On Petition for Rehearing.
Defendant petitions for a rehearing on the ground that it had received from the insured immediately after the state court trial, when it first learned of plaintiff's alleged status as an employee of the insured, a written stipulation that further conduct of the litigation should not operate as a waiver by defendant of any of its rights under the policy. Such agreement presumably would have disposed of the ground on which we originally chose to rest our decision, if it had been a part of the record in this suit. Frank Knauss, Inc. v. Indemnity Ins. Co. of North America, 270 N.Y. 211, 216, 200 N.E. 791; cf. Kearns Coal Corp. v. United States Fidelity & Guaranty Co., 2 Cir., 118 F.2d 33, certiorari denied, 61 S. Ct. 1099, 85 L. Ed. ; and Associated Indemnity Corp. v. Garrow Co., D.C.S.D.N.Y., 39 F.Supp. 100, discussing the New York law. Ordinarily, however, matter outside the record may not first be advanced for consideration on appeal, and certainly not on petition for rehearing after appeal. But we need not rest on that ground, because there was an alternative reason, originally pleaded, argued on appeal, and mentioned in our opinion, which we could have chosen for affirming the district court's judgment.
This reason was that the judgment recovered by plaintiff against the insured in the state court foreclosed against defendant the question of plaintiff's and insured's relationship. That question was necessarily involved in the original suit. N.Y. Workmen's Compensation Law, §§ 10, 11, Consol. Laws, c. 67. It is true that this defendant, acting for the insured, did not originally plead it; but it did seek to raise it by motion to amend, and argued it on appeal. Recovery in such circumstances conclusively settles against the defendant all defenses which might have been pleaded and proved, as well as those which actually were.Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S. Ct. 317, 84 L. Ed. 329; Grubb v. Public Utilities Commission, 281 U.S. 470, 50 S. Ct. 374, 74 L. Ed. 972. Defendant here, although not a nominal party in the original action, is likewise bound as the person ultimately liable. Washington Gaslight Co. v. District of Columbia, 161 U.S. 316, 16 S. Ct. 564, 40 L. Ed. 712; Oceanic Steam Navigation Co. v. Campania Transatlantica Espanola, 144 N.Y. 663, 39 N.E. 360.
The judge's charge to the jury in the original trial that plaintiff was insured's employee cannot alter this conclusion. The charge was not prejudicial to plaintiff, as defendant had not been allowed to plead the Workmen's Compensation Law defense; therefore, plaintiff had no grounds for an objection. Moreover, under the pleadings, the charge was not even material, for it appears that the insured would have owed plaintiff a landowner's duty of reasonable care toward an invitee, and plaintiff would have been equally entitled to rely on the promises of insured, as landowner, to repair defects in the property. Dougherty v. Pratt Institute, 244 N.Y. 111, 113, 155 N.E. 67; see, also, Restatement, Torts, 1934, §§ 343, 344, 346. Plaintiff was not required to object to an overfavorable charge going beyond the issues made by the pleadings.
CHASE, Circuit Judge, concurs on first ground stated.