Nationwide Ins. Co. v. Steigerwalt

• Decision Date: 04 February 1970
• Docket Number: No. 69-172,69-172
• Citation: 255 N.E.2d 570,21 Ohio St.2d 87
• Parties: , 40 A.L.R.3d 102, 50 O.O.2d 200 NATIONWIDE INS. CO., Appellant, v. STEIGERWALT, Appellee.
• Court: Ohio Supreme Court

Page 87

21 Ohio St.2d 87

255 N.E.2d 570, 40 A.L.R.3d 102, 50 O.O.2d 200

NATIONWIDE INS. CO., Appellant, v. STEIGERWALT, Appellee.

No. 69-172.

Supreme Court of Ohio.

Feb. 4, 1970.

Syllabus by the Court

1. Where, prior to filing a lawsuit under the provisions of the subrogation clause in an automobile insurance contract, the insurer is assigned a part of the insured's claim for damages resulting from an automobile collision, the insurer is in privity with the insured. (Paragraph seven of the syllabus of Vasu v. Kohlers, 145 Ohio St. 321, 61 N.E.2d 707, 66 A.L.R. 855, overruled.)

2. For the limited purpose of prosecution of a claim under a policy of automobile insurance, a single cause of action may be divided to the extent that the insurer, subrogated to a part of a claim assigned by the insured, may prosecute its claim in a separate action against the tortfeasor. (Hoosier Casualty Co. v. Davis, 172 Ohio St. 5, 173 N.E.2d 349, approved and followed.)

3. The failure of a defendant in a motor vehicle negligence action to act at the first opportunity to require joinder of the insurer or to consolidate for trial the prosecution of separate causes of action, filed by those in privity, arising from one claim and pending in the same court, is a waiver of any bar to the prosecution of a separate cause of action by the assignee-insurer and a waiver of the right to assert the doctrine of estoppel to prevent relitigation of issues previously determined.

This is an action instituted by Nationwide Insurance Company for property damage.

On February 20, 1964, one Raymond E. Zweily, who was insured by Nationwide Insurance Company under a policy of automobile insurance, was involved in a collision between his car and a truck operated by defendant Steigerwalt. Pursuant to a subrogation agreement in the policy, upon the payment of $2,105 prior to the filing of these actions, Nationwide became subrogated to the non-deductible part of Zweily's claim for property damage.

On September 22, 1965, Zweily sued Steigerwalt in the Court of Common Pleas for personal injuries and the $100 deductible portion of his property damage. On February 17, 1966, Nationwide sued Steigerwalt in the same Court of Common Pleas, which is the instant case, for the sum which it had paid its insured, Zweily, for property damage. On March 2, 1966, Steigerwalt filed an answer and cross-petition in the action brought by Zweily, but made no mention of Nationwide's pending action, nor did he suggest or request Nationwide's joinder in the Zweily case, or a consolidation of the cases for trial.

On May 9, 1966, the jury returned a verdict for the defendant in the Zweily case. Defendant, in his answer herein, contends that the judgment in the Zweily case is res judicata is this (Nationwide's) suit. Later, defendant moved for judgment on the pleadings. The motion was allowed and judgment was rendered for the defendant. The Court of Appeals affirmed. We allowed a motion to certify the record.

Harry A. Sargeant, Jr., Fremont, for appellant.

Thomas B. Hayes, Sandusky, for appellee.

DUNCAN, Judge.

Before crossing the threshold into a discussion of the specific question presented, it is germane to assemble the fact components of this case in such an orderly fashion that applicable past decisions of this court can be examined as they relate to this inquiry.

The rights of both Zweily and Nationwide arise from an auto-truck collision on February 20, 1964. According to our decision in the case Rush v. City of Maple Heights, 167 Ohio St. 221, 147 N.E.2d 599 (overruling paragraph four of the syllabus of Vasu v. Kohlers, Inc., 145 Ohio St. 321, 61 N.E.2d 707, 66 A.L.R. 855), Zweily has but one cause of action for both personal injuries and property damage resulting from Steigerwalt's alleged wrongful act.

The interest of Nationwide in the cause of action was received pursuant to an assignment from Zweily. In accordance with a subrogation clause of their insurance contract Zweily assigned to Nationwide a part of his cause of action upon payment by the insurer of the nondeductible portion of his claim against defendant Steigerwalt. Simply stated, Zweily has one cause of action, a part of which he assigned to Nationwide.

This court has held that, for the limited purpose of prosecution, a single cause of action may be divided to the extent that an insurer, subrogated to a part of a claim assigned by an insured, may prosecute its claim in a separate action against the tort-feasor. Hoosier Casualty Co. v. Davis, 172 Ohio St. 5, 173 N.E.2d 349.

The Hoosier Casualty case dictates that the cause of action in the instant (Nationwide case, for the purpose of prosecution, is separate from that in the Zweily case. The traditional ingredients necessary to give rise to the bar aspects of the doctrine of res judicata are absent. See Whitehead v. General Tel. Co., 20 Ohio St.2d 108, 254 N.E.2d 10; Norwood v. McDonald, 142 Ohio St. 299, 52 N.E.2d 67; Charles A. Burton, Inc., v. Durkee, 162 Ohio St. 433, 123 N.E.2d 432; Henderson v. Ryan, 13 Ohio St.2d 31, at 33, 233 N.E.2d 506. The authorities well chronicle the utilization of an aspect of res judicata-collateral estoppel-to prevent relitigation of issues litigated and determined between the parties and their privies, although the causes of action are separate. Whitehead v. General Tel. Co., supra; Conold v. Stern, 138 Ohio St. 352, 35 N.E.2d 133, 137 A.L.R. 1003; Schimke v. Earley, 173 Ohio St. 521, 184 N.E.2d 209.

Are Zweily and Nationwide in privity herein? We believe that they are.

To the contrary, paragraph seven of the syllabus of Vasu v. Kohlers, supra, states, regarding privity:

'Parties in privy, in the sense that they are bound by a judgment, are those who acquired an interest in the subject matter after the beginning of the action or the rendition of the judgment; and if their title or interest attached before that fact, they are not bound unless made parties.'

This narrow view has its authority. Restatement of the Law, Judgments, 433, Section 89, comment c, e and f; 2 Black on Judgments (2 Ed.), 830, Section 549. We believe that the doctrine of privity is not limited to the narrow concept stated in paragraph seven of the syllabus in Vasu.

A better rule is that the acquisition of an interest in a cause of action can arise at any time after the cause of action arises, depending upon the circumstances or upon the agreement of the parties. To hold that privity in an insurance subrogation case can arise only after a lawsuit is begun attaches a magic date for the creation of the relationship, without a responsible legal or equitable purpose, and forecloses the concept of privity without a lawsuit. Privity arises between an insurer and an insured according to the contract terms and performance. Cf. 1 Freeman on Judgments (5 Ed.), 975, Section 445, n. 16. Nationwide's petition alleges that Zweily's property damage was paid under the insurance contract and that it became subrogated for the amount paid. These facts pleaded reveal privity.

Although both Zweily's case and Nationwide's case were pending in the same court, which was known by defendant prior to the trial of the Zweily case, defendant did not act to join Nationwide and Zweily, or to consolidate the cases for trial.

Can a defendant, who has filed to join parties in privity, or who has failed to consolidate cases of those parties in privity who are prosecuting separate causes of action against him, of which he has knowledge, use any aspect of the doctrine of res judicata to bar a lawsuit prosecuted by a subrogated assignee-insurer when he (defendant) has previously prevailed in the cause of action brought by the assignor?

In Hoosier Casualty Co. v. Davis, supra (172 Ohio St. 5, 173 N.E.2d 349), this court held that 'where only a part of a property damage claim is...