Firemen's Fund Ins. v. Gulf Transp. Co.

99 So. 515, 135 Miss. 537, 1924 Miss. LEXIS 14

• Court: Mississippi Supreme Court
• Decided: March 10, 1924
• Docket: No. 23540
• Status: Published

Opinion

Sykes, P. J.,

delivered the opinion of the court.

The appellee, Gulf Transportation Company, a corporation, as complainant in the chancery court, seeks in its bill a recovery against the appellant (Firemen’s Fund Insurance Company) of thirty thousand dollars damages for the failure of appellant company to properly repair the barge Bert.

The bill alleges that the barge Bert, the property of appellee, was engaged in the oil-carrying business in the Gulf of Mexico; that it was insured in the appellant insurance company in the sum of thirty-five thousand dollars ; that the barge was structurally sound and seaworthy at the time of the issuance of the insurance • policy, and was in such condition when it sustained damages in a storm at sea, which injuries consisted of its being hogged, waterlogged, and strained in the storm, and while in this condition it was towed into Galveston, Tex., and turned over to the appellant insurance company under the terms and conditions of the insurance policy; that the appellant insurance company took charge of the barge through its agent, examined it, and repaired it at a cost of over twenty thousand dollars; that under the law and general custom of business these bills for repairs were paid by the appellee company, when approved and O. K. 'd by the agent of the appellant company; that after these repairs were made by the insurance company, it (the insurance company) through its agent issued a certificate of seaworthiness to the complainant, whereupon complainant, relying upon this representation of seaworthiness of the defendant, insurance company, leased the barge to a company engaged in the oil-carrying business; that the barge the next day after being loaded with oil, in the Houston Ship Channel, in smooth and placid waters, stranded and practically went to pieces; that the cause of this injury to the barge was the failure of the appellant, insurance company, to properly and adequately repair the barge at Galveston; that when the insurance company took charge of the barge at Galveston to repair it, it became its duty to put the barge in seaworthy condition and make proper repairs; that the repairs made were inadequate, did not put the barge in seaworthy condition, and were the proximate cause of her injury in the Houston Ship Channel, which injury amounted to practically a total loss; that before the. injury sustained in the storm the vessel was sound and seaworthy; that complainant relied on the representations of the defendant insurance company that the repairs made on the barge put her in a seaworthy condition. After these repairs were made the insurance policy was reinstated on the barge by the appellant company.

After a demurrer had been overruled to the bill the appellant answered generally denying the allegations of the bill and setting up certain alleged defenses contained in the insurance policy. It denied that it repaired the vessel through its agent, but alleged that the repairs, were agreed upon by its agent and the agent of the appellee, and were made by the appellee, and that it is not responsible for any insufficiency in these repairs. It denied that the barge was ever sound and seaworthy, but alleged that it was structurally weak and not fitted for the oil-carrying business. The answer refers to and specifically sets up a previous lawsuit between these two parties about the same subject-matter and alleges that all issues involved in this case were litigated therein, and that the previous cause is res adjudicata, of the issues here involved.

The cause was heard before the chancellor on pleadings and proof, and a decree was rendered in favor of the appellee Gulf Transportation Company, for the amount sued for, from which decree this appeal is here prosecuted.

The opinion of the court in the previous suit between these parties will be found in 121 Miss. 655, 83 So. 730, 9 A. L. B. 1307. For a complete understanding of all of the facts relating to these two suits, it will be necessary to read this former opinion of the court.

The two principal questions raised in this appeal are, first, whether or not the insurance company through its agent agreed to properly repair the barge Bert and put it in a seaworthy condition instead of making the indemnity under its insurance policy.

Subsidiary questions arising under this are, first, whether the barge was structurally sound and seaworthy before it was injured in the Galveston storm, and, second, if it was, and the insurance company repaired the barge, did these repairs place the barge in as good condition as she was before the storm.

The second principal question involved is whether, by virtue of the former suit, instituted by appellee (complainant), and reported in 121 Miss., supra, appellee is precluded from maintaining this suit. The subsidiary questions involved here are: (a) Is that litigation res adjudicata of this? (b) By prosecuting that suit did complainant make an election of remedies? (c) Did it thereby split a cause of action? and (d) Is it thereby estopped from maintaining this suit?

Upon the first question, the testimony of Mr. Fant, the owner of the Gulf Transportation Company, is to the effect that Mr. Anderson, a ship’ surveyor was the agent of. the insurance company; that Anderson had the barge put in the dry docks for repairs, drew the plans and specifications therefor, and represented that these repairs would make the barge ag’ain seaworthy and place it in as good condition as it was before the Galveston storm; that he relied upon these representations of Anderson as the agent of the insurance company, signed the contract for the making of the repairs with the contractor, and paid the bills therefor after they were O.K, ’d by Anderson. The testimony also shows that Anderson made reports of the progress of the work and kept the insurance company fully advised as to what was being done. Fant testified that the reason he signed the contract for the making of the repairs with the contractor was because it was the custom for the owner of the vessel to do so, and he was told by Anderson that this was proper; that in all of the transactions with Anderson he and Anderson both recognized that these repairs were being’ made by the insurance company in place of paying the indemnity in accordance with the policy; that Anderson assured him during the progress of the work that the repairs would make the barge seaworthy; and that after their completion he assured him that the barge was seaworthy, and issued a certificate to that effect.

The record shows that the repairs were properly made according to the specifications of Anderson.

Anderson’s own testimony showed that he was employed by the insurance company as their representative in the matter. He testified, however, that he did not undertake the mailing of these repairs as the agent of the insurance company, but recommended that they be made to Fant, and that they were in point of fact made by Fant and not by the insurance company.

From Fant’s testimony we think the chancellor had the right to decide this question of fact in favor of the appellee, namely, that the insurance company made the repairs on the barge. The barge had been injured in a storm, which under the policy is a peril of the sea. Because of this injury the insurance company became liable under this policy. Instead, however, of making this indemnity, under this testimony, it agreed with Fant, in lieu thereof, to repair the vessel. Both parties agreed that the insurance company make these repairs. Complete indemnity is the contract of insurance, and, when an insurance company attempts to make repairs instead of paying for the damage, it thereby becomes its duty to place the vessel in as good condition as it was before the storm. N. W. Transportation Co. v. Continental Ins. Co. (C. C.), 24 Fed. 171. In that case it is said:

‘ ‘ Having taken possession of her under an obligation to indemnify the owner for the entire loss occasioned by the voluntary stranding, we think the company must be conclusively presumed to have acted with the intention of doing; their whole .duty in that regard, and that they cannot discharge themselves of any portion of their obligation. ’ ’

Again in the same opinion it is said:

‘The whole law upon the subject may be summed up as follows: When an insured vessel is stranded and abandoned there are three courses open to the underwriters: They may accept the abandonment and pay for a total loss; they may allow the vessel to lie on the beach, and insist that there was no right to abandon; or they may elect to raise and repair her (if bound to repair), and if they can do this for less than half her valuation, they may return her to the owners and thus avoid paying for a total loss; but in so doing they must act promptly, that the owners may be repossessed of their property without unnecessary delay.”

Again in the same opinion it is stated that:

“Having once made their election to raise the vessel, we do not understand that they are at liberty to stop short of full performance, or to tender her back to the owners without complete indemnity for the loss.”

To the same effect is Joyce on Insurance, vol. 5, section 3049, p. 5-257, wherein the rule is thus stated:

‘ ‘ The object of insurance being indemnity, the assurers, who have taken possession for the purpose of repair, must tender the vessel back in such condition as to indemnify assured.”

See Ins. Co. v. Cotton Oil Co., 108 Miss. 589, 67 So. 58; Hume v. Frenz, 150 Fed. 502, 80 C. C. A. 320; Morrell v. Ins. Co., 33 N. Y. 429, 88 Am. Dec. 396.

There was a conflict in the testimony about whether or not the repairs made on the barge were sufficient to place her in as good condition as she was before the storm. The testimony of the appellee was to the effect that prior to the storm she was structurally sound and seaworthy, and the record shows that she made several voyages with cargoes of oil before sustaining the injuries in the storm.

On the other hand, there was testimony for the appellant that the barge was structurally weak, and, to quote the language of one of the witnesses for appellant, “a mistake from the beginning. ” It is sufficient to say that the chancellor was authorized to settle this conflict of fact in favor of the appellee.

From these views it follows that we think the chancellor was authorized in finding that the appellant, insurance company, failed in the duty it owed appellee to properly repair the barge, and is consequently liable in this case, unless complainant is precluded by virtue of the prosecution of the former suit.

This brings us down to a consideration of that question. In the first suit, reported in 121 Miss., supra, the Gulf Transportation Company sought recovery: First, for the return of its pro rata share under the insurance policy of the amount paid out for it for repairs on the barge, on the theory that the repairs were adequate and sufficient. Second, it asked to recover upon the reinstated insurance policy for the damage to the barge in the second disaster, on the theory, first, that the repairs at Galveston were made under the supervision of the agent of the insurance company and his issuing a certificate of seaworthiness, and that therefore the insurance company was estopped from contending that the barge was not seaworthy at the time of the second disaster; and, second, that the second disaster was a peril of the sea covered by the terms of the policy. In that litigation there was a recovery by the Gulf Transportation Company for its pro rata share of the repairs on the vessel. But a recovery was denied it on account of the second disaster. The court there held that the second disaster was not a peril of the sea and was not covered by the terms of the policy, and that the insurance company was not estopped because of its supervision in making the repairs and issuing the certificate of seaworthiness from claiming that the second disaster was not a peril of the sea and therefore not covered by the policy.

In that case the Gulf Transportation Company was attempting to recover for the second disaster under the reinstated policy of insurance. It claimed that the vessel was properly repaired, was seaworthy, and the disaster was a peril of the sea as contemplated by the policy, or that, so far as the insurance company was concerned, it was estopped from claiming that the vessel was not sea.worthy and was not injured by a peril of the sea. In that case the transportation company assumed that the repairs were sufficient and adequate.

In this case the transportation company (appellee) assumes a contrary or antagonistic position to that assumed in the first suit, namely, in this suit, that the repairs made by the insurance company were insufficient, and that the vessel as a matter of fact was not seaworthy at the time of the second disaster.

The question adjudicated in the first litigation, was that the vessel was not injured because of a peril of the sea, and consequently the insurance company was not liable on the reinstated policy. The present suit is not a suit based directly on either the original or reinstated policy of insurance, but is a suit based upon the contract to properly repair the vessel after the first disaster.

In the first suit the Gulf Transportation Company neither alleged nor attempted to prove a breach of the contract to repair, but assumed that the repairs were adequate. In fact its entire theory was that the repairs were adequate,' and that the vessel was seaworthy and injured in the second disaster because of a peril of the-sea.

In the case of Hardy v. O’Pry, 102 Miss. 197, 59 So. 73, the rule is thus stated:

“The usual test for determining whether the cause of action in the two suits is the same is to ascertain whether the evidence necessary to maintain the one would authorize a recovery in the other. If not, the prior judgment is not a bar to the second. ’ ’

And in the case of Insurance Co. v. Tate Mercantile Co., 117 Miss. 769, 78 So. 711, it is said: “The first action must be competent to dispose of the case on its merits.” But, in addition thereto it must be shown that “such disposition has been made.”

In the case of Phelps v. Commodore (Miss.), 1 So. 833, relating to the equity rule, the court said:

“The rule seems to be well settled in equity, and has been repeatedly announced by this court, that a complainant -who seeks relief upon one ground cannot, upon failing to establish that ground, be relieved upon independent or inconsistent facts established by the evidence, but not relied on in the pleadings. ’ ’

The case of Norton v. Huxley, 13 Gray (Mass.) 285, is instructive. It is there stated:

“The principle is well settled, that a judgment in a former suit between the same parties is a bar to a subsequent action only when the point or question inissue is the same in both. The judgement is conclusive in relation to all matters in the suit which were put in issue; but has no effect upon questions not involved in it, and which were not then open to inquiry, or the subjects of litigation (citing a number of oases). . . . Governed by this principle, it is very plain, upon a comparison of the allegations and cause of action set forth in the former suit, the record of which the defendant produced and offered to give in evidence, with the allegations and cause of action set forth in this, that the points or questions in issue are not the same in the two suits, and consequently that the judgment in the former constitutes no bar to the maintenance of the present action. It is true that both originated in the same series of transactions, and in the conversations and communications which took place between the parties concerning them. But the result of the former suit shows that the plaintiff there wholly mistook the effect of what was said by the defendant, and so failed to establish the claim which he then attempted to enforce. That was an action of contract, in which a promise and a breach of the promise were averred. This is an action of tort in which the plaintiff alleges that he sustained damage by the willfully fraudulent representations of the defendant. Proof which would fully support the one would have no tendency to maintain the other; for the reason, that the questions involved in the respective issues were essentially unlike. ’ ’

From these authorities we conclude that the first suit is not res adjudicaba of the questions here involved.

The second question then is whether or not there was an election of remedies by the transportation company in the prosecution of the first suit. This is not a case of an election of remedies, but is simply a case where the transportation company in the first case made a mistake as to its remedy. It mistakenly thought it had a remedy upon the reinstated policy for the loss of its' vessel in the second disaster. ■ The court, however, decided that it did not. The recovery in that case of the sixteen thousand dollars was a separate matter, and was simply the pro rata that the insurance company was required to refund the transportation company for paying the bills, really of the insurance company.

It is only where one has two or more remedies for a cause of action, upon either of which he may recover, that the pursuing of one of these constitutes an election. This rule is well stated in the following authorities, namely:

“When plaintiff sued a city on an express contract for lighting and was defeated, such suit did not constitute an election of remedies precluding the plaintiff from thereafter maintaining a suit on quantum meruit for the reasonable value of the service rendered; such remedies not being inconsistent.”

In this case plaintiff, having brought suit on an express contract for lighting-, on the ground that the contract had not been substantially performed, wherein he lost, he then brought a suit in quantum meruit for what he had done, and the court held that the judgment rendered in the suit on express contract was not res adjudicata against the suit on quantum meruit.

“The fact that a party through mistake attempts to exercise a right to which he is not entitled, or has made choice of a supposed remedy that never existed, and pursued it until the court adjudged that it never existed, should not and does not preclude him from afterwards pursuing a remedy for relief, to which in law and good conscience he is entitled.” Gas Co. v. Hutchinson, 160 Fed. 41, 90 C. C. A. 547, 19 L. R. A. (N. S.) 219.

“But the fact that a party wrongfully supposed that he has two such rights, and attempts to choose the one to which he is not entitled, is not enough to prevent his exercising the other, if he is entitled to that. There would be no sense or principle in such a rule.” Snow v. Alley, 156 Mass. 193, 30 N. E. 691.

“Election is simply what its name imports; a choice, shown by an overt act, between two inconsistent rights, either of which may be asserted at the will of the chooser alone. Thus, ‘if a man maketh a lease, rendering a rent or a robe, the lessee shall have the election.’ Co. Litt. 145a.” Bierce v. Hutchins, 205 U. S. 340, 27 Sup. Ct. 524, 51 L. Ed. 828.

“Where a wrong has been perpetrated and the victim is doubtful which of two inconsistent remedies is the right one, he may pursue both until he recovers through one, and, in the absence of facts creating an equitable estoppel, his prosecution of the wrong remedy to a judgment of defeat will not estop him from subsequently pursuing the right one to victory.” Rankin v. Tygard, 198 Fed. 795, 119 C. C. A. 591.

“The fatuous choice of a fancied remedy and the futile pursuit of it until the court adjudges it never had any existence, is no defense to an action to enforce an actual remedy inconsistent with that first invoked.” Harrill v. Davis, 168 Fed. 187, 94 C. C. A. 47, 22 L. R. A. (N. S.) 1153.

In Tate Mercantile Go., supra, this court said:

“One having a cause of action for damages arising from a breach of a contract, and which cause of action at the same time constitutes a wrong for which the plaintiff may waive the contract and sue in tort, the plaintiff then has two courses, either of which he may pursue. He may sue in contract for the damages arising from the breach, or he may waive the contract and sue in tort. He must, however, elect upon which theory he will proceed, and his declaration, or the counts contained in the same must be either all in contract or all in tort. ’ ’

Neither was there a splitting of the cause of action. The canse of action here sued on is entirely different from the one in the first case. The suit there was, first, for the amount expended for proper repairs on account of the insurance company, and, second, for recovery on the reinstated insurance policy. The suit here is for damages for improper and inadequate repairs, which caused practically the loss of the barge. It is contended by the appellant that at the time of the institution of the first suit the appellee here was in possession of all of the facts relating to the two disasters, and is therefore estopped to recover because of the alleged inconsistent position taken by it in the former suit.

There can be no estoppel where a party has a good cause of action but attempts to pursue the wrong remedy therefor. This is what happened in the former suit The decree of the lower court is affirmed.

Affirmed.