Chicago, Burlington & Quincy Railroad v. Emmons

Lacey, P. J. This was an action on the casé brought by appellee against the appellant to recover the value of certain property, real and personal, to the value of $1,400 or $1,500, consumed by fire originating on the appellant’s right of way, along its railroad leading from Shabbona, in the State of Illinois, through Whiteside County to Eock Island in said State, the said declaration charging that the appellant failed to beep its right of way free from dry grass and weeds as required by the statute, but carelessly allowed the same to remain on its right of way, and through its negligence, fire was suffered to escape from the locomotive engine to said dry grass, weeds, etc., and from thence to the plaintiff’s hay, straw, grain, barns, cribs, fences, granary and farming tools, etc., which were thereby consumed by fire, which was done on the 25th day of March, A. D. 1889. The appellant pleaded three pleas to the declaration : first, the general issue; second, accord and satisfaction by the nominal plaintiff; and third, settlement and release of all causes of action by the nominal plaintiff. The appellee replied to the said second and third pleas in substance, that prior to the committing of the said grievances in the declaration mentioned, the plaintiff applied to the Farmers Mutual Fire Ins. Co. to insure the goods, chattels, barns, cribs and granaries in said declaration mentioned, and long prior to the committing of the said grievances aforesaid, the said insurance company issued its policy of insurance to said nominal plaintiff, insuring thereby two-thirds the value of said goods and buildings against loss by fire, and on the 20th day of April, 1889, the said insurance company paid to the nominal plaintiff upon adjustment of the loss by fire, §495, and the same was received by appellee in full satisfaction of said loss, and that the defendant knew on the day and year in the said plea named, to wit, 6th day of May, A. D. 1889, that the said insurance company, in pursuance of the said insurance policy, paid to said appellee, Emmons, a large sum of money, to wit, §1,000, in full payment and satisfaction of said loss, by reason of the grievances named in the declaration, by which means the said insurance company had an equitable assignment of said claim of said Emmons on said defendant for said sum so paid as aforesaid by said insurance company to said Emmons. And any and all releases executed by said Emmons without authority of said insurance company were and are in fraud of said company, and this he is ready to testify. The appellant, besides general rejoinder to said replications, filed a special rejoinder setting up that it compromised the said cause of action with the said appellee, Emmons, on the 5th day of April, 1889, for the sum of §550, and afterward, on the 6tli day of May, 1889, in pursuance of said agreement, appellant paid to appellee, Emmons, the said sum of money in pursuance of said agreement, etc. A demurrer was sustained to said special rejoinder. Upon these issues a jury was waived and a trial had by the court, which found the issues in appellee’s favor and assessed his damages at §495, and rendered judgment in appellee’s favor thereon. Upon appellant’s motion for a new trial being overruled, judgment was rendered on the finding. From this judgment this appeal is taken. The first point raised by appellant is, that the evidence did not support the finding by the court as to the fact of the communication of the fire to the stubble and dry grass on appellant’s right of way from the locomotive engine of appellant. We think that, while the evidence was not positive, but circumstantial only, it, nevertheless, was abundantly sufficient to sustain the finding of the court. The evidence showed that directly after the appellant’s locomotive and train of cars had passed, fire broke out on its right of way in the dry grass' thereon. This we think was a sufficient circumstance, in connection with the other circumstances, to make out a prima fade case; and under the statute, when such fact is established, negligence is presumed. The next and most important question in the case is, had the appellee, Emmons, under the circumstances, the legal right to compromise the case so as to deprive the insurance company, the usee herein, of the right to sue in the name of the insured for its use and recover the amount of the insurance. It is not denied by appellant that the appellee’s usee, the Farmers Mutual Fire Insurance Co., would have the right to all the money paid in by it to appellee Emmons to the extent of the insurance paid, provided Emmons received the entire amount of his loss from appellant, and the insurance company had paid the insurance money on the loss. The insured has the primary right to indemnity against either the appellant or the insurance company, and could collect of either; but if he first collected of the railroad company the entire amount of his loss, he could not have a second satisfaction of the insurance company; and if he first collected of the insurance company, then he became the trustee in equity of the insurance company to the amount paid by it to him, and the insurance company subrogated to the right of the insured as against the wrongdoer, the railroad company, which wrongfully caused the destruction of the property, to the amount paid by such insurance company on account of the loss against which it had insured. 'In such case the tort committed by the railroad company in destroying the property, in equity would be considered done to the former in case it had the losses to satisfy to the insured, but the rights of the insurer must be enforced in the name of the insured, the owner of the property. And it was held in Hart v. Western Railway Co., 13 Met. 99, by Chief Justice Shaw, that such equity must be assigned by the insured, using the following language: “ Where such an equity exists, the party holding the legal right is consequently bound to make an assignment in equity to the person entitled to the benefit, and if he fails to do so, the cestui que trust may sue in the name of the trustee, and his equitable interest will be protected.” It is contended by appellant’s counsel, that the appellee, Emmons, had a legal right to release the claim against the appellant even without consideration, and after notice of the fact that the Farmers Mutual Fire Insurance Company had paid a portion’of the loss, or had arranged to pay it. We do not think that the absolute right of the insured goes to that extent, or that of the appellant to accept such a boon. To allow this to be done would have the effect to violate the equitable rights of the Farmers Mutual Fire Insurance Company, the usee herein, in a most flagrant manner. The law, we apprehend, would not sanction such a wrong merely to satisfy some supposed technical right of the holder of a legal claim to satisfy it without consideration by release where it was well known by the party receiving satisfaction that such legal holder of the claim had no interest in it further than as a trustee in equity. If the person or party receiving such satisfaction should pay the full amount of the claim to' the legal holder it might be quite a different question; but such we do not understand to be the case here. The facts of the case at bar, as appears from the evidence, are about these, so far as the supposed release in question is concerned, to wit: The adjuster of appellant, on the 21st of April, 1889, went to appellee’s premises, and according to the latter’s evidence, which is undisputed, adjusted the claim for the loss occasioned by the fire with him, and the amount was fixed at $1,000, and appellee, Emmons, was instructed by the adjuster, Alexander, to first get the insurance, and whatever that was he would deduct from the amount of 81,000. This was the offer. “ First, he (the adjuster) says, ‘You want to get your insurance money, and we will pay you the balance, whatever was agreed upon.’ I (Emmons) asked him if that was the way they did business. He said ‘ Yes; you settle with the insurance company and we will settle with them.’ ” This offer was accepted, and the money, 8505, paid afterward, to wit, on the 6th day of May, 1889, and a receipt taken by appellant from appellee in full of all demands and causes of actions, which receipt and settlement and payment is relied upon as being a complete bar to this action. On the 2d day of May, 1889, Mr. Hughes, the secretary and treasurer of the usee herein, met Mr. Thorne, the general superintendent of the division of the appellant, and had a conversation in regard to the matter, and he said to Thorne it was represented to him (Hughes) that the railroad company in such cases required the party having to collect his insurance to collect the same and they settle with the insurance company, and Hughes then said to Thorne, “If that is the case the money will bo refunded to us ” (the insurance company). “ I have the money on hand and can pay Mr. Emmons so he can go on building;” and Mr. Thorne says, “ That is my understanding.” He was present at the time the adjuster was with Mr. Emmons and says, “ That is my understanding of the matter.” The money was then paid on the same day to appellee, Emmons, by the usee herein, to wit, 8495.” But notwithstanding this arrangement with the insurance company, by its agent, Hughes, on the 6th May the appellant paid the amount coming to appellee, less the insurance money, and procured from him a release of all causes of action and claim, and now insists that it is released from paying the insurance money. The settlement was made with appellee on the basis of the 81,000, and appellant had full notice of the claim of the usee of 8495, which it agreed to pay, but instead of that fraudulently took a release from Emmons in full, and insists that such release is binding on the usee, as well as Emmons. We hold besides, the natural equity which prevents the insured to satisfy the claim in full as against the insurer where he has notice of the payment of the loss by the insurer, according to the facts of this case the appellant is estopped from taking a satisfaction piece of the insured so as to defeat the claim of the insurance company. By the promises and agreement made with the appellant, the claim of the usee herein was to be protected, and in view of that the insurance money was paid and the insurance company put in such position that it could make no defense in case Emmons wrongfully satisfied the entire claim and relieved the appellant, There is no question but the railroad company settled the loss caused by it for $1,000. There was no consideration for a full release by the insured to appellant of the claim, and we must hold that as to the insurance company, the taking of such release under the circumstances was fraudulent and void. There was no division of an indivisible claim as is contended in this case. The appellant paid a portion of it voluntarily, the amount of the loss in excess of the insurance money, and that left remaining due appellee to use of the usee herein, the sum of $195. The entire claim then remained due appellee for use of the insurance company, and in equity should be regarded as assigned. The rule of law that prohibits the satisfaction of a claim by the legal payee where it equitably belongs to another, is not confined, as we understand it, to cases where there is litigation to enforce it, pending, as is supposed to have been the case by counsel for appellant in Hart v. Western Ry. Co., 13 Met. 99. If there is litigation pending, that is notice to the debtor that the nominal plaintiff had no right to release the claim without consideration; but just as effectual notice existed in this case, as it was understood by the parties that the usee was to be protected in case it paid the insurance money. The point made that the appellant’s rejoinder was wrongfully held bad in the court below on demurrer, is not well taken. This rejoinder set up a prior contract made on April 5th, between appellant and Emmons, to release it from further liability on account of the loss on the payment of $550, and that money was paid in pursuance thereof on May 6th. This rejoinder was a departure from the pleading, and besides, the appellant had the full benefit of its proof in that respect under the general issue. The supposed contract of April 5, 1889, when produced, only shows an offer on appellee’s part, unaccepted by appellant. The adjustment for the $1,000 took place afterward, and the arrangement with the insurance company was on May 2d, before any payment, and no notice was given to the insurance company of any agreement of the kind. The proof fails to show any facts that would put appellant in any more favorable position on account of the supposed contract of April 5, 1889. After an examination- of the entire record we are unable to see any substantial merit in appellant’s case. When it pays this judgment it has only paid what in equity and good conscience it should pay. It has only paid on account of the loss what it agreed to pay, viz., $1,000, and when this payment is made it will go to the party equitably entitled to it, that is, the party who advanced it for the appellant. We see no merit in the mere technical points without substantial equity made by the appellant. The judgment will therefore be affirmed. Judgment affirmed.