it is averred that the instrument aforesaid was signed by the plaintiff and eleven other persons or firms, the creditors as aforesaid of said defendant, relying upon the good faith of both plaintiff and defendant in carrying out the terms of such agreement, as far as they were respectively concerned. It avers his readiness and willingness to carry out the agreement.

The answer seeks affirmative relief in the following manner: Wherefore, this defendant demands judgment against the plaintiff that the said agreement in writing be specifically performed; that the plaintiff be adjudged to receive the three notes in satisfaction of his claims, and the money upon such as have fallen due; that he be perpetually restrained from commencing any action upon such claims, or from assigning or disposing of the