Case Name: John J. Costello et al., Appellants, v. New York Central and Hudson River Railroad Company et al., Respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1924-05-20
Citations: 238 N.Y. 240
Docket Number: 
Parties: John J. Costello et al., Appellants, v. New York Central and Hudson River Railroad Company et al., Respondents.
Judges: 
Reporter: New York Reports
Volume: 238
Pages: 240–245

Head Matter:
John J. Costello et al., Appellants, v. New York Central and Hudson River Railroad Company et al., Respondents.
Subrogation — insurance — when insurance company, subrogated to rights of insured for amount of insurance paid for loss of one building, not entitled to payment of amount out of general verdict in action to recover for loss of several buildings where rule of damage was difference between value of farm before and after fire.
Where in an action to recover for the destruction by fire of certain buildings and their contents belonging to plaintiff, through the alleged negligence of defendant, the complaint alleged that on one building insurance had been paid and that plaintiffs had assigned to the insurer their right and claim against defendant and subrogated it to their rights and interests “ for the damage, destruction and loss of said building by fire ” to the amount so paid by it, and upon the trial the rule of damage adopted was the difference between the value of the farm before and after the fire and no question was submitted to the jury as to the loss on the barn as a separate item, and nothing occurred during the trial amounting to a waiver by the plaintiffs of the allegations of their complaint as to the nature and effect of the subrogation agreement nor to a promise express or implied that the insurer should first receive the amount paid by it out of any general recovery, a direction of judgment, after a general verdict that the farm was worth a certain amount less after the fire than it was before, providing that the amount of the insurance and interest be paid to the insurer and the balance to plaintiffs, cannot be sustained. The insurance company is only interested in that portion of the damages allowed for a specific item and not only is there no direct hint as to what that may be but it is impossible to draw the slightest inference.
Costello v. N. Y. C. & H. R. R. R. Co., 207 App. Div. 890, reversed.
(Argued April 11, 1924;
decided May 20, 1924.)
Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered December 10, 1923, unanimously affirming a judgment in favor of plaintiffs and of defendant Hartford Fire Insurance Company entered upon a verdict.
Harry E. Newell for appellants.
There is no basis either in law or the facts contained in the record to sustain the order and judgment awarding to the defendant insurance company the sum of $2,282 out of the verdict for $2,775. (Svea Assurance Co. v. Packham, 92 Md. 464; Hartford Fire Ins. Co. v. Pennell, 2 Ill. App. 609; Fire Ins. Co. of Philadelphia v. Wells, 84 N. J. Eq. 484; Shawnee Fire Ins. Co. v. Cosgrove, 85 Kans. 296; Newcomb v. Cincinnati Ins. Co., 22 Ohio St. 382, 746; National Fire Ins. Co. v. M’Laren, 12 Ont. Rep. 682; Pentz v. Receivers of Ætna Fire Ins. Co., 9 Paige, 568; Provident-Washington Ins. Co. v. Youmans, 82 Misc. Rep. 433; Columbia Trust Co. v. Norske Lloyd Ins. Co., Ltd., 100 Misc. Rep. 550; 183 App. Div. 896.) The verdict of the jury in this case is not conclusive as between the plaintiffs and the defendant insurance company as to the actual amount of plaintiffs’ loss. (Pentz v. Receivers of Ætna Fire Ins. Co., 9 Paige 568; Nat. Fire Ins. Co. v. M’Laren, 12 Ont. Rep. 682.)
Wordsworth B. Matterson for respondents.
Upon the rendition of the verdict, the trial court had power to direct that judgment be entered in favor of the defendant for the amount paid these plaintiffs with interest from July 24, 1920. (Lee v. Rudd, 120 Misc. Rep. 407; Mutual Life Ins. Co. v. O’Donnell, 146 N. Y. 275; Potter v. Rosston, 109 App. Div. 737; Dubuc v. L. D. & Co., 182 N. Y. 482; Lee v. Graubard, 205 App. Div. 344; Moses v. MacFarlane, 2 Burr. 1005.) The value of all the property-destroyed was determined by a tribunal of plaintiffs’ choosing and the valuation fixed at $2,775, which valuation has been unanimously affirmed by the Appellate Division, fourth department. (Dubuc v. Lazell, Daley & Co., 182 N. Y. 486.)

Opinion:
Andrews, J.
On the plaintiff's farm were a number of buildings containing a quantity of personal property. Because of the negligence of the defendant the New York Central and Hudson River Railroad Company they were burned. One of these buildings, a horse barn, was insured by the defendant the Hartford Insurance Company for the sum of $2,000. After the fire it paid this amount to the plaintiffs. This action was then begun to recover of the railroad company the damages caused by its act. The complaint alleged the negligent destruction of the buildings and their contents and the resulting loss amounting to $35,000. It also alleged the facts about the insurance on the barn, its payment, and that the plaintiffs had assigned to the insurer their right and claim against the railroad to the extent of $2,000 " for the damage, destruction and loss of said building by fire " and that the insurer was subrogated to the rights and interests of the plaintiffs to the amount so paid by it. Undoubtedly this was a general subrogation and entitled the company to any amount recovered for the loss of the barn not exceeding $2,000. It is equally undoubted that it transferred to the insurer no interest in whatever might be recovered because of the loss of the uninsured buildings or of the personal property. As the company refused to join the action as plaintiff, it was made a defendant. In its answer this -defendant admitted the allegations of the complaint, but alleged as a defense that it became subrogated " to the rights of the plaintiffs in this action to the extent of $2,000 of any recovery that may be had herein." If this is more than an erroneous conclusion of law, based on the facts pleaded,^ at least no attempt was made to prove the truth of the allegation.
The action then proceeded to trial. Substantially the entire record is devoted to testimony bearing upon the alleged negligence of the railroad company and the extent of the damage. Each building as well as the personal property was described. The value of the latter was given. As to the buildings, however, the rule of damage adopted and expressly left to the jury was'the difference between the value of the farm before and after the fire. There was no question submitted as to the loss on the horse barn as a separate item. There was no request that such a question be submitted. There was no finding whatever on the subject. All the jury did was to bring in a general verdict to the effect that subtracting whatever they may have allowed for the personal property the farm was worth $2,500 less after the fire than it was before.
Nor was there anything that occurred during the trial that amounted to a waiver by the plaintiffs of the allegations of their complaint as to the nature and effect of the subrogation agreement or any promise express or implied that the insurer should receive the first $2,000 of any general. recovery that might be had. At one time, evidently fearing that the jury might be misled by a reference which had just been made to the insurance situation, it said the payment of $2,000 was not to be considered by them " because it would have to be refunded to the insurance company under the subrogation agreement." Fairly construed this was but a repetition of the complaint — any allowance made for the loss of the barn must be refunded up to $2,000. It was so understood by the trial judge. He told the jury that the insurance company would be subrogated to the rights of the plaintiffs if the railroad l< has to pay $2,000 upon the barn, that is if an award is made here in favor of the plaintiffs."
Because of the conflicting claims of the plaintiffs and the insurance company (there was delay in entering judgment. Finally a motion was made by the latter. Alleging in its affidavits the insurance contract, the loss of the' barn and payment, for the first time we are given the language of the subrogation agreement. It is to the effect that the plaintiffs assigned and transferred to the insurer their claims to the extent of $2,000 against any party hable or adjudged liable " for the burning and destruction of said property " (referring to the barn) and subrogated it to their 'right in the premises. Upon this affidavit the trial judge directed judgment against the railroad company and that this judgment provide that $2,000 thereof and interest be paid to the insurance company and the balance to the plaintiffs. From this order and the judgment entered thereon, unanimously affirmed by the Appellate Division, the plaintiffs have appealed by permission to this court. They seek a reversal, however, only so far as their rights as against the insurance company are affected. Their claim is that as a matter of law, under the facts presented to him, the trial judge had no power to make such an order.
We agree with the appellants. We see no theory upon which the action of the trial judge may be sustained. The insurance company seeks affirmative relief. It is entitled thereto only to the amount, not exceeding $2,000, which has been allowed to the plaintiffs for the loss of the horse barn. Upon it is thé burden o! showing the facts upon which its relief depends. The horse barn was destroyed. So were a number of uninsured buildings and a quantity of personal property. The verdict, as has been said, was a general one covering all losses. Who can say what the jury allowed for any particular item? Was it a few hundred dollars for the barn and $2,000 for the other property, or was the reverse the truth? Can the insurance company point out what proportion of the general verdict has been assigned to it? It is said that the unanimous affirmance establishes that the total loss suffered by the plaintiffs was $2,500. If so they have collected of the insurance company $2,000 and should repay it. As between the plaintiffs and the railroad company the affirmance does fix the amount of damages. Not as between the plaintiffs and the insurance company (Pentz v. Receivers of Ætna F. Ins. Co., 9 Paige, 568), especially where as here it admits in its answer that the total loss was $35,000. And even were it so, were the damages allowed too much or too little, the insurance company is only interested in that portion allowed for a specific item. Not only is there no direct hint as to what this may be. It is impossible to draw the slightest inference. The rule of damages for injury to real estate caused by negligence enforced in this case is not the same as in an action to recover under an insurance contract for the destruction of a building by fire. The premises as a whole might be slightly depreciated in value by the loss of this particular barn. The jury might have so found. If they did, the insurance company has been allowed losses recovered for the destruction of uninsured property, to which it had no title by assignment, no right under any theory of subrogation.
The judgments appealed from must be reversed, with costs to the appellants in this court and in the Appellate Division against the respondent Hartford Fire Insurance Company. Judgment must be directed against the New York Central and Hudson River Railroad Company in favor of the plaintiffs for the sum of $3,127.31, with interest thereon from November 25, 1922.
His cock, Ch. J., Gardozo and Lehman, JJ., concur; Pound, McLaughlin and Crane, JJ., dissent.
Judgment accordingly.