A Selection of Cases on the Law of Torts

by Unknown

I was informed in the course of the argument, although these facts do not appear formally before me, that the defendant Charles had, before this present action, brought an action against the company upon the policy to recover the amount of his loss, and that in that action the company disputed their liability on the ground that the loss, having been caused by the arson of the wife, was not covered by the policy, and that they had also set up a counterclaim for damages against Smith and his wife, who was brought in as a party to the action upon the same ground; that that action went down to trial, and that the learned judge, before whom the cause came on for trial, adjourned the proceedings in order to enable the company to test the validity in law of their contention in a separate and distinct manner before proceeding to try the question of arson. The present action was then commenced. The questions, however, for determination in this action must depend exclusively upon the facts set forth in the statement of claim, and the issues of law raised by the demurrer.

The company in support of their case started with the general principle that “every husband is liable for the wrongful acts of his wife,” and that as the defendant Mary had wrongfully injured and destroyed the insured property, and had caused the damage upon which a claim upon the policy had been based, they, as the insurers of the property, had a right to sue her and her husband for the damage and injury so done by her, and not the less so because the husband happened to be himself the assured whom they had agreed to indemnify. In substance, the contention of the company came to this, that they ought not to be called upon to pay the assured the amount claimed, without being entitled concurrently to claim damages from him for the loss caused by the act of his wife, for which he is answerable.

The defendants, by their demurrer to this claim, raised two main issues of law. In the first place they said that the company were not in a position to maintain any action for the alleged damage done to the goods, because they were not the owners of the goods, nor had they sufficient interest therein to entitle them to maintain an action; that their only right as insurers would be to avail themselves of such rights and remedies as were vested in their assured, after they had admitted his claim and been subrogated to his rights in relation to the subject of insurance; and that, even if they had been subrogated to the rights of the assured, they could only sue in his name and could not maintain an action in their own name, and therefore that no such action could be maintained in the present case, because the assured had no right of action against his own wife.

In the next place the defendants contended that this action being based upon an act, which on the face of the statement of claim amounted to a felony, could not be maintained, because it was not shown that the rights of the public law had been vindicated by a prosecution of the felon.[^[549]]

Upon the first ground of demurrer the defendants are, in my judgment, clearly entitled to judgment both upon principle and upon authority. It appears to me that the insurance company have no right of action under the circumstances for the damage done to the goods by the defendant Mary. At the time when the damage was done to the goods the company had no property or interest in the goods sufficient to sustain any action for damage done to them; no right or interest in the goods could accrue to the insurance company, until they had acknowledged the claim under the policy, and by so doing entitled themselves to the benefit of any claims and causes of action vested in the assured; but it seems that even up to this moment the insurance company dispute the claim and deny the right of the assured to demand an indemnity under the policy. But, further, it seems to me equally clear that, if they had done everything to entitle themselves to the benefit of such a claim, it could only be enforced in the name of the assured and for the purpose of enforcing his rights, and inasmuch as he could have no such claim or right against his wife, it follows that in no possible view of the case is the plaintiffs’ claim sustainable. The case of Simpson v. Burrell, 3 App. Cas. 279, is in point upon this question. In that case Burrell was the owner of two ships, one of which negligently ran down and sank the other with a valuable cargo. Burrell’s underwriters upon the sunken ship paid him for a total loss, and were so subrogated to all his rights. A claim was made by the owners of the cargo in the sunken ship against Burrell, as the owner of the ship in fault, for the value of their goods, and Burrell, as the owner of the ship in fault, paid into court the whole value of that ship at £8 per ton, as the limit of his liability under the Merchant Shipping Acts, to be ratably divided among all who had sustained loss and damage by the ship being negligently run down and sunk; thereupon Burrell’s underwriters upon the sunken ship who had paid for a total loss claimed to come in and share with the rest the money paid in by the ship in fault; but the House of Lords, reversing the decision of the Lords of Session in Scotland, decided that they had no such right, and the reasoning in that case is directly applicable to the present. The Lord Chancellor Cairns said, “The view of the Lord President therefore appears to be that, after payment by the underwriters as on a total loss, there is effected by some independent operation of law a transfer of whatever, if anything, can be recovered in specie of the thing insured—and by reason of the transfer of the thing insured an independent right in the underwriters to maintain in their own name, and without reference to the person assured, an action for the damage to the thing insured which was the cause of the loss. I am not aware of any authority for the view of the case thus taken. I know of no foundation for the right of the underwriters, except the well-known principle of law that where one person has agreed to indemnify another he will, on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss.”

Lord Penzance said: “The learned counsel for the underwriters contended that they, by virtue of the policy which they entered into in respect of this ship, had an interest of their own in her welfare and protection, inasmuch as any injury or loss sustained by her would indirectly fall upon them as a consequence of their contract, and that this interest was such as would support an action by them in their own names and behalf against a wrong-doer. This proposition virtually affirms a principle which I think your Lordships will do well to consider with some care, as it will be found to have a much wider application and signification than any which may be involved in the incidents of a contract of insurance. The principle involved seems to me to be this,—that where damage is done by a wrong-doer to a chattel, not only the owner of the chattel, but all those who by contract with the owner have bound themselves to obligations which are rendered more onerous, or have secured to themselves advantages which are rendered less beneficial by the damage done to the chattel, have a right of action against the wrong-doer, although they have no immediate or reversionary property in the chattel, and no possessory right by reason of any contract attaching to the chattel itself, such as by lien or hypothecation. This, I say, is the principle involved in the respondent’s contention. If it be a sound one, it would seem to follow that if by the negligence of a wrong-doer goods are destroyed, which the owner of them had bound himself by contract to supply to a third person, this person, as well as the owner, has a right of action for any loss inflicted upon him by their destruction. But if this be true as to injuries done to chattels, it would seem to be equally so as to injuries to the person. An individual injured by a negligently driven carriage has an action against the owner of it. Would a doctor, it may be asked, who had contracted to attend him and provide medicines for a fixed sum by the year, also have a right of action in respect of the additional cost of the attendance and medicine cast upon him by the accident? And yet it cannot be denied that the doctor had an interest in his patients safety. In like manner an actor or singer, bound for a term to a manager of a theatre, is disabled by the wrongful act of a third person to the serious loss of the manager; can the manager recover damages for that loss from the wrong-doer? Such instances might be indefinitely multiplied, giving rise to rights of action which in modern communities, where every complexity of mutual relations is daily created by contract, might be both numerous and novel.” See, also, the cases of Randal v. Cockran, 1 Ves. Sen. 97; North of England Insurance Association v. Armstrong, Law Rep. 5 Q. B. 244; Stewart v. Greenock Marine Insurance Co., 2 H. L. C. 159; Davidson v. Case, 8 Price, 542; Mason v. Sainsbury, 3 Douglas, 61; Yates v. Whyte, 4 Bing. N. C. 272.

This action cannot therefore in my judgment be maintained, nor is there any substantial injustice in such a result, because, as it seems to me, the insurance company are in this dilemma; the loss and damage caused by the wrongful act of the wife either is or is not a loss which the company have agreed to indemnify the husband against; now, if it is such a loss, an attempt by the company to enforce against the husband a return indemnity or reimbursement is at variance with the very substance of their undertaking to indemnify him; if, on the other hand, the loss, by reason of its having arisen from the act of the wife, is not within the risks and losses covered by the policy, then this action is as wholly misconceived, unnecessary, and unfounded, as if the loss had been caused by any other risk not covered by the policy. The truth is that the real and substantial contention on the part of the insurance company is, that the loss in question having been caused by the wilful act of the wife of the assured, although acting without the privity of her husband, is not a loss covered or insured against by the policy. That question might be raised in the action brought by the assured against the company upon the policy, but it does not arise, and indeed could not be raised, so as to receive a binding and judicial determination, in such an action as the present. As however the question has been fully and ably argued before me, and as the parties have expressed a desire to elicit an opinion upon the point, I have no hesitation in saying that it appears to me to be upon principle perfectly clear and free from doubt that such a loss would be covered by an ordinary policy against loss caused by fire; under such a policy the company would be liable for every loss caused by fire, unless the fire itself were caused and procured by the wilful act of the assured himself or some one acting with his privity and consent. In order to escape from responsibility for such a loss as the present the company ought to introduce into their policy an express exception.

Judgment for the defendants.

KLOUS v. HENNESSEY
Supreme Court, Rhode Island, June 14, 1881.
Reported in 13 Rhode Island Reports, 332.

Durfee, C. J.[^[550]] This is an action on the case for conspiracy. The declaration charges in effect that the defendants and one Patrick Kenney, said Kenney being then a debtor of the plaintiffs, conspired together to prevent the plaintiffs and the other creditors of said Kenney from getting payment of their claims out of his property, and that, in pursuance of the conspiracy, Kenney made fictitious mortgages of his real and personal property to the defendants, under cover of which the defendants removed the personal property out of the possession of Kenney, and secreted it so that the plaintiffs were prevented from attaching it, and thus lost their claims. At the trial, after the plaintiffs had introduced their testimony in proof of the declaration, the court, on motion of the defendants, it having appeared that the plaintiffs were merely creditors at large of Kenney, without any interest in his property or lien upon it by attachment, levy, or otherwise, ruled that the action, in respect of the charges aforesaid, was not maintainable. The plaintiffs excepted to the ruling for error, and now petition for a new trial.