Fire Association of Philadelphia v. Schellenger

• Citation: Fire Ass'n of Philadelphia v. Schellenger, 90 A. 240, 83 N. J. Eq. 144 (N.J. Ch. 1914)
• Decision Date: 31 March 1914
• Court: New Jersey Court of Chancery
• Parties: FIRE ASSOCIATION OF PHILADELPHIA v. ROBERT V. SCHELLENGER

90 A. 240

83 N.J.Eq. 144

FIRE ASS'N OF PHILADELPHIA

v. SCHELLENGER.

Court of Chancery of New Jersey.

April 4, 1914.

Action by the Fire Association of Philadelphia against Robert V. Schellenger. Decree for complainant.

French & Richards, of Camden, for complainant. William C. French, of Camden, for defendant.

LEAMING, V. C. (orally). In a case of this nature, one's sympathies naturally go out to a defendant who has suffered a loss and who has made a settlement with the company that wrongfully occasioned the loss under the possible assumption that he was receiving only the balance of his claim; that is, the amount of his loss in excess of the amount of insurance he had already received. In such case a court naturally, and I think appropriately, seeks to ascertain, if possible, some theory upon which relief against a claim of this nature can be properly based; and, if I thought that by further consideration of this case my present views touching the law that controls the rights of the parties would be by any possibility modified, I would take the case under advisement; but the law is so well established, and the rights and duties of the respective parties are so plain, that it does not seem to me that it would be advantageous for me to take the case under advisement or give it further consideration. I will, for that reason, dispose of it at this time.

There are no material facts which are in dispute. The defendant, Mr. Schellenger, was owner of a certain building and machinery which were covered by a policy of insurance written by the complainant company to the amount of $3,000, $2,500 of which was on the building and $500 of which was upon the machinery. It is admitted that a loss occurred by fire on November 14, 1911. Thereafter complainant company made payment to the defendant of the amount for which it was then ascertained that complainant was liable under its policy, namely, $2,855. The loss which defendant had suffered had apparently included property which was not covered by the insurance, and the property which was covered by insurance was not totally destroyed, so that $2,855 was determined upon as the amount payable under the insurance policy. Thereafter a suit was brought by the defendant against a railroad company for the recovery of the damages occasioned by the fire; it being claimed in that suit that the railroad company had wrongfully and through its negligence destroyed the property of defendant That suit came to trial January 7 and 8, 1913, and on the latter date a verdict was rendered in favor of plaintiff in that suit, the defendant in this suit, of $6,000. Subsequently, on the 21st day of January, 1913, a judgment on that verdict was entered in the Supreme Court against the railroad company and in favor of the present defendant Thereafter a rule to show cause for a new trial was allowed by the judge who presided at the trial of that case, which rule enabled the railroad company to procure a review of the proceedings in the Supreme Court; and subsequently on February 21, 1913, the defendant and the railroad company made a compromise settlement, whereby the railroad company paid to the defendant $3,000 in full settlement of his claim, and in consideration of that payment defendant executed to the railroad company a release, a general release of all liability for all losses or damages occasioned by that fire, and canceled the judgment which had been entered of record. These facts, as already stated, are not in dispute.

Under these circumstances, there cannot be the slightest doubt touching the law. When the insurance company paid to the defendant the amount for which it was liable under its policy of insurance, the insurance company by the settled law of the land became subrogated to the rights of the assured to the amount of that payment. An insurance against loss by fire is an indemnity which the assured holds, and, when the insurer pays that indemnity to the assured, the assured becomes a trustee of the insurer to the amount of that payment in the event of its future collection by the assured from a person primarily liable for the loss. The company primarily liable for the loss here in question was the railroad company, and the...