Florida Farm Bureau Ins. Co. v. Martin

• Decision Date: 14 December 1979
• Docket Number: No. KK-352,KK-352
• Parties: FLORIDA FARM BUREAU INSURANCE COMPANY, Appellant, v. Frank W. MARTIN and Melba Martin, husband and wife, Appellees.
• Court: Florida District Court of Appeals

Page 827

377 So.2d 827

FLORIDA FARM BUREAU INSURANCE COMPANY, Appellant, v. Frank W. MARTIN and Melba Martin, husband and wife, Appellees.

No. KK-352.

District Court of Appeal of Florida, First District.

Dec. 14, 1979.

Allen W. Lindsay of Beall, Lindsay & Lindsay, P.A., Milton, for appellant.

William K. Jennings, Fort Walton Beach, for appellees.

PER CURIAM.

Florida Farm Bureau Insurance Company (Farm Bureau) appeals a final judgment denying it reimbursement under a subrogation claim from funds recovered by its insureds, the Martins, in a suit against the tortfeasor and its insurer. The trial court denied distribution of the proceeds to Farm Bureau because the loss sustained exceeded the total recovery from all parties. We affirm.

Farm Bureau paid the appellees approximately $42,535 for fire losses to their property. In July 1976, the appellees filed a complaint against the tortfeasor and its insurer alleging negligence. An answer was filed in August 1976 and a motion to intervene was filed by Farm Bureau in October 1976. Farm Bureau's complaint alleged a right of subrogation regarding the amounts paid by it to the appellees. Neither a loan receipt nor assignment of subrogation rights was executed in this case. Rather, the contract read:

This Company may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by this Company.

Pursuant to a hearing regarding stipulations, all parties stipulated that the appellees' property damage totalled $110,000; that recovery from the tortfeasor's insurer would be the maximum policy limit of $50,000; and that recovery from the tortfeasor would be the maximum collectable amount of $2,500. The trial court entered a partial final judgment denying Farm Bureau subrogation because the appellees' damages of $110,000 exceeded the total recovery of $95,035.00. This appeal followed.

Farm Bureau primarily contends that this case is controlled by Morgan v. General Insurance Company, 181 So.2d 175 (Fla. 1st DCA 1965). In Morgan, the court held that intervention by the insurance carrier in a suit by the insured against the tortfeasor was effective to protect its right of subrogation to the same extent as if it had independently proceeded. The court approved the following principle:

If the insurer pays a claim for a loss caused by the negligence of a third person and requests the insured to prosecute his claim against the tort-feasor, assists in the prosecution of the claim, and bears its share of the burden of preparing the case for trial, it is entitled, out of the judgment recovered, to the amount which it has paid on account of the loss, notwithstanding the judgment recovered is not, according to the insured's claim, the full value of the property destroyed. Pontiac Mut. County Fire & Lightning Ins. Co. v. Sheibley, 279 Ill. 118, 116 N.E. 644 (1917).

The court concluded its reasoning by stating the following:

Where the insurer has intervened in an action by the insured against the wrongdoer, and has shown a monetary interest in the result thereof, the court will not permit a settlement between the insured and the wrongdoer to the detriment of the insurer, but will protect the rights of all parties. The mutual stipulation for settlement with the tort-feasor and for disposition of the proceeds by order of the court was regular in all respects. The conclusion of the insured to settle for less than the full amount of the claim against the tort-feasor will not operate, in the absence of a clear agreement with the insurer, to reduce its subrogation rights in the settlement proceeds.

181 So.2d at 178-179.

Appellees contend that this case is distinguishable from Morgan and that the appropriate principle to be applied is the one stated in Central National Insurance Group v. Hotte, 312 So.2d 235 (Fla. 1st DCA 1975). There, this court cited with approval the general principles of subrogation as quoted from 46 C.J.S. Insurance § 1209(b):

'If insured obtains satisfaction from the wrongdoer and has previously received payment of the loss from the company, he must account therefor to the company, the general rule being that the company may recover from insured only the excess, which insured has received from the wrongdoer causing the loss, remaining after insured is fully compensated for his loss and the cost and expenses of the recovery thereof.'

312 So.2d at 237.

Under the facts of this case, we think the latter principle is the one which should be applied here. Subrogation is a normal incident of indemnity insurance where the primary purpose of the insurance is to allow true restitution for the loss suffered, here, the loss being property destroyed by fire. Since the loss can be objectively valued, the possibility of double recovery occurs if the insured is permitted to keep all proceeds collected from the insurer and the tortfeasor. To minimize this possibility, the doctrine of subrogation is employed.

Subrogation is a 'creature of equity having for its purpose the working out of an equitable adjustment between the parties by securing the ultimate discharge of a debt by the person who in equity and good conscience ought to pay it * * * a wrongdoer who is legally responsible for the harm should not receive the windfall of being absolved from liability because the insured had had the foresight to obtain, and had paid the expense of procuring, insurance for his protection; since the insured has already been paid for his harm, the liability of the third person should now inure for the benefit of the insurer.' 16 Couch, Cyclopedia of Insurance Law, § 61:18 (2d Ed. 1964).

. . . Furthermore, it is not available to an extent greater than the amount paid by the insurer, and then only after the insured has been fully indemnified.

DeCespedes v. Prudence Mutual Casualty Company of Chicago, Ill., 193 So.2d 224, 227 (Fla. 3d DCA 1966), cert. denied 202 So.2d 561 (Fla.1967) (footnotes omitted).

In Garrity v. Rural Mutual Insurance Company, 77 Wis.2d 537, 253 N.W.2d 512 (1977), the Garritys had a fire insurance policy with Rural Mutual Insurance Company. The Garritys suffered a fire loss to their dairy barn and they were paid $67,227.12 by Rural Mutual, the limits payable under the policy. The total amount of their loss was in excess of that amount although the amount of such loss was not stipulated to. Rural Mutual also insured the alleged tortfeasor. The complaint alleged damages in the amount of $110,000, and also named Rural Mutual as a defendant. Rural Mutual filed a third-party complaint against themselves as insurance...