American Central Insurance v. Weller

BEAN, J.

The facts in the ease are substantially as follows: On May 23, 1918, the defendant Weller, *497who is a dealer in automobiles, sold an automobile to one Leon Miller upon a conditional contract of sale executed in the customary form. This contract recited the purchase price at $502.40, admitted payment of $150 at the time of the execution of the contract, and provided for the payment of the balance in monthly installments of $52.40 one month from date and $50 each month thereafter until paid. On May 27, 1918, the defendant sold the contract for cash at a discount to Ashley & Rumelin, Bankers, and assigned the contract to them, and guaranteed to the bank the payment of all monthly installments and all moneys due or to become due under the contract. At the time of the transaction Weller arranged to have the automobile insured, and on May 29, 1918, the plaintiff issued an insurance policy in which L. Miller was named as the assured and the automobile was insured against fire and theft. The policy recited that the assured had purchased the car for $500, and had fully paid for the same except “$350 balance monthly payments.” To the policy was attached a conversion clause in favor of Ashley & Rumelin, Bankers, reciting that the automobile had been sold under a conditional sales contract, loss “payable to the said vendor and the said vendee as their respective interests may appear.” In consideration of $2 additional premium the company insured the vendor against all the direct loss or damage caused by the wrongful conversion of the automobile by the vendee Miller.

Shortly after the issuance of the insurance policy and before any further payments were made on the purchase price, the automobile was converted by Leon Miller, and no trace was thereafter found either of the automobile or of Miller. Thereupon the bank *498called upon the insurance company to make good its loss resulting from the conversion. The insurance company paid the bank $300, and took an assignment of the conditional contract of sale and the guaranty of "Weller, refusing to pay the balance of $52.40 for the reason, as stated in plaintiff’s brief, that the latter sum “did not in reality represent any part of the purchase price of the automobile but represented brokerage charges, insurance premium and cost of transfer of license fee which had been tacked on and added to the purchase price of the automobile by the defendant Weller.” After receiving the $300 from the insurance company the bank required the defendant Weller under his guaranty to pay the balance of $52.40 and also the interest due under the contract, which Weller did.

The plaintiff submits that after the issuance of the policy the bank was in this position: “It had legal title to the automobile under contract of sale to Leon Miller and was secured as to the balance of the purchase price under the contract in two ways — first, by the guaranty of the defendant Weller; and second, by the insurance policy issued by the plaintiff insurance company.”

The insurance company claims in this action that it has a right to be subrogated to the rights of Ashley & Rumelin, Bankers, and is therefore entitled to recover the $300 which it paid from the defendant Weller on his guaranty. It is fairly shown by the testimony on behalf of the plaintiff, that the policy of insurance was issued upon the request of the defendant Weller and that he paid the insurance premium. The defendant therefore claims that the plaintiff insurance company is not entitled to the right of subrogation as against him.

*499The ruling upon the motion for a judgment by the trial court shows that the court allowed the motion for the main reason that the defendant Weller was instrumental in obtaining the insurance policy and paid the premium. The payment of the premium by Weller on July 15, 1918, is shown by the receipt for the premium, with many other premiums of like kind, given by the Coast Underwriters Agency, the agent of the plaintiff, to Weller. There is practically no question in regard to the facts. If the defendant Weller is liable under the facts stated it was error to grant the motion. If Weller is not liable the motion and judgment were properly granted.

The plaintiff appropriately cites the law in regard to the right of insurer to subrogation where the policy is issued to a mortgagee, or mortgagor, with a loss payable clause in favor of the mortgagee. Ashley & Rumelin, Bankers, heid the legal title to the machine as security for the balance of the payment therefor, and were in a position analogous to that of a mortgagee while Miller’s position under the conditional contract of sale was analogous to that of a mortgagor. E. R. Weller, as alleged in plaintiff’s complaint, sold the car to Miller upon a conditional contract of sale, discounted and assigned the contract to Ashley & Rumelin, and guaranteed the payment of the balance of the purchase price. Weller was in no way responsible for the loss or conversion of the car. He is not accused of any wrongful act. The insurance company insured the car and for a valuable consideration insured Ashley & Rumelin, the assignee of the contract of sale, against a wrongful conversion thereof by Miller. The company did not insure the payment of the debt due from Miller to the bank. The liability of the insurer to Ashley & Rumelin is simply *500measured by the balance due on the contract. In case of an honest loss by Miller the amount to be paid by the insurance company would not have been changed by the payment of a large part, or all of the monthly payments: the only difference would have been in dividing the insurance money of a change of payee. The company insured the car and not the debt.

1. Plaintiff cites 5 Joyce on Insurance, Section 3563, which states the rule, that the mortgagee may effect insurance upon his interest as such in the mortgaged property, he himself paying the premiums and being chargeable with the same, and in case of loss may recover. The question thus arises as to the respective rights of the mortgagor, mortgagee, and the insurer. In such case the contract is between the mortgagee and the insurer, under which a certain consideration having passed from the former to the latter, the latter agrees to indemnify the former on the happening of a certain event. Therefore, upon the happening of such event the liability of the insurer is a fixed one as to the mortgagee, and to no other, and it is a liability which, as a general rule he alone can enforce. If in such case the mortgagee first proceeds to enforce his rights under the policy, and the amount received equals the amount of the debt, the insurer should be entitled to be subrogated to the right of the former under the mortgage. This section of Joyce further states as follows:

“Instances, may, however, occur where the mortgagor may be entitled to the benefit of the insurance effected by the mortgagee in the name of the latter; as where it appears that the insurance was effected by the mortgagee, acting in reality as agent for the mortgagor, the latter paying or being chargeable with the premiums, and there being nothing in the policy in*501consistent with the mortgagor receiving the benefit of snch insurance.”

In the present case the assignor of the mortgage effected the insurance and paid the premium.

Plaintiff also cites Milwaukee Mechanics’ Ins. Co. v. Ramsey, 76 Or. 570, 574 (149 Pac. 542, Ann. Cas. 1917B, 1132, L. R. A. 1916A, 556), which is authority for the rule in regard to the rights of an insurer where the mortgagee procures the insurance at his own expense, in substance as above stated, and also for the further proposition, that if insured property is burned by the tortious act of one not a party to the policy, the insurer paying the loss to anyone to whom by the terms of the policy payment must be made, is subrogated pro tanto to the chose in action the payee has against the tort-feasor. In that opinion Mr. Justice Burnett clearly states the reason for the two rules referred to in the Ramsey case. Ramsey, the mortgagor, procured insurance making the loss payable to the bank, the mortgagee, as its interest might appear, otherwise to the insured. The policy was rendered nugatory as to the interest of the mortgagor, Ramsey, by reason of a change of ownership without an indorsement on the policy, or permission of the company. After referring to the policy Mr. Justice Burnett states:

“By it the company agrees with Ramsey, and not with another, to pay á certain designated person in case of a loss. It does not agree to pay Ramsey’s debt. The application to his obligation of the proceeds of the insurance in case of loss is a matter between Ramsey' and the bank. What became of the money is no concern of the plaintiff after it paid the bank. It did not insure the debt. It insured the building. If Ramsey had burned the house, the mortgagee would have had an action against him for the tort, in that he damaged it by depreciating the value *502of the mortgag’ed property. * * It is not charged in the complaint that Earns ey was in any way to blame for the fire. He incurred no liability on that account to the company or to the bank.”

While the facts in the case at hand are different from those in the Eamsey case, the principles enunciated, and the reasoning of the opinion in the latter case are applicable.

2, 3. The doctrine of subrogation has long been an established branch of equity jurisprudence. It does not owe its origin to statute or custom, but it is a creature of courts of equity, having for its basis the doing of complete and perfect justice between the parties without regard to form. It is a doctrine which will be applied or not according to the dictates of equity and good conscience, and consideration of public policy, and will be allowed in all eases where the equities of the case demand it. It rests upon the maxim that no one should be enriched by another’s loss and may be invoked wherever justice demands its application, in opposition to the technical rules of law. The right of subrogation depends upon the facts and circumstances of each particular case, to which must be applied the principles of justice: 25 R. C. L., p. 1313, § 2. In Section 55, .page 1372, of the same volume we road:

“One who has indemnified- another in pursuance of his obligation so to do succeeds to, and is entitled to, a cession of all the means of redress held by the party indemnified against the party who has occasioned the loss.”

4. It is unquestionably the general rule that on payment of a loss, the insurer acquires the right to be subrogated pro tanto to any right of action which the insured may have against any third person whose *503wrongful act or neglect caused the loss: 14 R. C. L., p. 1404, § 568, note.

5. The facts in the case at hand do not bring the case within the rules above stated, or the authorities cited by counsel for plaintiff. The plaintiff for value assumed liability for conversion of the machine by Miller. It insured the automobile and not the debt due after the assignment to Ashley & Eumelin, who practically stood in the shoes of E. E. Weller, the vendor of the automobile. For the reason that a portion of the debt included the premium of insurance paid by Weller, the insurance company refused to compensate the banlc for that amount. Under the circumstances of this case it would be inequitable and unconscionable to require, in substance, that E. E. Weller be responsible for the conversion of the automobile by Miller. Weller by his assignment of the contract did not assume liability for, or insure the bank against the loss by theft, or conversion of the car, either by Miller or anyone else. Weller was by virtue of the assignment only secondarily liable for the payment of the debt to the bank. The plaintiff assumed liability for loss of the car, and by a special clause attached to the policy assumed liability for the conversion of the car by Miller. The plaintiff is entitled to be subrogated to the right of the bank as to any claim against Miller. If the car had been found the next day after plaintiff had paid the loss it would have been entitled to the benefit thereof to the extent of its expenditure.

If Weller by his contract of assignment had become responsible to the bank for the conversion of the automobile by Miller, or if Weller had in any way been the cause of the loss occasioned by the conduct of *504Miller, then the plaintiff would be in an entirely different position.

In Chicago etc. R. Co. v. Pullman, 139 U. S. 79 (35 L. Ed. 97, 11 Sup. Ct. Rep. 490, see, also, Rose’s U. S. Notes), cited by plaintiff, it appears the Pullman Southern Car Company hired ten cars to the railroad company for a certain compensation. The railroad company assumed responsibility for damages to the cars occasioned by “accident or casualty,” while the sleeping-car company assumed responsibility for loss caused by defective heating and lighting apparatus furnished by it. Two of the cars were entirely destroyed by fire originating “from a cause unknown.” At the time of the fire one of the cars was on the railroad track under a depot shed used by the railroad company to store cars when not in actual transit, and the other was in a repair-shop of the railroad company assigned to the exclusive use of and in the possession of the Pullman Company for repairs, where it had been for six months, and except for the fire would have been in condition for use by the railroad company the next day. Both of the lost cars were insured by the Pullman Company. After the fire the insurance companies paid $19,000 in settlement of the loss. Action was brought by the Pullman Company against the railroad company to recover the value of the burned cars, under an agreement between it and the insurance companies that the recovery should be equally divided by them. There was a verdict and judgment for plaintiff. It was held: (1) The losses were within the meaning of the contract ‘ ‘ occasioned by accident or casualty.” (2) As the syllabus reads,

“The collection of the insurance money did not impair the right of the Pullman Company to recover the *505amount of the loss according to the contract with the railroad company. Upon payment of the loss, or to the extent of any payment by them on account of the loss, the insurance companies were subrogated to the rights of the insured and could in its name, or in their joint names, maintain an action against the railroad company for indemnity, if the latter was liable to the insured for the loss of the cars; this, because the liability of the railroad company was, in legal effect, first and principal, and that of the insurer secondary, not in order of time but in order of ultimate liability.”

Further, it was held that the railroad company was responsible for the loss of one of the cars, but not for the one in the exclusive possession of the Pullman Company.

If, in the present case, Weller had stipulated with the bank that he would be responsible for the “theft or conversion” of the car, then the case referred to at length would be authority for the right of plaintiff to subrogation. As it is, the opinion indicates the reverse. In other words, according to the Pullman Company case, in order for an insurer having paid a loss to have the right of subrogation by virtue of a contract between the insured and a third party, such contract should show the primary liability of such third person for the loss of the property insured. The plaintiff insurance company was primarily liable to the bank for the conversion of the car by virtue of its policy, which, to all intent and purpose, defendant purchased and caused to be issued to Ashley & Eumelin.

The policy of insurance contains a subrogation clause which plainly indicated the right of the insurance company in this respect. It reads in part as follows:

*506“Subrogation. If this company shall claim that the loss or damage was caused by the act or neglect of any person or corporation, private or municipal, this Company shall, on payment of the loss be subrogated to the extent of such payment to all right of recovery by the Assured for the loss resulting therefrom, and such right shall he assigned to this Company by the Assured on receiving such payment.”

The facts of this case do not fall within the provisions of the subrogation clause of the policy.

As stated above, Weller was a guarantor of the payment of the contract price, or in the position of a surety, and was secondarily liable for the debt. The contract of insurance did not provide, for insuring the car only to the amount of the value after deducting what might be collected from the guarantor, but for the value thereof to the amount of $350. The liability of the insurer is primary.

In L. R. A. 1916A, page 563, note as to rights under subrogation clause, we find a principle enunciated which is applicable here. It is as follows:

“In Merchants’ Ins. Co. v. Story (1896), 13 Tex. Civ. App. 124, 35 S. W. 68, a mortgagor who took out a policy and conveyed to a vendee who had assumed the mortgage debt was held to be entitled, under the facts, to the rights of a surety as to the mortgagee and insurer, and the vendee, who had exchanged the original policy for a new one, was held to be the mortgagor within the meaning of a subrogation clause in the second policy.
“And it was held that as, under the subrogation clause, the mortgagee and its assigns were entitled to the benefit of the insurance, the sureties were also entitled to the same benefit in the absence of an express provision excluding them, and that such sureties were protected notwithstanding the forfeiture of the policy as to the original mortgagor’s vendee. Ibid. (Tex.)
*507“And it was held that the rights of the sureties could not be defeated merely by the prior purchase of the mortgage by the insurer. Ibid. The court, in stating its conclusions, said, in part: 'In construing the contract and determining the relative priorities as between the sureties for the debt and the insurance company, it is a material consideration that, while the liability of the sureties is clearly secondary, the liability of the insurance company is clearly primary, except to the extent that the contract of insurance expressly shows it to be otherwise, the premium received by the insurance company being considered a full equivalent for the risk assumed by it, and the original mortgagors, who now claim the benefit of the insurance, having paid the premium, and the contract for insurance being a burden on the property, which passed with it.’ ”

37 Cyc. 370, reads: The right of subrogation, as a general rule

“is broad enough to include every instance in which one party is required to pay a debt for which another is primarily answerable, and which, in equity and good conscience, ought to be discharged by the latter, and is the mode which equity adopts to compel the ultimate discharge of the debt by him who, in good conscience, ought to pay it, and to relieve him whom none but the creditor could ask to pay.” (Italics ours.)

6. Weller as guarantor comes within the class that should be relieved under the rule mentioned. No one but the creditor, Ashley & Eumelin, could ask him to pay. When the insurance company paid the $300 on the policy the debt was satisfied to that amount as to Weller, and could not be assigned.

7. There is no brief filed on behalf of defendant. Objection to the judgment is made in plaintiff’s brief, claiming that the trial court failed to make and file findings of facts as required by the statute, Section *508158, Or. L. There is no assignment of error in this regard contained in appellant’s printed abstract of record as required by rule number eleven of this court. No mention is made of the matter in the bill of exceptions.

Neither the transcript, nor the printed abstract of the record, filed in this court shows that no findings of fact and conclusions of law were made. Section 554, Or. L., requires the appellant to file “a transcript or such an abstract as the law or the rules of the appellate court may require, of so much of the record as may be necessary intelligibly to present the question to be decided by the appellate tribunal, together with the copy of the judgment or decree appealed from, the notice of appeal and proof of service thereof, and of the undertaking on appeal; * * ” Section 556, Or. L., directs that upon an appeal from a judgment, the same shall only be reviewed as to questions of law appearing upon the transcript. The appellant is required to file a transcript or abstract of no more of the judgment-roll than is necessary properly to present the question to be decided: See Preface to Bules, 100 Or. 739, 740.

8. It is the invariable rule in this state, that an error must be apparent on the face of the record, or must be made to appear by the bill of exceptions, in order to have it considered by the appellate court. It is not enough merely to assert in the brief that there is an error in the judgment of the trial court: O’Connor v. Van Hoy, 29 Or. 505 (45 Pac. 762); Union Pac. Ins. Co. v. Ferguson, 64 Or. 395, 403 (129 Pac. 529, 130 Pac. 978, 43 L. R. A. (N. S.) 958); Columbia Realty Inv. Co. v. Alameda Land Co., 87 Or. 277, 289 (168 Pac. 64, 440).

*5099. Where a judgment is entered by a court of general jurisdiction all presumptions are in favor of its regularity and validity. The error claimed in the brief is not shown by the record.

Finding no error in the record the judgment appealed from is affirmed. Aeeirmed.

Mr. Justice Burnett dissents.