Ingram v. Nationwide Mut. Ins. Co.

• Decision Date: 01 February 1963
• Docket Number: No. 530,530
• Citation: 129 S.E.2d 222,258 N.C. 632
• Parties: Henry L. INGRAM, Jr., Substituted Trustee, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant.
• Court: North Carolina Supreme Court

Page 222

129 S.E.2d 222

258 N.C. 632

Henry L. INGRAM, Jr., Substituted Trustee, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant.

No. 530

Supreme Court of North Carolina.

Feb. 1, 1963

John Randolph Ingram, Asheboro, for plaintiff, trustee.

Coltrane & Gavin, Asheboro, for defendant.

MOORE, Justice.

Plaintiff states in his brief that 'this is not an action to secure contribution of a joint tort-feasor's proportionate part of a payment on a Judgment * * *; it is an action to secure the entire proceeds available under defendant's insurance policy to be applied on said Judgment as complete reimbursement of the * * * $10,000.00 * * * payment made by William Curtis Garner, who was responsible on this judgment only through Henry Fletcher Garner * * *. ' In other words, plaintiff maintains that the complaint states a cause of action to require Nationwide, under the terms of the automobile liability insurance policy issued by it to H. F. Garner, to pay $10,000 for reimbursement of W. C. Garner for the $10,000 he personally paid on the judgment. This assertion embraces the theory that W. C. Garner is entitled to indemnity from H. F. Garner.

'Where two persons are jointly liable in respect to a tort, one being liable because he is the actual wrongdoer, and the other by reason of constructive or technical fault imposed by law, the latter, if blameless as between himself and his co-tortfeasor, ordinarily will be allowed to recover full indemnity over against the actual wrongdoer. ' Hayes v. Wilmington, 243 N.C. 525, 543, 91 S.E.2d 673, 686. For example, where liability has been imposed on the master because of the negligence of his servant, and the master did not participate in the wrong and incurs liability solely under the doctrine of respondeat superior, the master, having discharged the liability, may recover full indemnity from the servant. Gadsden v. George H. Crafts & Co., 175 N.C. 358, 363, 95 S.E. 610, L.R.A.1918E, 226; Smith v. South & Western Railroad Co., 151 N.C. 479, 66 S.E. 435. It was alleged that Trotter's judgment was assigned to plaintiff trustee pursuant to G.S. § 1-240, but there is no right of indemnity by virtue of that statute. It provides only for contribution as between tort-feasors who are in pari delicto with respect to the same injury, but before that statute was enacted (1929), it was settled law that a tortfeasor whose liability was secondary, upon payment by him of the injured party's recovery, was entitled to indemnity against the primary wrongdoer. Davis v. Radford, 233 N.C. 283, 63 S.E.2d 822, 24 A.L.R.2d 906; Gregg v. Wilmington, 155 N.C. 18, 70 S.E. 1070.

It is alleged that W. C. Garner's insurance carrier paid $10,000 (the limit of its policy) on the $35,000 judgment, W. C. Garner personally paid an additional $10,000, and the judgment was assigned to plaintiff trustee. Pursuing plaintiff's theory of the case we assume, though the complaint does not expressly allege, that the judgment plaintiff, Trotter, accepted W. C. Garner's payment in full compromise settlement of the balance of the judgment. In proper cases the right to indemnity, after judgment, is predicated entirely upon the discharge of the judgment debt. Hodges v. Armstrong, 14 N.C. 253.

When it has been established that one tort-feasor has incurred a legal obligation to indemnify another tort-feasor for payment by the latter of a judgment obtained against them by an injured party, it is a type of obligation against which a public liability insurance policy ordinarily insures. The insurance policy in the instant case obligates Nationwide 'to pay on behalf of insured all sums which the insured shall become legally obligated to pay as damages because of: Bodily injury * * * sustained by any person, arising out of the use * * * of * * * any non-owned automobile. ' Defendant Nationwide contends that it insures only against obligations arising out of insured's tortious use of an automobile causing injury to another, that the right to indemnity is based on contract implied in law and is not within the coverage of the insurance contract. It is true that we have said that the right of indemnity is not based on any theory of subrogation to the rights of the injured party. Further, that it is based upon a contract implied in law from the circumstance that the passively negligent tort-feasor has discharged on obligation for which the actively negligent tort-feasor was primarily liable. Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 75 S.E.2d 768. But defendant's contention is not sustained. The distinction is more apparent than real. In final analysis the obligation of defendant's insured to indemnify, if such obligation exists, stems from his wrongful conduct in the use of an automobile. The theory, contract implied in law, upon which indemnitee establishes his right to indemnity and to be subrogated to the rights of the judgment creditor with respect to the lien and certain incidents of the judgment, does not affect the nature of the transaction which gives rise to insured's obligation. The courts are divided on the question, but the great weight of authority is that liability for indemnity to a passively negligent tort-feasor ordinarily comes within the coverage of a public liability insurance policy. Most of the decided cases have arisen under circumstances in which the insured was compelled to pay indemnity and sued his insurer for reimbursement. The matter is summarized thus: '* * * public liability policies ordinarily are not confined to, and do not contemplate, indemnity only against direct actions by injured persons against the insured; rather, they cover losses which he may suffer by reason of being liable over to another who has been compelled to pay for damages to persons injured because of the negligence or wrongful act of the insured, or his agents, which resulted in such injuries being inflicted. In other words, the insured may sustain a loss from liability to the public on account of personal injuries caused by them, or their workmen, and such loss be brought within the terms of the policy by circuity of action, * * *.' Couch, Cyclopedia of Insurance Law, Vol. 5, § 1165(b), pp. 4136-4137; United States Fidelity & Guaranty Co. v. Virginia Engineering Co., 213 F.2d 109, 63 A.L.R.2d 1114 (4th Cir., 1954); Board of Trade Livery Co. v. Georgia Casualty Co., 160 Minn. 490, 200 N.W. 633, 40 A.L.R. 678 (1924); Creem v. Fidelity & Casualty Co., 206 N.Y. 733, 100 N.E. 454 (1912); Fidelity & Casualty Co. of New York v. Southern R. News Co., 101 S.W. 900 (Ky.1907). Our Court is in accord with this principle. Black Mountain R. R. Co. v. Ocean Accident & Guarantee Corporation, 175 N.C. 566, 96 S.E. 25; Hamilton v. Southern R. R. Co., 203 N.C. 468, 166 S.E. 392.

Assuming for the moment that the complaint states facts sufficient to constitute a cause of action in accordance with plaintiff's contention, it is our opinion that the plaintiff trustee can maintain the action without joining W. C. Garner, his cestui que trust. It is a firmly established principle in this jurisdiction that if a judgment debtor, who has a right to indemnity as against another judgment debtor (of the same judgment), pays the judgment and has it cancelled of record or has it assigned to himself, the judgment is extinguished, notwithstanding intention. But if he has assignment made to a trustee for his benefit, the judgment remains in force. The trustee is subrogated to the rights of the judgment creditor with respect to the lien and other incidents of the judgment, for the benefit of his cestui que trust, and may at the request of the beneficiary cause execution to issue or otherwise enforce collection, according to the rights and interest of the beneficiary. Burnett v. Sledge, 129 N.C. 114, 39 S.E. 775; Peebles v. Gay, 115 N.C. 38, 20 S.E. 173; Liles v. Rogers, 113 N.C. 197, 18 S.E. 104; Rice v. Hearn, 109 N.C. 150, 13 S.E. 895; Tiddy v. Harris, 101 N.C. 589, 8 S.E. 227; Hanner v. Douglass, 57 N.C. 262; Barringer v. Boyden, 52 N.C. 187; Hodges v. Armstrong, supra; Sherwood v. Collier, 14 N.C. 380. The foregoing is subject to the rule that the payment in full by a judgment debtor operates as an absolute discharge of the judgment, notwithstanding that an...