dissenting.
I cannot agree to the opinion nor to the conclusion reached by the court in this case. To make clear my reasons, I wish to restate some of the facts.
The defendant casualty company issued its policy of insurance to indemnify the Ford Hospital Company against loss for any payments it should make in money to satisfy judgments which might be rendered against it, growing out of personal injuries received by patients while dn the hospital.
While this policy was in effect, one Hannah sued the Ford Hospital Company and recovered a judgment for $5,500. Shortly thereafter the trial judge entered a remittitur of $2,000 from the judgment,' and ordered the defendant to pay $3,500 into court on or before December 28, 1918, and that the plaintiff should accept that amount in full settlement of the judgment. The Ford Hospital Company then employed Sullivan & Rait, as its attorneys, with the object of bringing about a settlement with Hannah, and of procuring reimbursement from the Fidelity & Casualty Company. The Fidelity & Casualty Company* took the position that its policy covered only such judgments as were based upon claims for damages for personal injuries received by patients in the hospital, and that Hannah was not a patient, and it therefore refused to provide money for the payment of the judgment. The Ford Hospital Company, through the testimony in its behalf, asserts that it had been unable personally to raise the $3,500 required to settle the judgment, though it appears that it made only one application for a loan, and that it did not apply to any bank.
Mr. Rait, one of the attorneys for the hospital company, then, without informing that company of his intended action, took up the matter with Hannah, and on December 24, 1918, before the period for remittitur had expired, paid to Hannah $3,526.82, and privately and in his own right purchased the judgment and had it assigned to Sullivan & Rait. These attorneys thus pur*322Chased for themselves a judgment against their own client in a suit in which they were employed to defend their client. Each of the attorneys furnished half of the money. The assignment of the judgment was also, on the motion of the parties to the assignment, approved by the court in which the judgment stood.
Thereupon, Mr. Rait caused execution to issue against his client, the Ford Hospital Company, though he testified that this company had not, until that time, been given notice of the purchase by, or of the assignment of the judgment to, its attorneys.
When confronted by this levy of execution, the hospital company, with the alleged purpose of satisfying the judgment, gave its note to Sullivan & Rait for $5,601.25, payable on demand, and secured the same by a mortgage on its real and personal properties. It is not disputed that the note was as “good as gold” and “amply secured Doctor Ford’s testimony showing that the reasonable market value of the Ford hospital was $250,000, against which there were mortgages aggregating only $115,000.
The note for $5,601.25,-given by the Ford Hospital Company to -its attorneys, has not been paid. In fact, though the note is payable on demand, no demand has been, and it is apparent no demand ever will be, made for its payment, since it is the manifest intention of the attorneys, payees of the note, to collect from the Fidelity & Casualty Company, and not from the Ford Hospital Company. The Ford Hospital Company, with that end in view and as security for the note, assigned to Sullivan & Rait whatever recovery could be had against the Fidelity & Casualty Company on the indemnity policy. The relation of these attorneys to the Ford Hospital Company, as attorney to client, has continued without interruption from the tine that they were first employed, throughout the period ,C the transaction just referred to. It is needless to say of these attorneys, whose standing in the profession is high, that what was done by them was not Avith the purpose or intent of compelling their own client to pay them a profit *323of $2,000 in the transaction. Mr. Rait stated that ais object was both to profit by the transaction and to educate the insurance company, which he believed was refusing to pay a just claim. These attorneys would not attempt to make a profit by such a transaction, had their client been called upon to pay it. Moreover, the law would not allow of such a profit.
When they purchased the judgment, their client, the Ford Hospital Company, was, under the law, because of the trust relation, entitled to receive‘the benefit of that transaction. The client, Ford Hospital Company, could, of course, if it desired, and so far as it was individually concerned, either pay to its attorneys what they had paid for the judgment, and defend against all excess above that amount, or waive its defense to the $2,000 item in its attorney's claim for $5,601.25, and pay to them the judgment in full, but it certainly could not, by such a voluntary waiver of its right to defend against the $2,000 excess, throw away the rights of the Fidelity & Casualty Company, which company was, by a contract known to all the parties, subrogated to the rights and entitled to all the protection that the hospital company itself could and should, in all fairness, have asserted. Had the Ford Hospital Company expected to be required to pay the $5,600 out of its own pocket, it is obvious indeed that it would not have waived its defense and allowed its attorneys to make a profit of $2,000 off of it, nor would its attorneys ever have made, or even thought of attempting to make, such-a collection. It was the clear and positive duty of the Ford Hospital Company to assert every defense it had and was aware of, and to reduce its obligation, and consequently the obligation of the Fidelity & Casualty Company, all that it could. Before this company can be generous to its attorneys, it must be just to its trust. It is a fundamental rule in such cases- that the insured must reduce its liability all that it possibly can, and that it cannot voluntarily waive legal defenses. When it voluntarily pays more than is required, it certainly cannot re*324cover from the insurance company that excels which it has gratuitously given.
In the case of St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U. S. 173, where it had been claimed that the insured had paid more than was legally required, though in that particular case there was no proof of that fact, the court said (p. 182): “We assume that the settlement was reasonable, and that the plaintiff could not expect to escape at less cost by defending the suits. If this were otherwise no doubt the defendant would profit by the fact. The defendant did not agree to repay a gratuity, or more than fairly could be said to have been paid upon compulsion.”
What the Ford Hospital Company has agreed to pay, over and above the amount of money paid by its attorneys in the purchase of the judgment, it has done voluntarily. The promise as to such excess could not have been enforced, nor could the payment of the excess have been compelled by any attempted execution on the judgment.
As a further proposition, let us look particularly to the policy, written by the Fidelity & Casualty Company. It contains express provisions calculated to protect it against just such transactions as this. In the first place the policy is an indemnity, not a liability, policy. It indemnifies only against “loss that the assured has actually sustained by the assured’s payment in money of a final judgment rendered after a trial in a suit against the assured for damages.”
The parties to the indemnity policy had the right to freedom of contract. The primary obligation of the insurance contract was to indemnify against insured’s “payment in money of a final judgment.” The obligation of that promise can neither be enlarged nor diminished by a court without doing violence to the rights of the parties to it. Had this been a general liability policy, with a primary obligation to indemnify against loss or liability, resulting from personal injuries, or judgments rendered against the insured, and then had the policy been *325further hedged about by conditions which, if not complied Avith by insured, Avould release the company from the obligation theretofore expressly assumed, ¿hen of course the company might, by its action, waive or be estopped from insisting upon a compliance Avith those conditions, and yet be bound by its general obligation which it had voluntarily undertaken to perform. But I am unable to see hoAv the court has a right in any case to Avrite an entirely new obligation into a contract that was not originally there and noAvhere voluntarily assumed by the parties.
The Ford Hospital Company has not paid the judgment in money. It has, therefore, not sustained the loss covered by the policy. It has, on the other hand, given a demand note Avhich, it is quite apparent, it never expects to be called upon to pay. Looking at the substance, rather • than the form, this is a suit primarily by the attorneys in the name of the Ford Hospital Company against the Fidelity & Casualty Company to recover moneys in satisfaction of a $5,500 judgment, which they have purchased for $3,500, and which judgment has never been paid in money by the Ford Hospital Company, the note 'given by it being only a promise, intended to be satisfied by funds to be recovered from the Fidelity & Casualty Company.
The specific obligation of the contract of the indemnity company is to reimburse the Ford Hospital Company for what it shall be compelled to expend in money in satisfaction of such a judgment.
In 4 Joyce, LaAv of Insurance (2d ed.) 4822, sec. 2800, it is stated: “A distinction exists * * * betAveen an indemnity against loss or damages and an indemnity against liability for damages, and even though the object of both is to save insured from loss or damage the legal consequences differ, for in the former case payment is essential, while in the latter it is not.”
Where, in a policy of indemnity, the obligation is to reimburse the insured for moneys actually expended, it is, by the great weight of authority, the settled rule that the *326assured cannot recover on the policy until a loss is sustained by way of an actual money payment. If respect is to be given to a contract obligation, such must be the rule. Fidelity & Casualty Co. v. Martin, 163 Ky. 12; Elliott v. Ætna Life Ins. Co., 100 Neb. 833.
Though in the case of Elliott v. Ætna Life Ins. Co., supra, this court held that an indemnity company, under certain circumstances, and where it assumed control of the defense of the case, Avas estopped to deny that the primary obligation of its contract Avas other than as written, the effect of that decision at most is only to assert an exception to a well-recognized general rule, and an exception which could have no application to the facts in this case.
In some cases also it has been held, and because no substantial rights were there invaded, that a forced sale of property of the judgment debtor Avi.ll be considered as a payment in money, since the property is actually and presently appropriated by the judgment creditor, and since such property has a money value which may be ascertained. McBride v. Ætna Life Ins. Co., 126 Ark. 528; Stag Mining Co. v. Missouri Fidelity & Casualty Co., 209 S. W. (Mo. App.) 321.
None of these cases, seeming to qualify the rule, has any application here. A present promise to pay money on demand cannot, at least until there has been an actual appropriation of money or property by the judgment creditor, ever be considered to be a present payment in money, as within the meaning or spirit of those provisions found in such indemnity contracts.
Judge Cornish, in his dissenting opinion in Elliott v. Ætna Life Ins. Co., supra, Avell said (p. 839) : “Now, Avhen parties have freely contracted, the courts must abide by the terms of the contract, or tell Avliy not; otherwise, the court makes the contract for the parties and becomes a legislative body. A mere inequity as between the parties is not sufficient. Some ambiguity or repugnancy must be shown, or that it is unconscionable, against public *327policy, or otherwise forbidden by law. Hard cases make bad law. * * * The insurer, on grounds of business policy, may prefer to make sure that the money goes to the injured employee. Without the provision, it may go eisuwhere.”
For the reason, then, that the note given by the Ford Hospital Company was not a compulsory payment as to its entirety, and since it was not a payment in money, it cannot justify an action for reimbursement against the Fidelity & Casualty Company.
It is my opinion that the action is premature and should be dismissed.