Ohio Cas. Group of Ins. Companies v. Royal-Globe Ins. Companies

• Decision Date: 23 December 1980
• Docket Number: ROYAL-GLOBE,No. 2-280A37,2-280A37
• Citation: 413 N.E.2d 678
• Parties: The OHIO CASUALTY GROUP OF INSURANCE COMPANIES, Appellant (Cross-plaintiff below), 4 v.INSURANCE COMPANIES, Appellee (Cross-defendant below). Donald V. JOHNSTONE, Plaintiff Below, v. Douglas S. BATES, H. E. Sintz & Associates, the Ohio Casualty Group of Insurance Companies and Royal-Globe Insurance Companies, Defendants Below.
• Court: Indiana Appellate Court

Page 678

413 N.E.2d 678

The OHIO CASUALTY GROUP OF INSURANCE COMPANIES, Appellant (Cross-plaintiff below), 4 v. ROYAL-GLOBE INSURANCE COMPANIES, Appellee (Cross-defendant below).

Donald V. JOHNSTONE, Plaintiff Below, v. Douglas S. BATES, H. E. Sintz & Associates, the Ohio

Casualty Group of Insurance Companies and

Royal-Globe Insurance Companies, Defendants Below.

No. 2-280A37.

Court of Appeals of Indiana, Second District.

Dec. 23, 1980.

John T. Hume, III, Michael E. Simmons, Smith & Jones, Indianapolis, for appellant.

John R. Hiner, Osborn & Hiner, Indianapolis, for appellee.

SHIELDS, Judge.

Appellant Ohio Casualty Group of Insurance Companies (Ohio) appeals from the trial court's grant of a motion for summary judgment in favor of Royal-Globe Insurance Companies (Royal-Globe).

We reverse.

Ohio and Royal-Globe had each issued policies of insurance to Donald Johnstone. Johnstone was involved in an automobile accident while driving an automobile which was not specifically listed as an insured vehicle in either policy. When Johnstone was sued by others involved in the accident, Royal-Globe denied coverage under its policy and refused to defend. Ohio initially denied coverage under its policy but later defended Johnstone in the lawsuit and eventually paid a settlement.

In an action brought by Johnstone against Royal-Globe and Ohio, Ohio filed a cross-claim against Royal-Globe seeking to recover the costs of defending and settling the third-party lawsuit against Johnstone. ¹

In support of its cross-claim, Ohio conceded it had no legal obligation to defend Johnstone or to pay the settlement. However, Ohio maintained it had done so under the mistaken but good faith belief that it was legally obligated. Ohio contended Royal-Globe, pursuant to its policy with Johnstone, should have defended and settled the lawsuit against Johnstone.

Royal-Globe moved for summary judgment on the basis that Ohio, having no obligation to Johnstone, was acting as a mere volunteer when it expended monies on his behalf and was therefore not entitled to subrogation. ² The trial court granted the motion under this theory. ³

As was stated in Home Owners' Loan Corporation v. Henson, (1940) 217 Ind. 554, 561, 29 N.E.2d 873, 875:

"The right of subrogation is not founded upon contract, expressed or implied, but upon principles of equity and justice, and includes every instance in which one party, not a mere volunteer, pays a debt for another, primarily liable, and which, in good conscience, should have been paid by the latter."

As a general rule a person making payment is a mere volunteer not entitled to subrogation if in making payment he has no right or interest of his own to protect and acts without obligation, moral or legal, and without being requested to do so by a person liable on the obligation. See Vernon Fire & Casualty Ins. Co. v. Graham, (1975) 166 Ind.App. 509, 336 N.E.2d 829; National Mutual Insurance Co. of Washington, D. C. v. Maryland Casualty Co., (1963) 136 Ind.App. 35, 187 N.E.2d 575; Fitzgerald v. Buffalo Co., (1953) 264 Wis. 62, 58 N.W.2d 457. However, subrogation is an equitable right and will be granted when an equitable result will be obtained. Therefore, a person who has paid a debt under the colorable obligation to do so or under an honest belief that he is bound or who mistakenly but in good faith believes he is liable is entitled to subrogation. Dampskibsaktieselskabet etc. v. Bellingham Stevedor. Co., (1972) 457 F.2d 889; Carter v. Carter, (1948) 251 Ala. 598, 38 So.2d 557; Williams v. Johnston, (1968) 92 Idaho 292, 442 P.2d 178; Home Owners' Loan Corp. v. Henson, (1940) 217 Ind. 554, 29 N.E.2d 873; Aetna Casualty & Surety Co. v. Katz, (1978) Ind.App., 377 N.E.2d 678; Ragan v. Kelly, (1942) 180 Md.App. 324, 24 A.2d 289; In Re...