U.S. Casualty Co. v. State Highway Dept.

It seems to me clear, under the Act of 1928, 35 Stat., 2055, that a person injured in his person or property under the circumstances detailed in the Act has a cause of action against the State Highway Department for damages, that as a prerequisite to the maintenance of such an action he must file a claim therefor, with the department, within ninety days from the date of the injury, and that he must institute his action for damages within six months from the same date.

The plaintiff, an insurance company, had issued a policy to one Foor, upon his automobile, in the sum of $1,200; the car was damaged under circumstances which, it will be assumed, gave the owner a cause of action against the department, upon his compliance with the terms of the Act; the insured entered a claim against the insurance company, under his policy, but did not file a claim therefor with the department, or institute an action against it, within the times required by the Act; the insurance company paid to the owner the amount of damage, and brings this action, claiming to be subrogated to the rights of the owner against the department.

The department entered a demurrer to the complaint upon the general ground, with specifications, only two of which I think need to be considered: (1) That it does not appear from the complaint that a claim for damages was filed by the owner or by the plaintiff, within ninety days as required by the Act; (2) That the Statute which waives the immunity of the State from suit upon certain grounds does not provide for such waiver of immunity from a suit of the nature disclosed in the complaint. Both of these grounds were overruled by his Honor, Judge Shipp, in an order from which the department has appealed.

I agree with the disposition of the exception assigning error in overruling the first ground above stated, for the reasons stated in the opinion of Mr. Justice Blease. If the claim of the insurance company to subrogation could be sustained, it could only be to the cause of action which the owner of the car may have had against the department, and, the complaint containing no allegation that a claim was filed within the time required, it is fatally lacking in an essential element of a cause of action under the Act. But I do not agree with the disposition of the second ground. The fundamental error in the conclusion announced, I think, lies in the apparent conception that the Act of 1928 created a liability upon the department, as an agency of the State. All that it did was to waive the immunity from suit. The Legislature had no right to impose a liability upon the State for an act for which it was not legally responsible; it did have the right to waive the State's immunity from suit on account of an Act for the consequences of which, but for the constitutional immunity from suit, it was liable.

In the case of Sandel v. State, 115 S.C. 168,104 S.E., 567, 571, 13 A.L.R., 1268, which involved a special Act permitting suit upon a claim based upon the use of impure vaccine by the board of health, a state agency, the Court said: "The Act does not create a liability which did not exist before its passage. The liability is one that is recognized by the common law. The only obstacle that lay in plaintiff's path to the enforcement of it was the State's immunity from suit, without its consent. The Act, therefore, by giving consent,merely provides a remedy where none existed before."

This ruling is confirmed in the later case of Sandel v.State, 126 S.C. 1, 119 S.E., 776, an enbanc decision.

It is so with the Act in question; it necessarily recognized the liability of the State, else it could not stand, for the reason, as stated, that the Legislature could not create a liability that did not previously exist.

Prior to the passage of the Act, there was an existing liability upon the State for the consequences of the neglect of the department, but with no remedy to the injured person for the enforcement of this liability. The Act, necessarily recognizing this existing liability, provides the missing remedy by removing the cloak of immunity which theretofore was a protection against such enforcement. There resulted a fixed liability and a fixed remedy for its enforcement.

The right of subrogation in the person who has indemnified another (with whom he has contractual relations to that effect), to recourse against a wrongdoer, is nothing more or less than an equitable assignment of the rights of the injured person against the wrongdoer.

In 25 R.C.L., it is said: "According to the great weight of authority, however, it is not essential to a complete legal subrogation that the one to whose rights another is subrogated shall make a formal assignment of securities or other rights to which the surety becomes entitled, even where subrogation is claimed to the original obligation itself. As soon as the right to subrogation arises, equity makes the assignment and hence, the right of the person entitled by no means depends on, or is affected by, the willingness or unwillingness of the creditor to transfer the security."

The controlling issue, then, is whether the owner possessing this fixed claim (if established), and the fixed remedy under the Act, had the right to assign his claim to the insurance company or to any one else. Under ordinary circumstances, I do not think that there could arise a question as to the right of a person who had suffered injury to hisproperty, by the wrongful act of another, to assign his claim for damages against the wrongdoer, to another.

In Miller v. Newell, 20 S.C. 123, 47 Am. Rep., 833, the Court said: "Torts, in their effects, may be divided into two classes, to wit: those which affect injuriously the estate, real or personal, of a party, and those which cause injuries strictly personal; those which survive to the administrator and those which die with the party injured. It appears that those which affect the estate may be assigned, but those of a personal character cannot." See, also, Ex parte Hiers, 67 S.C. 108,45 S.E., 146, 100 Am. St. Rep., 713.

In Evans v. Watkins, 112 S.C. 419, 100 S.E., 153, 154, the Court said: "The right of action being an injury to property was assignable" — citing Miller v. Newell, 20 S.C. 123. 47 Am. Rep., 833, and Montgomery v. Kerr, 1 Hill, 291.

But it is insisted that, because the Act does not give the assignee of a claim by the owner against the department the right to sue, under the rule of strict construction, he does not come within its protection. I think that this is an exceedingly narrow and unjustified contraction of the purpose of the Act, which evidently was that the department should be held responsible for the consequences of its delicts. But, aside from this, when the State invests one of its citizens with a fixed right and a fixed remedy, it follows necessarily that it intended to invest him with every incident of those rights, one of which is the right to assign them.

If there had been no insurance upon the car at all, and the owner, after the destruction of his car, by reason of the negligence of the department, would assign his claim against the department to a bank as collateral to a loan with which to buy another car, or to a dealer in the purchase of such, could it be successfully contended that the assignee had no cause of action against the department because he was not mentioned in the Act?

And there was insurance upon the car in the present instance, can it rightfully be held that the owner's acceptance of the insurance canceled the statutory responsibility of the department? That conclusion would lead to the illogical result that the department, admittedly liable for the loss of the car to the owner, is relieved entirely from liability by reason of the collection of insurance by the owner; in other words, it would receive the full benefit of insurance without having to pay a cent for it.

Would it be contended that the claim of the owner against the department would not descend to his executor or administrator because such representative was not named in the Act?

I do not think that it is necessary to cite any other authority upon this proposition than the case of Spiller v. R. Co.,253 U.S. 117, 40 S.Ct., 466, 473, 64 L.Ed., 810. In that case a provision in the Interstate Commerce Act that makes a common carrier, for anything done contrary to the prohibition of the Act, "liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this Act," was under review. The point was made there, as here, that the assignee of the original claimant could not claim the benefit of the statute. The Court said: "Section 16 as amended (34 Stat., 590) (49 USCA § 16) provides that where an award of damages is made by the commission and the carrier does not comply with the order, `the complainant, or any person for whose benefit such order was made' may bring suit. Stress is laid upon the absence of language expressly extending the remedy to the representatives or assigns of the person aggrieved; but we attribute no controling significance to this. The provisions of the Act giving redress, compensatory in its nature, to persons sustaining pecuniary injury through the violation of public duty by the carrier must receive a reasonably liberal and not a narrow interpretation. A claim for damages sustained through the exaction of unreasonable charges for the carriage of freight is a claim not for a penalty but for compensation, is a property right assignable in its nature Comegys v.Vasse, 1 Pet., 193, 213, 7 L.Ed., 108; Erwin v. UnitedStates, 97 U.S. 392, 395, 396, 24 L.Ed., 1065), and must be regarded as assignable at law, in the absence of an expression of a legislative intent to the contrary."

I think, therefore, that the demurrer should have been sustained upon the first ground above discussed; and that as to the second ground it be declared as the law that an insurance company which pays damages for an injury to a car, caused by the neglect of the State Highway Department, is subrogated to the rights of the owner against the department.