Home Ins. Co. of New York v. Smith

• Decision Date: 07 May 1940
• Citation: 140 S.W.2d 64,235 Mo.App. 552
• Parties: THE HOME INSURANCE COMPANY OF NEW YORK, A CORPORATION (PLAINTIFF) APPELLANT, v. MARVIN E. SMITH (DEFENDANT) RESPONDENT
• Court: Missouri Court of Appeals

140 S.W.2d 64

235 Mo.App. 552

THE HOME INSURANCE COMPANY OF NEW YORK, A CORPORATION (PLAINTIFF) APPELLANT, v. MARVIN E. SMITH (DEFENDANT) RESPONDENT

Court of Appeals of Missouri, St. Louis

May 7, 1940

Appeal from Circuit Court of Jefferson County.--Hon. Taylor Smith Special Judge.

REVERSED AND REMANDED.

Judgment reversed and cause remanded.

R. E Kleinschmidt, Taylor, Chasnoff & Willson, and J. H Cunningham, Jr., for appellant, The Home Insurance Company of New York.

(1) Smith & Son v. Phoenix Ins. Co., 181 Mo.App. 455, 168 S.W. 831; McKenzie v. Missouri Stables, Inc., 225 Mo.App. 64, 34 S.W.2d 136; Terry v. Reciprocal Exchange et al., 268 S.W. 421; Dick v. Franklin Fire Ins. Co., 10 Mo.App. 376, aff'd, 81 Mo. 103; Mosby et al. v. Aetna Ins. Co. et al., 285 Mo. 242, 225 S.W. 715; Swift & Co. v. Wabash R. R. Co., 149 Mo.App. 526, 131 S.W. 124; Busch & Latta Paint Co. v. Woerman Construction Co., 310 Mo. 419, 276 S.W. 614. (2) Subscribers at Casualty Reciprocal Exchange, etc., v. Kansas City Pub. Serv. Co., 230 Mo.App. 468, 91 S.W.2d 227; Smith & Son v. Phoenix Ins. Co., 181 Mo.App. 455, 168 S.W. 831. (3) Illinois Automobile Ins. Exchange v. Braun et al., 280 Pa. 505, 124 A. 691; Phoenix Ins. Co. v. Parsons, 129 N.Y. 86, 29 N.E. 87; Norwich Union Fire Assurance Society v. Stang, 18 Ohio C. C. 464, 9 Ohio C. D. 576; Cary v. Phoenix Ins. Co., 83 Conn. 690, 78 A. 426; Packham v. German Fire Ins. Co., 91 Md. 515, 46 A. 1066; Chickasaw County Farmers Mutual Fire Ins. Co. v. Weller, 98 Iowa 731, 68 N.W. 443; Egan v. British & F. M. Ins. Co., 193 Ill. 295, 61 N.E. 1081; Manley v. Montgomery Bus Co., 82 Pa. Sup. 530; Tokio M. & F. Ins. Co. v. Parnes, 216 N.Y.S. 783; Globe & R. F. Ins. Co. v. Truedell, 59 Ont. L. Rep. 444, 4 D. L. R. 540.

Terry, Terry & Terry for (defendant) respondent.

(1) By an equitable doctrine the courts will not consider a claim for subrogation unless to do so would be equitable under the circumstances. Sun Ins. Office v. Hohenstein, 220 N.Y.S. 386, 388, 389; Loewenstein v. Ins. Co., 227 Mo. 100, 123; Trader Ins. Co. v. Race, 142 Ill. 338; Pomeroy, Equity Jurisprudence (2 Ed.), page 1419, note; Castellain v. Preston, L. R. 11 K. B. Div. 380, l. c. 386. (2) Subscribers at Casualty Reciprocal Exchange v. Kansas City Pub. Serv. Co., 91 S.W.2d 227, 231; McKenzie v. Missouri Stables, 34 S.W.2d 136, 141; Black Law Dictionary, Damages. (3) There can be no subrogation of that part of the loss which has not been insured by the insurance company for the reason that there is no consideration for such subrogation and the insured has the right to make settlement of the amount not insured. Sun Ins. Office v. Hohenstein, 220 N.Y.S. 386, 388, 389; Castellain v. Preston, L. R. 11 Q. B. Div. 380, 386; Columbia Trust Co. v. Lloyds Ins. Co., Ltd., 166 N.Y.S. 919, 920; Svea Assur. Co. v. Packham, 92 Md. 464, 48 A. 359; Shawnee Fire Ins. Co. v. Cosgrove et al., 86 Kas. 374, 121 P. 488, 489; Washtenaw Mutual Fire Ins. Co. v. Budd, 208 Mich. 483, 175 N.W. 231; N. Western Fire & Marine Ins. Co. v. Ley, 266 N.Y.S. 172, 176, 264 N.Y. 427. (4) A man may buy his peace at any price and make settlement of a matter of controversy, and such settlement does not admit liability nor liquidate damages, and compromise settlements can be attacked only on ground of fraud, errors, or mistakes. No fraud, errors, or mistakes were pleaded or proved in the case at bar. Kronenberger v. Binz, 56 Mo. 121, 122; Troll v. Spenser, 238 Mo. 81, 101 and 102; Svea Assur. Co. v. Packham, 21 Md. 464, 48 A. 359; Bauer v. Weber Implement Co., 148 Mo.App. 652; Searcy v. Searcy, 196 Mo.App. 311.

BENNICK, C. Hughes, P. J., and Becker, and McCullen, JJ., concur.

OPINION

BENNICK, C.

This is an action by plaintiff, The Home Insurance Company of New York, to recover back from defendant, Marvin E. Smith, the sum of $ 85.88 paid defendant by plaintiff under a policy of insurance issued by plaintiff to defendant, insuring him against all damages by collision to his certain automobile in excess of $ 50. The ground relied upon for the recovery back of the money thus paid by plaintiff is the defendant's subsequent act in effecting full and complete settlement with the third party tort-feasor, so as to have defeated and destroyed plaintiff's alleged right of subrogation under an agreement theretofore executed between it and defendant, whereby defendant, in consideration of and to the extent of the payment made to him by plaintiff, purported to subrogate plaintiff to all the rights, claims, and interests which he might have against said third party tort-feasor arising out of the collision.

The case originated in a justice's court upon the filing of plaintiff's statement, to which defendant answered by a general denial, coupled with a counterclaim for damages allegedly sustained by him in being called upon to defend the action.

Taken on appeal to the circuit court, the case was tried and submitted to the court alone upon an agreed statement of facts, resulting in a finding in favor of defendant on plaintiff's cause of action, and in favor of plaintiff on defendant's counterclaim. Judgment was entered accordingly, from which plaintiff's appeal to this court has followed in the usual course.

The collision between the automobiles of defendant and the third party tort-feasor occurred while the policy was in full force and effect, and resulted in damages to defendant's automobile in the total amount of $ 135.88, for which plaintiff was liable under its policy to the extent of $ 85.88, representing the portion of the loss in excess of $ 50.

Thereafter defendant made a report of the accident to plaintiff, which indicated that the damages to his automobile had been suffered through the sole fault of the third party tort-feasor in the management and operation of the latter's automobile.

The policy of insurance which had been issued to defendant contained the following clause: "Subrogation. This company may require from the assured an assignment of all right of recovery against any party for loss or damage to the extent that payment therefor is made by this company."

Shortly following the report of the accident, but prior to plaintiff's actual discharge of its liability to defendant by the payment of the sum of $ 85.88, defendant, at plaintiff's request, executed a subrogation receipt, reciting that "in consideration of and to the extent of said payment the undersigned hereby subrogates said insurance company to all of the rights, claims, and interest which the undersigned may have against any person or corporation liable for the loss mentioned above," and warranting that no settlement had been made with or release given to any person responsible for the loss, and "that no such settlement will be made nor release given by the undersigned without the written consent of the said insurance company."

Later, at plaintiff's request, defendant signed a loss and damage agreement, the "sole purpose" of which was "to fix and evidence the total amount for which claim is made," and which concluded with a reiteration of the fact that "upon, in the event, and in consideration of the payment of the above amount by The Home Insurance Co., the undersigned hereby subrogates the said company to all rights and causes of action that said undersigned has against any person, persons, or company whomsoever for damages arising to said automobile."

Following defendant's execution of both the subrogation receipt and the loss and damage agreement in accordance with the subrogation provision of the policy, plaintiff discharged its liability to defendant by payment of the sum of $ 85.88, which, as we have indicated above, represented the amount of the loss in excess of $ 50.

Thereafter defendant, without plaintiff's knowledge or consent, executed a release to the third party tort-feasor, acknowledging receipt of the sum of $ 50 paid to him by such third party tortfeasor, which sum was "to cover all damages, both to property and personal injury and all liability" arising out of the collision which had occurred between the two automobiles, and which had resulted in specifically stated damage to the automobile, with "no injury sustained." In the concluding portion of the release it was again recited that "the above-mentioned $ 50 (fifty dollars) covers all damages."

Apprised of the settlement thus made by defendant with the third party tort-feasor by virtue of which its alleged subrogation rights had been defeated and destroyed, plaintiff brought this action, seeking to recover from defendant the damages amounting to $ 85.88, which it claims to have suffered as the result of defendant's violation of his agreement with plaintiff not to make settlement of his claim or execute a release to the third party tort-feasor without plaintiff's consent.

The sole point at issue on this appeal is whether the court erred in denying plaintiff a recovery upon its cause of action under the agreed statement of facts upon which the case was tried.

While as a principle of equity, an insurer, upon payment of the loss, acquires the legal right to be subrogated pro tanto to the insured's right of action against the person responsible for the loss (Swift & Co. v. Wabash R....