
    George H. Fernald, and Solomon A. Thomas, as Administrator, etc., of Solomon Thomas, Deceased, Respondents and Appellants, v. Providence Washington Insurance Company, Appellant and Respondent.
    
      Mrn’ine insurance — company not liable for the costs of an action to determine the liability—far what moneys paid out of the proceeds of sale of the vessel in a libel suit the company is not liable—deduction of a particular average for each loss under the policy.
    
    A marine insurance policy, insuring the owners of a steam tug against “loss and damage arising from or growing out of any accident caused by collision or stranding, resulting from any cause whatever to any other vessel or vessels, their freights and cargoes (or each or any of them), for which said steamer or its owners may be legally liable,” provided that the company should not be liable for a loss occurring, unless the liability of the tug “is determined by a suit-at law or otherwise, as this company may elect,” and permitted the insured “to sue,, labor and travel for and- to make all reasonable exertions in and about the defense, safeguard and recovery of the said vessels and cargoes, or any part thereof.”
    The owners of -the tug defended the trial of a libel filed by the owners of a schooner, which, while in tow of the tug was sunk in collision with another boat.
    
      Held, that the insurance company was not liable for counsel fees or for any ■ charges incurred by the insured in the defense of the suit, although the insured were directed by the insurance company todefend and determine-the liability by a suit at law;” nor for such portion of the sum for which the tug was sold in the libel suit as was used in the payment of sums for which the insured were personally liable for supplies furnished to the tug and the wages of its crew."
    A further provision contained in the policy, that “ in all cases of loss §200 shall be deducted,” authorizes the insurer to deduct that • sum from its liability, although a like deduction has already been made in the case of a previous loss to which the policy has attached.
    Cross-appeals by the plaintiffs, George H. Fern aid, and Solomon A. Thomas, as administrator,, etc., of Solomon Thomas, deceased, and the defendant, the Providence Washington Insurance Company, from a judgment of the Supreme Court in favor of the' plaintiffs, entered in the office of the clerk of' the county of Kings on the 11th day of May, 1897, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 25th day of May, 1897,' denying their motion for a new trial made upon the minutes.
    ■ This appeal was transferred from the second department to the first department.
    
      Nelson Zabriskie, for the plaintiffs.
    
      La Roy S. Gove, for the defendant.
   Van Brunt, P. J.:

This action is' brought upon a liability policy of insurance, issued ■by the defendant on January 20, 1893, upon the steam tug Unit, and running for one year from January 30, 1893. On the 19th of June, 1893, the tug had in tow, alongside, the schooner Isle of Pvnes, and when she had reached a point in the East river between Blackwell’s island and the New York shore a collision occurred between an excursion barge, in tow of the steani tug Titan and the steamboat Thomas Iiunt, and the schooner Isle of Tines in tow of the tug Unit, by reason of which the schooner Isle of Times was sunk with a cargo in her valued at over $6,000.

A libel was filed in the District Court of the United States for the southern district of New York by the owners of the schooner, and the tug- Unit was seized by the marshal under process of said court. The plaintiffs defended the suit in the District Court at the request of the defendant and filed a stipulation for costs in the' amount of $250. The court held. all three vessels liable for the damages resulting from the collision. An interlocutory judgment ■fixing the liability, but not the amount of the damage, was entered on the 21st of June, 1894, after a trial upon the merits in said court. The final decree was entered on the 7th of November, 1895. There were also libels filed against the Unit in the District Court for supplies furnished to the tug, for wages and for coal. The tug was sold for $400. The marshal’s fees upon the seizure and sale were taxed at $188.40, which sum was paid to the marshal out of the proceeds of the sale, leaving a balance of $211.60, and against this sum two items were subsequently taxed amounting to $6.30, leav-' ing a net balance of $205.30, which was paid on account tó the claimants under the libels for wages and supplies.

In January, 1894, the libelants who had filed the libel in the rem suit filed another libel in' the personam suit against the plaintiffs herein, based upon the same facts as set forth in the libel in rem, and sought to recover in said personam action against these plaintiffs the sum of over $6,000. Issues were joined in this last-named action, but it does .not 'appear ever to have been brought to trial.

In the present action the plaintiffs. sought to recover $906.75, being the $400 for which the steam tug Unit was sold, $250 "the amount of the stipulation for costs, $150 counsel fees and $106.75 for disbursements attending the trial. The court directed a verdict for $379.69, and from the judgment thereupon entered and from an order denying a motion for a new trial both parties appeal to this court.

The policy upon which this action was brought provides substantially as follows: Providence Washington Insurance Com, pany, by this policy of insurance, do make insurance and cause S. Thomas and George H. Fernald on account of the assured, loss, if any, payable to them, to be insured in the sum of three thousand ■dollars at and from at noon, of the 30th day of January, 1893 (warranted by the assured to be then in safety), until at noon on the ■30th day of January, 1894, * * * against such loss or damage as the steamer tug Unit may become legally liable for from any ■accident caused by collision Or stranding as below stated. * , * *

“ Touching the adventures and perils which the said insurance ■company is contented to bear- and take upon itself by this policy, this insurance is to fully indemnify the assured for loss and damage ai’ising from or growing out of any accident caused by collision or stranding resulting from any cause whatever to any other vessel or •. vessels, their freights and cargoes (or each or any of them) for which said steamer or its owners may be legally liable. * * *

“ Should any loss or damage happen during the period insured as aforesaid, this company shall not be liable unless the liability of the said steamer for such loss or damage is determined by a suit at law ■or otherwise as this company may elect.”

The policy also contained the following clause : “ It shall be lawful and necessary to and for the assured, their agents, factors, servants and assigns to sue, labor and travel for, and to make all reasonable exertions in and about the defense, safeguard and recovery of the said vessels and cargoes, or any part tlierof, without prejudice to this insurance.”

Another clause provides that the loss shall be payable in sixty days after proofs of such loss or damages and the amount thereof •shall be made, and that in all cases of loss $200 shall be deducted therefrom.

Another clause also provides that all claims paid under said policy of insurance shall reduce the liability under the policy to the extent ■of the sums paid.

It - is claimed by the defendant- that it was not liable for counsel fees or any charges incurred by plaintiffs in the defense of the suit ■of the owners of the Isle of Pines, against the Unit under the terms of the policythat it was a condition precedent that the plaintiffs should cause the liability of the tug for the loss to be ■determined in a suit at law or otherwise as'the company might elect; and that this was a burden the tug accepted under the policy, 'and until the tug had done that she had no claim.

This position, we think to be well taken. The insurance was against the legal liability; and the policy provided that the company should not make good any loss, unless the liability for such loss or damage was determined by a suit at law or otherwise as the company might elect. The company had a right to say, under the terms of the policy, that the suit should be defended and the liability determined by a suit at law.

It is claimed that the liability would be determined by a suit at law if the suit was brought and not defended; but it is clear that that was not the intention of this clause in the policy. In order that there may be a determination of a controversy two sides must be presented ; and, therefore, when, the policy provides that the liability must be determined in a suit at law, it means with all the concomitants embraced within such a method of procedure.

It is to be observed that the company had an election, and when, it was applied to to make such election, it did so and said: “ Defend and determine the liability by a suit at law.” This was the method in which proofs of loss were to be presented, and such being the. contract, the company was not liable for the expenses to which the. assured was put in preparing his proofs of loss in accordance with the terms of the policy. As well might it be said in the case of a. standard policy of fire insurance, when proceedings are taken under the arbitration clause to ascertain the amount of damages, that the-insurance company, in case it is held liable for the loss, could be compelled to pay the expenses incurred by the assured in the arbitration.. The decree being a necessary part of the proofs of loss, the assured was bound to. defend the suit and establish the liability of the company at his own expense. There could not, therefore, under any circumstances, be. a liability greater than $400but we think that,, in view of the application of the $400 to the payment of the debts, of the owners of the tug, they have not been damaged even to the full extent of that sum. They were relieved of personal obligations by the application of a portion of the proceeds of the sale of' the tug to the payment of sums for which they were personally liable for supplies furnished to the tug and the wages of its crew. Clearly, so far as the proceeds of sale have been applied to the payment of these personal obligations of the owners, they have no» claim against the defendant insurance company.

It seems to ns to be equally clear that the defendant was entitled to a further deduction of the sum of $200, the particular average provided for in the policy. It is urged that this deduction should not ■ be made in this case, because it had already been made in the case of a previous loss to which this policy attached. But the language of the policy precludes any such construction. It is : “ And, in all cases of loss, two hundred dollars shall be deducted therefrom.” Not in case of loss, but in all cases of loss. This would seem to refer to divers and various losses under this policy, and, in each case, from the loss is to be deducted the sum of $200.

We have endeavored to ascertain upon what theory the court directed the verdict in the sum of $379.69, but have been unable to reach the same result by any combinations of figures which have suggested themselves; and the learned counsel for the appellants and respondents have not aided us in any respect by attempting to explain the theory upon which such direction is made. We are of opinion that the direction was wrong and that the judgment and order appealed from must be reversed arid" a new trial ordered, with costs to the defendant appellant to abide event. .

Babrett and O’Bbxek^ JJ.,, concurred.

Rumsey, J. (concurring in result) :

I concur in the reversal of this judgment. But I cannot agree with so much of the opinion as holds that the plaintiffs are not entitled to recover the counsel fees which they expended in the defense of the action brought to charge the tug with the liability of this collision. The defendant caused to be inserted in the policy a provision that the liability of the tug was to be determined by an action at law, if it so elected. . That provision in the policy gave it the right to insist that the amount of its liability should be fixed by a judgment in an action brought against the tug. But the condition of the policy, which is one framed by the defendant, is not to be extended by implication or inference. All that the plaintiff was compelled to do to comply with that condition was to permit himself to be sued or an action in rem to be brought against his tug, and to await the result of that litigation. When the judgment was entered, that established not only the liability of the tug, but the liability of the defendant. He did not agree nor was he asked to agree to defend any action, and the defendant, not having inserted a provision that he should do so in the policy, cannot now insist upon it. The conclusiveness of a judgment does not depend upon the fact that the suit in which it was obtained has been defended. If jurisdiction has been acquired, the judgment becomes conclusive from that fact. This was all that the defendant had a right to require by its contract, and it equally with the plaintiff would be bound by such a judgment. Clearly, if the plaintiff had no defense he would not be bound to interpose a defense, and that seems to have been the situation here. A useless defense was interposed solely because the defendant insisted that it should be done. It was not necessary to determine the effect or the amount of its liability. The contract was purely one of indemnity. Ordinarily in such a contract when an action is brought against the person who is' to be indemnified, he may give notice of the pendency of the action to the indemnitor, and if the indemnitor desires the action to be defended, he may do it or he may procure it to be done-at his expense by the person who is sued. In either case he is liable for the expenses of defending the action as a part of the loss which the plaintiff has suffered and which is covered by the contract. The loss here is covered, not because the tug was liable for those counsel fees, but because the defendant, in an effort to escape or to limit its liability, had procured the plaintiff to incur other expenses than those required by the contract, at its request and for its benefit. Under those circumstances the defendant is clearly, as it seems to me, hable in this action for the counsel fees.

Ingraham, J., concurred.

Judgment reversed, new trial ordered, costs to defendant to abide event.  