Wyllis Blackstone, Receiver, etc., Respondent, v. The Alemannia Fire Insurance Company, Appellant

Wyllis Blackstone, Receiver, etc., Respondent, v. The Alemannia Fire Insurance Company, Appellant. (Argued February 20, 1874; decided February 27, 1874.) Defendant issued a policy of re-insurance containing this clause: “ Loss, if any, payable pro rata at the same time with the re-insured." The re-insurance was for half the amount originally insured. A loss occurred less than the amount of the original insurance. Belli, that defendant, by virtue of the first part of this clause, was not hound to pay the full amount re-insured, hut only one-half the losa; that by the latter part of the clause actual payment by the re-insured upon its policy was not required to precede or to accompany payment by defendant, but it merely fixed the time for payment, to wit, the same time as was fixed for payment by the re-insured. Under a contract of re-insurance the extent of the liability of the re-insurer is not affected by the insolvency of the re-assured, nor by the inability of the latter to fulfill its contract with the original insured. Appeal from judgment of the General Term of the Court of Common Pleas for the city and county of Hew York, in favor of plaintiff, rendered upon a case submitted under section 372 of the Code. The question submitted was as to the extent of the liability of defendant upon a policy of re-insurance issued by it to the North American Fire Insurance Company, of which company plaintiff was receiver. The facts submitted were, in substance, these: On the 5th August, 1871, the North American Fire Insurance Company issued a policy to D. W. & A. Keith & Co., for $5,000, upon a stock of goods. On the same day defendant re-insured said company for $2,500 on said risk. The policy of re-insurance contained this clause : ■ “ Loss, if any, payable pro rata, and at the same time with the re-insured.” On the 9th October, 187Í, the property insured was destroyed by fire; the loss was adjusted at $4,407.62. The North American Fire Insurance Company became insolvent, and by an order of the Supreme Court plaintiff was appointed its receiver. He declared dividends in all of forty-four per cent on all claims against the company, and that per cent is all that has or will be paid to the original assured upon their policy. Plaintiff claimed to be entitled to recover of defendant one-half the amount of the loss. Defendant claimed that it was only liable to pay one-half of" the amount actually paid to D. W. & A. Keith & Co. Theron R. Strong for the appellant. A policy of re-insurance is a contract of indemnity. (1 Phil, on Ins., 194, § 374, 3, § 4; N. Y. Bowery Ins. Co. v. N. Y. F. Ins. Co., 17 Wend., 363 ; Hone v. Mut. S. Ins. Co., 1 Sandf., 137; Eagle Ins. Co. v. La Fayette Ins. Co., 9 Ind., 443.) The words “loss or damage” in the-policy refer to actual loss or damage as distinguished from mere liability; and the measure of such" loss or damage is the amount actually paid. (Gilbert v. Wyman, 1 Coms., 550; Aberdeen v. Blackmar, 6 Hill, 324; Scott v. Tyler, 14 Barb., 202; Campbell v. Jones, 4 Wend., 306 ; Wright v. Whiting, 40 Barb., 235 ; Crippins v. Thompson, 6 id., 532; Sedg. on Dam., 348-352, 355, 356, marg. pages, 310-313.) Hamilton Cole for the respondent. A contract of re-insurance is a contract of indemnity; and such indemnity is the whole amount of the loss incurred by the original insurer. (Emerigon Tom., 1, 247-250; 1 Boulay Paty. Tr. des Ass. Ch. [8th ed.], 1857; 1 Aluzet Tr. gen. des Ass., No. 152, p. 276; 2 Park on Ins., 595, 596; 1 Marshall on Ins., 143; 2 Phil. Ins., 749 ; 1 Arn. Ins. 288; 3 Kent Com. [5th ed.], 279; Flanders on Ins., 32.) In a contract of re-insurance the re-insured alone has a claim against the re-insurer. (Carrington v. Com. F. and M. Ins. Co., 1 Bosw., 182; Herckemath v. Am. Mut. Ins. Co., 3 Barb. Ch., 63 ; Hastie v. De Peyster, 3 Caines, 190; N. Y. State Ins. Co. v. Prot. Ins. Co., 1 Story, 458.) The amount paid by the original insurer has nothing to do with the claim against the re-insurer. (Eagle Ins. Co. v. La Fayette Ins. Co., 9 Ind., 443 ; Hone v. Mut. S. Ins. Co., 1 Sandf., 137; affirmed, 2 Corns., 235.) The loss or damage referred to in the policy of re-insurance is the injury to the original property insured. (Prov. Ins. Co. v. Ætna Ins. Co., 16 U. C. [Q. B.], 135.) [MAJORITY — Johnson, J.] Johnson, J. In the case of Hone v. The Mutual Safety Insurance Co. (1 Sandf. Sup, C. R., 137), it was adjudged that under a contract of re-insurance, the extent of the liability of the re-insurer was not affected by the insolvency of the re-assured, nor by its inability to fulfill its own contract with the original insured. This proposition was maintained by Mr. Justice Sandfobd, giving the judgment of the Superior Court of New York, in a careful and learned opinion, thoroughly setting forth the reasons on which the decision rested and the authorities supporting it. This judgment was affirmed in the Court of Appeals, in 2 N. Y., 235. We have examined the printed record, as it was presented to the court, and find that the questions mentioned were distinctly raised, both by the exceptions taken at the trial and by the points of the counsel on both sides used on the argument. That these questions were not particularly noticed in the opinions delivered in the Court of Appeals must be attributed to their being regarded as too well settled to require notice. They were necessarily involved in the judgment pronounced, and the silence of the opinions scarcely diminishes the force of the precedent. A recovery was had in the case for the full amount of the re-insurance, notwithstanding it appeared that the re-assured company was insolvent and had been dissolved, and that its assets were not sufficient to pay more than fifty per cent of its debts. The policy now in suit differs from that in the case cited, in containing the following clause: “ Loss, if any, payable pro rata, and at the same time with the re-insured.” By virtue of the first part of this clause the defendant is not bound to pay the full amount re-insured by its policy, but only such a proportion of the amount of the loss as is in 'the ratio of the amount of the re-insurance to the amount originally insured. Thus, the defendant’s re-insurance being for half the amount of the original insurance, the defendant is to pay half the loss. In regard to the latter branch of the clause in question, which says that the loss is payable “ at the same time with the re-insured,” it is not possible to conclude from it that actual payment by thé re-insured is, in fact, to precede or to accompany payment by the re-insurer. It looks to the time of payability and not to the fact of payment. It has its operation in fixing the same period for the duty of payment by the re-insurer as was fixed for payment by the re-insured. To give to it the construction contended for by the defendant would, in substance, subvert the whole contract of re-insurance as hitherto understood in this State. In the case before us each of the policies was payable sixty days after proof of loss; and there was therefore no necessity for the clause in question to regulate the rights of the parties. We are, therefore, of opinion that the judgment given at General Term, by the Court of Common Pleas, was correct, and should be affirmed. All concur. Judgment affirméd.