Gatzweiler v. Milwaukee Elec. Ry. & Light Co.

Citation136 Wis. 34,116 N.W. 633
CourtUnited States State Supreme Court of Wisconsin
Decision Date05 June 1908
PartiesGATZWEILER v. MILWAUKEE ELECTRIC RY. & LIGHT CO.

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Milwaukee County; Orren T. Williams, Judge.

Action by Charles Gatzweiler against the Milwaukee Electric Railway & Light Company. From a judgment sustaining plaintiff's demurrer to the answer, defendant appeals. Affirmed.

Action to recover for a personal injury claimed to have been produced by defendant's negligence. The complaint stated facts sufficient to constitute a cause of action. Defendant answered in abatement that plaintiff when he was injured was possessed of a policy of accident insurance or contract to indemnify him against such injuries as the one in question, and that pursuant thereto before the action was commenced he received from the insurance company $2,500 on account of his injury, and that by reason thereof said company became subrogated to plaintiff's right of action against the defendant to the extent of said $2,500, and so interested on that account in the subject of the action that it cannot properly proceed without its presence as a party to the litigation.

Plaintiff demurred to the answer for insufficiency and the demurrer was sustained. Defendant appealed.Clarke M. Rosecrantz, for appellant.

Sheridan & Wollaeger and Webb & Webb, for respondent.

MARSHALL, J. (after stating the facts as above).

The appeal presents the question of whether the rule that when an insurance company has been compelled to pay or has paid a loss covered by its policy, it is thereby subrogated to the rights of the insured to the extent of such payment against a third person who wrongfully caused the loss, applies to a payment made by an accident insurance company on its policy to a person wrongfully injured by another. The rule in case of fire insurance risks is well settled. Swarthout v. Chicago & N. W. Ry. Co., 49 Wis. 625, 6 N. W. 314;Hustisford Farmers' Mut. Ins. Co. v. Chicago, M. & St. P. R. Co., 66 Wis. 58, 28 N. W. 64;Wunderlich v. Chicago & N. W. Ry. Co., 93 Wis. 132, 66 N. W. 1144. It must be conceded that if under such rule the insurance company in question by equitable assignment succeeded to the right of the plaintiff against the defendant to the amount paid by it, it is a necessary party to the litigation and the demurrer should have been sustained. Pratt v. Radford, 52 Wis. 114, 8 N. W. 606; Wunderlich v. Chicago & N. W. Ry. Co., supra; Allen v. Chicago & N. W. Ry. Co., 94 Wis. 93, 68 N. W. 873;Sims v. Mutual Fire Insurance Co. of La Prairie, 101 Wis. 586, 77 N. W. 908.

The general effect of the cases cited is that upon payment by an insurance company to another on its contract of fire insurance on account of a loss caused by a third person, in case of its only partially repairing the damage suffered by such other, it becomes by equitable assignment the owner, pro tanto, of the claim of such other against such person and both parties interested are necessary to an action to enforce payment of compensation by such person and in case the payment is a full legal equivalent for the injury, the entire claim of such other by such assignment passes to the insurance company, leaving the former no cause of action against such person.

The doctrine aforesaid is based on the theory that in a contract of fire insurance the company is a surety and so upon the general equitable principles of subrogation when it, as indemnitor, pays a loss caused by the negligence of a third person its relation with such person is that of principal obligor and surety. It has all the rights against the surety which the principal creditor, so to speak, formerly had. The insured has one claim which he can enforce against either party, but he can have but one satisfaction and the party primarily liable is relievable only by assuming the burden.

The right of the insurance company in the circumstances suggested, as stated by text writers, “is based upon the equitable doctrinethat where one has been obliged to pay money to another by the nonfeasance or misfeasance of a third, who, being at fault, ought to bear the loss, the party so paying, as by his direct obligation towards the party suffering the loss he may be compelled to do, shall be allowed, indirectly and through the right which the injured party had, to compel the wrongdoer to bear the burden which was imposed by his fault; although between him and the wrongdoer there is no direct relation upon which to found a cause of action.” May on Insurance (4th Ed.) § 454.

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41 cases
  • Lagerstrom v. Myrtle Werth Hosp.-Mayo Health Sys.
    • United States
    • Wisconsin Supreme Court
    • July 14, 2005
    ...N.W.2d 641 (1972). This rule in tort cases has been part of Wisconsin common law since at least 1908. Gatzweiler v. Milwaukee Elec. Ry. & Light Co., 136 Wis. 34, 116 N.W. 633 (1908). ¶ 125. The rule was explained in Campbell v. Sutliff, 193 Wis. 370, 373-74, 214 N.W. 374 (1927) (overruled o......
  • Hunt v. N.C. Logistics, Inc.
    • United States
    • U.S. District Court — District of New Mexico
    • June 23, 2016
    ...and pays for the right to have from another a specified sum upon the happening of a specified event." Gatzweiler v. Milwaukee Elec. Ry. & Light Co., 136 Wis. 34, 116 N.W. 633, 634 (1908). Investment contracts are not designed to compensate a victim for a tortfeasor's actions, but rather to ......
  • State ex rel. Woods v. Hughes Oil Co., 5586.
    • United States
    • North Dakota Supreme Court
    • August 19, 1929
    ...a contract of insurance (Van Zandt v. Sweet, 56 Cal. App. 164, 204 P. 860;Gatzweiler v. Milwaukee Elec. R. & L. Co., 136 Wis. 34, 116 N. W. 633, 18 L. R. A. [N. S.] 211, 128 Am. St. Rep. 1057, 16 Ann. Cas. 633); and the insurer is in no position to assert that he ought to be relieved from c......
  • Fischer v. Steffen
    • United States
    • Wisconsin Supreme Court
    • May 24, 2011
    ...424, 433, 195 N.W.2d 641 (1972)). This rule has been part of Wisconsin tort law since at least 1908. Gatzweiler v. Milwaukee Elec. Ry. & Light Co., 136 Wis. 34, 116 N.W. 633 (1908). ¶ 107 “Early cases discussing the collateral source rule addressed whether insurance payments or continued wa......
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