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later-is barred by the terms of the policy so far as these actions are concerned. But it is urged that the discontinuance of such actions cannot be resorted to for the purpose of defeating a recovery here, since the defendant through its attorneys undertook their defense and consented to the discontinuance without Creem & Co.'s knowl. edge or consent. This was neither alleged in the complaint nor proved at the trial, and if it had been it would not have aided the plaintiffs. The plaintiffs in these actions had an absolute right, upon payment of costs to discontinue (Janssen v. Whitlock, 58 App. Div. 367, 68 V. Y. Supp. 1086; Walsh v. Walsh, 33 App. Div. 579, 53 N. Y. Supp. 881), and the court was without power to prevent it (Matter of Butler, 101 N. Y. 307, 4 N. E. 518; Schlegel v. Roman Catholic Church of Most Holy Trinity, 124 App. Div. 502, 108 N. Y. Supp. 955; Telephonine Co. v. Douthitt, 115 App. Div. 362, 100 N. Y. Supp. 781). Those actions were at law. Defendants had not asked for any affirmative relief, and the plaintiffs could no more be compelled to continue the litigation than they could have been to commence it. The actions which the Johnstons brought against the bridge company were, as we have already seen, pending at the expiration of three years, June 6, 1899—but this court held in Tolmie v. Fidelity & Casualty Co., 95 App. Div. 352, 88 N. Y. Supp. 717, affirmed 183 N. Y. 581, 76 N. E. 1110, that an action upon a policy which contained a provision similar to the one here under consideration was barred in three years unless a suit was pending against the assured. In that case Wood & Tolmie had done work under a contract with the city of New York. A person injured through their negligence brought an action against the city to recover damages. The city notified Wood & Tolmie of the commencement of the action, and they, in turn, notified the insurance company, which assisted in the defense. Judgment was recorered against the city within three years after the accident. When the three years expired no action was pending against the assured, but the city, more than 30 days thereafter, brought an action against Wood & Tolmie and their surety on a bond given to indemnify it against the claim, and recovered judgment. Tolmie, as surviving partner, then brought an action to recover from the insurance company on the policy, but it was held that the action was barred, in that it was not commenced within the period provided in the policy.
The final judgments in the actions against the bridge company were entered in January and May, 1902, respectively, and, even if these could be deemed actions against the assured within the meaning of the policy, the present action was not brought within 30 days after the final judgments were rendered. It is true this action was brought within 30 days after judgment was entered upon the remittitur from the Court of Appeals in action No. 2, brought by the bridge company against these plaintiffs, but this fact cannot possibly affect the limitation clause in the policy. It was not “a suit arising out of such accident pending against the assured.” It was an action brought against Creem & Co. by the bridge company to subject the former to a liability growing out of a contract which they had entered into with the latter. It seems to me, therefore, that the defense that the action
to the maintenance of the action, and defendant's exception to the refusal to direct a verdict in its favor was well taken.
It is suggested by the respondents that the defendant waived the limitation clause of the policy, or, at least, is estopped from resorting to it to prevent a recovery, but such waiver or estoppel was neither alleged nor proved. In this connection our attention is called to the fact that the defendant had also insured the bridge company, and, when Kate Johnston commenced an action against it, it notified the defendant of that fact, and defendant's attorneys assumed the defense of the action, and in turn notified these plaintiffs that they were liable to the bridge company in case of a recovery. The complaint alleges that:
“Thereafter, in response to such notice, and at the instance and request of the defendant herein, and upon its express promise and assurance that every opportunity would be afforded for protecting their interest to the fullest extent, these plaintiffs agreed to and did assist the defendant herein in its defense of said suit, and upon the trial thereof testified as witnesses for said Phoenix Bridge Company."
This allegation is not sufficient to admit proof of a waiver or estoppel. The trial court so held, and, having refused to permit an amendment of the complaint, struck out all testimony which had been introduced, over defendant's objection, for the purpose of showing such waiver or estoppel. The respondents insist that this ruling was erroneous; that the testimony stricken out, which is set out in the record, was sufficient to justify the jury in finding a waiver or estoppel, and for that reason this court should amend the complaint, if necessary, to sustain the judgment.
I do not think the evidence would have justified the jury in finding either a waiver or estoppel, but it is unnecessary upon this appeal to pass upon that question. The court cannot sustain the judgment by considering testimony stricken out by the court below, which was not passed upon by the jury, and to do so would not only deprive the defendant of an opportunity to controvert it, but also deprive it of an exception to a refusal to strike out.
Other errors are alleged, and, since there must be a new trial, it may not be out of place to briefly call attention to some of them. In the application for the policy the plaintiffs stated their business to be "General Contractors, sewer construction.” The defendant was fully informed of the facts involved in or connected with Mrs. Johnston's injuries, and its attorneys thereafter undertook the defense of the actions brought by the Johnstons against the plaintiffs. This would seem to be a practical construction that the policy covered their liability for the accident. The work which Creem & Co. did was quite similar to sewer construction, and it could not be said that there was a breach of warranty as matter of law. The court held that phrase was ambiguous, and admitted oral evidence as to its meaning. The plaintiff Creem was allowed to testify as to his conversations with one Whiting, the broker through whom the policy was secured. The premium was based upon the amount of wages paid, and Whiting received the premium from Creem & Co. and delivered the policy. He knew of the work done, and examined the pay rolls at the end of the year
a small additional premium being then paid. No other person made any examination to ascertain if the premium had been correctly estimated, though that right was reserved to the defendant by the policy. Whiting's authority was not shown. A superintendent of the defendaut testified that he was never an agent of the company, and, so far as appears, he did nothing more than any employé or agent of the plaintiffs, familiar with the insurance business, might have done. Assuming, therefore, that the defendant would have been bound by his acts and knowledge, despite the provisions of the policy to the contrary, if he had been an agent of the insurance company, the evidence fails to show or justify a finding that he was such an agent. The admission of Creem's testimony as to conversations with him was therefore error, and it should have been stricken out on defendant's motion.
It was also error to permit a recovery for the expenses incurred by the plaintiffs in successfully defending the action brought by the bridge company on the Kate Johnston judgment. In Cornell v. Travelers' Insurance Co., 175 N. Y. 239, 67 N. E. 578, which was an action brought upon a policy containing a similar provision to the one involved in the present action, it was held that where the company failed to defend, but the assured did successfully defend an action brought against him to recover damages for alleged injuries, he could not recover his expenses incurred in defending such an action, since the policy covered only claims for which he was legally liable, and did not indemnify him against groundless claims. The plaintiffs having defended that action successfully, it is therefore established that no legal liability for damages rested upon them, and they have no claim under the policy against the defendant.
It follows that the judgment and order appealed from are reversed and a new trial ordered, with costs to appellant to abide event. All concur, except LAUGHLIN, J., who dissents in part.
LAUGHLIN, J. (concurring). I concur in the opinion of Mr. Justice McLAUGHLIN, with the exception that I think the plaintiffs sufficiently pleaded waiver and estoppel on the part of the defendant with respect to the period of limitation for bringing the action prescribed in the policy. Plaintiffs were not obliged to anticipate this defense by alleging in the complaint facts showing waiver or estoppel. When the defense was pleaded, they were at liberty to meet it, with or without a reply, by any proof tending to show that the defendant had waived its right or had, by its acts, become estopped from interposing that defense. Aside from this, however, the plaintiffs formally replied to the defense and set up facts sufficient, if established, to show waiver or estoppel. The general counsel of the defendant, who, in its behalf, was conducting the defense of the actions against the bridge company, was authorized to induce the plaintiffs to come in and aid in the defense of that action, and to rely upon his company protecting them under their policy of insurance with it; and if, as the evidence tends to show, he led the plaintiffs to refrain from employing other counsel and leave the matter in his hands on the express assurance that his company would defend them against any and all actions
company should be held to have waived its right, and should be deemed estopped from asserting its right to defend this action as not having been timely brought within the provisions of the policy, if, but for such acts of waiver and estoppel, the rights of the plaintiffs could and might have been preserved.
The evidence of waiver and estoppel, however, having been stricken out, is not available to the respondents on this appeal. I merely wish to express my opinion that that evidence was admissible and available to the plaintiffs without any further amendment of their pleadings.
KARST V. PRANG EDUCATIONAL CO.
(Supreme Court, Appellate Division, First Department. May 7, 1909.) 1. COPYRIGHTS (8 47*)-ROYALTIES—RECOVERY-NATURE AND FORM OF REMEDY.
The remedy to recover royalties reserved under an assignment of a copyright interest in books is an action at law for the royalties, rather than in equity for an accounting.
(Ed. Note -For other cases, see Copyrights, Dec. Dig. $ 47.*] 2. DISCOVERY (8 36*)–EXAMINATION OF DEFENDANT.
In an action at law for the recovery of royalties reserved in an assignment of a copyright interest in books, plaintiff may examine defendant as to the state of accounts on the sale of books, either to prepare his complaint or for the purpose of using the evidence on the trial.
[Ed. Note.—For other cases, see Discovery, Cent. Dig. 49; Dec. Dig.
§ 36.*] 8. TRIAL (8 11*)—SPECIAL CALENDARS—TRANSFER.
Where no facts are alleged on which plaintiff would be entitled to equitable relief if the facts stated show a cause of action at law, the case should be stricken from the equity calendar, and transferred to the Trial Term calendar.
Ed. Note.-For other cases, see Trial, Cent. Dig. $8 28–30; Dec. Dig. $ 11.*]
Ingraham, J., dissenting.
Action by John Karst against the Prang Educational Company. From an order denying the motion to strike the cause from the Special Term calendar, defendant appeals. Reversed.
Argued before INGRAHAM, MCLAUGHLIN, LAUGHLIN, CLARKE, and SCOTT, JJ.
Nelson L. Robinson, for appellant.
LAUGHLIN, J. The motion was made upon the theory that this is an action at law, and not a suit in equity. The complaint states facts showing a cause of action at law only, but it demands only equitable relief.
The plaintiff sues on an express contract for the payment of royalties on the sale of certain books. The contract fixes his royalties at •For other cases see same topic & $ NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes
2 per cent of the net wholesale price of all books falling within the terms of the contract sold by the defendant. The plaintiff
had a copyright interest in the publications, but he sold and assigned the same to the assignor of the defendant and to the defendant, reserving the right to the royalties on the sale of the books. He therefore has no interest in the books, no interest in the profits as such realized thereon by the defendant, and, although the contract requires the defendant to give him an account of the sales at fixed intervals, yet the failure of the defendant to comply with the contract in this regard or to pay the royalties would not give him a cause of action for an accounting. Moore v. Coyne, 113 App. Div. 52, 98 N. Y. Supp. 892; Baylis v. Bullock Electric Mfg. Co., 59 App. Div. 576, 69 N. Y. Supp. 693; Hart v. Garrett Co., 87 App. Div. 536, 84 N. Y. Supp. 774, and cases cited; Everett v. De Fontaine, 78 App. Div. 219, 79 N. Y. Supp. 692; Smith v. Bodine, 74 N. Y. 30; Lindner v. Starin, 128 App. Div. 661, 113 N. Y. Supp. 201. The plaintiff has under the contract merely a right of action for the royalties, and, having such action, he had the right to examine the defendant either for the purpose of preparing his complaint or for the purpose of using the evidence upon the trial and thereby ascertaining the state of the account, 'which is all that is material. There is no necessity for any accounting. The plaintiff merely needs to know the wholesale prices of the books and the number of books sold, and then the amount to which he is entitled may readily be computed. The contract leaves nothing to be deducted and nothing else to be considered. The plaintiff claims that it is a suit in equity and has noticed it for the Special Term calendar. In such case it has been held that the court may retain it on the Special Term calendar, and at the commencement of the trial or at the close of the proofs, if no right to equitable relief be shown, the complaint may be dismissed, although the facts show that the plaintiff is entitled to relief at law. Mittenthal v. Rabinowitz, 60 App. Div. 138, 70 N. Y. Supp. 119. We are of opinion, however, that, where no facts are alleged upon which the plaintiff would be entitled to equitable relief, yet, if the facts stated show a cause of action at law, the case should be stricken from the equity calendar, and transferred to the Trial Term calendar. McNulty v. Mt. Morris Electric Light Co., 172 N. Y. 410, 65 N. E. 196; Everett v. De Fontaine, 78 App. Div. 219, 79 N. Y. Supp. 692; Thomas v. Schumacher, 17 App. Div. 441, 45 N. Y. Supp. 166, affirmed 163 N. Y. 554, 57 N. E. 1126. See, also, Baylis v. Bullock Electric Mfg. Co., 59 App. Div. 576, 69 N. Y. Supp. 693; Davis v. Morris, 36 N. Y. 569, 572; Hudson v. Caryl, 44 N. Y. 553, 555; Wheelock v. Lee, 74 N. Y. 495.
Regarding the action as one at law, however, the plaintiff fails to demand the money judgment to which he is entitled, and it may be that it will be necessary for him to have his complaint amended; but whether he be entitled to only nominal or to substantial damages his cause of action on the facts stated is clearly at law and not in equity.
It follows that the order should be reversed, with $10 costs and disbursements, and motion granted, with $10 costs.