Hart v. Western Rail Road

Shaw, C. J. This is an action of first impression, and is, we believe, the first brought upon the St. of 1840, c. 85, involving the present question. The action is brought, in fact, by the Springfield Mutual Fire Insurance Company, for their own benefit, in the name of the present plaintiffs, under the circumstances mentioned in the agreed statement of fads, on which the case was submitted to our decision. 1. The first question in order, it appears to us, is, whether, upon the facts stated, the defendants were liable to any body, and for any loss, by force of St. 1840, c. 85; the defendants insisting that the case is not within the statute. The statute provides, § 1, that “ when any injury is done to a building or other property of any person or corporation, by fire communicated by a locomotive engine of any rail road corporation, the said rail road corporation shall be held responsible, in damages, to the person or corporation so injured.” It is contended that the plaintiffs’ building was not burnt by fire communicated by a locomotive engine, within the meaning of the statute. And the case certainly presents a question of great importance, and of great difficulty. On the one hand, if the word " communicated ” is used in the broad sense in which, without force or violence done to the language, it may be, to include all burnings, when a fire is communicated by the engine directly to one building, and thence by natural and ordinary means extending to others, without the intervention of any other means, the effect would be to charge the rail road company with damages to an unlimited amount, when a fire, thus originating in a village or city, has spread into a wide conflagration. The argument is earnestly urged, that the legislature could not have intended to impose a responsibility so serious and alarming; and it is insisted that the term “ communicated ” will bear, and ought to receive, a construction more limited, so as to restrain the opera-ion of the statute to the case where the very particles of fire which fall upon, and kindle the flame in, the building burnt, must have emanated from the engine itself, without the intervention of any other object. If so restricted a sense as thé — 104 — ratter had been intended by the legislature, it seems strange that they did not add some qualifying word, as “immediately” or “ directly,” to the word “ communicated.” Perhaps some light may be derived from a subsequent clause in the same section of the statute, which provides,. that “ any rail road corporation shall have an insurable interest in the property for which it may he so held responsible, in damages, along its route, and may procure insurance thereon in its own behalf.” These latter words, we think, describe buildings being near and adjacent to the route of the rail road, so as to be exposed to the danger of fire from engines, but without. limiting or defining any distance. In this view of the statute, it seems difficult to lay down any general rule. From the language made use of, we cannot think it was intended to limit its operation to the very first building which might be touched with a spark or. other fire from the engine, and not extend it to another building, contiguous though it may be, but belonging to another owner, which must necessarily burn with it. In the present case, the fire was transmitted, by ordinary and natural means, from the shop first touched by sparks from the engine, to the' plaintiffs’ dwelling-house, immediately across a street not very wide. The building burnt was, then, near the route of the rail way. Under these circumstances, the court are of opinion, that the plaintiffs’ house was injured by fire communicated by the locomotive engine of the defendants, within the true meaning of this statute, and that they are thereby held responsible, in damages, to the plaintiffs, the persons injured. 2. The next question is, whether the insurance company, having, pursuant to their contract of indemnity, paid the loss to the plaintiffs, are entitled to maintain this suit in the plaintiffs’ name, but for their own benefit, to recover the damages to which the defendants are liable by the statute. We consider this to be a statute purely remedial, and not penal. Rail road companies acquire large profits by their business. But their business is of such a nature as necessarily to expose the property of others to danger; and yet, on — 105 — account of the great accommodation and advantage to the public, companies are authorized by law to maintain them, dangerous though they are, and so they cannot be regarded as a nuisance. The manifest intent and design of this statute, we think, and its legal effect, are, upon the considerations stated, to afford some indemnity against this risk to those who are exposed to it, and to throw the responsibility upon those who are thus authorized to use a somewhat dangerous apparatus, and who realize a profit from it. This indemnity, provided by law against a special risk, may be considered as a quality annexed to the estate itself, and passing with it to anv and all persons who may stand in the relation of owners, however divided and distributed such ownership may be. The effect of the statute is, to diminish the specific risk to which such buildings may be exposed, from their proximity to the railroad, and in this respect to put them upon an equality with other risks. Now, when the owner, who prima facie stands to the whole risk, and suffers the whole loss, has engaged another person to be at that particular risk for him, in whole or in part, the owner and the insurer are, in respect to that ownership and the risk incident to it, in effect one person, having together the beneficial right to an indemnity provided by law for those who sustain a loss by that particular cause. If, therefore, the owner demands and receives payment of that very loss from the insurer, as he may, by virtue of his contract, there is a manifest equity in transferring the right to indemnity, which he holds for the common benefit, to the assurer. It is one and the same loss, for which he has a claim of indemnity, and he can equitably receive but one satisfaction. So that, if the assured first applies to the rail road company, and receives the damages provided, it diminishes his loss pro tanto, by a deduction from, and growing out of, a legal provision attached to, and intrinsic in, the subject insured. The liability of the rail road company is, in legal effect, first and principal, and that of the insurer secondary; not in order of time, but in order of ultimate liability. The assured ma| — 106 — first apply to whichever of these parties he pleases; to the rail road company, by his right at law, or to the insurance company, in virtue of his contract. But if he first applies to the rail road company, who pay him, he thereby diminishes his loss, by the application of a sum arising out of the subject of the insurance, to wit, the building insured, and his claim is for the balance. And it follows, as a necessary consequence, that if he first applies to the insurer, and receives his whole loss, he holds the claim against the rail road company in trust for the insurers. Where such an equity exists, the party holding the legal right is conscientiously bound to make an assignment, in equity, to the person entitled to the benefit ; and if he fails to do so, the cestui que trust may sue in the name of the trustee, and his equitable interest will be protected. But we think this position is exceedingly well sustained by authorities. A case very much in point, in principle, is that of Mason v. Sainsbury, first reported as a manuscript case, in Marshall on Insurance, (1st Amer. ed.) 691, and since in 3 Doug. 61. It was an action against the hundred, brought on the riot act, to recover damage sustained by the plaintiff in the riots of 1780. The plaintiff had an insurance on which hr had recovered, the insurance office having paid him without suit; and this action was brought in the name of the plaintiff, with his consent, for the benefit of the insurance company. It was decided by Lord Mansfield, and the whole court, that the plaintiffs were entitled to recover. Buffer, J. said it was to be treated as an indemnity, in which the principle is, that the insurer and the insured are as one person, and the paying by the insurer, before or after, can make no difference. The same doctrine was fully recognized by the court of king’s bench, in 1823, in the case of Clark v. The Hundred of Blything, 3 Dowl. & Ryl. 489, and 2 Barn. & Cres. 254. It goes upon the ground, that the hundred are liable at all events, and the private contract of insurance, dividing the risk, makes no difference in the owner’s right to recover. It was likened by Lord Mansfield and Ashhurst, J. in 3 Doug — 107 — 61, to the case of abandonment, in marine insurance, where the insurer is constantly put in the place of the insured. A similar case afterwards came before the court of common pleas, in 1838, and was very elaborately argued, and the principle above stated confirmed. Yates v. Whyte, 4 Bing. N. R. 272, and 5 Scott, 640. It was a case of collision at sea, in which the plaintiff claimed damages, sustained by reason of the defendant’s vessel having run foul of his vessel, through the defendant’s negligence. The plaintiff had recovered of the underwriters on his vessel a certain sum for the same loss, and the defendant contended that this sum should be deducted; but it was held that this was no answer, and that the sum thus paid by the insurers ought not to be deducted. This case was also distinguishable from the former in this respect; that, in this, the suit was not brought at the instance of the insurers. But the court clearly intimated, that the owners, having an absolute right, could recover their damages in that suit, and that if, under an indemnity against the same loss, he had already received payment, the money recovered in this suit would be held in trust for the insurers who had thus paid. It would be in the nature of salvage, received by the assured after payment of a total loss. This was distinctly held by Lord Hardwicke, in Randal v. Cockran, 1 Ves. sen. 98. Where owners of vessels, unjustly captured by the Spaniards, had received compensation from the underwriters, and afterwards, upon letters of marque and reprisal, granted by the government against the Spaniards, the owners received compensation, it was decided that the owners held the money, so received, in trust for the underwriters, in the nature of salvage. This was a case in chancery; but where the same principle can be carried into effect in the ordinary forms of proceeding, in a court of law, the same principle will be applied. If the trust consists in an equitable liability to pay money, it will be recognized and enforced in a suit at law. It is clear that the assured has a right to recover against the insurer, although he has a remedy, at the same time, against the party by law liable. Thus, in Cullen v. Butler, 5 M. & — 108 — S. 466, it is stated, by Lord Ellenborough, that it is no objection to the plaintiffs right to recover of the underwriter, that he may have a right also to recover against the person by whose immediate act the damage was occasioned. This being true, and it being also true, that a recovery against the underwriter is no bar to a suit by the assured against the party primarily liable, it f flows, as a necessary consequence, that after a payment by the insurer, by compulsion of legal process or voluntarily, the assured becomes trustee for the insurer, and by necessary implication makes an equitable assignment to him of the right so to recover. See opinion of Kent, C. J. in Gracie v. New York Ins. Co. 8 Johns. 245. There is a more recent case bearing upon the question of the right of underwriters, after payment of a loss, to claim salvage, obtained by the assured, the result of which may seem opposed to the above cases, because the underwriters did not recover back. Brooks v. Mac Donnell, 1 Y. & Coll. Exch. Rep. 500. But it will appear, from that case, that the doctrine herein above stated was affirmed at the bar and by the court; and that the case was decided upon the ground that an abandonment had been refused, and a certain sum had been paid, by agreement, as a compromise of all claims on both sides. In regard to the right of the insurance company to sue in the name of the assured, we think the cases fully affirm the position, that by accepting payment of the insurers, the as- ' sured do implicitly assign their right of indemnity, from a party liable, to the assured. It is in the nature of an equitable • assignment, which authorizes the assignee to sue in the name of the assignor, for his own benefit; and this is a right which a court of law will support, and will restrain and prohibit the assignor from defeating it by a release. The formal discharge, therefore, given by the nominal plaintiffs, is not a bar to the action. See Payne v. Rogers, 1 Doug. 407. Whitehead v. Hughes, 2 Crompt. & Mees. 318. Phillips v. Clagett, 11 Mees. & Welsb. 84. Timan v. Leland, 6 Hill, 237 Browne on Actions, 105. Judgment for the plaintiffs.