Calvert Fire Ins. Co. v. James

• Decision Date: 06 June 1960
• Docket Number: No. 17664,17664
• Citation: 92 A.L.R.2d 97,236 S.C. 431,114 S.E.2d 832
• Court: South Carolina Supreme Court
• Parties: , 92 A.L.R.2d 97 CALVERT FIRE INSURANCE COMPANY, Appellant, v. Norman JAMES and Mattson Fuel Oil Company, Inc., Respondents.

Page 832

114 S.E.2d 832

236 S.C. 431, 92 A.L.R.2d 97

CALVERT FIRE INSURANCE COMPANY, Appellant, v. Norman JAMES and Mattson Fuel Oil Company, Inc., Respondents.

No. 17664.

Supreme Court of South Carolina.

June 6, 1960.

J. Preston Warren, Walter B. Wilbur, Charleston, for appellant.

Hagood, Rivers & Young, Charleston, for respondents.

LEGGE, Justice.

Calvert Fire Insurance Company, plaintiff below, appeals from an order sustaining a demurrer to its complaint, for insufficiency, by the defendant Mattson Fuel Oil Company. It appears that the other defendant, Norman James, could not be found within the jurisdiction, and that no service upon him was made. Following is the substance of the complaint:

On December 29, 1956, as the result of a collision between James' automobile and a truck of Mattson Fuel Oil Company, James sustained personal injury and his automobile was damaged. James, insured under a '$50.00 deductible' collision policy issued by Calvert Fire Insurance Company, was on March 6, 1957, paid by that company the amount for which it was liable under the policy, $288.40; and he thereupon executed and delivered to the company the usual 'loan receipt' (cf. Phillips v. Clifton Mfg. Co., 204 S.C. 496, 30 S.E.2d 146, 157 A.L.R. 1255; South Carolina Electric & Gas Co. v. Aetna Life Insurance Co., 230 S.C. 340, 95 S.E.2d 596). Thereafter James made claim against Mattson Fuel Oil Company for damages resulting from said collision; and negotiations between them, looking toward settlement, continued for several months. On March 13, 1957, and thereafter while these negotiations were in progress, Calvert Fire Insurance Company in writing, and orally, notified Mattson Fuel Oil of its right to reimbursement and of its interest in the impending settlement. Thereafter, and without notice to Calvert Fire Insurance Company, Mattson Fuel Oil Company paid James $4,000 in settlement of all of his claims arising out of the collision and obtained from him a full release of such claims, thereby causing Calvert Fire Insurance Company to suffer loss in the sum of $288.40.

In his order sustaining the demurrer, the circuit judge held that plaintiff's rights as subrogee rested in its contract with the insured, James, and were enforceable only against him as trustee in respect of any money collected by him from Mattson to which the plaintiff might be entitled; and that, under the facts stated in the complaint, Mattson owed no duty to the plaintiff. We think that such holding was erroneous.

Legal subrogation is not dependent upon contract. The doctrine is an equitable one, founded not upon any fixed law, but upon principles of natural justice; its purpose is to require the ultimate discharge of a debt by the person who in equity and good conscience ought to pay it; and it is to be applied according to the dictates of equity and good conscience in the light of the actions and relationship of the parties. 50 Am.Jur., Subrogation, Sections 5, 6; Gadsden v. Brown & Wellsman, Speers' Eq. 37, 17 S.C.Eq. 17; Livingstain v. Columbian Banking & Trust Co., 77 S.C. 305, 57 S.E. 182, 22 L.R.A.,N.S., 442, 122 Am.St.Rep. 568; American Surety Co. v. Hamrick Mills, 191 S.C. 362, 4 S.E.2d 308, 124 A.L.R. 1147; Powers v. Calvert Fire Ins. Co., 216 S.C. 309, 57 S.E.2d 638, 16 A.L.R.2d 1261; St. Paul-Mercury Indemnity Co. v. Donaldson, 225 S.C. 476, 83 S.E.2d 159.

'Where the tortious conduct of a third person is the cause of a loss covered by an insurance policy, the insurer, upon payment of the loss, becomes subrogated pro tanto by operation of law to whatever rights the insured may have against the wrongdoer.' Globe & Rutgers Fire Ins. Co. v. Foil, 189 S.C. 91, 200 S.E. 97, 100; Lucas v. Garrett, 209 S.C. 521, 41 S.E.2d 212, 169 A.L.R. 660; Pringle v. Atlantic Coast Line R. Co., 212 S.C. 303, 47 S.E.2d 722; Appleman, Insurance Law and Practice, Section 4051.

Where the insurer has paid to the insured the entire loss, it may bring action either in its own name or in that of the insured against the tort-feasor whose wrongful act caused the loss, for in such case the whole remedial right is vested in it. As a general rule it may not bring action against the tort-feasor where it has paid only a portion of the loss sustained by the insured, because the insured's right of action is single and indivisible. South Carolina Electric & Gas Co. v. Aetna Life Ins. Co., 230 S.C. 340, 95 S.E.2d 596. In such case it may either join with the insured in bringing the action, or intervene in the action by the insured, against the tort-feasor. Mobile Ins. Co. v. Columbia & G. R. Co., 41 S.C. 408, 19 S.E. 858, 44 Am.St.Rep. 725; Mayfield v. Southern R. Co., 86 S.C. 52, 68 S.E. 21; Pringle v. Atlantic Coast Line R. Co., supra. But the 'indivisibility' rule may not be invoked against the subrogee where the subrogor has parted with all beneficial interest in the right of action, Aetna Insurance Co. v. Charleston & W. C. R. Co., 76 S.C. 101, 56 S.E. 788; Pringle v. Atlantic Coast Line R. Co., supra.

Upon it spayment to James of his loss covered by its collision policy, Calvert became subrogated, to the extent of that payment, to whatever rights James had against Mattson arising out of the collision that caused the loss. The question here presented is whether its rights as subrogee against Mattson were under the facts alleged in the complaint, extinguished by the settlement between Mattson and James. That question, raised by demurrer, must be resolved from the face of the complaint alone, Spell v. Traxler, 229 S.C. 466, 93 S.E.2d 601; and in our consideration of it the facts properly pleaded must be taken as true, Wallace v. Timmons, 232 S.C. 311, 101 S.E.2d 844.

'A release procured by a tort-feasor, knowing that the insured has already received payment from the insurer, has generally been held not to constitute a defense to the insurer's action against the wrongdoer to enforce its right of subrogation.' Appleman, Insurance Law and Practice, Section 4092.

In Wolverine Ins. Co. v. Klomparens, 1935, 273 Mich. 493, 263 N.W. 724, under facts quite similar to those alleged here, a settlement between the insured and the tort- feasor who he claimed was liable for the damage, whereby the insured purported to release the tort-feasor from all claims on account of the collision of their vehicles, was held not to bar action by the insurer against the tort-feasor for recovery of the amount that it had paid to the insured under its collision policy, the tort-feasor having been fully informed of such payment by the insurer prior to the settlement. The court quoted with approval from the annotation in L.R.A.1916A, 1282, as follows:

'It is too well settled to render the citation of authorities necessary that, as between an insurer and a tort...