Eldridge v. Crow — 57 N.Y. St. Rep. 498

Majority

p. 498

George H. Eldridge et al., Resp’ts, v. Moses R Crow, App’lt.

(New York Common Pleas, General Term,

Filed February 5, 1894.)

Headnote

1. Contract—Indemnity.

An action cannot be brought upon an agreement “to indemnify and keep harmless,” when neither payment has been made ijor liability adjudged.

2. Evidence—Paeol.

A parol agreement that the settlement of a third party’s claim was to be a condition precedent to the payment of a note, cannot be proved to defeat a recovery thereon.

Appeal from a judgment of the city court entered upon the decision and order of the court at special term sustaining a demurrer and from that decision and order.

Albertus Perry, for app’lt; B. B. Msler, for resp’ts.

This action is upon a promissory note. The answer sets up a counterclaim, to which the plaintiffs demur on-the ground that the counterclaim is not of the character allowed by law, not being a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiffs’ claim and on the further ground that it does not state facts sufficient to constitution a cause of action.

The facts as appear by the pleadings are these. The village of South Mt. Vernon entered into a contract with a certain company, granting them the privilege of establishing and operating a system of water-works in the village. The company on its part agreed not to unnecessarily obstruct the streets in tíre process of constructing the works, and within a reasonable time after using the streets to restore them as nearly as practicable to their former condition and to hold the village harmless from any and all damage arising from the negligence or mismanagement of the water company, or its assigns, or its employees in constructing and operating the said works.

Subsequently the water company engaged the defendant to do a portion of the work of construction by a contract identical in its essential features with the one above stated with the additional agreement that defendant should assume and perform all convenants and obligations entered into and incurred by the water company in its contract with the village.

The defendant then engaged the plaintiffs to lay water pipes in certain streets under a contract which provided that “upon completion of the trench for the laying of said water pipe, all rubbish and material should be removed from the streets * * * and that the plaintiffs should be responsiblefor any all and injury to person and property caused by any want of care or neglect on the part of themselves, their servants or agents in the prosecution of said work”. And it was also provided that “said plaintiffs should keep .lights at night upon all open trenches while engaged in the performance of their said contract.” The answer then goes on to allege performance on defendant’s part but that the plaintiffs did not remove rubbish etc., and did not keep lights upon open trenches at night “and in consequence thereof, one John O’Hara, while lawfully traveling and driving a team of horses upon one of said streets without fault on his part drove into said trench, so carelessly and negligently left open by the plaintiffs, and thereby one of his horses was so injured as to be rendered worthless, and other damage was sustained by said O’Hara, and the said O’Hara has presented a claim, as this defendant is informed and believes, to the board of trustees of said village, for the sum of one thous- and dollars ($1,000), alleging that by the accident aforesaid he sustained damages in that sum.” The defendant also alleges that under his contract with the water company he is liable for all such damages sustained by O’Hara. Also that the note sued upon “was given on account of plaintiffs’ services under their said contract by him and accepted by the plaintiffs subject to and upon condition that the plaintiffs settled with and satisfied the said John O’Hara for his claim for damages as aforesaid”; and that they have not so settled or satisfied it.

p. 500

The first ground of the demurrer is plainly untenable. Conceding for the purpose of examining its character, that a cause of action is set up in the answer it is certainly one on contract and consequently permissible under subd. 2; if not (as plaintiffs argue conclusively), under subd. 1, of § 501 of the Code of Civil Procedure. Whether any cause of action at all is stated is a more serious question. ’ According to the answer the plaintiffs agreed in their contract to “ be responsible for any and all injury to person and property caused by any want of care or neglect on the part of themselves, their servants or agents ifi the prosecution of said work.” Nothing is said as to how this responsibility is to be determined' or when it is to be discharged. Surely the meaning cannot be that it is to be determined by the mere fact that someone has presented to the village a claim for damages, alleged to be due by reason of plaintiffs’ fault, and that plaintiffs must straightway pay that amount to the claimant or suffer an equivalent deduction from the agreed sum due under the contract and promised in the note sued upon. The answer does not purport to set forth this contract ipsissimis verbis, but presumably it contains the same covenant as is found in, the two preceding and connected contracts, viz.: “to hold the said village harmless from any and all damage.” At any rate, since O’Hara has presented his claim to the village, the only way in which any loss appears 'to be threatening the defendant is through this covenant in his contract with water company, and that covenant is not broken until some harm comes to the village. In Kohler v. Matlage, 72 N. Y., 259 , 266, the court said: “It is settled that upon an obligation to do a particular thing, or to pay a debt for which the covenantee is liable, or to indemnify against liability, the right of action is complete on defendant’s failure to do the particular thing he agreed to perform, or to pay the debt or discharge thé liability. Belloni v. Freeborn, 63 N. Y., 383 ; Churchill v. Blunt, 3 Den. 321 ; Thomas v. Allen, 1 Hill, 145 . The distinction is clearly defined between such an obligation and an indemnity against loss or damage by reason of a liability. In the former case the covenantee is to be saved from the thing specified, and in the latter from the consequences of it; Gilbert v. Wiman, 1 N. Y. 550 ; Belloni v. Freeborn, 63 N. Y. 383 ; Churchill v. Hunt, 3 Den. 321 ; Thomas v. Allen, 1 Hill, 145 .” The agreement here belongs on authority to the latter class. In Wright v. Whiting, 40 Barb., 235 , 238, it was said that under an agreement “to indemnify and keep harmless” the defendant was clearly not liable until something had been paid by the covenantee. But whether in such a case as this both payment and liability must concur before a right of action arises from the covenant of indemnitjr, it is not necessary to decide, because there is here,, neither the one nor the other. Although the decisions on this subject are widely variant we do not find that it has ever been held that an action can be brought when neither payment has been made for liability adjudged. See Merlette v. N. & E. River Steam Boat Co., 13 Daly, 114 . In the Eagle Tube Co. v. Edward Barr Co., 16 Daly, 212 ; 32 St. Rep. 299 ; relied upon by the appellant, the defendant had substantially made payment and on facts clearly establishing a liability to pay.

p. 501

Appellant’s counsel also urges that, without the allegations relating to O’Hara’s damages, the answer states a good cause of action in that it alleges the plaintiffs’ breach of their agreement to remove rubbish and material from the streets and that by reason of this breach the defendant sustained damage. Had the pleading stopped here, this argument might have been good; but, instead, it goes on to specify in what the damages consisted. But, as has been said, these alleged damages can not be allowed as such. In his argument the counsel says that the expense of removing the rubbish and material was a damage which flowed necessarily from plaintiffs’ breach, and the defendant is entitled to recover such damage. Hot even in his brief, much less in the pleading, is it contended that the defendant incurred the expense of such removal. On the contrary, the clear inference from the answer is, that the only damage complained of is that which is likely to fall upon him because of the O’Hara accident. We see no reason why the maxim expressio uni us est exclusio alierius should not apply in such a case as this, where an unverified general denial was first put in, then leave to serve an amended answer was obtained, and finally the present evasively worded counterclaim set up. The suspicion that a desire for delay and not a consciousness of a meritorious defense prompts defendants’ course is hard to escape.

The allegation that the note on which the action is brought was given and accepted upon condition that the plaintiffs settle with O’Hara for his claim for damages presents no good defense. There is no allegation that such settlement was to be a condition precedent to recovery upon the note, and even if it were, it would be a parol agreement which could not be proved to vary or defeat the written contract; Bank of Albion v. Smith, 27 Barb, 489 , and cases cited; Schmittler v. Simon, 101 N. Y., 554 ; Burhans v. Carter, 13 Hun, 153 ; Cramer v. Lovejoy, 17 Wkly. Dig. 381 . Heither is there any statement that the agreement to settle O’Hara’s claim was any part of the consideration of the note, on the contrary it is expressly said to have been given “ on account of plaintiffs’ services under their said contract. Furthermore, this agreement is not upon any construction a good defense because if it was merely a re-affirmance of the liability already existing on the original written contract, it was futile to replead it. If, on the other hand, it adds to the former liability by binding the defendant to pay O’Hara’s claim whether valid or not, it is sufficient to say that no consideration appears. The giving of the note was not a consideration because that is stated to have been given on account of plaintiffs’ services under the original contract.

The judgment of the court below must therefore be affirmed with costs.

Cases cited

Gilbert v. Wiman 1 N. Y. 550 N.Y. p. 500
Belloni v. Freeborn 63 N. Y. 383 N.Y. 1876-12-14 p. 500