Dilling v. Draemel — 16 Daly (N.Y.) 104

Majority

p. 104

Karl Dilling, Respondent, against William Draemel, Appellant.

(Decided April 7th, 1890.)

Headnote

Plaintiff’s goods, .insured against loss through collapse of building, were injured by the fall of a wall of the building in consequence of his landlord’s excavating on an adjoining lot, and he brought action against the landlord therefor. The action was settled on payment of a certain' sum, and a release under seal was given against all claims or demands whatsoever. Held, that such release barred a subsequent action by plaintiff on his insurance policy to recover any part of such loss, as it destroyed the right of subrogation of the company.

Appeal from a judgment of the District Court in the City of New York for the Fourth Judicial District.

The facts are stated in the opinion.

Simon Sultan, for appellant.

Shorter Schaffer, for respondent.

The plaintiff held a certificate as a member of a voluntary association insuring his furniture and household goods against loss, “ either immediate through fire, explosion, or collapse of building, or mediate through water in extinguishing the fire.” Subsequently the easterly wall of the house he occupied fell in consequence of an excavation made upon an adjoining lot. Plaintiff in the first instance claimed that his landlord was liable to him in tort as a wrongdoer by reason of the falling of the wall, and brought an action against him to recover damages for the loss, among other things, to his goods, merchandise, and other property. The action was settled in consideration of $300, paid by his landlord to the plaintiff, whereupon he executed and delivered to the latter a general release under seal against all claims, dues, and demands whatsoever. Thereafter he brought this

p. 105

action to recover that proportion of his loss over the amount of $300, claiming that he had a discretion at his own pleasure to apportion such loss. He recovered a judgment, from which this appeal is taken.

The case was decided in the court below upon the theory that the plaintiff had not received all the damages sustained by him from the wrongdoer, and that, although he had absolutely released the wrongdoer, such action might be maintained.

It is well settled that if a loss under a policy of insurance is occasioned by the wrongful act oka third party, the insurer occupies the position of a mere surety, and the wrongdoer that of a principal debtor; and all the. incidents of suretyship attach to the position of the underwriter in such a case, including the right of subrogation (Hall v. Nashville, etc., R. Co., 13 Wall. 367 , 373). The same principle is applicable to a contract of insurance if the surety destroys the remedy of subrogation, and relieves the assurer to the full extent to which the wrongdoer could have been made liable for the loss (Sheldon on Subrogation, § 222; Atlantic Ins. Co. v. Storrow, 5 Paige 285 ).

Both parties rely upon the case of Connecticut Fire Ins. Co. v. Erie R. Co. ( 73 N. Y. 399 ). A careful examination of that case shows that it is an authority against the ruling of the court below. That action was brought by an underwriter to recover from the Erie Railroad Company, under the right of subrogation, the amount paid by the underwriter to the assured; a release was given by the assured to the company, which was not absolute in terms as is the release in this case. The release in the case cited contained a statement that the settlement did not include any claim the assured had against the underwriter, and the court held that because of that reservation the right of subrogation of the underwriter was preserved as against the railroad company, and that the release was limited and by its terms preserved the rights of the insured to collect what the insurance company owed him. The release in this case is a general absolute release without

p. 106

any such reservation, and the $300 paid cannot be considered as a payment pro tanto for the loss. Such a release destroyed the right of subrogation. If the assured by his own act absolutely and without reservation releases the wrongdoer, he thereby discharges the insurer to the full extent to which he has defeated the insurer’s remedy over by right of subrogation (Atlantic Ins. Co. v. Storrow, supra; Carstairs v. Mechanics & c. Ins. Co., 18 Fed. Rep. 473 ).

The judgment appealed from should be reversed, with costs.

Bischoff, J., concurred.

Judgment reversed, with costs.

Cases cited

Hall v. Railroad Companies 13 Wall. 367 SCOTUS at 373 p. 105
Connecticut Fire Insurance v. Erie Railway Co. 73 N. Y. 399 N.Y. 1878-04-23 p. 105