Malone Freight Lines, Inc. v. Johnson Motor Lines, Inc.

• Decision Date: 10 December 1959
• Citation: 156 A.2d 788,2 Storey 286,52 Del. 286
• Parties: , 52 Del. 286 MALONE FREIGHT LINES, INC., a corporation, Plaintiff, v. JOHNSON MOTOR LINES, INC., a corporation, and Joyce Edgar Bray, Defendants.
• Court: Delaware Superior Court

Page 788

156 A.2d 788

2 Storey 286, 52 Del. 286

MALONE FREIGHT LINES, INC., a corporation, Plaintiff, v. JOHNSON MOTOR LINES, INC., a corporation, and Joyce Edgar Bray, Defendants.

Superior Court of Delaware, New Castle County.

Dec. 10, 1959.

On defendants' motion for summary judgment. Granted.

William H. Bennethum, Wilmington, for plaintiff.

William Prickett (Prickett & Prickett) Wilmington, for defendants.

CHRISTIE, Judge.

Plaintiff, Malone Freight Lines, Inc. (Malone), and defendant, Johnson Motor Lines, Inc. (Johnson), are carriers. The plaintiff's and the defendant's vehicles were involved in an accident on February 10, 1953, in Delaware, as a result of which both vehicles were damaged and the cargo being hauled by Malone was completely destroyed.

Malone's liability as a carrier was insured by St. Paul Fire and Marine Insurance Company (St. Paul) and Malone's property damage was insured by another company.

Johnson brought an action based on negligence for property damage to its vehicle, captioned Johnson v. Malone, 188 C.A.1953, in this Court (referred to herein as the first Delaware case). Malone answered denying negligence and alleging that Johnson was negligent and counterclaimed for the damage to its trailer. Johnson answered the counterclaim denying negligence and asserting that the collision was due to Malone's negligence.

This Court found that Malone was negligent and Johnson not negligent. Judgment was entered for the full amount of Johnson's claim. Malone's counterclaim was denied.

Malone appealed to the Supreme Court. 1 Storey 504, 148 A.2d 770, 773 (1959). On appeal, Malone argued that there was no competent evidence to support the findings of the trial judge. The Supreme Court found that there was competent evidence to support the findings. Malone also argued that this Court had erred in a ruling denying an application by Malone to amend its answer so as to include a counterclaim for the loss of the cargo of the Malone vehicle. On this point the Supreme Court stated:

'(a) The complaint was filed February 25, 1953 and amended in March, 1954. Answer and counterclaims were filed in April 1954. In December, 1954, Malone moved to amend its counterclaim by adding an additional item of damage for loss of the cargo carried by its vehicle. The motion was denied. It is renewed in June, 1955, and again denied.

'The ground for denial appears to have been the failure of Malone to explain to the court's satisfaction the reason for the delay in asserting the claim. Much is said in the briefs about this ruling, but in the light of the verdict of the court on the issue of liability and our affirmance of it, the alleged error has become immaterial. Since Malone has been adjudged to have no claim against Johnson, the amount of damages claimed is now of no moment. Hence, if the court was in error (we do not for a moment imply that it was), the error was harmless.'

Meanwhile, this suit (sometimes referred to herein as the second Delaware suit) had been filed whereby Malone sues Johnson for the loss of Malone's cargo.

Johnson has moved for summary judgment based upon res judicata, collateral estoppel and upon the theory that Malone is attempting to split one cause of action by asserting its claim for damages to its vehicle by way of a counterclaim in the first suit and its damages for cargo loss in this a separate suit. This decision is confined to the issues raised by Johnson's motion.

Malone insists that the defenses here asserted by Johnson are not applicable because Malone's name is merely being used by St. Paul to assert a claim of the United States for lost cargo. At the same time, Malone must also insist that it is a real party in interest in this suit.

St. Paul Fire and Marine Insurance Company paid Malone $39,534.43 on account of the loss of the cargo and took in exchange for such payment loan receipts. Under the terms of the loan receipts Malone in effect appointed St. Paul its manager and agent in respect to its claim for the lost cargo, with full authority to act in Malone's name in connection with any claim arising out of such loss. The loan receipts required that Malone repay the loan only in the event and to the extent of any net recovery Malone may receive from others on account of the loss.

It is apparent that all attempts to recover for the loss of Malone's cargo, both in the first Delaware suit and in this suit, have been made by St. Paul in Malone's name. Malone's real interest in the cargo loss, if it has a real interest, stems only from its bare legal title to the claim and its legal obligation under the loan receipt.

St. Paul, through the terms of loan receipts, acquired the right to assert, in Malone's name, any claim Malone had on account of the loss of cargo. United States was not a party to the loan receipts and St. Paul did not acquire any separate rights which the United States might have had. Thus, St. Paul, in acting through Malone, is subject to all of the defenses which could have been asserted against Malone in the absence of the loan receipts. A loan receipt does not insulate the insurer from defenses that may be asserted against the insured nor does it effectively assign to the insurer rights which the insured does not possess.

Malone cites many cases as to the validity and legal import of the terms of loan receipts, but such cases do not indicate that the insured acting for the insurer under the terms of a loan receipt, is immune from defenses which could be asserted against the insured in the absence of a loan receipt.

Even if the loan receipts were regarded as instruments of subrogation, St. Paul would be subrogated to Malone's position and not to the position of the United States. In that case St. Paul would have no rights not possessed by Malone. Phoenix Insurance Co. v. Erie & Western Transportation Co., 1886, 117 U.S. 312, 6 S.Ct. 750, 29 L.Ed. 873.

In any event, Malone (then, as now, acting for St. Paul under the terms of loan receipts) attempted to assert the very claim it here asserts in the prior suit in this Court. Malone's attempt in the first Delaware case to amend its answer to assert a counterclaim for loss of cargo was before the Supreme Court and the record revealed that this Court had refused to permit the amendment. The Supreme Court stated that even if the refusal to allow the amendment were error, such error was harmless and immaterial, and that since Malone has been adjudged to have no claim against Johnson, the amount of damages claimed is of no moment.

The language of the Supreme Court shows that it regarded the decision of this Court to have disposed of the claim here asserted. The only important additional factors before the Court which were not before the...