Fire Ass'n of Philadelphia v. Schellenger
| Decision Date | 14 June 1915 |
| Citation | 84 N.J.Eq. 464,94 A. 615 |
| Parties | FIRE ASS'N OF PHILADELPHIA v. SCHELLENGER |
| Court | New Jersey Supreme Court |
Appeal from Court of Chancery.
Action by the Fire Association of Philadelphia against Robert V. Schellenger. From a decree for complainant (83 N. J. Eq. 144, 90 A. 240), defendant appeals. Reversed.
William C. French, of Camden, for appellant. French & Richards, of Camden, for appellee.
The Fire Association of Philadelphia, the complainant below, issued a policy of insurance upon the property of Schellenger the defendant below, for $3,000. One of the provisions of the policy was that:
"If this company shall claim that the fire was caused by the act or neglect of any person or corporation, private or municipal, this company shall on payment of the loss be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment."
The property insured having been injured by fire, the complainant paid to Schollenger, under its policy, $2,855, that being the amount agreed upon as the extent of its liability. Subsequently the defendant brought suit against the Atlantic City Railroad Company, claiming that the fire by which his property was injured was caused by sparks negligently permitted to escape from an engine of that company. A verdict of $6,000 was recovered in this suit; and afterwards (a rule to show cause having in the meantime been allowed) the parties to that litigation compromised it for $3,000, and Schellenger executed to the company a general release of all liability for loss or damage occasioned by the fire. The case which the present respondent sought to establish in the court of chancery was that, having paid to the appellant the amount due on the policy issued by it, a right of subrogation immediately sprung into existence, under which it was entitled to receive, out of the proceeds of the litigation brought by Schellenger against the railroad company, reimbursement of the moneys paid by it under the policy.
The learned Vice Chancellor who heard the case, after pointing out that an insurance against loss by fire is an indemnity which the assured holds, declared as a principle of law that, when the insurer pays that indemnity to the assured, the latter becomes a trustee of the insurer to the amount of the payment, in the event of its future collection by the...
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