Providence Washington Ins. Co. v. Hogges

• Citation: 67 N.J.Super. 475,171 A.2d 120
• Decision Date: 12 May 1961
• Docket Number: No. A--997,A--997
• Parties: PROVIDENCE WASHINGTON INSURANCE COMPANY, Plaintiff-Respondent, v. Thomas HOGGES, Defendant-Appellant.
• Court: New Jersey Superior Court – Appellate Division

Page 475

67 N.J.Super. 475

171 A.2d 120

PROVIDENCE WASHINGTON INSURANCE COMPANY, Plaintiff-Respondent, v. Thomas HOGGES, Defendant-Appellant.

No. A--997.

Superior Court of New Jersey

Appellate Division.

Argued Feb. 27, 1961.

Decided May 12, 1961.

Robert Kleiner, Paterson, for appellant (Harry Zax, Paterson, attorney).

Donald L. Berlin, East Orange, for respondent (Stevenson & Willette, East Orange, attorneys).

Before Judges PRICE, GAULKIN and SULLIVAN.

The opinion of the court was delivered by

GAULKIN, J.A.D.

This case was submitted to the county district court for decision upon a stipulation of facts. The stipulation sets forth that plaintiff insurer issued a policy to defendant, insuring him against damage of his automobile by collision. Plaintiff apparently also insured defendant against liability, by the same or another policy. The only portion of the collision policy which is made part of the record is the following clause:

'In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights.'

On or about March 15, 1957 defendant, while driving his automobile, was in a collision with a car owned by Bernard Sage and driven by Joseph Pistocchi. Sage and Pistocchi will hereafter be called the tortfeasors. Plaintiff and defendant settled defendant's claim on the collision policy on the basis that defendant's car had suffered $900 damage, and plaintiff paid defendant $850, there apparently being a $50 deductible clause. The date of this payment by plaintiff is not given.

Thereafter, on or about February 3, 1958, Hogges instituted an action for personal injuries and property damage against the tortfeasors, which resulted, on April 24, 1958, in a judgment against Hogges of no cause of action. Plaintiff insurer 'was at no time given notice of the commencement or pendency of the suit in the Bergen County District Court and did not participate in the prosecution of the said action.'

The stipulation then says:

'On December 30, 1958, suit was instituted against the defendant, Thomas Hogges, by Bernard Sage for property damage arising out of this said accident in the amount of Six Hundred ($600.00) Dollars. * * * Plaintiff, Providence Washington Insurance Company, entered a defense under the terms of their policy aforesaid.

'On March 2, 1959, plaintiff Providence Washington Insurance Company counter-claimed for the property damage incurred by the defendant herein under the terms of the subrogation clause of the policy aforesaid. Subsequent to April 24, 1958, for the first time, the plaintiff, Providence Washington Insurance Company was informed of the action that had been brought in the Bergen County District Court. Thereafter the suit brought by Bernard Sage was settled in the amount of Two Hundred and Seventy-Five ($275.00) Dollars and the plaintiff, Providence Washington Insurance Company dismissed their counterclaim for property damage.'

Upon the basis of this stipulation of facts, the trial court entered judgment for the plaintiff for $850, and defendant appeals.

The complaint in the action now before us, and the answer if any, have not been made part of the appendix, in violation of R.R. 1:7--2. Consequently, we do not know upon what theory plaintiff framed its complaint. However, from plaintiff's brief it appears that its position is that the carrying of the action to an unsuccessful conclusion without its knowledge prejudiced plaintiff's rights as a matter of law, and that this entitled plaintiff to the return of its $850 payment without proof that the tortfeasors were actually liable, or that plaintiff was in fact damaged. Plaintiff equates the facts at bar with the situation where an insured gives a general release to the tortfeasor after having received payment from his insurer. In such a case, says plaintiff, citing the Dictum in Rogers v. American Fidelity & Casualty Company, 52 N.J.Super. 254, 262, 145 A.2d 344, 348 (App.Div.1958), the insurer is entitled to recover the entire sum paid to the insured 'without showing any evidential demonstration of liability by the third person to the insured.'

But the situations cannot be equated. Plaintiff admits in its brief 'that the defendant had a right to institute a civil action for personal injuries,' and it does not contend that it is entitled to notice of the institution or prosecution of an action for personal injuries alone. It does contend, '(h) owever, (that) the defendant had no right to institute an action for property damage without putting the plaintiff on notice of the pendency of such an action.'

Had Hogges sued for his personal injuries alone, the adverse judgment (which, under the stipulated facts, we must assume established, at least as between Hogges and the tortfeasors, that the tortfeasors were not liable) would have barred the insurer's right to recovery as effectively as the judgment complained of. Esper v. Manhattan Transit Co., Inc., 112 N.J.L. 186, 169 A. 823 (Sup.Ct.1934), affirmed opinion below 115 N.J.L. 113, 178 A. 754 (E. & A.1935); Wirth v. Slinn, 10 N.J.Misc. 361, 158 A. 743, (Sup.Ct. 1931); Freitag v. Renshaw, 9 N.J.Misc. 1161, 157 A. 455 (C.P.1931). Although that would have prejudiced the insurer, it would not have been a violation of the policy. The equitable right of subrogation is subject to the exercise by the insured of his legal rights. Cf. Employers' Fire Ins. Co. v. Ritter, 112 N.J.Eq. 418, 164 A. 426 (Ch.1933). The fallacy of the analogy to the execution of a release becomes obvious when we consider the destructive effect of a judgment of no liability, in an action by the insured against the tortfeasor before the insurer makes payment, upon the insurer's right of subrogation. In that case the insured would nevertheless be entitled to recover from the insurer; Contra, if he had given a release to the tortfeasor.

Since that is so, should the mere fact that Hogges added a count for the property damage change the result? It is not contended that Hogges acted in bad faith. He still had a prior right to $50 of any sum recovered for property damage from the tortfeasors, and to any surplus over $900. If he had recovered a judgment against the tortfeasors for property damage it would have been a benefit to the insurer, for he would have held it in trust for the insurer, up to $850.

There is nothing in the stipulated facts to indicate, nor is it suggested, that the insured's suit against the tortfeasors was improperly or negligently handled, or that the insurer could have done or supplied anything which would have resulted in a verdict for Hogges.

The insurer knew that Hogges had to sue for his personal injuries within two years after the accident, and the effect upon its subrogation rights of an adverse judgment in such an action, yet it does not appear that the insurer ever made any approach to Hogges for joint action, or any effort to collect on its own behalf from the tortfeasors, or that it even intended to do so. The insurer also covered Hogges against liability. It may be that its investigation satisfied it of the tortfeasors' non-liability, and that it had decided not to press its subrogation in order to avoid precipitating counteraction by the tortfeasors. It does...