Weber v. United Hardware & Implement Mutuals Co.
| Decision Date | 20 February 1948 |
| Docket Number | 7072. |
| Citation | 31 N.W.2d 456,75 N.D. 581 |
| Court | North Dakota Supreme Court |
Rehearing Denied March 18, 1948.
Syllabus by the Court.
1. On an appeal from a judgment entered notwithstanding the verdict the only question for the appellate court is whether upon the record, as a whole, the party in whose favor such judgment was ordered and entered is entitled to a judgment on the merits as a matter of law.
2. An insurer who has paid a loss is entitled to subrogation to the rights of the insured against any one primarily responsible for such loss.
3. It is generally held that if the insured before payment by the insurer unconditionally releases in full the one primarily responsible for the loss, he thereby destroys the insurer's right of subrogation. The insurer may then set that up as defense to an action on the policy.
4. An insurer may waive the release of the tort-feasor as a defense or by his acts be estopped from asserting it.
5. The evidence is examined and it is held that the defendant waived the right to subrogation and is estopped from claiming the release of the tort-feasor as a defense in this action.
Additional Syllabus on Petition for Rehearing.
6. Under Sec. 28-0740, NDRC 1943, a plaintiff is not required to reply to new matter in an answer not constituting a counterclaim, except by order of the court; but every allegation of new matter in the answer, not constituting a counterclaim is deemed controverted by the plaintiff as upon a direct denial or avoidance by operation of law, and the plaintiff may introduce evidence of any fact tending to deny or avoid the new matter set forth in the answer. Moores v. Tomlinson et al., 33 N.D. 638, 157 N.W 685.
7. In granting a motion for judgment notwithstanding the verdict two prerequisites are essential: (1) A motion for a directed verdict must have been made and denied; (2) the party who moved for a directed verdict must have been entitled to a directed verdict at the time of the motion.
8. The motion for a judgment notwithstanding the verdict reviews only the court's ruling in denying the motion for a directed verdict and only the grounds assigned for that motion are considered.
Murray & Murray, of Bismarck for plaintiff-appellant.
Day Lundberg & Stokes, of Grand Forks, for defendant-respondent.
The plaintiff was the owner in 1944 of a gas and oil service station located on Main Street in the City of Mandan. This consisted of three Wayne computing gasoline pumps placed parallel with the street in front of the service building and with flood lights at each end of the line of pumps connected with the lighting system of the building. He carried insurance with the defendant indemnifying him for loss and damage to that property by 'vehicles running on land' in the amount of $450 on the building, $250 on the pumps and $300 on the contents.
On February 14, 1944, an employee of the state highway department driving a truck of the department ran into the pumps causing extensive damage to them and to the lighting system.
The defendant insurance company was duly notified and claim filed. An investigator was sent out by the defendant. It developed, however, that the state highway department at the time of this damage carried an insurance policy with the Royal Indemnity Company of St. Paul, Minnesota to indemnify it for all damages it might sustain up to $5,000 caused by the negligence of employees of the state highway department while such employees were engaged within the scope of their employment.
The defendant notifed the plaintiff to the effect that he should seek compensation from the insurer of the highway department and its employee. A suit was commenced against the employee but he could not be found. Negotiations were then had with representatives of the Royal Indemnity Company of St. Paul, which resulted in a settlement on February 28, 1945, for $375 and a complete release and discharge by the plaintiff of the employee of the North Dakota state highway department charged with responsibility for the damage to the plaintiff's property above described. This release was signed by the plaintiff and the $375 check of the Royal Indemnity Company turned over to his attorney. Plaintiff claims he made this settlement on the assurance of the defendant's agent that the defendant would pay its share of the loss. The defendant failed to do that.
Then this suit was commenced. The complaint alleges $800 damages to the above described property of the plaintiff, of which it is claimed defendant under the insurance policy would be liable for $250 for damages to the pumps and $75 for damages to the lighting fixtures of the building.
The defendant answers setting up that the specific coverage on the pumps was only $250 and that the settlement with the Royal Indemnity Insurance Company constituted full payment on behalf of the tort-feasor of plaintiff's claim for damages and that plaintiff is estopped from bringing this action by reason of double indemnity and that the defendant is discharged from further liability be reason of said payment.
The case was tried and submitted to a jury after motions for dismissal and for directed verdict had been denied. The jury brought in a verdict for the plaintiff in the sum of $300. Thereupon the defendant's attorneys made a motion for judgment notwithstanding the verdict. Judgment for the defendant notwithstanding the verdict was ordered and entered. Plaintiff has appealed from that judgment.
This order of the court amounts to a delayed action directed verdict for the defendant. Ch. 220, 1945 S.L. The sole question before this court is whether or not the evidence warrants such action. Rokusek v. National Union Fire Ins. Co., 50 N.D. 123, 195 N.W. 300; First National Bank v. Burdick, 51 N.D. 508, 200 N.W. 44; First Security Bank v. Bagley Elevator Co., 61 N.D. 140, 237 N.W. 648.
There is no conflict in the evidence. The ownership of the property and the damages in the amount of $800 are not disputed. The insurance policy is admitted. The evidence warrants a verdict of $250 for damages to the pumps and $50 for damages to the lighting fixtures connected with the building. So the verdict is within the coverage of the policy. The settlement with the Royal Indemnity Company of St. Paul and the release of the tort-feasor are also admitted.
The damages of $800 being more than the combined payment of the Royal Insurance Company, $375 and the verdict of $300 there is no question of double indemnity.
That makes the real question for determination in this lawsuit whether or not defendant was discharged from further liability by reason of the payment on behalf of the tort-feasor. Did the release of the tort-feasor deprive defendant of the valuable right of subrogation so as to constitute a complete defense to this action?
Subrogation as used in this connection is a substitution by which the insurer who has paid a loss under a policy succeeds to any rights the insured may have against any person who may be primarily responsible for the loss. This rule has its origin in the general principles of equity and the nature of the insurance contract. 8 Couch Cyclopedia of Insurance Law 6587; 6 Appleman, Insurance Law and Practice, § 4051; Vance on Insurance 668; May on Insurance, Second Edition 683; 26 C.J. 455; 46 C.J.S., Insurance, § 1211; Pittsburgh, C., C. & St.L.Ry. Co. v. Home Ins. Co. of New York, 183 Ind. 355, 108 N.E. 525, Ann.Cas.1918A, 828.
This principle applies even if there is no provision for it in the insurance contract. It is purely a matter of equity. The purpose is to make him pay who is primarily responsible for a loss and in good conscience should bear the consequences thereof. Under this rule the insurer has the right to recover from the one primarily liable for the damage to recoup himself to the amount he has paid the insured under the insurance policy.
This is a right that will be liberally applied for the protection of those who are its beneficiaries but will not be allowed where it would work injury to the party against whom it is claimed or deprive him of legal or equitable rights. 8 Couch Cyclopedia of Insurance Law 6589; 6 Appleman, Insurance Law and Practice, § 4051.
The right of subrogation does not come into existence until the insurer has paid to the insured his liability under the insurance contract. But, if before such payment by the insurer, the insured makes settlement with the tort-feasor or the one primarily liable for the loss and releases him fully from all liability it is generally held that such release destroys the insurer's right to subrogation and is therefore a complete defense to an action on the policy. 8 Couch Cyclopedia of Insurance Law 6610; Vance on Insurance 675; 26 C.J. 459; 46 C.J.S., Insurance, § 1211; 6 Appleman, Insurance Law and Practice, § 4093; Auto Owners' Protective Exchange of Kankakee, Ill. v. Edwards, 82 Ind.App. 558, 136 N.E. 577; Propeck v. Farmers' Mut. Ins. Ass'n, Tex.Civ.App., 65 S.W.2d 390; Sims v. Mutual Fire Ins. Co., 101 Wis. 586, 77 N.W. 908; Harter v. American Eagle Fire Ins. Co., 6 Cir., 60 F.2d 245.
It is however argued on behalf of the plaintiff that, granting such is the law, the defendant has waived it and is estopped from urging it as a defense. It is claimed that the defendant's letters to the plaintiff urging him to seek compensation from the insurer of the highway department and the tort-feasor together with plaintiff's conversation with defendant's agent constitute, if not a waiver, then an estoppel to assert such a defense.
The insurance company may waive any defense it may have to an action on an insurance policy. McDowell v. Fireman's Fund Insurance Company...
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