
    The American Lucol Company, Respondent, v. William E. Lowe and Others, Appellants, Impleaded with Others.
    
      Action upon a Lloyds policy against all the underwriters—objection that each should: be separately sued,, how taken—-when waived—suit against the attoi'neys, when unnecessai'y—what attoi'neys should be sued,
    
    A complaint in an action brought against the underwriters of a Lloyds policy which alleges that in and by said policy the defendants “ severally agreed to pay respectively their proportionate part or share of any loss by fire to the property thereby insured, not exceeding in the aggregate the sum of five thousand dollars ($5,000),” and in which the demand for judgment is limited expressly to each underwriter’s proportion of the loss, apportioned to such policy, states a cause of action for the proportionate part of each underwriter’s obligation under the policy. The provision above quoted has no relation to the apportionment of the total loss among all the insurers.
    An objection to such complaint that, the causes of action being several, each underwriter should have been sued alone, when not taken by demurrer, is waived.
    
      Semble, that if the defect objected to were not apparent on the face of the complaint, the answer in taking the objection should distinctly point out which of the matters enumerated in section 488 of the Code of Civil Procedure was referred to; and that it was not sufficient that the answer simply stated that “each of the defendants above named allege that he has been improperly united with each of the other defendants herein named.”
    The policy in question provided: “ No action shall he brought by the assured to enforce the provisions of this policy, except against the attorneys in fact, as representing all of the underwriters. * * * Judgment entered in such an action shall he satisfied out of the premiums in the hands of the underwriters, unexpended and undivided; if such premiums be insufficient, then out of the deposit made by the several underwriters; * * * but in no case shall the judgment bind the property of the said attorneys to a greater extent than the several liabilities of each of them as individual underwriters.” It also contained a further provision that, wherever the phrase “ ‘attorneys of the underwriters' occurs, it shall be held to mean their attorneys in fact, to wit, Beecher & Company.”
    
      Held, that the provision did not require that Beecher & Co. should necessarily and under all circumstances be sued, but that the underwriters stipulated in effect against an agency over which they exercised present control and authority, subject to the implied condition that the parties should he excused from fulfillment in case such agency had ceased to exist at the time when performance would otherwise he required;
    That, as, at the commencement of the action upon the policy, there wore no attorneys in fact representing the underwriters, the action 'ivas properly brought directly against the underwriters to enforce their individual liability.
    Appeal by the defendants, William E. Lowe and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 31st day of March, 1899, upon the decision of tlje court, rendered after a trial before the court without a jury at the New York Trial Term.
    W. C. Beecher, for the appellants.
    
      F. K. Pendleton, for the respondent.
   Barrett, J.:

This action is against the underwriters of wliat is known as a Lloyd policy. These underwriters were associated under the name and style of The Indemnity Lloyds. The execution of the policy was conceded, the loss and the proof of loss. The amount due from the underwriters was proved and was not disputed. The defense rested upon two points : First, that the causes of action against the underwriters were several, and consequently that each underwriter should have been sued alone. Second, that suit had not, in the first instance, been brought against the attorneys in fact for the underwriters.

It is a sufficient answer to the first point that the defect relied upon appears upon the face of the complaint, and that the objection thereto, not having been taken by demurrer, was waived. The defendants contend that there is no allegation in the complaint that each underwriter was liable only for his proportionate share of the loss. As they construe the complaint, it alleges a several liability to insure the plaintiff to the full amount of the loss, not exceeding $5,000. This is an inaccurate view of the complaint. We find there an express allegation that “in and by said policy,” the defendants “ severally agreed to pay respectively their proportionate part or share of any loss by fire to the property thereby insured, not exceeding in the aggregate the said sum of five thousand dollars ($5,000).” It is said that this provision refers, not to the proportionate part of the loss payable under the policy, but to the policy’s proportion of the total loss as between it and other insurance. This contention is entirely without merit. The provision in question had no relation to the apportionment pf the total loss among the insurers generally, but clearly to the proportionate part of each underwriter’s obligation under this particular policy. There can be no misunderstanding about this, either from the tenor of the complaint or the demand for judgment. The latter is expressly limited to each underwriter’s proportion of the loss apportioned to the present plicy.

- We may add that the objection is not sufficiently taken even by answer. If the defect did not appear upon the face of the complaint, the answer in taking the objection, should have distinctly pointed out which of the matters enumerated in section 488 of the Code of Civil Procedure was referred to. None of these matters is covered by the objection. The answer simply states that “ each of the defendants above named allege that he has been improperly united with each of the other defendants herein named.” This is not an explicit objection that “ causes of action have been improperly united,” nor “ that there is a defect of parties, plaintiff or defendant.” Indeed, it could not, upon the defendants’ own showing, have referred to the latter, for they insist that the allegations of the complaint contemplate a several liability for the whole amount of the loss, and they have in their answer averred nothing to the contrary.

It is well settled that, under section 454 of the Code of Civil Procedure, two or more persons severally liable on the same instrument for the whole amount of its obligation may be included as defendants in the same action. (Straus v. Hoadley, 23 App. Div. 360.) It was essential, therefore, to a proper presentation of this objection, that there should have been a statement in the answer to the effect that separate causes of action against each defendant for his proportionate part of the amount insured had been improperly united. There is no such statement in the answer either in terms or in substance. There is a denial that the defendants contracted jointly, or jointly and severally. This, however, is a denial of something which is not alleged. We find no affirmative allegation that the defendants contracted severally, or indeed that they contracted at all. In fact, the existence of the policy is “ignored.” It is apparent, therefore, that the objection under consideration was not taken either by demurrer or answer.

The second point is presented by an allegation in the nature of a special plea. The plea is that “ if any policy was issued to plaintiff as in said complaint alleged, it was in consideration of and under a mutual written agreement whereby it was provided that any action brought by the assured to enforce the provisions of the said policy should be brought against Beecher & Company, as attorneys in fact for and representing all of the underwriters.” It was then averred that “no action has been brought by the said plaintiff upon said policy against the said Beecher & Company as attorneys in fact, representing the said underwriters, * * * and that these defendants have never waived their rights thereunder.” The sole question then is, Was the plaintiff bound in the first instance to sue Beecher & Co. ? We have held that provisions of this nature are ordinarily binding and must be complied with. (Leiter v. Beecher, 2 App. Div. 577.) The question here, however, is whether the parties contemplated a resort to this provision after the particular persons named therein as attorneys for the underwriters had ceased to be such attorneys, and had actually transferred the business of the association and the moneys in their hands belonging to the principals to other persons who thereafter acted as attorneys in fact for the underwriters. The precise point will be more readily understood when we consider the language of the provision. It is in these words: “ No action shall be brought by the assured to enforce the provisions of this policy except against the attorneys-in-fact, as representing all of the underwriters, and each of the underwriters hereby agrees to abide the result of any suit so brought, as fixing his individual responsibility hereunder. * * * Judgment entered in such an action shall be satisfied out of the premiums in the hands of the underwriters unex¡3ended and undivided; if such premiums shall be insufficient, then out of 'the deposit made by' the several underwriters * * * as hereinbefore expressed and limited; but in no case shall the judgment bind the property of the said attorneys to a greater extent than the several liabilities of each of them as individual underwriters.”

It will be ■ observed that the name of Beecher & Co. does not appear in this direct connection. It is, however, elsewhere provided in the policy that wherever the phrase “1 attorneys of the underwriters ’ occurs, it shall be held to mean their attorneys in fact, to wit, Beecher & Company.” The object of this provision is quite clear. It was to avoid multiplicity of suits and to provide a convenient method of settling in one action all questions in dispute between the insured and the underwriters. To do this with justice to both parties it was essential that the persons sued should be, as the proviso stipulates, l£ the attorneys in fact, as representing all of the underwriters.” The specified firm name does not, under this provision, necessarily and under all circumstances determine who shall be sued. The essential fact on that head is the fact of present representation. Justice to the underwriters requires, as we held in Wheelock v. Chapman (34 App. Div. 464), that the action should be brought against the acting representatives of the underwriters at the time when the liability arises. The underwriters stipulate for an action, not against a fixed and unchangeable personality, but in effect against an agency over which they exercise present control" and authority'. They certainly do not contract to abide the result of a suit brought against persons who in a business sense have become strangers to them. Upon the other hand, why should the insured be required to sue persons who have ceased to hold any relations to their debtors with regard to the subject of the contract? And why, indeed, should those persons be thereafter required to defend any such suit? Justice to the insured must also have been within the intention of the parties, and the contract should be construed in the light of this implied intention. Now, it appears that the attorneys in fact, representing the underwriters, are the recipients of the premiums and other moneys belonging to the association, and that when Beecher & Co. “went out” all the funds in their hands were turned over to new attorneys in fact, named Edwards & Co. How, then, could a judgment thereafter entered against Beecher & Co. he conveniently satisfied, as the contract provides, “out of the premiums in the hands of the underwriters unexpended and undivided,” or “ out of the deposit made by the several underwriters? ” These "premiums and deposit were part of the funds of the association which Beecher & Co. turned over to Edwards & Co. It would he impossible on a judgment against Beecher & Co., entered after that firm had thus turned over the business and assets in its hands to a new agent, to define with precision and enforce with-certainty the individual liability of the underwriters under the clause in question. For, as we have seen, it is'only when the application of the premiums and deposits has proved insufficient that the judgment is to be satisfied out of the individual liability of the several underwriters. It is clear, therefore, that the condition of this policy was based at least upon the existence of attorneys in fact, representing the underwriters at the time when the liability arises. If the attorneys in fact named in the policy are then dead and others have not been substituted, certainly the condition cannot be performed, and a direct action will lie against the underwriters. The principle is the same if the attorneys have been discharged, or have resigned, or have otherwise ceased to represent the underwriters. If, in the latter contingency, others have not been substituted, there can be no substantial performance of the condition in accordance with the implied intention of the parties. If others have been substituted and the insured are notified thereof and required to regard such substituted agents as the attorneys in fact representing the underwriters, doubtless the provision in question would then apply to such substituted attorneys.

The plea here is that Beecher & Co. should have been sued. That plea fails for the reasons assigned. There is no plea that Edwards & Co. should have been sued. We may say, however, that the evidence clearly shows that that firm also “ went out ” in July, 1895, after previously informing the underwriters that there were no funds left to pay losses, that they could no longer carry on the business, and that the original underwriters of the Indemnity Lloyds would have to take care of themselves as best they could.

Thus, when this action was commenced in April, 1896, there were no attorneys in fact representing the underwriters and no funds of any description from which to collect the loss save the individual liability of these defendants. Under these circumstances the provision became practically inoperative. It contemplated the continued existence of the agency and" was subject to the implied and underlying condition that the parties should be excused from fulfillment in case such agency had ceased to exist at the time when performance would otherwise be required.

We think, therefore, that the judgment was right and should be affirmed, with costs.

Rumsey, Ingraham and McLaughlin, JJ., concurred.

Judgment affirmed, with costs.  