Armijo v. Foundation Reserve Ins. Co.

• Decision Date: 13 December 1965
• Docket Number: No. 7610,7610
• Parties: Bobby ARMIJO, Plaintiff-Appellee, v. FOUNDATION RESERVE INSURANCE COMPANY, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 750

408 P.2d 750

75 N.M. 592

Bobby ARMIJO, Plaintiff-Appellee, v. FOUNDATION RESERVE INSURANCE COMPANY, Defendant-Appellant.

No. 7610

Supreme Court of New Mexico.

Dec. 13, 1965.

McRae, Ussery, Mims, Ortega & Kitts, Albuquerque, for appellant.

Sheehan & Duhigg, Albuquerque, for appellee.

COMPTON, Justice.

The plaintiff instituted this action to recover for damages to his automobile under an insurance policy issued to him by the defendant. The latter appeals from a judgment allowing a recovery of the amount of the policy.

As grounds for reversal of the judgment the appellant has advanced three points, under which he maintains (1) that the insurance policy was void from its inception because obtained by fraudulent misrepresentation, (2) that the appellee failed to join in his action an indispensable party, and (3) that the appellee's settlement with and release of the estate of the other driver involved in the accident which caused the damage released it from any liability under the policy.

The first point set out above is the primary ground upon which the appellant resisted the action in the lower court. The second and third points were first raised at the trial by the appellant's motions to dismiss and thereafter in its requested findings and conclusions.

In view of our determination that the third and last point has merit and disposes of the appeal, we confine our consideration to this latter point. Consequently, only those facts pertinent to the settlement and release need be set forth here with any particularity.

On May 14, 1962, the appellee purchased a used 1957 Buick automobile on which a policy of $50.00 deductible collision insurance was issued to him by the appellant. On May 19, 1962, while driving the Buick, the appellee was involved in a head-on-collision with another automobile driven by one Aaron Lopez who was killed in the collision. By letter of June 29, 1962, the appellee demanded payment from the appellant under the policy, stating therein that 'there is excellent subrogation on this claim and we would like to discuss that aspect with you.' On July 12, 1962, the appellant advised the appellee that the policy was void for the reasons set out in point one above and that the premium was being returned. Thereafter, on July 18, 1962, the appellee filed a suit against the estate of Aaron Lopez to recover damages for his personal injuries resulting from the collision. The present action against the appellant was commenced on August 8, 1962. Thereafter, on September 25, 1962, after negotiations with an adjuster of State Farm Automobile Insurance Company, the liability insurance carrier for the decedent, the appellee settled his claim against the Lopez estate, executed to it a release and, on October 11, 1962, dismissed with prejudice his action against that estate.

At no time prior to the trial of the present action did the appellant have notice or knowledge of the filing of the suit against the Lopez estate nor of the settlement with it and execution of a release by the appellee.

The release, admitted into evidence, provides insofar as pertinent here that:

'* * * the undersigned hereby releases and forever discharges Mrs. Aaron Lopez and estate of Aaron Lopez, their heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable or who might be claimed to be liable, * * * from any and all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever and particularly on account of all injuries, known and unknown, both to person and property, which have resulted or may in the future develop from an accident which occurred on or about the 20th day of May 1962 at or near Laguna, New Mexico.

'Undersigned hereby declares that the terms of this settlement have been completely read and are fully understood and voluntarily accepted for the purpose of making a full and final compromise adjustment and settlement of any and all claims, disputed or otherwise, on account of the injuries and damages above mentioned, and for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident.' (Emphasis ours)

At the trial the appellant moved for dismissal on the ground, among others, that there had been a complete settlement by the appellee of all claims arising out of the accident, thus destroying any subrogation rights it may have had both by law and under the terms of the policy, and precluding a recovery under the policy by the appellee. The court reserved a ruling on the motion and, thereafter, permitted the adjuster for State Farm to testify that at the time of...