"[I]t is a well established rule that if an insured settles with or releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurance company, the insurance company's right of subrogation against the wrongdoer is thereby destroyed." Hilley v. Insurance Co., 235 N.C. 544, 549, 70 S.E.2d 570, 574 (1952). Cf. Insurance Co. v. Insurance Co., 49 N.C. App. 32, 38, 270 S.E.2d 510, 514 (1980) (insurer may not be subrogated to greater rights than possessed by insured).
For all that the record shows, that may be the situation here. Since an insured destroys his cause of action on the policy by releasing the tortfeasor after the event, Hilley v. Blue Ridge Ins. Co., 1952 235 N.C. 544, 70 S.E.2d 570, 38 A.L.R.2d 1090; Conard v. Moreland, 1941, 230 Iowa 520, 298 N.W. 628, it might well be argued that by releasing the tenant in advance the landlord destroys his action on the policy against the insurer who lacked notice. Thus, the landlord would stand the loss and all theories of "distribution of risk" would be unavailing.
However, "if an insured settles with or releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurance company, the insurance company's right of subrogation against the wrongdoer is thereby destroyed." Markham v. Nationwide Mut. Fire Ins. Co., 125 N.C. App. 443, 449, 481 S.E.2d 349, 353 (1997) (emphasis added) (internal quotations and citation omitted); see also Lexington Ins. Co. v. Tires Into Recycled Energy and Supplies, Inc., 136 N.C. App. 223, 522 S.E.2d 798 (1999); Hilley v. Blue Ridge Insurance Co., 235 N.C. 544, 549, 70 S.E.2d 570, 574 (1952). This follows the principle that an insurer's subrogation rights may not be greater than the rights of the insured.
We think it is well established that if an insured, without the knowledge of his insurer, effectively releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurance company, he destroys any right of subrogation the insurer may have against the wrongdoer and is, thereafter, precluded from a recovery from his insurer under the policy. Vol. 6, Appleman on Insurance Law and Practice, p. 580, ยงยง 4092, 4093; 6 Blashfield, Cyclopedia of Automobile Law and Practice, ยง 4181; 29A Am.Jur., Insurance, ยงยง 1733, 1735, pp. 810, 811. Also see Hilley v. Blue Ridge Insurance Co., 235 N.C. 544, 70 S.E.2d 570, 38 A.L.R.2d 1090; Libertin v. St. Paul Fire Marine Ins. Co., 74 S.D. 436, 54 N.W.2d 168. For the reasons stated, the judgment must be reversed.
In Levitt v. Simco Sales Service of Penna., Del. Super., 135 A.2d 910, it is held that a judgment for property damage bars an action for personal injury. In Hilley v. Blue Ridge Ins. Co., 235 N.C. 544, 70 S.E.2d 570, 38 A.L.R.2d 1090, it is held that when an insured settles with the tort-feasor the action by the insurer is destroyed. The case of Farmers Ins. Exchange v. Arlt, supra, was an action brought by insured against the claimed tort-feasor.
The rule is that where the language of a contract is free from ambiguity, the ascertainment of its meaning and effect is for the court, and not for the jury. Hilley v. Insurance Co., 235 N.C. 544, 70 S.E.2d 570; Sellars v. Johnson, 65 N.C. 104. We find no ambiguity or uncertainty in the language of the contract before us. Accordingly, it was the duty of the court to declare its meaning.
In fact, the evidence suggests that the subrogation claim did not arise until after Johnson settled with Traveler's. If an insured owner settles with the tort-feasor and releases the tort-feasor from liability before payment of the loss by the insurance company, as apparently was done in this case, the insurer's right to be subrogated against the tort-feasor is thereby lost. Calvert Fire InsuranceCo. v. James, supra. Hilley v. Blue Ridge Ins. Co., 235 N.C. 544, 70 S.E.2d 570 (1952). It follows then that the subrogee's action is barred. For the foregoing reasons, the judgment of the trial court is
He introduced evidence that Aetna's attempt to enforce any subrogation rights against Tervail would not have produced funds in addition to the settlement amount and that Aetna was demonstrably not prejudiced by the settlement. At the conclusion of the nonjury trial, the court ruled as a matter of law that Galinko's settlement and release of Tervail "operated to destroy the defendant Aetna Casualty and Surety Company's right of subrogation set forth in its policy of insurance" and precluded plaintiff from maintaining an action "against Aetna on the policy for uninsured motorists benefits," citing Hilley v. Blue Ridge Insurance Co., 235 N.C. 544, 70 S.E.2d 570 (N.C. 1952). Aetna relies on the following exclusion:
The rationale for the rule is that the release or settlement with the tortfeasor deprives the insurer of its subrogation right granted by the policy, since the insurer only has whatever rights its insured has. A policy requirement that the insured shall do nothing after the loss to prejudice his right of subrogation is generally breached by the insured when he releases or settles with the wrongdoer, and as a result extinguishes his right of action on the policy. Hockelberg v. Farm Bureau Ins. Co., supra; Hilley v. Blueridge Ins. Co., (1952) 235 N.C. 544, 70 S.E.2d 570. However, it is also well settled that the doctrines of waiver and estoppel extend to any ground upon which liability can be denied by an insurer.
To the extent that the parties' intention can be demonstrated by a clear and unambiguous written instrument signed with full knowledge of its contents and without any fraud, mistake, or duress, the matter is a question of law and one to which this court may properly direct its attention upon review and one to which the trial court could properly direct its attention upon defendant's motion for summary judgment. (76 C.J.S. Release ยง 72(f) (1952); Atlantic Coastline R.R. Co. v. Boone, 85 So.2d 834 (Sup.Ct. Fla. 1956); Warrior Constructors, Inc. v. E.C. Ernst Co. 127 Ga. App. 839, 195 S.E.2d 261 (1973); Dial Temp Air Conditioning Co. v. Faulhaber, 340 S.W.2d 82 (Tex.Civ.App. 1960); Hilley v. Blue Ridge Insurance Co., 235 N.C. 544, 70 S.E.2d 570 (1952).) Where, however, the evidence is conflicting regarding the parties' intentions in the execution of a document which is unclear in its terms, the issue is a question of fact for a trier of fact to decide.