O'Connell v. New York, New Haven, & Hartford Railroad

Loring, J. [After the foregoing statement of the case.] We are of opinion that the decree in favor of the plaintiffs must be reversed. [278] The judge has found that neither of the two promises counted on in the bill now before us was in fact made, and the plaintiffs have not undertaken to overturn that finding of fact. What the plaintiffs have contended for here is that the final decree can be justified on the ground that under the findings made below the surety company is estopped to set up the defence set up by it. But the policy issued by the surety company to O’Connell is in the same form as that under consideration in Connolly v. Bolster, ante, 266, and under the decision in that case payment of the O’Leary judgment by O’Connell is a condition precedent to an action on the policy. If, therefore, we assume in favor of the plaintiffs (without making a decision to that effect) that after the defendant surety company had taken on itself the defence of the action it was precluded from afterwards taking the position that the case was not one covered by the policy, still the plaintiffs have not made out a case here, because the plaintiff O’Connell has not paid the judgment entered in the action defended by the surety company. There is nothing in the finding of the judge which amounts to a waiver of this condition precedent to the defendant surety company’s liability. To create a waiver there must be some act inconsistent with the right waived. There is nothing found here or in the evidence on which that finding was made inconsistent yrith a determination from the beginning on the part of the surety company to insist that when the time came for payment under the policy payment should be made in accordance with the terms of the policy and on no other terms; that is to say to pay when O’Connell had paid the judgment in the action which the company had tried, and which for that reason it was estopped to say was not an action fixing its obligation under the policy. The difficulty is not avoided by Wolmershausen v. Grullick, [1893] 2 Ch. 614, and the other cases cited by the defendants. The doctrine of those eases is that while one holding a covenant of indemnity or one who has a right to contribution cannot sue at law until he has paid, he can maintain a bill in equity to compel the covenantor or person bound to contribute to make payment directly to the creditor. But the doctrine of those cases is that equity will compel specific performance of the obligation due from the defendant. It is a relief given in case of general [279] covenants of indemnity, as Mr. Justice Story states it. Story, Eq. Jur. § 850. Such a bill cannot be maintained where the plaintiff has not performed a covenant which by the express terms of the contract which he asks to have specifically performed is a condition precedent to any liability on the part of the defendant. In such a case the party to be indemnified is not in a position to ask for specific performance of the contract of indemnity. Decree reversed ; decree of hill dismissed to he entered.