Hilley v. Blue Ridge Insurance

70 S.E.2d 570 (1952) 235 N.C. 544

HILLEY
v.
BLUE RIDGE INS. CO.

No. 521.

Supreme Court of North Carolina.

May 7, 1952.

Horace Kennedy, Shelby, for defendant appellant.

Frank P. Cooke, Gastonia, R. R. Friday, Gastonia, for plaintiff appellee.

WINBORNE, Justice.

The sole question presented on this appeal is based upon exception by defendant to the ruling of the trial court in overruling its motion for judgment as of nonsuit.

Defendant contends, and we hold properly so, that since the terms of the policy of insurance, and of the release given by plaintiff to Southern Railway Company are in writing, and free from ambiguity, and are in evidence, the ascertainment of their meaning and effect is for the court and not for the jury.

The terms of the condition of the policy relating to subrogation are clear, and speak for themselves. Likewise the terms of the release are clear, and speak for themselves. Brock v. Porter, 220 N.C. 28, 16 S.E.2d 410. Hence the ascertainment of their meaning and effect is for the court, and not for the jury. Young v. Jeffreys, 20 N.C. 357; Patton v. Sinclaire Lbr. Co., 179 N.C. 103, 101 S.E. 613; Drake v. City of Asheville, 194 N.C. 6, 138 S.E. 343.

One of the conditions on which the policy of insurance here involved was issued provides that "in the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights," and that "the insured shall do nothing after loss to prejudice such rights."

This clearly and expressly gave to the insurance company right of subrogation—and obligated the insured, the plaintiff, to secure to it such right, and to do nothing after loss to prejudice such rights.

On the other hand, the terms of the release read as follows:

"I, J. B. Hilley, H. D. Darnell and T. G. Yearwood of Gastonia, North Carolina, in consideration of the payment to me/us by Southern Railway Company of the sum of One Dollar ($1.00) and other valuable considerations, the receipt of which is hereby acknowledged, hereby release and forever discharge the said Southern Railway Company from any and all claims, demands, actions, or causes of actions of any kind whatsoever which I/we have or could hereafter have on account of, arising out of, or in connection with, personal injuries and property damages at or near Lowell, North Carolina, on or about the 21st day of January 1951. This release is fully understood by me/us and constitutes the entire agreement between the parties hereto and is executed solely for the consideration above expressed without any other representation, promise or agreement of any kind whatsoever." Thus it appears that plaintiff has released and discharged the railway company "from any and all claims, demands, actions, or causes of actions of any kind * * * arising out of or in connection with * * property damages" at time and place in question.

And in this connection this Court, in opinion by Barnhill, J., in Service Fire Ins. Co. of New York v. Horton Motor Lines, Inc., 225 N.C. 588, 35 S.E.2d 879, 880, in keeping with prior decisions, declared: "When property upon which there is insurance is damaged or destroyed by the negligent action of another, the right of action accruing to the injured party is for an indivisible wrong—and a single wrong gives rise to a single indivisible cause of action * * *. The whole claim must be adjudicated in one action * * *. The cause of action abides in the insured through whom the insurer, upon payment of the insurance, must work out his rights", citing Powell & Powell v. Wake Water Co., 171 N.C. 290, 88 S.E. 426, Ann. Cas.1917A, 1302; 1 Am. Jur. 493.

And it is a well established rule that if an insured settles with or releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurance company, the insurance company's right of subrogation against the wrongdoer is thereby destroyed. Appleman on Insurance Law and Practice, Vol. 6, p. 580, Sec. 4092.

Hence plaintiff, in the present action, having released the railway company from liability for the loss caused by the collision of its train and plaintiff's automobile, covered by the policy here involved, and before payment of loss by the insurance company, the insurance company's right of subrogation is destroyed. Hence, the condition as to subrogation as set forth in the policy has been breached.

The question then arises as to the effect of such breach on right of plaintiff, the insured, to maintain against the insurance company an action on the policy for loss.

While this question appears to be one of first impression in this State, we find that courts of other States, in well reasoned opinions have passed upon the question, and that text writers have treated the subject. The purport of these is that where the insured releases his right of action against the wrongdoer before settlement with the insurer, that release destroys, by operation of law, his right of action on the policy. Farmer v. Union Ins. Co., 146 Miss. 600, 111 So. 584; Packham v. German Fire Ins. Co., 91 Md. 515, 46 A. 1066, 50 L.R.A. 828, 80 Am. St. Rep. 461; Auto Owners' Protective Exchange v. Edwards, 82 Ind.App. 558, 136 N.E. 577; Maryland Motor Car Ins. Co. v. Haggard, Tex.Civ.App., 168 S.W. 1011; Superior Lloyd's of America v. Boesch Loan Co., Tex.Civ.App., 1941, 153 S.W.2d 973; Remedial System of Loaning v. New Hampshire Fire Ins. Co., 227 Ky. 652, 13 S.W.2d 1005; Brown v. Vermont Mut. Fire Ins. Co., 83 Vt. 161, 74 A. 1061, 29 L.R.A.,N.S., 698; Couch's Enc. of Insurance Law, Vol. 8, Sec. 2003, p. 6610; Appleman on Insurance Law and Practice, Vol. 6, Chap. 176, Sec. 4093, p. 587, and cases there cited; 29 Am.Jur. Insurance, Sec. 1344; Ann. 26 A.L.R. 429, at 432; Ann. 54 A.L.R. 1454, at 1456.

Hence we hold in the present action that, having released the railway company, before defendant, the insurance company, had paid the loss, and thereby destroyed the insurance company's right of subrogation, the plaintiff destroyed his right to maintain an action against the insurance company on the policy for the loss in question.

Therefore, motion of defendant for judgment as of nonsuit should have been sustained.

Reversed.