Court Opinion

ID: 6657461
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:58:56.819407+00
Date Added: 2024-06-11T16:00:00.532816
License: Public Domain

Letton, J.,
concurring separately.
The contract between the plaintiff and the defendant Brown was, in effect, a contract of insurance. By its *839terms Brown became absolutely liable upon tbe happening of a loss by fire to pay David Bradley & Company the value of the goods destroyed. When he insured these goods with the several insurance companies, he became, in effect, a reinsurer. He stood in the same relation to the owner of the goods and to the insurance company that the original insurer, if it reinsures, stands to the insured and to the reinsuring company. The principles of law governing this relation are well settled, and it is held by a majority of the courts passing upon the question that the liability of a reinsurer to pay the whole amount of the loss to the reinsured is not affected by the insolvency of the latter or his inability to fulfil his own contract with the original policy holder. It is said in Goodrich & Hick’s Appeal, 109 Pa. St. 523: “Reinsurance is properly applied to an insurance effected by one underwriter with another, the latter wholly or partially indemnifying the former against the risks which he has assumed; that is to say, after an insurance has been effected, the insurer may have the subject of insurance reinsured to him by some other. There is in such case, however, no privity between the original insured and the reinsurer; the latter is in no respect liable to the former, as a surety or otherwise, the contract of insurance and of reinsurance being totally distinct and disconnected. * * * Even if the insurer fail, or became insolvent, so that his insured receives only a dividend, however small, the reinsurer can gain nothing by this, but must pay the amount of the loss to the first insurer.” Where an insurance company has written a policy and afterwards causes itself to be reinsured, and after the loss of the property insured such company becomes insolvent, the person originally insured has no equitable lien upon the sum of money due on the part of the reinsurer, but the fund belongs to all the creditors of the insolvent company ratably. Herckenrath v. American Mut. Ins. Co., 3 Barb. Ch. (N. Y.) 63. See, also, Blackstone v. Alemannia Fire Ins. Co., 56 N. Y. 104; Consolidated R. E. & F. Ins. Co. v. Cashow, 41 Md. 59; Eagle *840Ins. Co. v. Lafayette Ins. Co., 9 Ind. 443; Delaware Ins. Co. v. Quaker City Ins. Co., 3 Grant Cas. (Pa.) 71; Strong v. American Central Ins. Co., 4 Mo. App. 7.
These decisions seem to be supported by sound reason. The original insurer has an insurable interest in the property because, in case of its loss by fire, he is liable to pay the loss to the extent to which he has insured it. When a loss occurs, the relation between him and the insured is that of debtor and creditor. There is no privity between the insured and the reinsurer, and any sum recoverable by the insurer from the reinsurer is an asset of his estate, liable to the claims of his general creditors, and not subject to any specific lien or charge in favor of the insured.