LEIBELL, District Judge.
This is an appeal from a judgment of the United States District Court, Southern District of New York, Dawson, J., in favor of the plaintiff insurance carrier, in the sum of $5,000 (plus costs) against two defendants, Borsari Tank Corporation, and Anheuser-Busch, Inc., after a trial without a jury.1 The claim against the third defendant, Employers Mutual Liability Insurance Company of Wisconsin, was dismissed on consent at the end of the trial.
In 1950 and subsequent thereto, the Borsari Corporation was engaged in the business of installing brewing vats, and did work in many states. It maintained plants and hired employees in three states, New York, New Jersey and Missouri. Liberty Mutual issued a master Workmen’s Compensation Policy covering those three states in 1950. When Borsari performed a job in any other state, key men would be sent from its plants to direct and assist in the work.
About May 6, 1952 Liberty issued to Borsari a policy of Workmen’s Compensation Insurance (No. WC 20-300337-52 N.Y. effective April 1, 1952 for one year) which covered compensation liability of Borsari on work being done in the State of New Jersey for the Anheuser-Busch Corporation.
On July 23, 1952, Borsari and Anheuser entered into a contract, whereby Borsari agreed to perform certain additional work for Anheuser at Newark, New Jersey. The contract for the additional work was known as Anheuser’s Project 654, and Borsari’s Job No. 5207. It was the second job Borsari had undertaken for Anheuser at Newark; the earlier job was known as Borsari Job No. 4910 under a contract containing similar provisions for workmen’s compensation insurance. Under the terms of the contract, Anheuser agreed to furnish Borsari (at the expense of Anheuser) liability insurance protecting Borsari “under any Workmen’s Compensation Act or other statute or law inposing liability for injuries sustained by [Borsari] employees in connection with work covered by the contract.” The trial court properly construed this contract provision to be all inclusive, that it included any compensation liability of Borsari under the laws of Missouri, as well as those of New Jersey.
Anheuser obtained from Employers Mutual workmen’s compensation insurance insuring Borsari, and Employers Mutual issued and delivered to Borsari a certificate of insurance dated February 2, 1953. The date of the policy itself does not appear. The certificate was silent as to the states included in the coverage, but the master policy, which was issued to and retained by Anheuser, [280]*280specifically provided that it covered Borsari only for the workmen’s compensation liability imposed by the laws of- the State of New Jersey.
It is alleged by Liberty, that Borsari, acting in good faith, and in order to save a premium charge, and believing it was fully covered by the Employers Mutual policy for its workmen’s compensation liability in every state where required, requested Liberty to eliminate from its existing workmen’s compensation policy all coverage for injuries to or death of Borsari’s employees in connection with the Anheuser job in Newark, New Jersey. Accordingly on December 8, 1952, Liberty issued an endorsement (No. 17) to Borsari’s policy reading as follows:
“Insurance Not Applicable to Certain Designated Operations
“It is agreed that, anything in this policy to the contrary notwithstanding, this policy does not insure as respects injuries (Or death resulting therefrom) sustained by any employees engaged in work directly connected with operations conducted at:
“Job #5207, Anheuser Busch, Inc. “Newark, New Jersey.”
Borsari had made a similar request in 1950 as to Liberty’s coverage on Job #4910, and the same course had been followed.
On March 11, 1953, a fire occurred at the Anheuser job site in Newark, New Jersey, and as a result three of Borsari’s employees, Grainger, Hageman and Manthey, lost their lives. Later Borsari learned that the Employers Mutual policy did not provide coverage for Borsari’s liability under the Workmen’s Compensation Law of Missouri. V.A. M.S. § 287.010 et seq.
The widows of the deceased employees, who were residents of Missouri, filed claims for compensation death benefits against Borsari and Liberty, as insurance carrier, with the Division of Workmen’s Compensation, Department of Labor and Industrial Relations for the State of Missouri. The Missouri statute- provided more liberal compensation than the New Jersey statute. The claimants had a choice of compensation under either the New Jersey or the Missouri statutes.
The contracts of employment of the deceased employees had been made in the State of Missouri and their widows were eligible to recover from Borsari and from Liberty Mutual, its insurance carrier in Missouri, the compensation benefits under the Missouri Workmen’s Compensation Law. Under § 287.280 of the Act and under the authority of Allen v. Raftery, 237 Mo.App. 542, 174 S.W.2d 345, Liberty was precluded from denying liability, despite its endorsement of December 8, 1952, issued to Borsari, which excluded coverage with respect to Borsari’s employees in connection with the Anheuser job in Newark, New Jersey. Liberty had covered some of Borsari’s employees in Missouri and under the statute (§ 287.-110, subd. 2) the widows of the Borsari workmen hired in Missouri were similarly protected, although working in another state. On May 19, 1954, each surviving widow received from the Missouri Workmen’s Compensation Division a final compensation award of $12,400.00 against Borsari and Liberty, a total of $37,200. The $400.00 of each award was for funeral expenses.
The estates of the three deceased employees had instituted common law actions in the State of New Jersey to recover damages from certain contractors for having negligently caused the deaths of these men. While the third party actions were pending, Liberty and Borsari, pursuant to the laws of New Jersey, “asserted liens [by statutory notice] against any recovery by the states,”2 in the common law actions.
[281]*281The actions in New Jersey were settled for a total sum of $82,500. In the Grainger estate the settlement figure was $30,000; in the Hageman estate $27,-500; and in the Manthey estate $25,000. Under the terms of the settlement Liberty was to receive about $15,000 as reimbursement for compensation payments theretofore paid to the surviving widows, and also the right to be released from making further payments under the Missouri awards of May 19, 1954.3 Liberty alleges that as a condition of receiving its share of the settlement recovery, it was required by the statutes, of Missouri and New Jersey, to pay an attorney’s fee of $5,000.00 to the attorneys who represented the estates of the deceased workmen in the third party actions; and that at the time Liberty received its part of the recoveries Liberty paid the $5,000.00 fee by three checks (Ex. 11), dated January 9, 1956, total-ling the $5,000. Liberty accordingly has claimed reimbursement of that amount from the defendants, Borsari and Anheuser, in the present action.
Liberty’s claim against Borsari is that since the latter induced Liberty “to eliminate three state coverage from its compensation policy,” on Borsari’s representation that it was obtaining similar coverage through another insurance carrier under Borsari’s contract with An[282]*282heuser, Borsari is liable to Liberty for the loss it sustained by Borsari’s failure to do so; and that the $5,000.00 attorneys’ fee represents that loss.
Liberty claims that it is subrogated to any rights of recovery vested by law in Borsari against Anheuser, and that Anheuser breached its contract with Borsari, by failing to provide proper insurance for Borsari “under any Workmen’s Compensation Act,” including the State of Missouri. Liberty bases its claim against Anheuser on the subrogation clause of Liberty’s insurance policy issued to Borsari and on the general principles of subrogation.
Judge Dawson found in favor of Liberty, holding Borsari and Anheuser jointly and severally liable for the $5,000.00 Liberty paid as its proportionate share of the attorneys’ fees in the New Jersey third party actions.
The most important question presented on his appeal is whether the payment of the $5,000.00 by Liberty Mutual was a “voluntary” payment, or a payment that Liberty was obliged to make by statute. If the payment was voluntary, Liberty Mutual would have no basis for a claim of recoupment. The nature of the payment, voluntary or otherwise, is governed by the provisions of the statute, applicable as of the date the recoveries in the third party actions were effected.
Although Liberty Mutual and: Borsari filed their statutory notice in the third party actions instituted in the New Jersey State Court, pursuant to New Jersey law, their right to recover on their lien, the amount of their recovery and the conditions attached thereto, are governed by the law of the State whose Compensation Act was invoked by the claimants in obtaining their compensation awards.4 In this ease it would be the law of Missouri. However, the trial of this case and its decision proceeded on the assumption that the Compensation Law of New Jersey applied. The New Jersey statute required contribution by the compensation carrier towards the expenses and attorney’s fee of the plaintiff in a third party action. It was in effect on all pertinent dates.
Prior to August 29, 1955, the law of Missouri, § 287.150, made no provision for the deduction of any part of the attorney’s fees and expenses of the third party action from the amount payable by way of reimbursement to the employer of the insured employee, or to the employer’s insurance carrier, out of the amount recovered by the estate of a deceased employee in the third party action. The employer or its insurance [283]*283carrier was entitled to be reimbursed for the full amount of the compensation award without any deduction.
If the payment of $5,000.00 by Liberty Mutual as its share of the attorney fees for the recovery made in the third party action is governed by the provisions of subdivision 2 of § 287.150 which went into effect August 29, 1955 (not July 29th as stated in Liberty’s brief), i. e., if the recoveries in the third party actions were effected on or after that date, then under the language of subdivision 2, the payment of the $5,000.00 would be required by statute and would not be voluntary.
Subdivision 2 reads as follows: “2. Whenever recovery against the third person is effected by the employee or his dependents, the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee. After the expenses and attorneys fee has been paid the balance of the recovery shall be apportioned between the employer and the employee or his dependents in the same ratio that the amount due the employer bears to the total amount recovered, or the balance of the recovery may be divided between the employer and the employee or his dependents as they may agree. Any part of the recovery found to be due to the employer, the employee or his dependents shall be paid forthwith and any part of the recovery paid to the employee or his dependents under this section shall be treated by them as an advance payment by the employer on account of any future installments of compensation.”
In the first clause of the first sentence “Whenever recovery against the third person is effected by the employee or his dependents” the word “whenever” means “if” or “in the event of.” State ex rel. Kansas City v. School Dist. of Kansas City, 333 Mo. 288, 62 S.W.2d 813, 817; Morse v. Custis, 38 Cal.App.2d 573, 101 P.2d 702, 704. Note the words “recovery” and “is effected.” The date the terms of the settlement were arrived at, is not the date the recovery was effected. The date the moneys were actually paid over in settlement of the third party action is the date the recovery is effected.
The second clause of the first sentence — “the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee”— contains the mandatory words “shall pay.” A payment made under that clause could not be considered as “voluntary.” The said second clause also indicates when the payment of a share of the expenses is to be made. It is to be paid “from his (the employer’s or his insurer’s) share of the recovery,” and it is not payable until the “recovery” has been “effected.” The date the compensation insurer (Liberty), as subrogee of the employer, received its share of the money paid in settlement of the third party action would not necessarily be the determinative date; nor would the date Liberty paid its share of the attorney’s fee in the third party action be the determinative date, in deciding whether subdivision 2 of § 287.150 of the Missouri statute is applicable. As hereinabove indicated that subdivision did not go into effect until August 29, 1955.
In the case at bar the employer’s insurer and subrogee (Liberty Mutual) which was obligated to pay the amount of the award made by the Missouri Compensation Board to the estates of the three deceased employees, actually paid the $5,000.00, as its “proportionate share of the expenses of the recovery, including a reasonable attorney fee.” The reasonableness of the $5,000.00 payment is not disputed. The trial record does not show when the recoveries were actually effected in the third party actions. A letter to Judge Dawson, dated February 24, 1956, sent by one of the attorneys after the trial, shows the total amounts of the recoveries in the third party actions by the estates of the three deceased employees, and that the payments were [284]*284made by the Employers Mutual Liability Insurance Company of Wisconsin on behalf of the defendants named in the third party actions.5
The record is silent as to the dates the recoveries were effected in the third party actions; the dates the attorney for the estates actually received the checks in settlement of the action representing the estates’ share of the amount paid; the dates those checks were deposited and paid; the dates Liberty Mutual received and deposited the checks paid in satisfaction of its liens in said actions.
This defect in the trial record we sought to have supplied by a stipulation of the attorneys making a part of the record on appeal in the case, photostats of the checks (face and reverse sides) given by Employers Mutual in payment of the amounts of the settlement of the third party actions. The attorney for the defendants obtained photostats of the checks and was willing to make such a stipulation. But the attorney for Liberty Mutual refused to so stipulate. These checks should show when “the recovery” was “effected” in the third party actions in relation to August 29, 1955, the date when subdivision 2 of § 287.150 of the Missouri statute became effective. If the recoveries were effected prior to August 29, 1955, Liberty’s payment of the $5,000.00 was not required by the-Missouri statute, was “voluntary” and is not recoverable in this action.
The discussion of the Missouri statute in Zasslow v. Service Blue Print Company, March 20, 1956, 288 S.W.2d 377, 379, is helpful, although subdivision 2 of § 287.150 was held not applicable because, in that case, both the recovery in the third party action and the making of the compensation award had been had [285]*285prior to the effective date of subdivision 2 of § 287.150.6
The Court adopted verbatim the opinion of the Commissioner from which the following paragraphs are quoted:
“In short, the principal question in this case is whether an employer who is liable to pay compensation to the dependent of a fatally injured employee is entitled to a subrogation credit out of the proceeds of a third party action by the employee’s dependent, without proportionately sharing the cost of attorneys’ fees.”
“The Act, as then written,7 treated the recovery as a fund charged first with the payment of the expenses of making the recovery and then with the compensation paid by the employer, and the employee was entitled only to whatever excess remained. * * * it was a matter of indifference whether the recovery was obtained against the third party by the employer or by the employee, and no reason is apparent why a different method of distribution should be adopted in the one case from that directed in the other. The expenses of making the recovery were a first charge on the fund by the terms of § 287.150, supra, which fixed the equities of the situation. The employer was entitled to receive credit for the full amount of appellant’s net recovery of $6,000, without deduction of respondents’ proportionate share of appellant’s attorneys’ fees. * * * The distribution was properly held to be governed by § 287.150, supra, which was the only section of the Act evidencing the legislative intent relating to the distribution of third party recoveries in effect at the time the facts in the instant case occurred.”
“The Sixty-eighth General Assembly repealed § 287.150, supra, and in lieu thereof enacted a new § 287.-150 consisting of two paragraphs, the first of which is a reenactment of § 287.150, supra, verbatim and the second of which provides that whenever recovery against a third person is effected by the employee or his dependents ‘the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee’, as now sought to be enforced by appellant. Laws 1955, p. 598, H.B. No. 335, § 1. This provision, however, was not in effect when the instant facts occurred. It did not become effective until 90 days after May 31, [286]*2861955. This court cannot give it retroactive effect.”
For a discussion of a comparable situation dealing with the Workmen’s Compensation Act of New Jersey, see Savitt v. L. & F. Const. Co., 16 N.J.Misc. 462, 1 A.2d 752, modified 17 N.J.Misc. 65, 4 A.2d 692, writ of certiorari denied 123 N.J.L. 149, 8 A.2d 110, judgment modified and remanded for further proceeding, 124 N.J.L. 173, 10 A.2d 728; and Feinsod v. L. & F. Const. Co., 16 N.J. Misc. 514, 2 A.2d 357, affirmed 17 N.J. Misc. 65, 4 A.2d 692.
If the $5,000 payment by Liberty was not “voluntary,” as that term has been defined in this opinion, the next question to be considered is whether Liberty Mutual has a claim to be reimbursed in that amount by Borsari or AnheuserBusch, or by both. The trial court’s opinion holds Borsari and AnheuserBusch jointly and severally liable.
Liberty’s Claim Against Borsari
Liberty Mutual was put in the position where it was obligated to pay the awards under the Missouri Workmen’s Compensation Law (despite its rider excluding the Newark job from coverage under Liberty Mutual’s policy) by reason of certain representations of Borsari that Anheuser-Busch had obtained the necessary compensation insurance for Borsari under Anheuser’s contract with Borsari, as a result of which Liberty at Borsari’s request can-celled its compensation coverage of Borsari on the Anheuser job at Newark, New Jersey. Borsari is not excused by reason of the fact that when it notified Liberty to cancel its compensation coverage on the Anheuser job, Borsari actually believed that it was fully covered under another policy procured by Anheuser under its contract with Borsari. What Liberty was held for under Missouri law was Borsari's obligation as employer. Borsari should be required to reimburse Liberty on the theory of implied contract arising out of Borsari’s representations to Liberty, as to Borsari’s coverage under the compensation policy Anheuser procured under its-contract with Borsari, when Borsari requested Liberty to cancel its coverage of Borsari on the Anheuser job. This resulted in an implied agreement by Borsari that Liberty should be exonerated from any compensation liability arising out of the Anheuser job. The principles of implied contract would require under those circumstances that Borsari stand the loss and not Liberty Mutual. United States Fidelity & Guaranty Co. v. Taylor, 132 Md. 511, 104 A. 171; Gise v. Fidelity & Casualty Co., 188 Cal. 429, 206 P. 624, 22 A.L.R. 1476; Janes Contracting Co. v. Home Life & Accident Co., Tex. Com.App., 260 S.W. 839; DeCampos v. State Compensation Ins. Fund, 122 Cal.App.2d 519, 265 P.2d 617. Liberty was not negligent in relying on Borsari’s representations. As a matter of public policy, in the interest of the workmen, the Missouri statute held Liberty liable for the awards equally with the employer, Borsari. But there is no public policy that requires that the burden of the loss should be shifted to Liberty, despite the arrangement between Borsari and Liberty for a cancellation of the coverage.
Liberty’s measure of damages would not be the loss in premium which Liberty would have received from Borsari if Liberty’s policy had not been changed to eliminate compensation coverage on the Anheuser job. Liberty’s actual out of pocket loss (the $5,000 item) would be Liberty’s measure of damages, as the District Court held. Larson, Workmen’s Compensation Law (1952) § 94.10. United States Fidelity & Guaranty Co. v. Taylor, supra.
Liberty’s Claim Against Anheuser
Liberty bases its action against Anheuser on the theory that as Borsari’s insurance carrier, it is subrogated to Borsari’s claim for breach of contract against Anheuser-Busch (1) by virtue of the subrogation clause contained in the master policy of insurance issued by Liberty to Borsari, and (2) by virtue of the common law principles of subrogation.
[287]*287Although the Missouri Workmen’s Compensation Act is silent as to the right of an injured employee or his dependents to sue a tortious third party it has been held that the Missouri Compensation Act did not take away the employee’s common-law right against an offending third person. McKenzie v. Missouri Stables, Inc., 225 Mo.App. 64, 34 S.W.2d 136; Reynolds v. Grain Belt Mills Co., 229 Mo.App. 380, 78 S.W.2d 124; and Schumacher v. Leslie, 360 Mo. 1238, 232 S.W.2d 913. It was pointed out in Bunner v. Patti, 343 Mo. 274, 121 S.W.2d 153, 155, that while § 287.150 subrogates the employer to the rights of the employee against a third person: “yet it is settled that the employee also may sue, independent of the statute, or the two may sue together; and this is true notwithstanding the employee has already claimed and collected compensation under the Act for the same injuries from his employer. Anzer v. Humes-Deal Co., 332 Mo. 432, 58 S.W.2d 962.” See also, Schumacher v. Leslie, supra; McKenzie v. Missouri Stables, supra.8
Liberty Mutual made the following subrogation clause part of its Workmen’s Compensation insurance policy issued to Borsari:
“Subrogation The Company shall be subrogated in case of any payment under this Policy, to the extent of such payment, to all rights of recovery therefor vested by law either in this Employer, or in any employee or his dependents claiming hereunder, against persons, corporations, associations or estates.”
The employer and his insurer stand in the position of the employee or the dependents of a deceased employee who have received payments under the policy; and they acquire such rights, and only such rights, against a third person whose negligence caused the injury, as the injured employee or the dependents of a deceased employee would have had against the third person. The sole test of liability of the third party to the subrogated employer or his insurance carrier is the liability of the third party to the injured employee or to his dependents. General Box Co. v. Missouri Utilities Co., 331 Mo. 845, 55 S.W.2d 442; Gayhart v. Monarch Wrecking Co., 226 Mo.App. 1118, 49 S.W.2d 265. See also Goldschmidt v. Pevely Diary Co., 341 Mo. 982, 111 S.W.2d 1, at page 4; Superior Minerals Co. v. Missouri Pac. R. Co., 227 Mo.App. 1044, 45 S.W.2d 912.
The employer and its insurance carrier are subrogated only to tort claims existing in favor of the injured employee or his dependents, and not to contract claims existing in their favor. Hanson v. Norton, 340 Mo. 1012, 103 S.W.2d 1; and Schumacher v. Leslie, supra, enlarging the Hanson holding. See also 71 Corpus Juris [Workmen’s Compensation] § 1609, page 1570.
[288]*288The employer’s right of subrogation to the tort claims existing in favor of the injured employee or his dependents against third persons is conferred by the first sentence of § 287.150, subd. 1 of the Missouri Compensation statute, which provides in part that “where a third person is liable to the employee or to the dependents, for the injury or death, the employer shall be subrogated to the right of the employee or to the dependents against such third person." Paragraphs 8 and 9 of the Missouri Workmen’s Compensation and Employer’s Liability Endorsement, attached to the insurance policy, issued by Liberty to Borsari, relate to claims arising from injuries to employees of Borsari.9
It is Liberty Mutual’s contention that the subrogation clause of the policy it issued to Borsari is not limited to the rights of its insured, Borsari, against third party tort-feasors whose negligence resulted in the death of Borsari’s employees, but includes also any right of action Borsari may have against Anheuser-Busch based on the latter’s breach of its contract to obtain for Borsari compensation coverage under the applicable compensation laws of any State, including the State of Missouri. We are of the opinion that the subrogation clause of the policy, when considered in relation to the purpose of the insurance and the other provisions of the policy, does not include within its scope Borsari’s right of action against Anheuser-Busch for breach of contract. The purpose of the clause in the policy was to subrogate the insurer to the employer’s right of action against any third party tort-feasor who injured or caused the death of insured’s employee, whether that tort-feasor was a natural person, a corporation, an association, or an estate. The right of subrogation which an employer or his compensation insurer has against a third party whose negligence has resulted in injury to the employee and the resultant payment of a compensation award under a State statute, is a right created by the compensation statute. The subrogation clause of the policy gave the insurance carrier the right which the insured employer had under the statute. The employer had no common-law right of subrogation against the third party tort-feasor. McKenzie v. Missouri Stables, Inc., supra, 34 S.W.2d at page 138; Crab Orchard Imp. Co. v. Chesapeake & O. Ry. Co., 4 Cir., 115 F.2d 277 at page 279.
The question remains as to whether under common law principles of subrogation, Liberty Mutual has a right of subrogation to Borsari’s right of action against Anheuser-Busch for breach of contract. Liberty Mutual has been required to pay something that it would not have had to pay, if Anheuser-Busch had fully performed its obligation to Borsari and furnished Borsari a policy that would cover Borsari's employees with workmen’s compensation under the Missouri statute. Anheuser-Busch provided compensation insurance coverage for Borsari’s employees only under the laws of New Jersey. The deceased employees’ dependents elected to claim compensation under the laws of Missouri, and under the Missouri law Liberty Mutual was held liable for the compensation awards. The Missouri Commission’s additional findings (dated Febru[289]*289ary 18th, 1955) contain the following paragraph:
“We further find that Borsari Tank Corporation of America, employer herein, had insured its entire liability under the Missouri Workmen’s Compensation Law as provided in Section 287.280, RSMo 1949, with Liberty Mutual Insurance Company as its insurance carrier, a duly authorized insurer; that on the date of this accident said employer had not qualified as a self-insurer as to any of its operations; and that, therefore, Liberty Mutual Insurance Company was the insurer of this employer without reservation and is primarily liable to the dependent of deceased employee. Allen v. Raftery [237 Mo.App. 542], 174 S.W.2d 345; Harris v. Pine Cleaners, Inc. [Mo. App.], 274 S.W.2d 328, loc. cit. 332.”
Liberty Mutual would not have been obliged to pay the awards under the Missouri law, if Anheuser-Busch had covered Borsari with a proper compensation policy including liability under the Compensation Law of Missouri. Bosari Corporation would not have been a qualified self-insurer under Missouri law, but it would have been a properly insured employer and Liberty Mutual’s release from coverage would have been recognized.
Although there was no privity between Liberty Mutual and Anheuser-Busch, Liberty Mutual’s dealings with Borsari in cancelling its coverage on the Anheuser-Busch, Newark, New Jersey, job were in reliance on Borsari’s representation that Anheuser-Busch had obtained proper insurance coverage of Borsari’s employees on the Anheuser-Busch job at Newark, New Jersey. Borsari’s representations were made in good faith. The certificate of insurance it received from Anheuser-Busch contained the statement “Pull coverage under workmen’s compensation law. As designated in endorsement for coverage under paragraph Qne(b),” of the policy which AnheuserBusch retained.
The fault was on the part of Anheuser-Busch in not obtaining proper compensation coverage for Borsari. Applying equitable principles to the fact situation in this case, the loss should fall on Anheuser-Busch, not on Liberty Mutual. And in order to place the loss where it belongs, Liberty Mutual should, in equity, be subrogated to Borsari’s right of action against Anheuser-Busch for breach of contract. In Gerseta Corporation v. Equitable Trust Co., 241 N.Y. 418, 425-426, 150 N.E. 501, 504, 43 A.L.R. 1320, Judge Pound writing for the Court stated the equitable basis of the doctrine of subrogation:
“Subrogation, an equitable doctrine taken from the civil law, is broad enough to include every instance in which one party pays a debt for which another is primarily answerable, and which in equity and good conscience should have been discharged by the latter, so long as the payment was made either under compulsion or for the protection of some interest of the party making the payment, and in discharge of an existing liability.”
See also Pittsburgh-Westmoreland Coal Co. v. Kerr, 220 N.Y. 137, 144, 115 N.E. 465, 467, holding that the doctrine of equitable subrogation “includes so wide a range of subjects that it has been called the ‘mode which equity adopts to compel the ultimate payment of a debt by one who in justice, equity, and good conscience ought to pay it.’ ”
In the case at bar it appears that both Liberty Mutual and Anheuser-Busch were under a legal obligation to protect Borsari against liability resulting from injuries sustained by Borsari’s employees in connection with the work performed by Bosari’s employees at the Newark job. Liberty Mutual was so bound by virtue of the public policy of the State of Missouri, as hereinabove explained; Anheuser-Busch by virtue of the provisions of its contract with Borsari. Although both were legally bound, yet as between themselves, Anheuser-Busch was pri[290]*290marily liable, because it was the breach of its contract with Borsari that brought about the resultant loss to Liberty Mutual. Under the circumstances the equities strongly favor Liberty Mutual.
Since the two defendants, without separate representation, have presented a common defense without any claim of right as against each other, and since each is liable to the plaintiff, a joint and separate judgment is appropriate.
At the new trial the trial court will be in a position to receive in evidence the checks that were given in settlement of the three third-party actions. It may also hear and receive any other proof that will show when the recoveries were effected in those actions. It will then apply the Missouri Compensation statute, in force at the time the recoveries were effected, in determining whether Liberty Mutual’s payment of the $5,000 was “voluntary.”
At the new trial the Court may also inquire, if the issue is raised, as to the correctness of the amount of $5,000, to ascertain if it was in excess of the amount Liberty Mutual should have paid under the Missouri statute. Apparently that issue was not raised before Judge Dawson, as his opinion indicates.
Reversed and remanded for further proceedings not inconsistent with this opinion.
. The opinion of the trial court states:.
“It has not been urged that the amount of the attorney’s fee was excessive or improper, nor has any evidence been adduced that Liberty Mutual could have received reimbursement of its lien from the third party claims without payment of the attorney’s fee to the attorney for the estates of the decedents.” [139 F.Supp. 641, at page 645.]