Allied American Mutual Fire Insurance v. Loveman

Hammond, J., delivered the opinion of the Court. Insurance manuals reveal that Allied American Mutual Fire Insurance Company is one of the very few large writers of casualty insurance that has not shown an underwriting loss in any of the last few years. A hint of why may appear in the appeal before us. In an effort, as subrogee, to collect $425.00 paid to an insured, Allied sued twice, in different jurisdictions, and has appealed to this Court to reverse the judgment against it rendered by the Circuit Court for Baltimore County in the Maryland suit.

Allied indemnified Loveman against loss from damage to his motor vehicle less the first $50.00 of such loss — that is to say, it issued to him its fifty dollar deductible policy. In September, 1951, Loveman’s car was struck by a car owned and driven by one Memler. Loveman and Allied haggled for nine months over the amount of the damage, agreed on $475.00 — the receipted repair bill was $437.04 — and Allied paid him $425.00, on the strength of his statement in the proof of loss he signed and swore to that Allied was subrogated to his rights of recovery against any person to the extent of the payment made. (This statement was declaratory of Allied’s rights as an indemnitor who had paid a loss under its liability insurance contract. 2 Richards, Insurance (5th ed.), Sec. 184).

Before the payment — indeed eighteen days after the accident — Loveman, through his lawyer Horowitz, had filed suit in the District of Columbia against Memler, claiming damage for injuries not only to his person but to his car and for the loss of its use. Eight months later, in June, 1952, Loveman received a letter from Allied’s Washington lawyers, enclosing subrogation forms and saying they wTould endeavor to collect “the entire amount of the loss that was sustained by Allied * * * and by you * * *” at a fee of 25% of the amount recovered, and asking advices as to ⁶⁶ “any additional items of damage which should be included in any suit filed on your behalf.” Loveman says he wrote them back after a long delay, sending the forms and telling them he understood that since their letter they had “been in touch with my attorney, Mr. Horowitz, and received all information from him.” Loveman says he wrote further that he understood Horowitz had withdrawn the claim for property damage in the pending suit and added “I have a claim for $385.00 * * * which I paid for rental of a car while my car was disabled, together with $35 for taxicabs and other transportation. In addition the frame is still out of line and other damage to the car is still unrepaired to my damage in the amount of $450 — which should be added to your claim.” Apparently Loveman thereafter had no communication with or knowledge of those lawyers or of what they had done. On January 8, 1954, Horowitz filed a pretrial statement in Love-man’s suit against Memler, alleging and claiming damages to the automobile of $437.04 (the amount of the receipted bill) as well as $400.00 for loss of use of the vehicle.

Two weeks later, settlement in the amount of $5,500.00 was agreed to, and Loveman signed a release, acknowledging under oath “that he fully understands its contents * * In the release Loveman discharged Memler and all others responsible for “injuries to the person and property of the Undersigned, and the treatment thereof, and the consequences flowing therefrom * * Horowitz deducted his fee of $1,600.00 and sent Loveman a check for $3,900.00 but stopped payment on the check before it was cashed. This was done to enable Horowitz to retain $900.00 to pay the doctor who had treated Loveman, and Allied. Loveman reluctantly signed a paper agreeing to leave with Horowitz the money for those payments and got his $3,000.00. Then he immediately retained another lawyer to compel Horowitz to pay over the $900.00.

Finally, it was agreed that the doctor should be paid but that Allied’s $425.00 should be turned over to Loveman. Not only is Loveman’s persistence explained by a sentence of his testimony but that sentence also shows the feelings that have led to, and supported, as a defense, a rationalization of his belief that he was being imposed on by being asked to pay ⁶⁷ Allied. He testified he did not owe the $425.00 “because it was up to Allied to get that from Memler, and I had paid a premium on my policy and was entitled to that money and shouldn’t have to pay it back.” In February, 1954, a month after the settlement, Allied sued Horowitz in Washington for its $425.00, alleging he had been put on notice of its interest in the suit and had promised to protect that interest. In August, 1954, Allied sued Love-man in the case before us, and in May, 1955, dismissed the suit against Horowitz with prejudice.

No question is raised as to the