Mahr v. Bartlett — 25 N.Y. St. Rep. 481

Majority

p. 481

John C. Mahr et al., Resp’ts, v. Charles H. Bartlett and The Norwich Union Fire Insurance Company, App’lts.

(Supreme Court, General Term, First Department,

Filed July 9, 1889.)

Headnote

1. Insurance (fire) — Action by one claiming to be pledgee of policy—Necessary parties—Proof of loss.

The plaintiffs claiming to be pledgees of a policy of insurance, sued B. to whom it was issued (a loss having occurred and B. denying the pledge), to have themselves declared entitled to receive the moneys due on said policy, and to restrain the insurance company from paying such moneys to B. or any one else. Held, that to such action the pledgor, as well as the pledgee, is a necessary party, and the action should be treated as merely determining the right to the benefits of the policy, and not as adjudging any liability of the defendant company, except so far as that defendant, by its own action in asking affirmative relief, put such liability in issue, and, therefore, it was not necessary to prove upon the trial, the extent of the loss, or to present proofs of loss.

'3. Same—When jurisdiction cannot be questioned.

The company besides denying the pledge, alleged that one K. was the owner of the policy, by a paramount assignment from B., and on its motion K. was made a party defendant. Being a non-resident he was served by publication, but never appeared. Held, that the company had no standing, K. not having appealed, to object that the court did not acquire jurisdiction of K., except so far as it may be entitled by a valid judgment to be protected from any claim on K.’s part.

3. Same—Assignment—When policy not avoided.

An assignment which is merely a pledge to secure the payment of a debt, does not avoid the policy.

Frederick P. Foster, for app’lts; David Welch, for resp’ts.

This is an appeal from a judgment in favor of the plaintiffs, entered upon a decision of the special term.

p. 482

The action is a peculiar one and we have been somewhat-at a loss to determine in what character it is to be considered. The plaintiffs claimed to hold a policy of fire in - surance, issued by the defendant company in favor of the defendant Bartlett, on the latter’s stock, as security for a. loan made to Bartlett. A loss occurred. Bartlett denied the pledge of the policy to the plaintiffs. This action was thereupon brought and the relief sought was not to recover the amount of the loss, but to have plaintiffs declared entitled to receive the moneys due on the policy and to restrain the defendants from paying such moneys to Bartlett or to anyone else than the plaintiffs. Bartlett answered denying the pledge. The company answered denying knowledge of the pledge, and alleged that one Kelly, of Iowa, was the owner of a paramount assignment from Bartlett. It further answered that the assignment to the plaintiffs violated one of the conditions of the policy, and for this reason asked, as a counter-claim, that the policy be-adjudged void.

On the company’s motion, Kelly was made a party defendant. Being a non-resident he was served by publication, but he never appeared in the action. On the trial the plaintiffs established their claim against Bartlett and the pledge of the policy, but no proof was given as to the extent of the loss, nor of its adjustment. The court gave the-relief prayed for, and from the judgment the defendant insurance company alone has appealed.

It seems settled by authority that to an action on a pledged policy, the pledgor, as well as the pledgee, is a necessary party. Griffey v. New York Central Insurance Co., 100 N. Y., 417 : citing Simson v. Satterlee, 64 id., 657; Bard v. Poole, 12 id., 495.

The cases last mentioned were foreclosures of pledged mortgages. In Bard v. Poole, the reason of the rule is-stated to be that the general owner might be able to show the debt had been paid. The plaintiffs as pledgees might have maintained a suit at law on the policy, joining the pledgor as plaintiff, or if the latter refused to become plaintiff making him a party defendant. As Bartlett denied the pledge, there would have been two entirely independent issues to be tried, the pledge by Bartlett and the liability of the-company. A pledgor has always the right to go into equity to foreclose his pledge. The pledge in this case being a •chose in action, it should be collected, not sold, to satisfy the debt. Wheeler v. Newbould, 16 N. Y., 392 .

We, therefore, see no objection to an action in equity having its purpose merely to establish the right of the-plaintiff to recover any amount due on the chose in an action leaving the liability on the chose in an action to be determined in a subsequent suit at law. The defendant insurance company raised no objection to the-equitable jurisdiction, but on the contrary sought afirma

p. 483

tive relief in its own behalf in that jurisdiction. We shall, therefore, treat the action as merely determining the right to the benefits of the policy, and not as adjudging any liability of the defendant company, except so far as that defendant by its own action in asking affirmative relief, put such liability in issue. In this view of the case, it was not necessary to prove upon the trial, the extent of the loss or the presentation of proofs of loss.

The principal objection against the judgment below urged by the defendant company, is that the court did not acquire jurisdiction of the defendant Kelly, and that therefore, the judgment so far as it restrains Kelly from collecting the insurance moneys or suing the company therefor, is void. But Kelly does not appeal from the judgment and the company have no standing to complain of it in this respect, except so far as it may be entitled by a valid judgment to be protected from any claim on Kelly’s part. Had the plaintiffs brought a suit at law on the policy, it would not have been a defense to show that Kelly claimed to own the policy.

It would have been necessary for the defendant to go further, and show that Kelly did own it, or, at least, that the plaintiff did not. In a proper case the defendant might have an interpleader ; but if one of the claimants was beyond the jurisdiction of the court, the defendant would labor under the same embarrassment as in this case, nor do we see how it would be relieved from it. It would have to show not only the foreign claim, but its validity. Any other rule would defeat the enforcement of liability in our courts, where there was a foreign, claimant. The policy was not negotiable, and Kelly could not obtain any greater rights to the policy than his assignor Bartlett.

The evidence clearly established the pledge of the policy to the plaintiffs, long anterior to the assignment to Kelly, which latter was not until four days after the commencement of this suit. The rights of the plaintiffs are, therefore, paramount to those of Kelly, and we must assume that it will be so held in Iowa.

It is next claimed that the policy became void by the assignment to the plaintiffs. That assignment was merely as a pledge to secure the payment of a debt. Griffey v. N. Y. Central Insurance Company (supra) is conclusive to the effect that such an assignment does not avoid the policy.

Lastly, it is contended that the decree goes beyond the pleadings in awarding absolute judgment against the company on the policy. We do not so construe the decree. It adjudges that the company pay the plaintiffs “ such moneys as shall be found due and payable under and by virtue of the policy.” It does not determine what moneys, or that any moneys are due on the policy. It simply adjudges plaintiffs’ rights to the policy at whatever value it may be.

p. 484

We think the case properly determined, and that the judgment appealed from should be affirmed, with costs. Van Brunt, Oh. J., concurs.