Flanary v. Reserve Ins. Co.

• Decision Date: 22 September 1961
• Docket Number: No. 20,A,20
• Parties: James J. FLANARY, Plaintiff and Appellee, v. RESERVE INSURANCE COMPANY, Defendant and Appellant. pril Term.
• Court: Michigan Supreme Court

Page 670

110 N.W.2d 670

364 Mich. 73

James J. FLANARY, Plaintiff and Appellee, v. RESERVE INSURANCE COMPANY, Defendant and Appellant.

No. 20, April Term.

Supreme Court of Michigan.

Sept. 22, 1961.

William Goldberg, Flint, for defendant and appellant, Richard C. Fruit, Flint, of counsel.

Walter J. Barkey, Flint, for plaintiff and appellee.

Before the Entire Bench.

DETHMERS, Chief Justice.

Plaintiff owned an automobile. Defendant issued a collision insurance policy to cover it. On August 20, 1958, it was struck by the motor vehicle of one Fenton and nearly demolished.

On December 16, 1958, this suit was begun to recover, under the insurance policy, for the value of the automobile. On January 12, 1959, while this suit was pending, plaintiff sued Fenton for damages resulting from the collision, alleging, inter alia, that his car was a total loss, and included as defendants two bar owners who allegedly sold liquor unlawfully to Fenton preceding the collision. In the latter case a consent judgment for plaintiff of $20,000 was entered on May 13, 1959, and satisfied on May 25, 1959. Defendant insurance company did not know of the filing, pendency and settlement of plaintiff's suit against Fenton until afterwards.

During pendency of the Fenton suit defendant herein filed an answer on April 13, 1959, alleging that it had been unable to settle plaintiff's claim because of his unjust demands and that it had offered to pay plaintiff the cash market value of his automobile before it had been damaged or to replace it with a like one of equal value, which plaintiff declined to accept. After the settlement of the Fenton Case, defendant herein, learning of it, moved to dismiss on the ground of that settlement and plaintiff's having precluded defendant, thereby, from recovering, under the subrogation clause of the policy, from Fenton the tort-feasor. The subrogation clause reads as follows:

'(a) Subrogation: In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights.'

The motion to dismiss was denied, the case tried by the court without a jury, and judgment entered for plaintiff in the amount of $1,260. Defendant appeals here.

In proceeding against Fenton and accepting settlement of his claim against the latter, plaintiff precluded himself from thereafter taking the position that he had been paid only for personal injuries and suing Fenton for his car loss. In so doing he also precluded his insurer, defendant herein, from doing so. Coniglio v. Fire Insurance Company, 337 Mich. 38, 59 N.W.2d 74. See, also, General Accident, Fire & Assurance Corp. v. Sircey, 354 Mich. 478, 93 N.W.2d 315, and cases cited therein for discussion of rule against splitting causes of action. This was in violation of defendant's rights under the subrogation clause in the polity and of plaintiff's agreement therein to do nothing after loss to prejudice those rights. Unless there is waiver or estoppel, plaintiff's actions have barred his right here sought to be established against defendant.

Plaintiff claims waiver by and estoppel against defendant because of its failure to promptly settle plaintiff's claim. In support he quotes from 38 A.L.R.2d 1099, which, in turn, cites ...