152 P.2d 836 (Kan. 1944), 36176, City of New York Ins. Co. v. Tice

Docket Nº:36176.
Citation:152 P.2d 836, 159 Kan. 176
Opinion Judge:HOCH, Justice.
Party Name:CITY OF NEW YORK INS. CO. v. TICE et al.
Attorney:Harry K. Allen, of Topeka (L. M. Ascough, of Topeka, on briefs), for appellant. Allen Meyers, of Topeka (G. Clay Baker, Hubert Else, and Herbert A. Marshall, all of Topeka, on briefs), for appellee.
Case Date:November 04, 1944
Court:Supreme Court of Kansas

Page 836

152 P.2d 836 (Kan. 1944)

159 Kan. 176

CITY OF NEW YORK INS. CO.

v.

TICE et al.

No. 36176.

Supreme Court of Kansas

November 4, 1944

Page 837

Syllabus by the Court.

Allegations of petition must be accepted as true upon demurrer.

The rule against nonassignability of rights of action in tort did not apply to insurer's action to recover from tort-feasor the amount paid by insurer under automobile collision policy which contained a subrogation clause. Gen.St.1935, 60-401.

"Subrogation" is a substitution of persons by which another person succeeds to rights of a creditor or similar claimant in relation to the debt or claim.

"Legal subrogation" is grounded in equity and arises by operation of law, which gives to a third person who has been compelled to pay a remedy as against one who, in justice, ought to pay.

Conventional subrogation is founded upon contract express or implied.

The doctrine of subrogation applies to indemnity contracts.

Subrogation is a normal incident of indemnity insurance, and clearly applies where policy contains the ordinary subrogation clause.

An insured's release of wrongdoer from liability cannot defeat insurer's rights against wrongdoer when such release is given without insurer's knowledge, and when wrongdoer has knowledge as to insurer's right of subrogation under the contract.

Where insurer paid insured part of loss sustained, under automobile collision policy containing a clause whereby insurer was subrogated to extent of its discharged liability to all of insured's rights of action, and thereafter insured was paid balance of loss by the wrongdoer and released wrongdoer from all liability without insurer's knowledge, insurer could in its own name, sue as a "real party in interest" to recover from wrongdoer the amount paid to insured.

Insured who under automobile collision policy had been paid part of loss sustained in collision, and who released wrongdoer from all liability upon his payment of balance of the loss, was properly made a defendant in insurer's action to recover from wrongdoer the amount paid to insured, under right of subrogation provided for in the policy. Gen.St.1935, 60-411.

Where insurer under indemnity policy is subrogated to extent of its discharged liability to all of insured's rights of action, loss has not been fully covered by insurance payment and insured asserts a claim against wrongdoer, insured and insurer are real parties in interest, but action should be brought by insured who will hold as trustee for insurer the amount which insurer has been compelled to pay, and if insured refuses to bring action, insurer may do so.

Where insurer under indemnity policy is subrogated to extent of its discharged liability to all of insured's rights of action, insured's loss has been fully satisfied, or insured has fully released the wrongdoer, action against wrongdoer must be brought by insurer in its own name, or by insured for use and benefit of insurer.

1. The rule that rights of action in tort are not assignable is not applicable to an action by an insurer to recover from the tort-feasor the amount which it has been required to pay to a property owner under a subrogation clause in a policy indemnifying such owner against property damage by collision or accident.

2. Subrogation is a normal incident of indemnity insurance and the doctrine is clearly applicable where the policy contains the ordinary subrogation clause.

3. The rights of the insurer, under such a subrogation agreement in the policy, cannot be defeated by a settlement made without his knowledge and consent between the insured and a wrongdoer who has full knowledge of the insurer's right of subrogation.

4. Actions against a tort-feasor to recover damages to property covered by an indemnity insurance policy containing the ordinary subrogation clause are properly brought as follows:

A. When the owner's loss has been fully satisfied or he has fully released the wrongdoer, action must be either (a) by the insurer in its own name; or (b) by the insured "for the use and benefit" of the insurer.

B. When the owner's loss has been only partially satisfied and he has not released the wrongdoer as to the deficiency (a) action should be by the owner, in which case he holds as trustee for the insurer in respect to such part of the amount recovered as the insurer has been required to pay under the policy; (b) in case such owner refuses to bring action the insurer is entitled to protect its own interest by action against the wrongdoer.

5. Record examined in an action to recover damages for injury to an automobile, and held: (a) the action was properly brought by the insurance company against the tort-feasor under an indemnity policy containing a subrogation clause; (b) the insured car owner was properly joined as a party defendant.

Appeal from District Court, Shawnee County, Division No. 3; Dean McElhenny, Judge.

Action by the City of New York Insurance Company against Clarence A. Tice, doing business as the Standard Drive it Yourself System, and another to recover the amount which plaintiff had paid on an automobile collision policy. A demurrer to the petition was sustained, and the plaintiff appeals.

Reversed.

HARVEY, J., dissenting.

Harry K. Allen, of Topeka (L. M. Ascough, of Topeka, on briefs), for appellant.

Allen Meyers, of Topeka (G. Clay Baker, Hubert Else, and Herbert A. Marshall, all of Topeka, on briefs), for appellee.

HOCH, Justice.

An insurance company brought action to recover from a third party, an alleged tort-feasor, the amount which it had paid to a policy holder under an automobile policy indemnifying against loss by collision or accident. The policy holder was also joined as a party defendant. A demurrer to the petition was sustained and the plaintiff appeals. The principal question here is whether the insurance company could maintain the action in its own name.

The essential facts, as alleged, may be briefly summarized: Mrs. Downs, a resident of Wichita, delivered her car in Topeka to an employee of Tice, operator of a concern which rented and stored automobiles, to be taken to the garage for storage. Enroute to the garage the car was involved in a collision and damaged to the extent of $312.62. Mrs. Downs held a policy issued by the City of New York Insurance Company covering the loss except as to $50 excluded under a "$50.00 deductible clause." The insurance company paid $262.62 to Mrs. Downs, being the full amount of its liability. Subsequent thereto Tice, the garage operator, paid $50 to Mrs. Downs, her loss being thus fully paid. She gave him a receipt which purported to release him fully from any further liability. Tice had been informed by an agent of the insurance company that the company had paid or had agreed to pay the car owner the sum of $262.62 and "would be subrogated to all of the rights of defendant Downs against the defendant Tice and his employee."

The policy contained the following clause:

"9. Subrogation. In the event of any payment under this policy the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute...

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