FOURTH DEPARTMENT, JULY TERM, 1897.

[Vol. 20.

Ellis & Griffith, for the appellant.

Henry M. Field, for the respondent.

HARDIN, P. J.:

On the 31st day of October, 1895, Knapp, the plaintiff and respondent, brought an action in Justice's Court in Ontario county, before A. DUNHAM, Esq., a justice of the peace, and lodged with the justice of the peace a written complaint containing the following words: "That on or about the 19th day of June, 1895, the said defendant, for value received, made, executed and delivered to the plaintiff an assignment and transfer of certain moneys that he was to receive from the Lehigh Valley Railroad Company, and thereby agreed to become the agent of the plaintiff for the collection of the said moneys, and immediately upon the collection of the same, on or about the 18th day of July, 1895, to pay the same over to the said plaintiff, free of all charge or expense. That on or about the 18th day of July, 1895, the said defendant collected and received the sum of $35.00 from the Lehigh Valley Railroad Company, which jury can be had. So the plaintiff gets an adjudication and the underwriters have their day in court. The attorney represents them as an executor or administrator represents the next of kin. The mode of ascertaining the rights of parties is often made the subject of stipulation. As was said In re N. Y., L. & W. R. R. Co. (98 N. Y. 447-453), "and generally all stipulations made by parties for the government of their conduct, or the control of their rights, in the trial of a cause, or the conduct of a litigation, are enforced by the courts." The counsel for the defendant argues that there is no way of enforcing the judgment after one is recovered.

Possibly suit may be necessary, but the merits cannot be retried. The stipulation must be taken in toto, and by it the underwriters expressly agree to abide the result of any action brought against the attorney, so that another suit would simply be a step in the procedure to enforce judgment like proceedings supplemental to execution, or any other remedy designed to insure or aid in the collection of a judgment. In full liability corporations resort must first be had to the corporate assets, and in case of failure to realize out of these, then the members of the corporation become liable, but it has never been regarded in contravention of public policy that the creditor must first proceed against the body corporate. Perhaps the more troublesome question is, even assuming the insured can proceed against the attorney, does that restriction absolutely inhibit suing the individual underwriters in separate actions? If force is to be given to the restrictive clause at all, it must be with the intent of carrying out the design of the parties to the insurance contract. Their agreement is that no action shall be

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FOURTH DEPARTMENT, JULY TERM, 1897.

was the money of this plaintiff. That this plaintiff immediately thereafter, and frequently since, has demanded the said moneys of the said defendant, and he has neglected and refused to deliver the same to this plaintiff. That the said defendant has unlawfully and wrongfully converted the said sum of $35.00, the property of this plaintiff, to his own use."

The summons was returnable on the 11th of November, 1895, and on that day the plaintiff appeared. The defendant did not appear. The plaintiff submitted the case " on his verified complaint," after proof that the interest amounted to seventy cents. The justice thereupon rendered a judgment for thirty-five dollars and seventy cents damages, and one dollar and ninety cents costs, and on that day issued an execution against the defendant, and delivered the same to the plaintiff, which was returned unsatisfied December 30, 1895.

In the affidavit of Mr. Griffith it is stated that the plaintiff was present before the justice when the judgment was rendered "and demanded the issuing of a body execution, and took the same himself to a constable of the said town of Manchester."

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brought to enforce the provisions of the policy except against the attorney, and no casuistry can construe this stipulation into meaning that twenty-five actions can be brought to enforce the provisions of the policy. That was the very annoyance both parties were seeking to avoid, and as its foundation lies in a purpose to adjust their rights in court without a multiplicity of actions, the courts should fairly endeavor to make effective this object. Of course, if the scheme designed that no redress could be had against the underwriters, that the action against the attorney ends any attempt by legal proceeding to enforce the claim against the personal liability of the underwriters, then the provision would be nugatory and against public policy. It would then be a mere jumble of words to permit the underwriters to assume ostensibly a liability incapable of enforcement. But in construing this provision, as in every other, we must give a fair interpretation to the intent of the contracting parties. The scheme of insurance evidently contemplated there would be a general fund on hand to meet losses, and the personal liability of the underwriters was only to be available when the judgment could not be made out of the fund, so that it is again akin to the liability of stockholders of a full liability corporation. The underwriters contract to pay after their liability has been established in the manner provided, and after collection from the designated fund cannot be made. The inhibition against suing the underwriters is not absolutely unqualified, but no action to enforce the provisions of the policy" is maintainable against the underwriters for that must be against the attorney; that is, the merits of any controversy that may arise within the compass of the contract must be determined in that action, and

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An appeal was taken from the justice's judgment to the County Court of Ontario county, and the judgment was reversed by the County Court, and thereupon a judgment was entered in favor of the defendant for thirty-five dollars and twenty-five cents costs in the Ontario county clerk's office.

On the 23d of November, 1896, an execution was issued against the property of Knapp, the plaintiff, and delivered to the sheriff of the county of Ontario, and by him returned unsatisfied on the 16th of December, 1896, and on the 18th of December, 1896, an execution against the person of Knapp was issued to the sheriff of Ontario county, and Knapp was duly arrested and taken into custody thereunder on the 29th day of December, 1896, by Lyman II. Aldrich, a deputy sheriff of Ontario county."

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Whether the County Court properly reversed the justice's judgment is not a question to be considered on this appeal.

The gravamen of the plaintiff's complaint seems to be for a conversion of a sum of money, which the plaintiff alleges he had demanded of the defendant, and after such allegation made in the complaint, the plaintiff further alleges, viz.: "That the said defendant the stipulation of the underwriters to abide thereby cuts off any further litigation as to the provisions of the policy, and thereafter whatever proceedings are carried on are merely with a view of collecting the judgment. The clause is reasonably susceptible to this construction, and it has the merit of fairly spelling out the purpose of the parties to it.

It seems to me that Hagen is not merely an agent or attorney in his contractual relations with the insured. He is one of the underwriters, and in this particular the case may be distinguishable from the celebrated case of Knorr v. Bates (14 Misc. Rep. 501). He is the particular underwriter who is designated in the policy to bear the brunt of any litigation that may arise to enforce the provisions of the policy, and his ultimate liability is like that of his associates.

These Lloyds policies have grown into extensive use recently, and clauses of like purport to the one here in controversy have been several times the subject of judicial construction, but unfortunately without unanimity of opinion.

In Knorr v. Bates (12 Misc. Rep. 395; 24 Civ. Proc. Rep. 377; affd., 14 Misc. Rep. 501) the clause was almost identical with the one in suit, and the only distinction seems to be that in that case the attorney was not an underwriter, and the reasoning both of the judge at Special Term and of Judge PRYOR lays considerable stress upon the fact that the attorney was not a party to the contract. In that case the clause was held to be invalid. This has been followed in the City Court of New York. (See Ralli v. Hillyer, 15 Misc. Rep. 692.) And in case of Farjeon v. Fogg (16 id. 219), Judge TRUAX, in the Special Term of the Supreme Court, decided a similar clause to be invalid, putting his conclusion

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FOURTH DEPARTMENT, JULY TERM, 1897.

has unlawfully and wrongfully converted the said sum of $35.00, the property of this plaintiff, to his own use."

Upon recovery by the plaintiff under such a complaint, he was entitled to issue a body execution. Indeed, such seems to have been the construction of his complaint by him when he held a judgment against the defendant.

In subdivision 2 of section 2895 of the Code, which provides for an order of arrest, it is specified that where the recovery is for "an injury to property, including the wrongful taking, detention or conversion of personal property," an order of arrest may be granted.

In Babcock v. Smith (19 N. Y. Supp. 817) it was held that the section from which the quotation has been made, that where the cause of action is for the wrongful conversion of personal property, the same is one of the sections specified in subdivision 2, section 2895 of the Code of Civil Procedure.

Under a complaint somewhat similar to the one before us, it was held in Farrelly v. Hubbard (148 N. Y. 592) that it authorized the issuing of a body execution. In the course of the opinion delivered it was stated: "As already stated, the action in Justice's Court was

squarely upon the ground that the stipulation required the action to be brought against a person not a party to the contract, and the provision was, therefore, void as inimical to public policy.

In Leiter v. Beecher (2 App. Div. 577) and in New Jersey & Penn. Concentrating Works v. Ackermann et al. (6 id. 540) the Appellate Division of the first department decided similar clauses to be valid, although an endeavor was made to distinguish those cases from Knorr v. Bates (supra).

The contention pressed by the counsel for the plaintiff, that the twelve months' limitation in which actions must be commenced would operate to prevent the insured recovering against the underwriters at all, is not applicable to this case, as was well said in the case last cited. The limitation has reference solely to the action against the attorney in fact, and not to any proceeding to enforce an established judgment.

Again, it occurs to me that Hagen is a trustee of an express trust within the purview of section 449 of the Code of Civil Procedure. The contract was made with him, and, so far as the other underwriters are concerned, for their benefit. While that section, on its face, is in terms permissive in allowing actions to be prosecuted, yet a similar provision of the Code was held to warrant suits to be maintained against the trustees. (Mead v. Mitchell, 5 Abb. 92-106; affd., 17 N. Y. 210.) That is the general doctrine, that an executor, administrator or person expressly authorized by statute to sue can be prosecuted by action in pursuance of the same authority that accords him the privilege of invoking the aid of the courts. The complaint must be dismissed, with costs. Ordered accordingly.

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for conversion and within the second subdivision of section 2895 of the Code of Civil Procedure, if the act of the plaintiff in this action in failing to pay over the money collected by him was, as matter of law, conversion."

In the case in hand it was the duty of the defendant, upon receiving the money mentioned in the complaint, "to have immediately carried the money or check to his assignee, and not doing so he became liable for conversion upon failure to pay over on demand." The case from which the quotation has just been made is authority for issuing a body execution in the case in hand.

Carrigan v. Washburn (14 Civ. Proc. Rep. 350), cited by the respondent, is not applicable to the case in hand. That was a case where the plaintiff's right to arrest the defendant did not depend upon the nature of the action, but upon extraneous grounds.

Nor does Roeber v. Dawson (14 Civ. Proc. Rep. 354) aid the contention of the respondent. In that case it is said: "The plaintiff in this case could not recover without proof beyond the complaint allegations."

In Longuemare v. Nichols (7 N. Y. Supp. 672) it was held that "where a plaintiff is defeated, and defendant seeks to pursue him on a judgment for costs, plaintiff becomes a defendant, within Code Civil Procedure, N. Y. section 572.”

Whenever a plaintiff brings an action in tort and seeks to recover in tort, if he is defeated and the defendant recovers costs, he is entitled to have a body execution. (Philbrook v. Kellogg, 21 Hun, 238.)

The doctrine which we have already adverted to was approved in Parker v. Spear (62 How. Pr. 394), and it was said that the principle aptly illustrates the truth of the old proverb that "those who take the sword should perish by the sword."

It seems from the affidavit that the plaintiff was willing to obtain a body execution after he had obtained judgment against the defendant while it remained unreversed.

The foregoing views lead to the conclusion that the Special Term fell into an error when it set aside the body execution issued against the plaintiff.

We think the order should be reversed, and the defendant should be allowed to pursue his remedy against the plaintiff to recover the costs of the action.