City of Birmingham v. Walker, 6 Div. 801

• Decision Date: 06 March 1958
• Docket Number: 6 Div. 801
• Citation: 101 So.2d 250,70 A.L.R.2d 464,267 Ala. 150
• Parties: , 70 A.L.R.2d 464 CITY OF BIRMINGHAM v. Herbert B. WALKER et al.
• Court: Alabama Supreme Court

Page 250

101 So.2d 250

267 Ala. 150, 70 A.L.R.2d 464

CITY OF BIRMINGHAM v. Herbert B. WALKER et al.

6 Div. 801.

Supreme Court of Alabama.

March 6, 1958.

Geo. B. Foss, Jr., Birmingham, for appellant.

Taylor, Higgins, Windham & Perdue, Birmingham, for appellee Walker.

London & Yancey, Birmingham, for Belcher, Inc., and others.

COLEMAN, Justice.

This is an appeal from a judgment denying appellant's petition to intervene in a suit filed in the Circuit Court of Jefferson County by Herbert B. Walker, plaintiff, against S. E. Belcher, et al., defendants. In that suit, the plaintiff, Walker, sought to recover damages for personal injuries alleged to have been sustained by him as the proximate result of the negligence of defendants in operating a motor vehicle on a public highway in the City of Birmingham, Alabama.

The City of Birmingham, a municipal corporation, hereinafter referred to as the City, alleged in its petition for intervention: that the plaintiff, Walker, was at the time of his injury, and is now, a police officer employed by the City, and was at the time and place of his injury engaged in his duties as the City's employee and police officer; that as a proximate result of Walker's injuries the City lost his services for 119 days; that under Act. No. 246, General Acts 1945, page 376 (1940 Code, Title 62, §§ 330(21) to 330(48), Pocket Parts), and Rule 11.7 of the Personnel Board of Jefferson County, Alabama, which was promulgated under authority of said Act No. 246, the Personnel Board determined that the City should pay, and the City did pay, to Walker the sum of $1,266.42, for his lost services of 119 days, at his full salary rate; that under the Alabama rule of damages, Walker cannot recover for such lost time where the employer continued to pay his wages (citing 6 Ala.L.R. 79-83), but that the City 'can recover by virtue of legal or conventional subrogation or both'; that Walker orally or impliedly agreed that the City should be subrogated to his right of action against defendants to the extent that the City paid him his salary in said amount of $1,266.42; and that Walker orally or impliedly agreed that the City should be subrogated to any recovery he might obtain from defendants to the extent of the aforesaid salary payment. The petition further alleges that the interests of the City in said suit will not be adequately protected unless the City is allowed to intervene.

A copy of Personnel Board Rule 11.7 mentioned above is attached to the petition as Exhibit A, and is as follows:

'Rule 11.7

'Injury In Line of Duty: An employee who is injured while performing the duties of his position, without fault or negligence on his part, shall be allowed such leave with pay as the Board deems proper. Every application for such allowance shall contain a statement by the employee affirmed by his supervisor setting forth the details of the accident and supported by the certificate of a licensed physician setting forth the nature and extent of the injury and the probable period of disability. Every leave granted under the provisions of this rule shall be recorded in the Minutes of the Board and shall be entered in the roster as 'Injured With Pay'.'

It appears that in the above mentioned suit, judgment by agreement was entered in favor of Walker and against the defendants for $30,750. The Circuit Court denied the City's petition for intervention and ordered that all costs not heretofore taxed against defendants be taxed against the City.

The question in this case is: Where a municipality has lost the services of an employee as the result of a personal injury sustained by said employee while he was performing the duties of his employment, said injury being the proximate consequence of the negligence of a third party, and the municipality, under compulsory statutory provisions, has paid said employee at his full salary rate during the time his services were lost, is the municipality subrogated to the employee's right of action against said third party to the extent of the amount so paid by the municipality to the employee during the time he was unable to work, under the rules of the common law and without any statutory provision giving the City the subrogation rights which it claims?

By denying the City's petition to intervene, the trial court answered the foregoing question in the negative. We are of opinion that the trial court was correct in this ruling.

We have not been cited to any statute conferring the right of subrogation on the City under the circumstances of this case, and the City's claim to subrogation must, therefore, rest on the law as set out in the former decisions of this and other common-law courts.

The City contends that the principles of law which operate to place an insurer in the position of the insured, in cases where the insurer has paid a property loss caused by a third party tort-feasor, have application here; and, that upon application of those principles here, the City is subrogated to the employee's rights against the party who injured him, at least to the extent that the City has paid the employee's wages during the time he was disabled as a result of the injury.

The general rule is that when an insurer pays the insured in accordance with the insurance contract for a loss of property proximately resulting from fire caused by the actionable misconduct of a third party, the insurer becomes, by the doctrine of equitable subrogation, the owner, pro tanto, of the claim of the insured against the third party. If such payment only partially reimburses the insured for the loss, the insurer is subrogated only to the extent of the amount paid, and the insured remains the owner of the claim for the unreimbursed amount of the loss. If such payment by the insurer fully reimburses the insured for the property loss, then the insurer is subrogated to the entire right of insured against the third party.

This doctrine is based on the theory that the insurer is a surety for the third party, who is the principal obligor to the insured, and so, upon the principle that one who has paid a debt for which another is primarily liable should be substituted for and have the rights of the primary creditor against the primary debtor, the insurer, with respect to the claim of insured against the third party tort-feasor, is held to be substituted for the insured to the extent of the amount so paid by the insurer. The equity of such principle is said to be that the insured has only one claim and is entitled to one payment only, and that the loss should ultimately fall on the third party who caused it. This principle appears to be generally accepted with respect to indemnity contracts relating to property, and was recently stated by this court in a case involving insurer's right of subrogation on a tort claim for theft as follows:

'* * * Under the long settled law of this state, as elsewhere, an insurer carrying the risk of loss from the tortious act of a third person is upon payment of such loss subrogated to the cause of action of the insured, and may sue in the insurer's own name, or in the name of the insured for the use of the insurer. * * *.' Adams v. Queen Insurance Co. of America, 1956, 264 Ala. 572, 579, 88 So.2d 331, 337. For other cases, see 12A Ala.Dig., Insurance, k 606(1).

As to an insurer who has paid under a life insurance contract upon the death of the insured proximately caused by the actionable misconduct of another, subrogation to a right of action against the third-party tort-feasor causing the death has been denied. The rule has been stated as follows:

'The doctrine of subrogation applied in indemnity insurance, by which insurer is entitled to recover in the name or right of insured against a wrongdoer who has caused the destruction of the property covered by the policy, has no application to life insurance, for the reason that there is no right of action for causing the death of a person except as such remedy is given by statute, and for the further reason that life insurance is not a contract of indemnity; and, accordingly, subrogation not contracted for is not given insurer in case of death. Insurer is not entitled to recover against the wrongdoer who has caused the death of insured, as there is no such relation between the wrongdoer and insurer as to entitle the latter having an interest in the life of insured only by contract to a recovery for the tort. * * *.' 46 C.J.S. Insurance § 1209, p. 167.

Another text contains the following statement:

'There seems to be little doubt that a life insurance company cannot recover of one who has caused the death of an insured the amount which it has thereby been compelled to pay. Nor, in the absence of a stipulation in the policy to that effect, is an insurance company subrogated, on the payment of an accident policy, to the rights of the insured against the one who caused the injury, since accident insurance, unlike fire insurance, is not an indemnity contract, but an investment contract, in which the only parties concerned are the insurer and the insured or the beneficiary.' 29 Am.Jur., Insurance, § 1340, pp. 1003 and 1004.

The City's argument is based on the proposition that its position is analogous to the position of an insurer of property rather than the position of an insurer under a life or accident policy. Cases from Illinois and Pennsylvaia support appellant's contention.

In an Illinois case, decided in 1954, the court was called upon to decide whether or not in the absence of statutory subrogation, an employer could recover from a third-party tort-feasor the amount of compensation which the employer had paid to the injured employee under the Illinois Workmen's Compensation Act. Geneva Construction Co. v. Martin Transfer & Storage Co., 4 Ill.2d 273, 122 N.E.2d 540, 543. In that case the court observed:

'The remedy of common-law subrogation in workmen's compensation cases is largely academic, inasmuch as the vast majority...