Merchants' Mutual Insurance v. New Orleans Mutual Insurance

Taliaferro, J. These suits were instituted by the Merchants} Mutual Insurance Company against seven other insurance companies on contracts of reinsurance entered into severally by each of these seven companies with the Merchants’ Mutual Insurance Company, the plaintiffs in this case. The history of this litigation seems to be this: Dupasseur & Co. were insured by the Merchants’ Insurance Company •on eight hundred and thirty-four bales of cotton, at the rate of $200 per bale, on board the ship Argean from New Orleans, bound to Havre, in France. The defendants reinsured the plaintiffs for the amounts respectively stated in their separate answers. The vessel arrived safely at the port of her destination and, after discharging a portion of her cargo in sound condition, of which three hundred and twenty-five bales of the cotton insured for Depasseur & Co. constituted part, took fire, which was ultimately extinguished by letting water into the hold. The remainder of the cargo was discharged in a damaged condition. When the news first reached New Orleans of the occurrence of the accident, the Merchants’ Mutual Insurance Company made several advances to the insured for an aggregate sum' of $104,000, subject to a future adjustment. In like manner the reinsuring companies made corresponding advances to assist the Merchants’ Insurance Company. In accordance with the usage and practice at Havre, a statement or adjustment of the loss was made by the “Tribunal du Commerce,” and by this adjustment it seems the several companies reassuring profess to have always been willing to abide. By this adjustment it appeared that the case was one of partial loss only. Dupasseur & Co., on their part, held that it amounted to a constructive total loss, and refusing when called upon by the Merchants’ Insurance Company to [306] refund any portion of the large advances that had been made to them,, claimed an abandonment; the loss, as they asserted, having amounted' to more than fifty per cent. Suit was brought against them by the Merchants’ Mutual Insurance Company. Judgment was rendered in favor of Dupasseur & Co. as in case of total loss, but condemning them to-pay the sum of six thousand dollars, being the excess of the advances over the amount adjusted for constructive total loss. The reinsurers were then called upon by the Merchants’ Insurance Company to contribute according to their several undertakings in favor of the insurers in order to lessen the burden upon them. This they refused to do, and against four of the companies which engaged in the reinsurance, suit was brought in the Fifth District Court, and against the other three suit was instituted in the Seventh District Court. In the Fifth District Court the case was tried before a jury of merchants. Four of the companies, it seems, contended that tho-amounts advanced by them subject to future settlement and adjustment exceeded the sums they were legally bound to contribute, and they set up reconven lion al demands for the overplus. The other three specified small amounts, which they admit they are bound to furnish to make up the sums they are legally bound to contribute, and wiiicli deficits they aver they have always been willing and ready to pay. Judgment was rendered in the Fifth District Court in favor of the plaintiffs against those admitting they owed balances and for the sums-so admitted, and in favor of the Louisiana Mutual Insurance Company on its reconvontional demand for the amount alleged to have been in. excess of the sum it was bound to contribute. Iu tlie Seventh District Court judgmont was rendered against the plaintiffs and in favor of the defendants on their respective reconventional demands, the court treating the judgment of the plaintiffs against Dupasseur & Co. as a nullity, and also on the ground that there was not, and under the facts of tlie case there could not be, in regard to the damage sustained, by tlie ship taking fire, an abandonment and a claim by Dupasseur & Co. for a constructivo total loss. Front both judgments the plaintiffs have appealed. The judgment in the case of the plaintiffs, The Merchants’ Mutual Insurance Company v. Dupasseur & Co. was, by consent of tho parties,, rendered by the court out of term timo and during vacation, viz: on the thirty-first of August, and was signed on the fourth of September. On the trial of the cases now before the court, the introduction of the judgment in question by the plaintiffs, as evidence was objected to by the defendants as'being res inter alias acta, and that they were not bound by it, not having been parties to it. There was a stipulation in the agreement of the parties that there should be no application made to tho court for a new trial. The defendants hold the judgment a nullity [307] for tlie reasons assigned, and cite the ease of Culver, Simonds & Co. v. Leovy et al., 21 Au. 30G. It is, we think, clearly shown that the loss sustained by tho perils insured against did not amount to fifty per cent, of tho value of the cargo, and under tho rule of fifty per cent, of the party insured could nob make an abandonment. The loss, how-over, must be moro than one-half. Parsons on Insurance, '2 vol. pp. 126 and 127. There is an exception, too, both in regard to ship and goods where the vessel arrives at the port of destination, and any substantial part of tho goods insured arrives in safety at its destined port. 'Nor can a loss of a part of the goods at the port of destination be-made a constructive total loss by abandonment, however largo that part may be. Parsons on Insurance, vol. 2, p. 159. But it is argued that the abandonment by Dupasseur & Co. was accepted by tho Merchants7 Insurance Company, and therefore, whether rightfully made or not, could not be brought in question. Whatever might bo the effect in-such a case between tlie Merchants’ Insurance Company and Dupasseur & Co. wo think it would scarcely affect the reinsurers. It seems to bo well settled that reassurers are entitled to make the same defenses and to urge the same objections which might be made by tlio original insurers. 1 Story, 460; 2 Philips, sec. 2173. Reinsurers may have defenses against the original insurer which he could not have against the original insured. " 1 Parsons, 299. Reassurers are only liable for what the insurer is legally liable. 2 Philips, sec. 1751. . The several companies who took the reinsurance, it is urged, had knowledge of the pendency of tho suit between the insurer and Dupasseur & Co. and they wore at liberty to intervene to protect their own interests; that they now make only the same defenses which they might have made in the original suit, and that they might have appealed from tho judgment, but which they have not done, and which it is alleged they were invited to do. That the defenses now set up by tho reinsured as to the want of right in Dupasseur & Co. to make an abandonment were made by the Merchants’ Insurance Company in the suit they brought against Dupasseur & Co. The plaintiffs contend that formal knowledge by notice in writing in matters of commerce and insurance is not required, but that knowledge howover-required is sufficient; and that tho reinsurers had knowledge of tlio suit brought against Dupasseur, although not notified of it officially. But notwithstanding the reinsurers knew of the pendency of the suit by common rumor, how can they be held bound by a judgment rendered in a suit to which they were in no manner made parties ? They were under no contract with Dupasseur & Co.; their obligatiou was with tho insurers to make good to a certain extent a liability that they might incur they were not called in warranty nor cited to appear in the case in any capacity. The invitation given them to appeal and their declining to [308] do so did not preclude the insurers themselves from appealing, which it would seem they had no intention to do. They agreed with Dupasseur & Co. to submit the case to he determined during vacation, both parties waiving motions for new trials. TJio plaintiffs insist upon the validity of that judgment, and that the defendants are bound by-it. We deem it unnecessary to pass upon the question of its validity, as we think the case with the defendants, irrespective of that judgment/ The vessel arrived safely at her port of destination, with her cargo in good condition. The damage and loss sustained by the fire which occurred before the vessel was entirely unloaded was partial, as accurately shown by the investigation and adjustment made by the tribunal at Havre. The amount for which the insurers were liable was far less than that for which they aim to make their reinsurers liable. They surely have no right to make such a demand. We think the judgments appealed from should be sustained. It is therefore ordered, adjudged and decreed that the judgments herein appealed from, viz : The judgment of the Fifth District Court, rendered in the case numbered 348 on the docket of that court, and the judgment of the Seventh District Court, rendered in the suit numbered 998 on the docket of that court, bo affirmed with costs in both courts. Rehearing refused.