Packham v. German Fire Ins. Co. of Baltimore

• Decision Date: 16 June 1900
• Citation: 46 A. 1066,91 Md. 515
• Parties: PACKHAM v. GERMAN FIRE INS. CO. OF BALTIMORE.
• Court: Maryland Court of Appeals

46 A. 1066

91 Md. 515

PACKHAM v. GERMAN FIRE INS. CO. OF BALTIMORE.

Court of Appeals of Maryland

June 16, 1900

Appeal from superior court of Baltimore city; Henry D. Harlan Judge.

Action by Eldridge Packham, Jr., trading as E. Packham, Jr., & Co. against the German Fire Insurance Company of Baltimore on a fire policy. From a judgment in favor of defendant, plaintiff appeals. Affirmed.

Argued before MCSHERRY, C.J., and PAGE, FOWLER, BOYD, BRISCOE, and SCHMUCKER, JJ.

George Whitelock and Edward I. Koontz, for appellant. Edwin G Baetzer, for appellee.

PEARCE J.

On December 10, 1896, the appellee issued a policy of insurance to the appellant, insuring him against loss by fire to the amount of $750 for one year on "office furniture and fixtures generally, including iron safe, stationery, and supplies, contained in brick building No. 14 Light St Balt.," which policy was regularly renewed, the last renewal expiring December 13, 1899. This policy contained the following clause: "Whenever this company shall pay any loss, the assured agrees to assign over all his rights to recover satisfaction therefor from any other person or persons, town or other corporations, or to prosecute therefor at the charge and for account of the company if requested." On December 22, 1898, while this policy was in force, the property described in and insured thereby, together with a large stock of merchandise belonging to the plaintiff, was destroyed by fire caused by the alleged wrongful conduct or negligence of the Consolidated Gas Company of Baltimore city. The plaintiff held other policies in several companies upon his stock of merchandise, and on February 11, 1899, instituted suit against the Consolidated Gas Company for the loss suffered by him on his merchandise and property, and on the profits of his business by reason of the fire so caused by the negligence of the gas company. Upon the impaneling of a jury to try the case the parties thereto agreed that a verdict should be rendered for the plaintiff for $18,000, which was accordingly rendered, and under interrogatories duly propounded to the jury these damages were, by the express agreement of the parties, apportioned by fixing $9,000 as the loss on merchandise and $9,000 as the loss on profits in business. The loss sustained on furniture and fixtures was by express agreement of the parties to the suit wholly excluded from the consideration of the jury and from the damages awarded by the verdict, though the same negligence and the same resulting fire caused all the damage sustained. Judgment was entered on the verdict, and this judgment was subsequently satisfied by payment in full. There was no reservation to the plaintiff, either in the agreement or verdict, of any right of action for the loss sustained on furniture and fixtures under the policy now in question, nor any qualification as to the effect of said verdict and judgment upon any further or other liability of defendant by reason of said negligence. On July 5, 1899, this action was commenced. The narr. is in the usual form. The defendant pleaded--First, the general issue; and, second, a special plea setting forth all the facts above recited, and averring that their effect was to destroy the defendant's right of subrogation stipulated for in the policy, and to release it from liability thereon. The plaintiff demurred to this plea, and the demurrer was overruled, which ruling presents the first and most important question in the case. After the ruling on the demurrer, the plaintiff filed a replication, alleging that the defendant was a party to the agreement mentioned in the plea, and that it assented to everything done in pursuance of that agreement. The defendant, in its rejoinder, traversed this replication, and issue was joined thereon. Two exceptions were taken to the rulings in the testimony, which will be noticed hereafter. At the close of the testimony the court, at the instance of the defendant, instructed the jury that no testimony had been offered tending to prove that the defendant was a party to the agreement or assented to the proceedings mentioned in the replication to the second plea, and that their verdict must be for defendant, to which ruling the plaintiff took its third exception.

The ruling upon the demurrer will be first considered, and for this purpose we are confined to the facts averred in the second plea. These being all issuable, and well pleaded their truth is admitted by the demurrer, which denies that they constitute a good defense. The facts thus admitted are substantially these: (1) That the policy sued on secured to the defendant by express contract, upon payment of any loss under the policy, all the plaintiff's right to recover satisfaction therefor from any person or corporation wrongfully causing the loss; (2) that the loss arising on that policy, and sought to be recovered by the plaintiff, was caused solely by the wrongful conduct or negligence of the Consolidated Gas Company, which was the same negligence that caused, by one and the same act, the loss and damage recovered by the plaintiff from the gas company; and (3) that the plaintiff, in order to secure the judgment thus obtained against the gas company, deliberately adopted a procedure by which he disabled himself from performing his agreement to assign over to the defendant his right to recover satisfaction for the loss incurred on this policy. If these facts operated to release and discharge the defendant from liability on the policy, the demurrer was properly overruled; otherwise not. Whether these facts did so operate must depend upon the applicability and effect of certain legal rules and principles which are well established. Contracts of marine and fire insurance are essentially contracts of indemnity, and, if the insured recovers the amount of his loss from any source, the insurer may recover from him pro tanto, and this right is called the subrogation of the insurer into the rights of the insured. Anson, Cont. (8th Eng. Ed.) 238; Castellain v. Preston, 11 Q. B. Div. 380. "The insurer is treated as a surety who is entitled to all the remedies and securities of the assured, and to stand in his place, and use his name in an action to recover the money which he has paid. This right is based upon the equitable doctrine that where one has been obliged to pay money to another by the nonfeasance or misfeasance of a third, who, being at fault, ought to bear the loss, the party so paying, as by his direct obligation towards the party suffering the loss he may be compelled to do, shall be allowed indirectly, and through the right which the injured party had, to compel the wrongdoer to bear the burden which was imposed by his fault, although between him and the wrongdoer there is no direct relation upon which to found a cause of action. *** The liability of the wrongdoer is, in legal effect, first and principal, and that of the insurer secondary, not in order of time, but in order of ultimate liability. And where the party insured insists upon his remedy against the party secondarily liable, he is conscientiously bound to make an assignment in equity to the person entitled to the benefit, and the acceptance of the indemnity from the insurer is in the nature of an equitable assignment, which authorizes the insurer to sue in the name of the insured for his own benefit, and this is a right which a court of equity will support by restraining and prohibiting the insured from defeating it by a release." May, Ins. § 454. We have reproduced the above passage from a distinguished text writer because it condenses and states with great clearness the fundamental principles upon which the decision of this case must turn, and which have been repeatedly applied by the courts in insurance cases. Thus, in Hall v. Railroad Co., 13 Wall. 370, 20 L.Ed. 596, it is said, "Standing thus, as the insurer practically does, in the position of surety, whenever he has indemnified the owner he is entitled to all the means of indemnity which the satisfied owner had against the party primarily liable." In the case of The Sidney (D. C.) 23 F. 88, the court said, "In such cases the insurer, on payment, is held to be equitably entitled to stand in the shoes of the assured, and to recover such indemnity as the assured was entitled to recover against other persons having no right to the benefit of the insurance." Both branches of the passage cited from May, Ins., supra, are well and strongly stated in Dilling v. Draemel (Com. Pl.) 9 N.Y. Supp. 497, where the court says: "It is well settled that, if a loss under a policy of insurance is occasioned by the wrongful act of a third party, the insurer occupies the position of a mere surety, and the wrongdoer that of a...