This is the second appeal in this case from a judgment in favor of the plaintiffs. After our decision on the former appeal (132 App. Div. 241) the complaint was amended, and the record now' presents the plaintiffs’ claim of waiver, estoppel and breach of contract. At the close of the evidence on the trial under review the defendant moved to dismiss the complaint., The plaintiffs asked the court to submit certain specific questions to the jury and to reserve the direction of a general verdict until the finding of the special verdict. The court submitted a single question, hereinafter referred to, which was answered in the affirmative, whereupon the court directed a verdict for the plaintiffs for $7,139.91, comprising three items, viz., $5,000 of the Bernard Johnston judgment, $898.33 expenses in defending the suit on that judgment, and $1,241.58 interest. Except for a request to charge on a specific point, hereinafter referred to, the defendant did not ask for the submission of any question to the jury. In effect, the case was submitted to the court by the parties, except with respect to a single question of fact upon which the verdict of the jury was taken for the. information of the court.
The history of the different litigations involved in this case was . quite fully stated by Mr. Justice McLaughlin on the former appeal, and I shall state herein only such additional facts as may be necessary to elucidate the questions now presented.
The first question is whether the plaintiffs’ loss is covered by the policy. . By the-terms of the policy the .defendant agreed to indemnify the plaintiffs “against loss from- liability for damages on
*496account of bodily injuries, fatal or otherwise, accidentally suffered to any employee or employees ; ” and by an agreement attached to it the policy was extended “ to cover the liability of the assured to the public only for personal injuries, only caused by the assured or by the assured’s own workmen.” The fair import of these two clauses, construed together, as. they must be, is an agreement to indemnify plaintiffs against loss from liability for damages on account of accidental injuries to employees and injuries to the public caused, by the assured or their employees. The recoveries in the J ohnston suits were upon the theory that Kate Johnston was injured by falling over an obstruction in the street, caused by the assured in .the performance of a contract between them and the Phosnix Bridge Company (Johnston v. Phoenix Bridge Co., 44 App. Div. 581; 169 N. Y. 581); wherefore the .latter recovered in the suit on the Bernard Johnston judgment on the principle that one who has been held legally liable for damages which another ought to pay is entitled to indemnity from the latter. (Phoenix Bridge Co. v. Creem102 App. Div. 354.) The right to indemnity in such case exisindependently of contract. (Ocean S. N. Co. v. Co. T. E., 134 N. Y. 461, and cases cited by Follett, Ch. J., particularly. Gray v. Boston Gas Light Co., 114 Mass. 149.) By circuity of action, then, these plaintiffs have sustained a loss from liability to the public on account of personal injuries caused by them or their workmen,, and the case is as plainly within the terms of the policy as though the Johnston suits had been brought in the first instance against them. The appellant had notice of, and an opportunity, to defend each of the four suits. By its conduct of the defense of the" Kate Johnston suit judgment was allowed to be recovered without denying the responsibility of these plaintiffs for the accident. Thereby that question was res adjudícala in the husband’s suit, and ultimate liability was- imposed on - these plaintiffs. Wherefore, the appellant cannot now be heard t-o say that the. accident was not caused by the assured simply because.in action- Flo. 1, brought by the bridge company on the Kate Johnston judgment, these plaintiffs had the good fortune to escape proof of the notice to defend, and thus were allowed to prove that they were not responsible for the accident.
The case of Tolmie v. Fidelity & Casualty Co. (95 App. Div. 352; 183 N. Y. 581) is not in point. There, the plaintiff sought to *497recover the amount of a judgment, recovered against his firm by the city of Flew York, on a bond given to indemnify and save the city harmless from an action brought against it, “ whether groundless or otherwise,” but did not prove what caused the accident out of which the cause of action against the city arose.
Much confusion of thought will be avoided by determining the precise time when this cause of action arose and when the limitation period, provided in the policy, expired, points which were not decided upon the former appeal.
The defendant’s agreement was to indemnify against loss from liability for damages. The assured, “ upon the occurrence of an accident, and also upon receiving information of a claim on account of an accident,” was to give written notice thereof to the defendant. Then follow these provisions:
“ 3. If thereafter any legal proceedings are taken against the assured to enforce a claim for damages on account of such accident, the company will defend the.same at its own cost, in the name and on behalf of the assured.
“4. The assured shall not, except at his own cost, settle any claim, nor incur any expense, nor interfere in any negotiation for settlement or in any legal proceedings, without the consent of the company previously given in writing, * *
The defendant then was to defend any legal proceedings taken against the assured to enforce a claim for damages on account of an accident — not simply an accident covered by the policy as is the provision of some policies of indemnity insurance. (See Cornell v. Travelers’ Ins. Co., 175 N. Y. 239.) And the assured was not to settle any claim or even interfere in any legal proceedings without the written consent of the defendant. The defendant, of course, was at liberty on its own account to compromise a claim before final judgment. But the fair import of the contract is that the assured could not call upon the defendant to pay the stipulated amount of indemnity for a loss until that loss had actually been sustained as the result of the rendition of a judgment against the assured; and so the limitation clause provided that an action might be brought within thirty days after final judgment against the assured. If the defendant refused to defend an action, it may be that a cause of *498action for breach of the contract to defend would immediately arise, although the damages could not be determined until later. But such an action is very different from an action on the contract. The action on the policy arose on one Of two dates, either on May 10, 1902, when the final judgment was rendered in the action of Bernard Johnston against the Phoenix.Bridge Company, or on June 25, 1906,. when the final judgment was-rendered in the case of the Phoenix Bridge Company against these plaintiffs.
If the plaintiffs had11 not been notified to defend the Bernard Johnston suit, the rendition of judgment therein would have given them no cause of action on the policy; and it seems to me that the fact that notice was given cannot in and of itself determine the question, but that the policy must govern, and that the same rule will apply in either case. The defendant has contended throughout this litigation that the suits against the bridge company were not suits against the assured within the meaning of the policy, although the latter had notice to defend them; and it must be conceded that the judgments against the bridge company were in no sense judgments against the assured, who were not harmed by them, until claims were asserted thereon. Liability and loss are not the same. The contract was to indemnify against loss from liability. The loss was not sustained within the meaning of the. contract until the liability was established- by a judgment. The fact of notice to defend the Bernard Johnston suit merely had the effect of making the judgment in that suit conclusive evidence with respect to the issues actually litigated. (Corning v. Spelman, 130 App. Div. 767.) lino notice had been given, the question, settled by the judgment, could have been established by independent evidence. As a matter of fact, the judgment in the Bernard Johnston suit was not-conclusive even as to these- plaintiffs’ responsibility for the accident, because that question was res aclgudicata as between the parties to the suit, and the bridge company was apparently unable to prove that these plaintiffs "had notice to defend the Kate Johnston suit, else they would have done so in action FTo. L. While this point does not appear to have been raised in action Ko. 2, this defendant cannot complain because it had notice to defend. Moreover, it was at least a fair question whether the bridge company had the right to indemnity in view of the, fact that it had been held liable for its *499own -negligence, and these plaintiffs were certainly justified in litigating that question. Their success in the defense of action No. 1 certainly justified their course in defending both actions. No doubt the refusal of the defendant to defend the suits brought by the bridge company was a breach of contract, and the plaintiffs may then have had a cause of action for such breach. Possibly, that may have given them the right to pay the judgments without suit and thereupon to bring an action on the policy for the stipulated indemnity, in which actions they would have had to establish their liability. But they were not obliged to take that chance, and could wait until there was ah adjudication of liability. Their cause of action, then, on the policy' to recover the stipulated indemnity arose on June 25, 1906.
When was the action barred by the terms of the policy ? The limitation clause is as follows: “ 12. No action shall lie against the company after the expiration of the period within which an action for damages on account, of the given injuries or death might be brought by such claimant or his representatives against the assured, unless at the expiration of said period there is a suit arising out of such accident, pending against the assured, in which case an action may be brought in respect to the claim involved in such action against the company by the assured within thirty days after "final judgment is rendered in such suit, and not later.” . Obviously, the purpose of that provision was to require an action to be brought within the time during which an action on account of the accident might be brought against the assured, or within thirty days from the final judgment in such an action. If the case were one of first impression I should. say that, applying the rule of construction applicable to such a contract (See Gillet v. Bank of America, 160 N. Y. 549), the letter of the clause would have to yield to its spirit and purpose and that it would not be permissible to adopt a construction which would bar an action before it arose. (See Mayor, etc., v. Hamilton Fire Ins. Co., 39 N. Y. 45; Hay v. Star Fire Ins. Co., 77 id. 235; Steen v. Niagara Fire Ins. Co., 89 id. 315; Barnum v. Merchants' Fire Ins. Co., 97 id. 195.) Very likely the draftsman of that clause did not think of the contingency which has arisen in this case; and it may be that the case is nob covered by it, in which event the statute would apply. It seems *500to me, however, that it is quite possible to construe that clause so as to fit this case. The words “ suit ” and “ action ” might be construed with reference, to the words “ legal proceedings ” in clauses 3 and 4, and the actions of Bernard Johnston against the bridge company and of the latter against these plaintiffs might be deemed continuous, legal proceedings, taken against the assured to enforce a claim for damages on account of the accident. While very likely the draftsman had in mind the person injured, when he used the words “ such claimant or his representatives,” I find no antecedent of “ such claimant.” In the prior provisions the expressions “ claim on account of an accident,” “ claim for damages on account of such-.accident,” “any claim,” are found. The Phoenix Bridge Company was a claimant for damages, and it founded that claim upon the assured’s responsibility for the accident. Its action against the assured was timely brought, and this action was brought eight days after final judgment therein. I am not undertaking to review our former decision, for we are undoubtedly concluded by it upon the proposition that the limitation period, specified in the policy, had expired before the action was brought. But it seems to me that those observations are pertinent upon the questions of waiver and estoppel, for it ought to require but slight recognition by the defendant of its obligation under the policy to amount to a waiver of such a limitation clause, as we have construed it.
For the purpose of this appeal it must be deemed settled that no action could be brought on the policy after the expiration of three years from the happening of an accident unless a suit was then pending against the assured. The only suits pending against the assured on the 6th of June, 1899, were the two suits brought by Kate and Bernard Johnston, which never resulted in judgments, but were discontinued,- and, for the present, I shall eliminate them. It is immaterial that the plaintiffs had notice to defend the suits against the bridge company, for, as has already been observed with respect to the time when the plaintiffs’ cause of action arose, the rulé of limitation must be the. same whether notice to defend those suits was given or not. Upon the construction of the contract which this court has adopted, those suits were not pending against the assured.'
. Either the spirit of the instrument is to govern, if it covers this *501case, in which event the action was timely brought within thirty days after June 25, 1906, or the letter is to control and the action was barred June 6, 1899. It seems to me that there is no middle course, and if it were possible to find one, we should not seek it to help the defendant escape a just obligation. If the defendant will invoke the letter of its own contract, let it have the cold literal words. Indeed, the defendant contends that the action was barred June 6, 1899, and we now adopt its construction.
This defendant assumed the defense of the Johnston suits against the bridge company, pursuant to a policy of indemnity insurance which it had issued to the defendant therein. On March 24, 1899, its counsel wrote one of the plaintiffs under the defendant’s letter head, but nominally on behalf of the bridge company, notifying him of the Kate Johnston suit, and that the bridge company would look to him for indemnity. Clause 13 of the defendant’s policy provides:
“ 13. In case of loss under this policy, the company shall be subrogated to all claims or rights of the assured in respect to such loss against any third party or parties, and the assured shall execute any and all papers required to secure to the company said rights.”
There is a dispute as to what occurred after the giving of that notice. 'The jury have accepted the plaintiff Creem’s version of the transaction, and we do not feel justified in interfering with their verdict. Said plaintiff then, upon receipt of said notice, took the policy to the defendant’s counsel and was told that it would protect the plaintiffs against any claim of the bridge company for indemnity. Said counsel'showed to said plaintiff the summonses and complaints in both of the Johnston suits, and requested him to assist in the defense of these actions, and, in response to his question as to whether he needed a lawyer, promised to act as his lawyer and to protect him to the full amount of his policy at any time. That promise and counsel’s authority to make it on behalf of the defendant must be considered with reference to the defendant’s obligations under the contract, the existing situation and the purpose which counsel desired to accomplish. While it is said that the counsel had authority to represent the defendant only in the particular matters intrusted to him, this matter had been intrusted to him, and his promise was in the line of his diity and in fulfilment of the *502defendant’s obligation under the policy'. Moreover, there are other circumstances bearing upon the question of the counsel’s authority which it is unnecessary to consider because the question was at least one of fact, and by not asking to llave it submitted to the jury, the, defendant consented that it" be passed on by. the court.
The promise referred to two possible claims which might be made against these plaintiffs, one by the bridge company for indemnity, the other by the Johnstons in case they were defeated in the pending suits. Both contingencies were referred to in the conversation. Counsel desired to defend the pending suits on the ground that the negligence causing the injury was that of these plaintiffs, independent contractors, and it' was certain that, if that defense prevailed upon the trial but should fail on- appeal, as happened, final judgment would not be obtained against the bridge company within the three-year period, which then lacked only two months of expiration. The promise, therefore, necessarily involved an agreement to waive the limitation clause, and it was supported by sufficient consideration'because it was. made to obtain the co-operation of these plaintiffs in the defense which counsel desired to make and to induce them not to employ other counsel who might .have insisted upon a different defense.
However, we do not need to rest the decision on the ground of an agreement to waive the limitation clause, supported d>y a sufficient consideration, because a case of technical waiver, as well as estoppel, is established, not by reason of the promise alone, because no forfeiture had then occurred, but- by reason of the promise together with the subsequent conduct. When the plaintiffs were given notice of the pending suits they had the right to assume the defense of them if they were to be bound by the judgments. If they had then been well advised they would not have hazarded their rights on a judgment of. dismissal granted on the ground that 'their negligence had caused the accident, but in view of the short time remaining in which to bring an action on the policy they would have insisted on a defense on the merits, which would have resulted either in a judgment virtually ending both litigations or in one against the bridge company on April 7,1899, and in, time to enable. them to preserve their rights under, the limitation clause of the policy. While the defendant had the right under the policy to *503insist upon non-interference by the plaintiffs and was obliged to defend in their behalf, it could not exercise that right or discharge that duty so as to prolong the litigation until the plaintiffs’ rights were forfeited. By giving the plaintiffs notice of the suits and by then procuring them not to interfere the defendant assumed the defense on their behalf pursuant to the provisions of the policy and the promise to protect them, which was but a renewal of its obligations under the policy, and it could not continue in that relation a moment beyond the tliree-year period without recognizing its continued obligation tinder the policy. When it ceased to represent the plaintiffs it was bound to turn the defense over to them,, and its failure to do that amounted to a technical waiver of the limitation. clause. (Draper v. Oswego County Fire Relief Assn., 190 N. Y. 12 ; Kiernan v. Dutchess County Mut. Ins. Co. 150 id. 190; Walker v. Phoenix Ins. Co., 156 id. 628; Hartford Life Ins. Co. v. Unsell, 144 U. S. 439.) Waiver, once established, cannot be recalled. (Dobson v. Hartford Fire Ins. Co., 86 App. Div. 115; affd., 179 N. Y. 557.)
Moreover, it amounted to an estoppel. The judgment of dismissal in the Kate Johnston suit was reversed after the three-year period had expired, and without any notice to the plaintiffs the defendant gave a stipulation for judgment absolute and appealed to the Court of Appeals. Ko competent lawyer would have allowed the plaintiffs to take that chance if their rights under the policy were forfeited. The result was that the plaintiffs were subjected to liability without ever having a day in court on- the merits. Unless the defendant recognized its obligation under the policy its duty was to turn the case over to these plaintiffs, who then had the right to decide wlie'ther such a step should be taken, and by going ahead without a word to the plaintiffs the defendant estopped itself to deny its obligation under the policy. '
The pendency of. the Johnston suits against these plaintiffs on June 6, 1899, presents another aspect of the case. The defendant’s counsel appeared for these plaintiffs in those suits. When the suits were brought by the bridge company on June 4, 1902, plaintiff, Creem, took the summonses and complaints to said. counsel, who refused to defend, whereupon written notice was given to the defendant that it would be held responsible for any judgments *504obtained therein. On July 1, 1902, orders of discontinuance in said two Johnston suits were entered. Those orders were obtained upon the written consent of the attorneys for the respective parties and on the motion of the attorneys for this defendant, nominally acting on behalf of these plaintiffs.
It thus appears that, at the expiration of the three years after the accident, there were suits “ arising out of such accident, pend- . ing against the assured.” This action is brought “ in respect to the claim involved in such” actions, i. e., the liability of these plaintiffs for damages on' account of personal injuries sustained by Kate Johnston, which was in fact the claim involved in every one of the suits hereinbefore referred to. Therefore, but for the discontinu- - anee of those suits, this suit would have been brought in time within the strict letter of the limitation clause, if hot within its spirit. And the defendant cannot insist upon the letter of one sentence and the spirit of the next.
While- the plaintiffs in those suits had the right to discontinue them, these plaintiffs had a right to notice of such discontinuance and would have had it but for the fact that they had intrusted their rights to the defendant, pursuant to its promise of protection. As a matter of fact the suits were discontinued on the motion of the defendant’s counsel, who assumed to act on behalf, of these plaintiffs. Thus, as late as July 1, 1902, the defendant assumed to act on behalf of these plaintiffs, as it had no right to act except perforce of the policy and of its promise. That action, therefore, was a disr tinct recognition by the defendant of its liability under the policy and was a technical waiver of any forfeiture, and that was more than thirty days- after final judgment - in the Bernard Johnston action against the bridge Company.
Moreover, the purpose of the defendant in procuring those orders of discontinuance is apparent, and it requires no argument to- show that, while pretending to act for the plaintiffs, the defendant could not secretly cause their rights under the policy to be barred nor could it conceal the fact that an event had occurred which would set the short limitation period running. Such conduct should estop it to deny that those suits are still pending.
With respect to the defendant’s claim of breach of warranty, upon which it requested the court to charge the jury, it is sufficient *505to say that, even if well founded, it is now too late'for the defendant to assert it in view of what it has done in recognition of the policy,, and of the fact that, by its conduct, the plaintiffs have been, subjected to liability. .
The plaintiffs ask us to modify the judgment by increasing the amount so as to include the expenses incurred-by them in the successful defense of action ’¡No. 1, brought by the bridge company. Our power to do that is, to say the least, doubtful, even if we were not concluded on the point by our-former decision. It seems to us, however, that the case was both difficult and extraordinary, and that the motion for an extra allowance should have been granted.
The order denying the motion for an extra allowance is reversed. and the motion granted, allowing the plaintiffs five per cent of the recovery as an additional allowance, on the ground that the action is difficult and extraordinary, and the judgment as thus modified and the order denying motion for a new trial are affirmed, with costs.
Laughlin and Dowling, JJ., concurred; Ingraham, P. J., and McLaughlin, J., dissented.