The Atchison v. The Home Insurance Company

• Decision Date: 11 June 1898
• Docket Number: 10378
• Citation: 53 P. 459,59 Kan. 432
• Court: Kansas Supreme Court
• Parties: THE ATCHISON, TOPEKA & SANTA FE RAILROAD COMPANY v. THE HOME INSURANCE COMPANY

53 P. 459

59 Kan. 432

THE ATCHISON, TOPEKA & SANTA FE RAILROAD COMPANY v. THE HOME INSURANCE COMPANY

No. 10378

Supreme Court of Kansas

June 11, 1898

Decided January, 1898.

Error from Sumner District Court. J. A. Burnette, Judge.

Judgment affirmed.

A. A Hurd, O. J. Wood and W. Littlefield, for plaintiff in error.

C. E Elliott and H. L. Woods, for defendant in error.

OPINION

DOSTER, C. J.

The plaintiff in error, through the negligent condition and operation of one of its engines, set fire to the property of one Daniel Lane, damaging him to the amount of $ 7875. The property was insured by the defendant in error, and it and the owner adjusted its liability under the insurance contract at $ 4875, but it did not immediately pay the amount. The plaintiff in error and the owner of the property adjusted his loss, over and above the amount covered by the insurance, at three thousand dollars. In the settlement with the plaintiff in error, the fact of insurance upon the property and the amount at which the Insurance Company's liability had been adjusted were taken into account. Payment of the three thousand dollars was made by the plaintiff in error, and a receipt in full and release of damages was executed to it, conditioned to take effect upon payment of the sum due from the Insurance Company. This condition was inserted in the receipt and release, and was in the following language: "This settlement based on fact of adjustment already had by insurance company at $ 4875; company not released until adjustment is paid in full."

This sum was presently paid in full by the defendant in error. It thereupon brought suit against the plaintiff in error to recover the amount so paid. A verdict and findings were returned in its favor and judgment rendered thereon, from which error is prosecuted to this court.

When insured property has been destroyed or damaged by fire occasioned by the negligent act of another than the owner and the insurer has paid to the assured the amount of the loss or damage, the former becomes subrogated to the position of the latter, and may maintain an action to recover from the wrongdoer the amount which by his contract he was compelled to pay. This as a rule of equity is so well established that particular cases need not be cited in its support or justification. 4 Joyce on Insurance, § 3574. Wood on Fire Insurance (B. & B. ed.), § 473; Ostrander on Fire Insurance (2d ed.), § 126. When the amount of the loss does not exceed the amount of the insurance, so that satisfaction by the insurer fully compensates the assured, the right of action against the wrongdoer vests wholly in the insurer, and he may, indeed must, under our Code, as the real and only party in interest, undertake the maintenance of the action for his reimbursement. When the loss does exceed the amount of the insurance, so that payment under the insurance contract constitutes but a partial satisfaction of the damages sustained, leaving a residue to be made good by the wrongdoer, a question has arisen as to whether the action against the wrongdoer for the recovery of the portion paid by the insurer should be undertaken in the name of the insurer or of the assured. The tendency of the courts seems to be to hold the latter to be the only competent person to bring suit. This upon the theory that an action for damages for a tort is indivisible and cannot be split up. In such cases the assured sustains towards the insurer the relation of trustee, in respect of such portion of the amount recovered as the former under his contract has been compelled to pay. Norwich Union Fire Ins. Soc. v. Standard Oil...