Dilling v. Draemel — 30 N.Y. St. Rep. 435

Majority

p. 435

Karl Dilling, Resp’t, v. WIlliam Draemel, App’lt.

(New York Common Pleas,

General Term,

Filed April 7, 1890.)

Headnote

Insurance (Fire)—Release op wrong-doeer relieves the insurer.

Plaintiff was a member of a voluntary association insuring his building against loss by Are or collapse. The wall of the building fell by reason of an adjoining excavation. An action against his landlord therefor was settled on payment of $300, plaintiff giving a general release. Held, that such release deprived the association of its right to subrogation, and relieved it from liability.

Appeal from fourth district court.

S. Sultan, for app’lt; Shorter & Schaffer, for resp’t.

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 fire.” Subsequently the easterly wall of the house he occupied fell in consequence of an excavation made upon the adjoining lot. Plaintiff, in the first instance, claimed that his landlord was liable to him in tort as a wrong-doer 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. That 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

p. 436

claims, dues and demands whatsoever. Thereafter he brought this 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 wrong-doer, and that, although he had absolutely released the wrong-doer, such action might be maintained.

It is well settled that if a loss under a policy of insurance is occasioned by the wrongful act of a third party, the insurer occupies the position of a mere surety and the wrong-doer 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. 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 wrong-doer could have been liable for the loss. Sheldon on Subrogation, § 222 ; Atlantic Ins. Co. v. Storrow, 5 Paige, 285.

Both parties rely on the case of Conn. Fire Ins. Co. v. Erie R. 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 R. R. Co., 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 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 release without 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 wrong-doer, 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. Mech. & Traders' Ins. Co., 18 Fed. Rep., 473 .

The judgment appealed from should be reversed, with costs.

Bischoff, J., concurs.