Norwich Union Fire Ins. Soc. v. Standard Oil Co.

CALDWELL, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The circuit court sustained the demurrer to the complaint on the ground that the plaintiff could not maintain the action in its own name, and the correctness of this ruling is the only question we tind it necessary to consider. When an insurance company pays to the assured the amount of a loss of the property insured, it is subrogated, in a corresponding amount, to the assured’s right of action against any other person responsible for the loss. This right of the insurer against such other person is derived from the assured alone, and can be enforced in his right only. At common law it must be asserted in the name of the assured. In a court of equity or of admiralty, or under the modern codes of practice, it may be asserted by the insurance company in its own name, when it has paid the insured the full value of the property destroyed. St. Louis, I. M. & S. Ry. Co. v. Commercial Union Ins. Co., 139 U. S. 223, 235, 11 Sup. Ct. 554, and cases cited; Marine Ins. Co. v. St. Louis, I. M. & S. Ry. Co., 41 Fed. 643. But the rule seems to be well settled that, when the value of the property exceeds the insurance money paid, the suit must be brought in the name of the assured. Aetna Ins. Co. v. Hannibal & St. J. R. Co.. 3 Dill. 1, Fed. Cas. No. 96; Assurance Co. v. Sainsbury, 3 Doug. 245; Insurance Co. v. Bosher, 39 Me. 253; Hart v. Railroad Corp., 13 Metc. (Mass.) 99; Connecticut, etc., Ins. Co. v. New York, etc., R. Co., 25 Conn. 265, 278; Insurance Co. v. Frost, 37 Ill. 333; Fland. Ins. pp. 360, 481, 591; Marine Ins. Co. v. St. Louis, I. M. & S. Ry. Co., supra. In such an action the assured may recover the full value of the property from the wrongdoer, but as to the amount paid him by the insurance company he becomes a trustee; and the defendant will not be permitted to plead a release of the cause of action from the assured, or to set up as a defense the insurance company’s payment of its part of the loss. Hart v. Railroad Corp., supra; Hall v. Railroad Co., 13 Wall. 367. In support of this rule it is commonly said that the wrongful act is single and indivisible and can give rise to but one liability. “If,” says .fudge Dillon in Aetna Ins. Co. v. Hannibal & St. J. R. Co., supra, “one insurer may sue, then, if there are a dozen, each may sue; and, if the aggregate amount of all the policies falls short of the actual loss, the owner could sue for the balance. This is not permitted, and so it was hold nearly a hundred years ago, in a case whose authority has been recognized ever since both in Great Britain and in this country.” The learned counsel for the plaintiff in error challeng'es the soundness of this rule, and contends with much force that the-rule that a wrongdoer who injures many people by the same act; is liable to each person separately for the injury done to each should be applied to this class of cases. It is said, “The convenience of the innocent injured man to sue and get reparation is paramount to the inconvenience of the wrongdoer who suffers from a multiplicity of suitors.” It would serve no useful purpose to [988] repeat here the reasoning of the courts in answer to this contention. The subject is fully gone over in the authorities we have cited. The rule that, where the property exceeds in value the amount insured, the suit must be in the name of the assured, seems not to rest so much upon the necessity or desirability of exempting the wrongdoer from a multiplicity of suits as upon the peculiar nature of the relation existing between the assured and the insurer. It is held by the supreme judicial court of Massachusetts (Hart v. Railroad Corp., supra) and by the supreme court of the ITnitc'd States (Hall v. Railroad Co., supra) that in respect to the ownership of the property, and the risk incident thereto, the owner and the insurer are considered but one person, having together the beneficial right to the indemnity due from one who is responsible for its loss. When the insurer pays the assured the full value of the property destroyed, the insurer may maintain an action in his own name against one responsible for its loss, because, by operation of law, the whole beneficial right to indemnity from the wrongdoer has been vested in the insurer. He is therefore the real and only party in interest, and, under the Code, the proper party to bring the suit. But, when the value of the property destroyed exceeds the insurance money paid, the beneficial right to indemnity from the wrongdoer remains in the assured, for the whole value of the property, — for the unpaid balance due to himself, as well as for the amount paid by the insurer, as to which last sum he is chargeable as a trustee. It will be observed that in this case 10 other insurance companies have issued separate policies on the property, and that the aggregate amount of all the policies only equals three-fourths of the value of the property, and that the assured has brought suit against the oil company for the value of the property destroyed. If the contention of the plaintiff in error is sound, then the 11 insurance companies and the assured can each maintain a separate action against the alleged wrongdoer. We are cited to no case which supports this contention, and we do not think one can be found. The allegation of the complaint that the mill company, in its action against the oil company, makes no claim for the amount of insurance paid by the plaintiff, does not alter the case; for, if this was done at the request of the plaintiff, it cannot complain, and if it was done by the mill company on its own motion, and it recovers in the action, it will hold an amount of the recovery equal to the insurance paid as trustee for the plaintiff. The judgment of the circuit court is affirmed.