Case Name: NEW JERSEY & P. CONCENTRATING WORKS v. ACKERMAN et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-06-05
Citations: 39 N.Y.S. 585
Docket Number: 
Parties: NEW JERSEY & P. CONCENTRATING WORKS v. ACKERMAN et al.
Judges: 
Reporter: West's New York Supplement
Volume: 39
Pages: 585–592

Head Matter:
NEW JERSEY & P. CONCENTRATING WORKS v. ACKERMAN et al.
(Supreme Court, Appellate Division, First Department.
June 5, 1896.)
1. Insurance—Agreement to Limit Litigation.
A stipulation in a policy on which 100 underwriters are se\ erally liable for the one-hundredth part of the insurance, and that the assured shall not sue more than one of the underwriters at one time, and that a final decision in any action thus brought shall be decisive of the claim of the assured against each of the underwriters who agree to abide the event of the suit, is not void as against public policy; and, in an action in which all the underwriters were made parties defendant, a plea that it was brought in violation of the agreement should have been sustained. In-graham, J., dissenting. 37 N. Y. Supp. 489, reversed.
2. Same—Limitation or Actions.
Under a condition in such policy that no action shall be brought on it after three years, service on one of the defendants within the time is sufficient to prevent the running of the limitation as against all the defendants.
Appeal from special term, New York county.
Action by the New Jersey & Pennsylvania Concentrating Works against Charles F. Ackerman and others on a policy of insurance. From an interlocutory judgment entered on an order sustaining a demurrer to the second and third defense of the answer (37 N. Y. Supp. 489), defendants appeal. Reversed as to the second defense. Affirmed as to the third.
Argued before VAN BRUNT, P. J., and BARRETT, RUMSEY, O’BRIEN, and INGRAHAM, JJ.
Herbert Barry, for appellants.
A. Walker Otis, for respondent.

Opinion:
BARRETT, J.
The facts upon which the questions of law presented by the demurrer are raised are fully and accurately stated by the learned judge at special term, in the opinion there filed. The main question is as to the validity of the stipulation that suit shall not be brought or maintained upon any claim arising out of the insurance in question against more than one of the underwriters at one time, and, further, that a final decision in any suit thus brought shall be decisive of the claim of the assured against each of the underwriters. In consideration of this stipulation upon the part of the assured, each of the underwriters waives any limitation as to costs, and agrees to abide the event of any such suit. This contract, in our judgment, runs counter to no rule founded upon public policy. Upon the contrary, public policy favors any agreement which tends to prevent multiplicity of actions. The purpose of the contract is to have all questions between the parties settled in one action. That purpose is clearly commendable. We have here not 100 separate policies of insurance, but one policy underwritten by 100 insurers contracting severally, and so contracting in consideration of a premium paid to them, it seems, as a body. Why should not all questions between these parties be settled in one action against one of their number? And why should not the separate claims of the insured against the other 99 await the finality of such single action? It may possibly be that, when the single action is ended, the 99 will not respond. But what of that? The crucial fact is that they have agreed to respond, and, if they fail to do so, the courts are open to the assured. At that epoch the 99 will simply have no defense. By their contract, the judgment against one of their number who was first sued will be res adjudicata as to them. The contract limitation will not run against the remaining 99 claims of the assured pending the litigation of such single action. As to them, the right of action, under the terms of the contract, matures only when such single action has finally terminated in favor of the assured. What is there, then, against the validity of the contract? Simply, the bare possibility that, upon the termination of the first action in favor of the assured, the underwriters may still refuse to pay,—may, in fact, resort to guerrilla warfare or dilatory tactics. The answer is that the contract contemplates loyal submission of both parties to the final judgment of the court in the single action. People may always attempt to avoid their engagements, however binding in form. They do this sometimes even with regard to existing actions. Stipulations that several actions shall abide the event of one are not alwrnys loyally observed when the one action has terminated; but, because of the possibility of a doubt upon that head, the law does not discourage such stipulations. We see no reason why sensible business men, contracting with presumable honesty, may not, if they choose, engage for the settlement of any future difference in the simple and inexpensive manner provided for in this policy.
What difference is there between a stipulation to abide by the event of one suit without bringing the other 99, and a stipulation to abide by the event of one suit after bringing the other 99? In each case the party is entitled to judgment and execution upon the final decision of the one suit. He may not secure it quite as speedily in the one case as the other; but the immediate right thereto is the same. The only substantial difference is that costs are saved in the one case, and incurred in the other; and that difference in the policy in question is to the advantage of both parties. There is here no attempt to oust the court of any part of its jurisdiction, or to supersede the ordinary methods of trial, or to deprive the assured of the protection of the law. The stipulation simply recognizes the undoubted fact that, while the underwriters contract severally, their obligation is precisely alike, under the same policy, signed by all. These views are not antagonistic to those expressed in Knorr v. Bates, 14 Misc. Rep. 501, 35 N. Y. Supp. 1060. There the agreement was (so said the court) that no action should be brought against any of the underwriters, but only against their attorneys in fact. The learned court held that that provision in the policy amounted to a stipulation that in no event should the underwriters be sued for the enforcement of their obligation. It is true that the underwriters there agreed to abide the result of the action against their attorneys, but the court held that the attorneys were not parties or privies to the underwriters' promise; that they were strangers to the contract; and that an action could not be maintained against them upon it. We took a different view of the liability of attorneys in fact for certain underwriters in Leiter v. Beecher, 2 App. Div. 577, 37 N. Y. Supp. 1114, where the question arose in a direct action against such attorneys. But the ruling in Knorr v. Bates proceeded entirely upon the view there entertained, that no action would lie against the attorneys, and consequently that the condition precedent of a judgment against them could never be fulfilled. Here, however, there can be no question of the right to maintain the one action against the one underwriter. Consequently, the conclusion in Knorr v. Bates, that the stipulation there forbade enforcement of the underwriters' liability at any time or in any manner, differentiates that case from the present, and avoids any necessity for its further consideration.
This conclusion leads to the reversal of the judgment appealed from so far as the demurrer to the second detense is concerned. The right to insist upon the terms of the contract is not waived by failure to demur to the complaint. What is thereby waived is the right to object to the improper joinder of separate causes of action against each individual defendant. The plea which is here demurred to is not a plea against such improper blending of causes of action, but a plea that the action is brought in violation of the terms of the contract. The contract provides that suit shall not be brought against more than one of the underwriters at one time. The answer pleads that stipulation, and seeks its enforcement. That has nothing to do with the improper blending of causes of action. It goes to the root of the contract obligation, and, waiving all questions of form, insists, as matter of substance, that the contract obligation shall be respected. The action is brought against all; consequently, against more than one at one time. To this, all can plead the limitation of the contract. The one first served can, equally with the others, plead this limitation, for he is prejudiced by the violation of the stipulation on that head. Instead of defending alone, unhampered and unembarrassed by the presence of other underwriters, and by the diffi culties of procedure to which their presence may give rise, he finds himself in an action essentially foreign to that contracted for. Instead of now defending with the ease, directness, and simplicity of procedure given to a single defendant, he is compelled to share the developments and vicissitudes of a complex litigation, in which the single issue between himself and the plaintiff may be delayed, clouded, and complicated by the issues raised between the plaintiff and the other defendants. It was to avoid all this, as well as to save expense, that the stipulation in question was made. It was to avoid not merely an improper joinder of causes of action, but the bringing of more than one action against one at all, in any form or manner. If 100 separate suits had been brought, certainly each defendant other than the defendant first served could have thus pleaded. It is the same whether one suit is brought against the 100, or one suit against each of the 100. The statutory objection to the form of such actions is one thing. But the contract obligation upon the subject is quite another. The defendants have not waived their right to plead the limitation of the contract by failing to demur to the complaint. They could not take advantage of this stipulation of the contract by demurrer. That could only be done by answer. They were bound to plead the stipulation, and insist upon its terms, or they would have waived it. The demurrer (as already observed) only goes to the vice of improperly uniting causes of action which, disunited, might be maintained. The plea goes to the right to now maintain more than one such cause of action, whether united ór disunited. The plea avers that, "in violation of the said stipulation, the plaintiff has brought this action against more than one of the persons who were underwriters, on the policy set out herein, at one time." The demurrer admits the truth of this averment. The plea was consequently good, and should have been sustained.
We think, however, that the demurrer to the third defense was properly sustained. The stipulation of the contract that no action shall be brought upon the policy in any court after three years from the time the accident occurred must be read in connection with the stipulation already discussed. On holding that the latter is valid, the conclusion follows that the limitation as to the time within which an action must be brought relates to the action contemplated by the parties, namely, against one underwriter at one time. The present action was brought upon the policy within the three years. That is averred in the plea. The action as brought may not be sustainable owing to the objection already considered. In fact, it may not be the action which the parties intended. But the fact that the action may fail because it is not brought against one underwriter at one time does not affect the present question. The defendants, as we have seen, are severally liable. An action against one of them was commenced when the first defendant was served. That saved the contract limitation. He who was served within the three years cannot plead it successfully; nor can he who was served afterwards, because the action thus commenced prior to the expiration of the three years stopped the running of the contract limitation until final judgment as between the defendant first served and the plaintiff. The plaintiff may discontinue its action as against every defendant save some one who was served within the three years; and it may again proceed against all the other defendants upon obtaining final judgment against the one defendant who may thus be left in the present action. The plea of these defendants that, as to all of their number save those served within the three years, the contract limitation applies, is bad, and the judgment on that head should be affirmed.
It follows that the judgment appealed from should be reversed as to the second defense, and affirmed as to the third defense, without costs of this appeal or of the special term, with leave to the plaintiff to apply at special term for such relief as it may be advised.
VAN BRUNT, P. J., and RUMSEY and O'BRIEN, JJ., concur.