Colvill v. Chubb — 38 N.Y. St. Rep. 698

Majority

p. 698

John Colvill et al., App’lts, v. Percy Chubb, Resp’t.

(Supreme Court, General Term, First Department,

Filed May 15, 1891.)

Headnote

Stay—An action at law in which an equitable issue is raised.

An action at law having been brought upon a policy of marine insurance, the defendant, by way of counterclaim, alleged error in the contract and asked a reformation. The plaintiff replied to the counterclaim. Held, that an equitable issue was thereby raised, triable at special term, and that until it was decided the action at law should be stayed.

Appeal from order of special term, staying the trial of certain issues in the action at circuit until after the trial and determination at special term of issues raised by the reply to the counterclaim, setting up an equitable cause of action.

Anson B. Stewart, for app’lts; J. L. Ward, for resp’t.

This action was brought to recover damages for an alleged breach of a written contract of marine insurance.

The defendant served his answer admitting the issuance of a policy of insurance. He denied that in and by the policy they insured against the risk alleged in the complaint, and denied generally the other allegations in the complaint.

The defendant further. answered, by way of counterclaim, al

p. 699

leging a mistake in the terms of the policy of insurance, of which the plaintiff was duly notified and refused to return the policy for correction, and prayed that the policy might be reformed so as to make the same express truly the contract according to the .intention of the parties thereto, and that the plaintiffs might be restrained from bringing, or causing to be brought, any suit upon said policy until so reformed, and also for a dismissal of the complaint. No reply or demurrer to this counterclaim being served within the time limited by law, the plaintiffs noticed the case for trial at the circuit court. In December, 1890, while the case was on the day calendar in said circuit court, the defendant moved at special term for judgment by default. This motion was granted, with leave, however, to the plaintiff, on payment of ten dollars cost of motion, to serve a reply or demurrer to the counterclaim within ten days after service of the order, to be entered upon said motion. The order further provided that the same case was to remain on the calendar as of its former date of issue, and the order to be without prejudice to any proceedings theretofore had in the action. The plaintiffs took the benefit of the order by paying ten dollars costs of motion and serving a reply, which contained a denial of the allegations of the counterclaim and set up a further and separate defense thereto. The defendant thereupon filed a note of issue for the issues raised by the reply, and served notice of trial thereof at the ensuing general term.

After this decision upon the motion for judgment upon the counterclaim, the plaintiff made a motion on two days’ notice that the case be placed on the day calendar of the circuit court. This motion was granted. The case standing upon the calendar marked “ Deserved generally ” the plaintiff had the right to have it restored upon two days’ notice to the day calendar under the rules of the court. Thereupon the defendant moved for an order that the trial at circuit be stayed until after the trial and determination of the special term issues raised by the reply to the equitable counterclaim contained in the answer.

The motion was granted, and from the order thereupon entered this appeal is taken. *

We think no error was committed. In fact the plaintiff was not in a condition to try the issues raised by the complaint and answer, which were properly triable at circuit, until after he had disposed of the issues raised by the affirmative equitable cause of action set up in the counterclaim.

The Code provides that where a defendant interposes a counterclaim and thereupon demands an affirmative judgment against the plaintiff, the mode of trial of an issue of fact arising thereon is the same as if it arose in an action brought by the defendant against the plaintiff for the cause of action stated in the counterclaim and demanding the same judgment

There is no question but that if the cause of action- set up in this counterclaim had been contained in a complaint in an action brought by the defendant against the plaintiff, and for the same relief, that it would have been properly triable at special term as being an equitable cause of action. Such being the case when

p. 700

the defense is set up as a counterclaim, it must be tried in precisely the same form as though it arose in an action brought by the defendant against the plaintiff.

It is undoubtedly true that the plaintiff cannot be deprived of the right to a trial by jury upon the cause of action set out in his complaint; but it is equally true that it would be idle to try his cause of action until the equitable cause of action set up in the answer had been disposed of.

Under the old practice the proceeding would have been to file a bill in the court of chancery to reform this policy; and a stay of the trial of the action at law would have been granted until the equitable cause of action was disposed of.

In the case of Born v. Schrenkeisen, 110 N. Y., 55 ; 16 N. Y. State Rep., 412, this view is expressly recognized. The plaintiff sought on a written contract to recover royalties for the use of his patent, and the defense was that the written instrument did not express the true contract between the parties. The issues were tried before a judge at special term who ordered judgment that the complaint be dismissed upon the merits and that defendants recover their costs. The plaintiff appealed to the general term who affirmed the judgment. An appeal was taken to the court of appeals where the point being taken that there was no finding that the parties acted under a mutual mistake, the court held that sufficient facts for a reformation were alleged and found, the omission to make the reformation by the j udgment was a technical error which might be corrected on appeal and the court therefore modified the judgment so as to reform the agreement in accordance with the findings of fact, and affirmed the judgment as modified. If it had not been necessary to have obtained á judgment of reformatio'n, the judgment as rendered by the court below would have been amply sufficient.

Applying the principle of the case in question to the case at bar if this whole issue was tried at the circuit and resulted simply in a dismissal of the complaint upon the ground, if you please, that the contract should be reformed and when so reformed there was no cause of action, yet under the decision of the court of appeals in question such judgment would be irregular, because there must be a judgment first reforming the contract and then dismissing the complaint. No such judgment could be rendered at circuit, because in that court affirmative equitable relief cannot be granted.

The objection that the orders previously made were an adjudication upon this question and should have been appealed from, is not well taken because no such question arose.

The order should be affirmed, with ten dollars costs and disbursements;

Daniels, and Lawrence, JJ., concur.