New Amsterdam Cas. Co. v. Acorn Products Co.
| Decision Date | 01 April 1969 |
| Docket Number | No. 177,177 |
| Citation | 166 N.W.2d 198,42 Wis.2d 127 |
| Parties | NEW AMSTERDAM CASUALTY CO., a foreign corporation, Respondent, v. ACORN PRODUCTS CO., a foreign corporation, Appellant. |
| Court | Wisconsin Supreme Court |
Giffin, Simarski, Goodrich & Brennan, Milwaukee, for appellant. Alvin A. Stack, Milwaukee, of counsel.
Kluwin, Dunphy, Hankin & Hayes, Milwaukee, for respondent.
The plaintiff contends that Acorn breached its contract with Woerfel by not procuring workmen's compensation insurance and, therefore, the plaintiff seeks damages equivalent to the sums paid the injured employee.
The defendant contends that the plaintiff, as insurer of Woerfel, is not entitled to subrogation against it. The defendant further asserts that plaintiff is subrogated to only those rights arising under the workmen's compensation act and concludes that the plaintiff has no right of reimbursement under the act from Acorn.
The defendant is correct in saying that the plaintiff has no remedy against defendant under the workmen's compensation act. 1 However, this action is not founded on the workmen's compensation act. If the plaintiff has a cause of action it arises from the alleged indemnity agreement between Woerfel and the defendant.
This court has previously considered cases based upon negligence of a third party tort-feasor and involving an agreement for indemnification and a claim paid under the Wisconsin workmen's compensation act. 2
The instant case is distinguishable from the previously decided cases in this state because the plaintiff seeks recovery for breach of the alleged indemnity contract and not for a tortious act. The plaintiff now seeks to stand in the place of Woerfel and recover under the alleged indemnity between Woerfel and Acorn.
Perkins v. Worzala (1966), 31 Wis.2d 634, 637, 143 N.W.2d 516, 518.
Northwestern N.C. Co. v. State A. & C. Under. (1967), 35 Wis.2d 237, 242, 151 N.W.2d 104, 106.
The defendant argues that even if the plaintiff was entitled to subrogation, the plaintiff would be subrogated to the rights of the injured employee who received compensation from the plaintiff and not to the rights of Woerfel. While this could be true in a case where reimbursement is sought from a third party tort-feasor, here suit is not against a tort-feasor, but against Acorn for its alleged breach of the indemnity agreement.
The defendant argues that there is no policy reason to allow equitable subrogation in this case because there is no allegation that Acorn was negligent. In Patent Scaffolding Co. v. William Simpson Construction Co. (1967), 256 Cal.App.2d 506, 64 Cal.Rptr. 187, a California intermediate appellate court rejected equitable subrogation and indemnification for a claim paid under a fire insurance contract. in Patent, the general contractor contracted to provide fire insurance for the subcontractor. A fire destroyed some of the subcontractor's equipment. The general contractor had not provided fire insurance and the subcontractor's own fire insurer paid the loss. The fire insurer of the subcontractor was denied recovery in its action against the general contractor to recover damages for breach of its contract with the subcontractor to provide fire insurance. The California court determined that if subrogation were permitted, the subcontractor's fire insurers would receive a windfall because all it had been required to pay was the fire loss arising out of the risk it had specifically insured and for which it had received a premium. Patent, at page 193, sets forth the following rule:
The rule in equitable phraseology is this: Where two parties are contractually bound by independent contracts to indemnify the same person for the same loss, the payment by one of them to his indemnitee does not create in him equities superior to the nonpaying indemnitor, justifying subrogation, if the latter did not cause or participate in causing the loss.'
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