Hardware Dealers Mutual Fire Insurance v. Sheek , 272 N.C. 484 ( 1968 )

158 S.E.2d 635 (1968) 272 N.C. 484

HARDWARE DEALERS MUTUAL FIRE INSURANCE COMPANY
v.
Gorrell R. SHEEK.

No. 451.

Supreme Court of North Carolina.

January 12, 1968.

Womble, Carlyle, Sandridge & Rice, by W. P. Sandridge, Jr., Winston-Salem, for plaintiff appellant.

Deal, Hutchins & Minor, by Roy L. Deal, Winston-Salem, for defendant appellee.

HIGGINS, Justice.

By proper assignments of error, the plaintiff contends the trial court committed errors of law: (1) by allowing the defendant's motion to amend his answer to allege the plaintiff, having paid only a part of the loss, is not the real party in interest; (2) by refusing to permit the plaintiff to amend the complaint by making the insured an additional party; and (3) by dismissing the action.

Our cases seem to establish the proposition that when an insurer of property pays the insured's loss, he is subrogated to the extent of the payment to insured's claim against the wrongdoer who caused the damage. If the sum paid covers the entire loss, the insurer is subrogated to the entire cause of action and may sue the wrongdoer without making the insured a party. When the insurer pays only a part of the loss, the insured must bring the suit for the entire loss in his own name. He becomes a trustee for the insurer to the extent of the amount the insurer has paid. If the insured refuses to bring the suit, the insurer may sue in its own name, for the amount it has paid, and make the insured a party defendant. The wrongdoer is entitled to have the amount of his liability determined in a single action. Shambley v. Heating Co., 264 N.C. 456, 142 S.E.2d 18, 13 A.L.R.3d 234; Phillips v. Alston, 257 N.C. 255, 125 S.E.2d 580; Burgess v. Trevathan, 236 N.C. 157, 72 S.E.2d 231; Gaither Corp. v. Skinner, 241 N.C. 532, 85 S.E.2d 909; Smith v. Pate, 246 N.C. 63, 97 S.E.2d 457.

The defendant, in term, applied for leave to amend his answer two days after he ascertained the plaintiff insurer had paid the full amount of the coverage but had not paid the full amount of insured's loss. The plaintiff does not challenge this contention. The application for leave to amend the answer was addressed to the sound discretion of the trial court. The order allowing the amendment was made in term. Notice was not necessary. Burrell v. Transfer Co., 244 N.C. 662, 94 S.E.2d 829; Harris v. Board of Education, 217 N.C. 281, 7 S.E.2d 538; Coor v. Smith, 107 N.C. 430, 11 S.E. 1089; Chappell v. Winslow, 258 N.C. 617, 129 S.E.2d 101. The Court did not commit error of law in allowing the amendment to the answer.

The answer, as amended, discloses a complete defense to the plaintiff's action. It was not brought by the real party in interest. The plaintiff moved to amend the complaint by making Ogburn Station Furniture and Hardware Company, Inc. a party. In the written motion to amend, the plaintiff alleges the insured's loss exceeded the amount of plaintiff's coverage. When the Court ascertained this fact in the pre-trial conference, the Court concluded the plaintiff could not maintain the action. This Court said, in Shambley v. Heating Co., supra, 264 N.C. at 458, 142 S.E.2d at 20:

"The defendants have the right to demand that they be sued by the real party in interest and by none other. * * * Having decided the plaintiffs cannot maintain this action, the court, even under its broad power to allow amendment, was without power in this case to permit the addition of a new party whose presence before the court might bring back to life a dead cause of action. ``The court has no authority, over objection, to convert a pending action which cannot be maintained into a new and independent action by admitting a party who is solely interested as plaintiff.' Graves v. Welborn, 260 N.C. 688, 133 S.E.2d 761, 3 A.L.R.3d 1225; Orkin Exterminating Co. v. O'Hanlon, 243 N.C. 457, 91 S.E.2d 222. ``Ordinarily, an amendment of process and pleading may be allowed in the discretion of the court to correct a misnomer or mistake in the name of a party. * * * But not so where the amendment amounts to a substitution or entire change of parties.' Bailey v. McPherson, 233 N.C. 231, 63 S.E.2d 559."

The sole right to sue in this case was in Ogburn, the insured whose property was negligently damaged. The plaintiff discharged a part of the loss, but the sole right to sue still remained in Ogburn. The plaintiff had the legal right to demand that the insured assert its claim against the wrongdoer and to hold in trust for it so much of the recovery as was required to reimburse it for the amount paid. In the event the insured refused to prosecute its claim, the insurer could sue both the insured and the wrongdoer.

In denying the motion to amend the complaint by inserting a new party who had the sole right to assert the cause of action against the wrongdoer, the trial court followed the decisions of this Court. The judgment dismissing the action is

Affirmed.