D'Angelo v. Cornell Paperboard Products Co.

• Decision Date: 05 March 1963
• Citation: 19 Wis.2d 390,120 N.W.2d 70
• Parties: James D'ANGELO, Plaintiff-Respondent, Employers Mutuals Liability Insurance Company, Intervener-Respondent, v. CORNELL PAPERBOARD PRODUCTS COMPANY, Defendant-Respondent, Indemnity Insurance Co. of North America, Interpleaded Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 70

120 N.W.2d 70

19 Wis.2d 390

James D'ANGELO, Plaintiff-Respondent Employers Mutuals Liability Insurance Company, Intervener-Respondent, v. CORNELL PAPERBOARD PRODUCTS COMPANY, Defendant-Respondent Indemnity Insurance Co. of North America, Interpleaded Defendant-Appellant.

Supreme Court of Wisconsin.

March 5, 1963.

Kivett & Kasdorf, Fred D. Huber, Jr., Milwaukee, Alan M. Clack, Milwaukee, of counsel, for appellant.

Burlingame, Gibbs & Roper, Moore & Moore, Milwaukee, for intervener-respondent.

WILKIE, Justice.

The sole issue on this appeal is whether the amended complaint and cross complaint states any cause of action by Employers against Indemnity. The well-established rule, of course, is to construe the complaint liberally in testing whether the demurrer should be sustained. ¹

The pertinent portions of the amended complaint and cross complaint here are as follows:

'5. James D'Angelo, while in the scope of his work and employment, on or about the 9th day of January, 1958, received * * * personal injuries * * * As a result of such injuries said James D'Angelo was permanently disabled and incurred substantial medical expenses, suffered a loss of income, and well continue to suffer such loss of income.

'6. The intervening plaintiff, Employers * * *, on its behalf and on behalf of Cornell Paperboard Products Company * * * paid to the plaintiff, James D'Angelo, the sum of one hundred twenty thousand and no/100 ($120,000.00) dollars and received from him and from his workmen's compensation insurance carrier an assignment of their rights arising out of said accident and injuries. The payment by the Employers Mutuals was by reason of the asserted liability of Cornell Paperboard Products Company to the said James D'Angelo, Employers Mutuals having theretofore issued a policy of comprehensive liability insurance in favor of the said Cornell Paperboard Products Company insuring it against liability arising out of its negligence or the negligence of its employees. * * * That by such payment Employer was, additionally, subrogated to any rights of Cornell against Indemnity. (Emphasis added.)

'7. Prior to the 9th day of January, 1958, Indemnity * * * had issued and there was outstanding its automobile liability insurance policy under which it insured the said Cornell Paperboard Products Company against liability for injuries arising out of the * * * use or operation of motor vehicles by the said Cornell Paperboard Products Company or by its employees * * *. By its terms, coverage of said policy was extended to include * * * the use of the trailer unit hereinafter described and that said policy by its terms and under the circumstances of this case covered the * * * use and operation of a fork-lift truck to which reference is hereinafter made.

'8. That on the 9th day of January, 1958, said James D'Angelo together with the aforementioned Howard Venz and another employee of the defendant Cornell and while on the premises * * * of Cornell, were engaged in the unloading of large bundles of compressed paper from a trailer unit, which, under the policy of Indemnity * * * was an insured vehicle so that the liability arising out of the use thereof was insured thereunder and that by reason thereof, said defendant, Indemnity * * * is liable for the consequences, arising out of such use, of any negligence in the use thereof. (Emphasis added.)

'9. That the said policy of the defendant, Indemnity * * * also defined the term 'insured' to include any person while using any vehicle with the consent of the insured and that the said Howard Venz, in using the aforesaid trailer and a fork-lift truck, * * * was using vehicles with the consent of the insured thereby becoming an additional assured whose liability is covered and insured under the terms of the aforesaid policy.

'12. That the injuries of the said James D'Angelo, as he has alleged, were proximately caused by negligence of the employees of Cornell, including the said Howard Venz, in the use and operation of the fork-lift truck, a vehicle insured under the policy of Indemnity Insurance Company of North America, and in the loading and unloading of the platform truck which was a similarly insured vehicle in such use; * * *.

'13. The intervening plaintiff, having made the payment hereinabove described, became subrogated to the rights of Cornell against Venz and against the insurance carrier, Indemnity, and has the right to assert its claim in respect thereto. (Emphasis added.)

'14. * * * That by reason thereof, [describing the personal injuries] the said James D'Angelo was damaged in the sum of three hundred thousand and no/100 ($300,000.00) dollars. That the Employers Mutuals by reason of the assignment hereinbefore alleged of the negligent injury so received, plaintiff, James D'Angelo, is entitled to judgment against Indemnity in the sum of three hundred thousand and no/100 ($300,000.00) dollars.

'WHEREFORE, intervening plaintiff, Employers Mutuals Liability Insurance Company, on its own behalf and as assignee of James D'Angelo, Continental Casualty Company, and Cornell Paperboard Products Company, demands judgment against defendant, Indemnity Insurance Company of North America, in the sum of three hundred thousand and no/100 ($300,000.00) dollars, together with the taxable costs and disbursements herein.'

Indemnity contends that the amended complaint and cross complaint is demurrable in that it does not allege the essentials of a cause of action based on subrogation and the claimed cause of action grounded on the assignment is defective because such an assignment is champertous and void as against public policy.

The trial court did not consider whether the amended complaint and cross complaint stated a good cause of action grounded on subrogation but dismissed Indemnity's contentions that the assignment was champertous and against public policy.

In Wisconsin, contrary to the rule in a majority of states causes of action for personal injuries are assignable. ²

In the case at bar we are asked to go further and determine whether, although a personal injury action may in general be assignable, under the circumstances of this case this particular assignment was both champertous and against public policy.

The usual method for settling a personal injury claim as between the injured party and a number of joint tort-feasors and their insurers, if one of the tort-feasors or one of his insurers wants to settle the matter and the others do not, is for the insurer and his insured to make a payment to the injured party. The insured and insurer simultaneously take a complete release discharging all claimed tort-feasors and their insurers from further obligation to the injured party, with the insured and his insurer being subrogated to the extent of the amount paid in its efforts to seek contribution or indemnification from the other joint tort-feasors and their insurers or from other insurers of the settling joint tort-feasor.

This procedure was not followed in the case at bar. D'Angelo, the injured party, and his workmen's compensation insurer received payment from Employers of $120,000 and in turn executed a full assignment (rather than a release) to Employers of their causes of action as against Cornell and Indemnity. Employers further alleges that because it made the payment by reason of Cornell's alleged liability and under a general liability policy it is subrogated to the rights of Cornell against its employee, Venz, and the automobile liability insurer, Indemnity.

Although we agree with the trial court that the assignment is not champertous, in our view public policy prevents the enforcement of Employers' rights under that assignment for any amount above the $120,000 paid out by Employers. We hold, therefore, that the assignment is void for any amount in excess of $120,000, but good to the extent of $120,000 since that assignment is an integral part of Employers' cause of action against Indemnity based on subrogation.

The common law prohibition against champerty prevails in Wisconsin. Barker v. Barker (1861), 14 Wis. 131; Allard v. Lamirande (1872), 29 Wis. 502. Sec. 331.375, Stats., modifying the common law, reads as follows:

'331.375 Abrogation of defense that contract was champertous. No action, special proceeding, cross complaint or counterclaim in any court shall be dismissed on the ground that a party to the action is a party to a contract savoring of champerty or maintenance unless the contract is the basis of the claim pleaded.'

In Miles v. Mutual Reserve Fund Life Asso. (1901), 108 Wis. 421, 433, 84 N.W. 159, at page 164, we had this to say about the basis for the prohibition against champerty:

'The real mischief which the law of champerty aims to prevent is that of encouraging litigation by persons who have no interest therein independent of that to be derived from carrying it on in whole or in part at [their] expense.'

The object of the law against champerty is stated in Barker v. Barker, supra, at page 144:

'That object is to prevent strife and litigation, and this it aims to secure by forbidding parties not interested to contract for an interest in the thing to be recovered, upon condition of their carrying on the suit.'

The trial court correctly determined that Employers was not an intermeddler, that Employers had a great interest in the subject of the lawsuit and was not a mere volunteer. ³ Because of the interest of Employers associated with its payment of $120,000, the assignment to Employers was not champertous. ⁴

Indemnity argues that although causes of action for personal injuries are in general assignable in Wisconsin, nevertheless this particular assignment is void because it is against public policy. In substance, this claim is that it is against public policy for a cause of action to be bought up by a tort-feasor or his insurer with the idea of later prosecuting the claim for a larger sum, thus permitting the tort-feasor or his...