St. Paul Fire & Marine Insurance v. W. P. Rose Supply Co.

198 S.E.2d 482 (1973) 19 N.C. App. 302

ST. PAUL FIRE AND MARINE INSURANCE COMPANY
v.
W. P. ROSE SUPPLY COMPANY.

No. 738DC525.

Court of Appeals of North Carolina.

August 29, 1973. Certiorari Denied November 1, 1973.

C. K. Brown, Jr., Raleigh, for plaintiff appellant.

Smith & Everett, by James N. Smith, and James D. Womble, Jr., Goldsboro, for defendant appellee.

Certiorari Denied by Supreme Court November 1, 1973.

VAUGHN, Judge.

Insured's counsel took the position that the claim against the Tort-feasor could not be split and maintained suit for the total damages. His view is supported by Hardware Mutual Fire Insurance Co. v. Sheek, 272 N.C. 484, 158 S.E.2d 635. There the court said: "When the insurer pays only a part of the loss, the insured must bring the suit for the entire loss in his own name.. . . The sole right to sue in this case was in Ogburn, the insured whose property was negligently damaged." Similarly, in Phillips v. Alston, 257 N.C. 255, 125 S.E.2d 580, the court said:

"When the sum paid is only partial compensation, the owner is a necessary party to an action against a tortfeasor. If he desires full compensation for his loss, he should bring the suit. If he refuses, insurer may sue, making the owner a party defendant."

In Nationwide Mutual Insurance Co. v. Spivey, 259 N.C. 732, 131 S.E.2d 338, the court approved a suit by an insured against a Tort-feasor wherein the insured had limited his claim to the uncompensated part of his loss. In Spivey the court said, "It should be noted . . . the insured may recover, not that he must recover, the full loss. True, the Tort-feasor cannot be compelled against his will to defend two actions for the same wrong. His remedy, if sued by the injured party for the uncompensated portion of the loss and he wishes to settle the entire controversy in one action, is to require a determination of the entire damage to the motor vehicle. To accomplish that purpose he would be entitled to have the insurance carrier made a party." With respect to the Insured in the present case, therefore, without regard to whether it might have limited its claim against the Tort-feasor to its uncompensated loss, it could and did properly sue for the entire loss. The Insurer would have been a proper, but not necessary party. Burgess v. Trevathan, 236 N.C. 157, 72 S.E.2d 231.

Insurer urges that its right of subrogation requires that Insured's partial recovery against the Tort-feasor be prorated between Insured and Insurer in the ratio that their respective loss bears to the cash received. Insurer also argues that its share should be calculated without regard to expenses for counsel that Insured incurred in the prosecution of the suit against the Tort-feasor which resulted in the recovery of the funds in dispute.

In Powell & Powell v. Wake Water Co., 171 N.C. 290, 88 S.E. 426, the court said:

"The great weight of authority is. . . that, when the loss exceeds the insurance, as the cause of action is indivisible and the right of the insurer is not because of any interest in the property destroyed or damaged, and is enforced upon the equitable principle of subrogation, the action must be brought by and in the name of the owner of the property, and that he is entitled to recover the entire damages, without diminution on account of the insurance, and that he holds the recovery first to make good his own loss, and then in trust for the insurer.. . ." (Emphasis added).

Although Powell & Powell v. Wake Water Co., supra, did not involve subrogation rights under an automobile collision policy, there seems to be no reason why the owner of such a policy should not hold his recovery "first to make good his own loss." When the sum recovered by the Insured from the Tort-feasor is less than the total loss and thus either the Insured or the Insurer must to some extent go unpaid, the loss should be borne by the insurer for that is a risk the insured has paid it to assume.

The Insurer declined to bring, participate in or assist with the action against the Tort-feasor. On this record Insured's action on the claim against the Tort-feasor was brought in good faith and there is no indication that the expenses incurred, including counsel fees paid by him, were unreasonable. On these facts if the Insured is to "first make good his own loss" he must recover these expenses before the Insurer is entitled to reimbursement. The judgment of the trial court is in accord with the principles expressed in most of the cases dealing with reimbursement of a subrogated Insurer by the Insured. See 44 Am.Jur.2d, Insurance, § 1846, p. 773.

Affirmed.

BROCK, C. J., and HEDRICK, J., concur.