Universal Credit Co v. Serv. Fire Ins. Co. Of N.Y.

• Decision Date: 22 April 1943
• Docket Number: No. 29992.,29992.
• Parties: UNIVERSAL CREDIT CO, for Use of LE WALLEN. v. SERVICE FIRE INS. CO. OF NEW YORK.
• Court: Georgia Court of Appeals

25 S.E.2d 526

UNIVERSAL CREDIT CO, for Use of LE WALLEN.

v.SERVICE FIRE INS. CO. OF NEW YORK.

No. 29992.

Court of Appeals of Georgia, Division No. 2.

April 22, 1943.

Syllabus by the Court.

1. "While subrogation, strictly speaking, can logically arise only after a payment by the insurer of the claim for injury to or loss of the automobile, still an additional or supplementary rule exists, even where the policy expressly mentions subrogation and provides for its effectuation by assignment of the insured's claim against the wrongdoer to the insurer upon or after payment by the latter, that any payment as damages received by the insured from the wrongdoer before settlement with the insurer, reduces by operation of law the liability of the insurer pro tanto, and where the insured releases his right of action against the wrongdoer before settlement with the insurer, that release destroys, by operation of law, his right of action on the policy."

2. The evidence showing conclusively that the insured, after his automobile was run into on a public highway by another automobile and was almost totally destroyed in value, settled with the tortfeasor for a small sum without giving the insurer an opportunity to indemnify him for his loss and obtain from him an assignment of his right of action against the tort-feasor, the insurer's right of sub-rogation was thereby destroyed and the insured precluded from recovery under the policy of indemnity. The trial court did not err in directing the verdict in favor of the defendant insurer, and in overruling the plaintiff's motion for new trial.

Error from Superior Court, Whitfield County; John C. Mitchell, Judge.

Action by Universal Credit Company, for the use of Clarence Lewallen, against the Service Fire Insurance Company of New York on an automobile collision indemnity policy. Verdict was directed for defendant, plaintiff's motion for new trial was overruled, and plaintiff brings error.

Affirmed.

Stafford Brooke and R. Carter Pittman, both of Dalton, for plaintiff in error.

D. W. Mitchell, of Dalton, for defendant in error.

SUTTON, Judge.

Universal Credit Company, suing for the use of Clarence Lewallen, brought suit against Service Fire Insurance Company of New York, alleging substantially as follows: Previously to July 1, 1941, Clarence Lewallen purchased from a named person a certain described automobile as to which such third person held a policy insuring against collision damage, with a $50 deductible clause, loss, if any, to be adjusted with the assured, though to be paid, subject to all the conditions named in the policy, only to the Universal Credit Company for the account of all interests. The policy was duly transferred and assigned, with the consent of the insurer, to Clarence Lewallen, who thereafter paid all premiums on the policy. The written transfer was not delivered to him but was retained by the defendant, and in the petition it was called upon to have and produce the same upon the trial of the case. The policy, a copy of which was attached to the petition, provided, among other things: "This company may require from the assured an assignment of all right of recovery against any party for loss or damage to the extent that payment thereof is made by the company." It was alleged in the petition that on July 13, 1941, the said Clarence Lewallen sustained a total loss of the automobile in question in a collision with an automobile from a foreign State, the junk value of the damaged automobile being $100, and that previously to the collision it was reasonably worth $750; that after the collision Lewallen received $100 from a third party to apply against his loss, for which the defendant is given credit, "and now the defendant is indebted to the said Clarence Lewallen in the sum of $500 by virtue of the automobile after the collision, the $100 received from a third party and the $50 deductible sum expressed in the policy." It was alleged that Lewallen had complied with the terms and conditions of the policy, and that immediately after the collision notice was given to the defendant as provided in the policy and the defendant unconditionally denied liability upon the policy.

The defendant filed an answer denying liability for the reason that Lewallen had settled his entire loss with a third party and had received a sufficient amount to compensate him for any damage sustained to his automobile, and that inasmuch as the policy provided for subrogation in its favor for any amount it should pay Lewallen against a third party, it would be inequitable to allow him to settle his claim with a third party for a nominal sum such as was alleged in the petition and then the defendant be held responsible for the balance of the claimed damage; that it was at all time? ready and willing to settle the claim of Lewallen in accordance with the provisions of the policy, thereby taking a subrogation over against the third party, and that Lew-alien's refusal to accept any settlement from the defendant and settling with the third party denied it a substantial right and was a violation of the insurance contract.

The evidence upon the trial of the case showed that Lewallen was assigned the policy referred to in the foregoing statement of facts, with loss payable as there indicated, and also the following facts: About three weeks after the automobile was acquired by him and while Lewallen was driving it upon a public highway in this State, it was run into by another car being driven by one Fae Magnes and was so damaged that upon being sold, after the Universal Credit Company had taken possession of it, it brought only the sum of $65. Lewallen testified that it was worth $713 at the time of the collision, and afterwards was worth $50 to $65. The insurance was in force at the time of the collision, and the policy was introduced in evidence in the present suit and contained the provisions hereinbefore mentioned. Lewallen brought suit against the husband of the driver of theautomobile which struck his, alleging that the car was being negligently driven by Fae Magnes as agent for him and under his direction and control, and sought damages for personal injuries and for the reduction in value of his automobile alleging that before the collision it was reasonably worth $800 and afterwards was reasonably worth no more than $100 as junk, and judgment was prayed for $3,000. Lewallen accepted a settlement from the tort-feasor without the case going to trial. He testified that he did not settle for damages to the car, but in evidence was a dismissal filed in the trial court reading as follows: "The above stated case having been settled between the parties, the...