Liberty Mut. Ins. Co. v. Alsco Const., Inc., 54861

• Decision Date: 16 November 1977
• Docket Number: No. 54861,No. 3,54861,3
• Parties: LIBERTY MUTUAL INSURANCE COMPANY v. ALSCO CONSTRUCTION INC. et al
• Court: Georgia Court of Appeals

Page 899

240 S.E.2d 899

144 Ga.App. 307

LIBERTY MUTUAL INSURANCE COMPANY v. ALSCO CONSTRUCTION INC. et al.

No. 54861.

Court of Appeals of Georgia, Division No. 3.

Nov. 16, 1977.

Rehearing Denied Dec. 7, 1977.

Bennett, Gilbert, Gilbert, Whittle, Harrell & Gayner, Wallace E. Harrell, William R. Waldrop, Brunswick, for appellant.

James G. Williams, Fendig, Dickey, Fendig & Whelchel, J. Thomas Whelchel, Brunswick, for appellees.

WEBB, Judge.

Hendry Corporation in doing certain road construction rented from Alsco Construction, Inc. and John W. Alford some equipment. The latter also furnished the operating personnel for the equipment, who were paid, however, by Hendry. As a part of the rental and personnel arrangement, Alford executed and delivered to Hendry the following agreement: "I, John Alford, title Pres. of Alsco Construction, acknowledge that the operators, oilers and any other of my people you are carrying on your payroll while they are operating, serving and attending my equipment are my own personnel and I assume full responsibility for all their actions while on Hendry Corporation, I-95-Bryan County, Ga. work and especially as regards safe working conditions and the safety, protection, maintenance, care and general operation of my equipment. I accordingly hold Hendry Corporation and all other persons, firms or corporations harmless and free of liability for injury to or death of any person or persons and for loss of or damage to my equipment while working for you on above project under our equipment rental agreement even though my personnel are carried on Hendry Corporation payroll which I agree is for administrative purposes only."

While operating Alsco's equipment for Hendry, two workers were killed and Liberty Mutual as insurer for Hendry was required to pay workmen's compensation benefits to their dependents. There was no contention that the deaths were brought about by any negligent or wrongful acts of Hendry. Liberty Mutual, contending that it was subrogated to the rights of Hendry, seeks indemnity from Alsco and Alford based upon the foregoing "hold harmless" agreement. The case was submitted to the trial court on a "stipulation of facts" and the court entered judgment for Alsco and Hendry. Upon appeal we remanded "with direction that the trial court vacate the judgment, cause appropriate findings of fact and conclusions of law to be made, and enter a new judgment . . ." Liberty Mutual Ins. Co. v. Alsco Construction Co., 139 Ga.App. 786, 229 S.E.2d 559 (1976).

On remand the judgment was vacated, the case was again tried without a jury, and the court entered its judgment for Alsco and Alford. The trial court in denying Liberty Mutual's claim concluded that (1) the insurer had no right to subrogation; (2) a "stipulation" entered into before the Workmen's Compensation Board was a settlement of all claims between Liberty Mutual on the one part and Alsco and Alford on the other part as to the dependents of one of the deceased operators; and (3) the indemnity agreement was to be strictly construed in favor of the indemnitor. Liberty Mutual excepts to each of these three grounds, and on appeal enumerates them as errors.

1. Did Liberty Mutual have the right to be subrogated to the position of its insured, Hendry?

The trial court concluded, "Here the plaintiff's liability for benefits to the dependents of the deceased employees of Hendry Corporation was based on the policy of insurance and the Workmen's Compensation Act, the death of the employees being merely one of several conditions precedent to that contractual liability. Strictly speaking the plaintiff was not liable 'for injury to or death of any person' within the terms of the indemnity agreement, but was liable only upon its own purely contractual undertaking to pay certain benefits pursuant to the policy and the Act."

Subrogation is a legal as well as an equitable right. It is "the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor. The substitute is put in all respects in the place of the party to whose rights he is subrogated. The doctrine is of equitable origin and benevolence. It is founded upon the dictates of refined justice. Its basis is the doing of complete, essential, and perfect justice between all the parties, without regard to form, and its object is the prevention of injustice. This right does not necessarily rest on contract or privity, but upon principles of natural equity, and does not depend upon the act of the creditor, but may be independent of both creditor and debtor. . . . The courts incline rather to extend than restrict the principle." Cornelia Bank v. First Nat. Bank of Quitman, 170 Ga. 747, 750, 154 S.E. 234, 236 (1930); Argonaut Ins. Co. v. C & S Bank, 140 Ga.App. 807, 810, 232 S.E.2d 135 (1976).

"Subrogation will arise only in those cases (1) where the party claiming it advanced the money to pay a debt which, in the event of default by the debtor, he would be bound to pay, or (2) where he has some interest to protect, or (3) where he advanced the money under an agreement, express or implied, made either with the debtor or creditor, that he would be subrogated to the rights and remedies of the creditor." McCollum v. Lark, 187 Ga. 292(2), 200 S.E. 276 (1938); Lee v. Holman, 182 Ga. 559, 562, 186 S.E. 189 (1936); Gilbert v. Dunn, 218 Ga. 531, 533, 128 S.E.2d 739 (1962).

How do these three conditions apply, if at all, to this case? As to the first, Alsco and Alford became indebted to Hendry under the hold harmless agreement when the dependents of the deceased workers made valid claims under Workmen's Compensation Laws upon Hendry. Secondly, Liberty Mutual paid the workmen's compensation claimants to protect its interest under the insurance policy as carrier for Hendry. Lastly, the insurance carrier was entitled to be subrogated to Hendry when it as required to pay according to the terms of the insurance policy. The policy itself provides as follows: "Subrogation In the event of any payment under this policy, the company shall be subrogated to all rights of recovery...