Brighthope Ry. Co. v. Rogers

• Decision Date: 31 March 1881
• Citation: 76 Va. 443
• Court: Virginia Supreme Court
• Parties: BRIGHTHOPE RAILWAY CO. v. ROGERS, FOR, & C.

76 Va. 443

BRIGHTHOPE RAILWAY CO. v. ROGERS, FOR, & C.

Supreme Court of Appeals of Virginia.

March 31, 1881

Writ of error to judgment of circuit court of Chesterfield county in action of George J. Rogers, suing for benefit of the Watertown Fire Insurance Company, of New York, against the Brighthope Railway Company. Rogers had piled on the line of the railway company wood, insured in that insurance company by two policies aggregating $1,500. The wood was set on fire by defendant's locomotive, and about $1,000 worth of it destroyed. Rogers claimed the insurance. The claim was compromised by the payment of $701.51 by the insurance company, which then sued the defendant in Roger's name on the ground that the loss was caused by the defendant's negligence and defective machinery. Afterwards, Rogers on his part denied bringing the suit, or authorizing the use of his name in bringing it, and formally declined to be a party thereto. He also executed a release to the railway company of all claims and demands against it, on account of the loss. This release, the defendant set up in a plea and presented as a defence to the action, which it asked should be dismissed but the court rejected the plea and refused to dismiss the action. Verdict in favor of the insurance company for $701.51, the amount it had paid Rogers. Judgment accordingly. Writ of error and supersedeas awarded. The opinion of the court states the other facts and the instructions given.

D S. Hounshell, for appellant.

1. The court below erred in allowing the insurance company to prosecute this action in the name of Rogers against his formal protest, and in rejecting the defendant's plea setting out Roger's release of the defendant. The doctrine of the subrogation of the insurer to the right of action of the assured against the wrongdoer, does not apply where the insurer has paid the assured less than the amount due on the policy.

2. The court also erred in admitting testimony tending to prove other special fires extending backward three years before the damage sustained by the plaintiff. Redfield on Railways, ch. 19, §§ 164-5, 6, and note 7, and other authorities.

3. The court also erred in refusing new trial on the ground that the verdict was contrary to the law and the evidence.

B. H. Nash, for appellee.

This case is of first impression here. The right of the insurer to recover of the wrongdoer the amount he had to pay the assured, and to bring an action in his name for that purpose, is established by the decisions of the supreme court of the United States and of the sister States. See Hart v. Western R., 13 Metcalf 99; Conn. Ins. Co. v. Erie R. R. Co., 73 N.Y. 399; Monmouth Ins. Co. v. Hutcheson and Camden and Amboy R. R., 21 N. J. (6 Green), 107; Long & Hall v. Railroad Companies, 13 Wallace 367.

2. Evidence of other fires caused by the same locomotive was admissible, In 1 Otto 454, the S. C. U. S. held that such evidence was admissible as tending to show negligent habits of the agents of the corporation.

3. The six instructions given at the plaintiff's instance, are correct. Their correctness is shown by the authorities cited above and below.

Lack. and West. R. R. v. Solmon, 10 Vroom N. J. 299; Smith v. London and West. R. Co., Ex. Cham. L. Reports, 6, C. P. 14; Vaughan v. Taff. Valley R., 5 H. & N. 679, 16 Kan. 201; 40th Cal. 14; 49 N.Y. 420; 80 Penn. St. R. 373; and opinion of C. J. Dixon in Kellogg v. Chic. and N. W. R., 26 Wis. 223.

OPINION

STAPLES, J.

The first question to be considered here is, whether an insurance company which has paid the assured the amount due him upon the policy, can maintain an action for reimbursement in the name of the assured against the person by whose misconduct or negligence the loss was occasioned.

The learned counsel for the defendants, in a very elaborate note of argument, insists that the action cannot be supported, because there is no privity between the insurer of the property and the wrongdoer, and a right of action sounding in tort is not assignable at common law, and cannot be the subject of the equitable doctrine of subrogation. We are of opinion, however, that the question cannot be regarded as an open one, that the right to maintain such action has been settled by a long train of decisions of the highest courts of England and America. As far back as the case of Mason v. Sainsbury et als., reported in 3 Douglas 61, the doctrine was recognized by Lord Mansfield, and has been again and again reaffirmed by the English judges. In the United States the decisions are almost uniformly the same way, as may be seen by reference to the case of Hart et als. v. Western R. R. Company, 13 Metc. 103, where the whole subject is exhaustively discussed by Chief-Justice Shaw, and the grounds upon which the doctrine rests fully and clearly stated. See also Woods on Fire Insurance, 473-4, 477, and notes, where numerous decisions are cited; Hall & Long v. The R. R. Companies, 13 Wallace 367; 73 New York, 399.

The doctrine briefly stated is, where the property insured is destroyed by the negligence of a third person, so that the assured has a remedy against him therefor, the insurer, by the payment of the loss, becomes subrogated to the rights of the assured to the extent of the sum paid under the policy, and may bring an action in the name of the assured to recover the amount so paid. In such cases the assured stands in the relation of trustee to the insurer to the extent of the sum paid, and he cannot even release the right of action, nor the action itself, if one has been commenced, so as to defeat the claim of the insurer to reimbursement from the wrongdoer for the injury. Woods, § 478. The learned counsel for the appellant has, however, taken the ground that this doctrine does not apply where the insurer has paid the assured less than the amount due upon the policy. In such cases the insurer has no right of subrogation or right of action for indemnity against the wrongdoer. In other words, if the insurer pays the assured the entire amount of the loss, he is entitled to his action against the wrongdoer for indemnity; but if by any arrangement or compromise with the assured, he pays less than the amount of the loss, he has no claim against the wrongdoer for reimbursement. The learned counsel has entirely misconceived the cases to which he has referred. These cases relate exclusively to controversies between creditors on the one hand and sureties on the other. They proceed upon the familiar doctrine that where the surety has satisfied the demand of the creditor, so that the latter has no longer any claim, the surety is entitled to the benefit of all the securities of the creditor, and all his rights and remedies against the principal. But where the surety has paid part only of the debt or demand, his right of subrogation is in subordination to the paramount claim of the creditor to be satisfied his whole demand, the surety will be permitted to occupy the place of the creditor only when the latter has no longer occasion to hold the securities for his own protection. This is the principle laid down in Grubbs v. Wysors, 32 Gratt. 131, and is the doctrine of the cases cited by appellant's counsel. It will be perceived they have no sort of application to a case like the present, where the creditor (the insurer) has been fully satisfied and is asserting no demand against the wrongdoer.

No good, or even plausible reason can be suggested for the distinction made by counsel, and no authority can be found to support it. If the assured prefers to accept from the insurer a less sum than he is justly entitled to for the loss sustained, rather than embark in an expensive law suit for the recovery of the whole, the wrongdoer certainly has no just cause of complaint. It does not lie in his mouth to say that the damage arising from his misconduct deserves a higher compensation, and he ought to be compelled to pay more than he is required to pay. The insurer's equitable right of subrogation is based upon what he has actually paid, and not upon that which he might or ought to have paid; and as against the wrongdoer, he is entitled to indemnity for the part so paid, whether it be the whole or part of the demand. I do not deem it necessary to notice particularly some other cases cited by appellant's counsel. They relate to the law of maritime insurance, and the rights of insurers as affected by what is known as an abandonment of the property insured. They have no sort of application to the present controversy. Applying these principles to the present case they are conclusive of two matters. First, the right of the Watertown Fire Insurance Company to maintain this action in the name of the nominal plaintiff, Rogers, who has been indemnified for his loss. Secondly, that the release obtained from Rogers by the defendant, after the commencement of the action, is null and void and in violation of the rights of the insurance company. The circuit court, therefore, did not err in disregarding the release and the plea which offered it as matter of...