The American Lucol Company, Respondent, v. William C. Beecher and Others, Defendants; Joshua Brown, Appellant

The American Lucol Company, Respondent, v. William C. Beecher and Others, Defendants; Joshua Brown, Appellant. Insurance—action to prevent the underwriters from diverting a security fund — misjoinder of causes of action—assignee of an original underwriter a proper party. The complaint in an action, brought on behalf of the plaintiff and all others similarly situated, alleged the execution of a policy of insurance by the defendant; that a loss had occurred which was apportioned among all the insurers; that a sum of §4,813.20 had been fixed and determined as the sum payable under the policy, and that although due notice had been given, payment had not been made. It further alleged that, under certain articles of association between the defendants, a fund was constituted by the contribution of a certain sum by each, and from premiums, which it was agreed should- never fall below an aggregate of §16,000, to be held by the advisory board of the underwriters (which, by the policy was made a primary fund from which losses should be paid); that, under the agreement, the personal liability of each of the defendants upon all policies issued by them was not to exceed §5,000 for each insurer. The complaint alleged that policies had been issued in excess of the aggregate sum for which all the underwriters were liable; that subsequently each of the underwriters sold and assigned his interest in the association to one of the • defendants in this action (other than those who were underwriters upon the original policies) and transferred the fund to a new committee which proposed to use it for other purposes, thereby destroying or impairing the security of the plaintiff. Judgment was demanded that the original fund should be applied to the amount due the plaintiff and others similarly situated, and its transfer be adjudged to ¡be illegal End be set aside and -that the fund should be repaid and turned over to a receiver to be appointed; no- individual judgment to recover the amount due upon the policy was asked-ag'áinst any of the defendants, and all of the persons having any .interest in the fund were made parties. A demurrer was interposed by 'an assignee' of one of the 'original underwriters upon the 'ground, among others, that several causes of action had been improperly united: Held, that the demurrer could not be sustained; -That the complaint stated a single cause of action which was to set aside an illegal transfer of. a fund which ought to be maintained as¡ a security for the policyholders; That, as an assignee of one of the Original underwriters, the defendant who demurred was a proper party, having an interest in the fund. Appeal by the defendant, Joshua Brown, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the cleric of the county of New York on the 24th day of March, 1896, upon the decision of the court, rendered after a trial at the New'.York Special Term, overruling his demurrer to the plaintiff’s complaint.- Menken Brothers, for the appellant. F. K. Pendleton, for the respondent. [MAJORITY — Ingraham, J.:] Ingraham, J.: As to the first ground of demurrer, we think bnt one cause of action was alleged in the' complaint, and that the complaint was not open to the objection specified. The complaint alleges the execution of the policy of insurance by the defendants; that a loss Occurred under the policy; that such loss was duly apportioned among all insurers, and that the amount due hnd payable thereon under the policy executed by the defendants was the sum of. $4,813.20, “ which said sum was fixed, determined and. adjusted after compliance with all the terms and provisions /of said policy in regard to determining, fixing and adjusting -the amount of loss, and was agreed to by said defendants as the sum payable under said policy, and due notice was thereupon given as required by said policy, and the said sum became due and payable sixty days thereafter. That said sixty days have long since expired, but that-neither the same nor -any part thereof has been paid, although duly demanded.” The complaint then alleges that under the articles of association "between the underwriters who are defendants in the action, a fund was constituted by contribution of $1,400 made by each of the underwriters, and by the premiums received upon policies issued under such agreement, which, it was agreed, should never fall below an aggregate of $16,000, to be held by certain of the underwriters called the advisory board, and that the personal. liability of each of the defendants upon'all policies issued by them under the agreement should not exceed in the aggregate $5,000 for each insurer; that large numbers of policies had been issued insuring property in a sum largely in excess of said aggregate sum for which all the underwriters were liable ; that, subsequently, each of the said underwriters, by an agreement among themselves, sold, transferred and assigned his interests in said association to one of the defendants in tliis action other than those who are underwriters upon original policies, and transferred such fund to a new committee appointed, which fund had been by such new committee appropriated to purposes other than that provided for in the agreement; and that thereby said fund was reduced below the minimum of $16,000 provided for by the articles of association. It is further alleged that by the policy such fund was made a primary fund' out of which all losses under policies issued by said underwriters should be paid; and that, in consequence of this illegal disposition of such fund, plaintiff’s right to have such fund applied to the payment of the amount due under the policy was impaired or destroyed: and that.the plaintiff’s security for the payment of the loss which, by the terms of the policy was to be kept for him, was also destroyed. The complaint then demands judgment, that such original fund or deposit should be applied to the amount due plaintiff and others similarly situated ; that the transfer of such fund should be adjudged illegal and unauthorized as against plaintiff and those similarly situated; that the same should be set aside, and that such fund should be repaid and turned over to a receiver to be appointed. . The action is brought on behalf of the plaintiff and all others similarly situated who shall come in and be made parties to the action. But one cause of action is here alleged, and that is to set aside an illegal and unauthorized transfer of a fund which, by the agreement between defendants and the -plaintiff and other policy holders of policies issued by the defendants, should be maintained as a fund with which to pay the amount due to policy holders under policies issued by the underwriters who were defendants. No individual judgment to recover the. amount due upon the policy is asked against any of the defendants. What the plaintiff seeks is to have applied to the payment of his claim a fund held by the defendants who are called the advisory board, which,- by the policy, was to be primarily liable to the payment of any loss under the policy, and, to accomplish that, that a certain transfer of that fund to others be held to be illegal and set aside. All of the persons having any interest in this fund are made parties .defendant. This defendant demurring is not one of the original underwriters, but is a defendant to whom the original underwriters have transferred their interests in the fund. Against him no personal judgment of any kind is asked, except so far as the judgment should decree that the transfer of this fund from the trustees in 'whom it was vested .for- the benefit of this plaintiff and others similarly situated, be declared void, and the amount of that fund applied to the payment of a claim which, by the agreement between the original underwriters, one of whom is this demurring defendant’s assignor, and the plaintiff, should- be a primary fund from which any loss under this policy should be made payable. As an assignee of one of the original underwriters and .those' interested in the fund, the title to which is involved in this action, this demurring defendant was a proper party. There is no cause of action alleged to recover from -this defendant any liability as ;aii underwriter, nor does the plaintiff seek to enforce a right against this defendant on the theory of a judgment creditor, nor does the plaintiff seek to enforce a promise made for the benefit of .a third party not privy to the consideration; and while the cause of action .is, to some extent, based upon a violation of a trust, the primary object is to reach a trust fund which was to be held for the benefit of this plaintiff, and others similarly situated. As but one cause of action is alleged in the complaint, and as this demurring defendant is made a party simply as one having an interest in the fund, the disposition of which is sought to be effected, his demurrer that several causes of action have -been improperly united is without merit. The demurrer states, as a ground of demurring, that the complaint does not state facts sufficient to constitute a cause of action, but as this ground was not pressed upon us on the argument, and is not relied upon in the appellant’s brief, it is not necessary to refer to it. We think the judgment appealed from is right and that it should be affirmed, with costs. Van Brunt, P. J., Williams, Patterson and O’Brien, JJ., concurred. Judgment affirmed, with costs.