
    William E. Hughes v. Hartford Fire Insurance Co. et al.
    1. Subrogation.—While the right of subrogation does not arise by contract, such a right, like all other legal or equitable rights, may be qualified or extinguished by contract.
    2. Construction of contract.—The court is of opinion that the construction of the contract of assignment in this case is, that $5,000 of the money to be realized out of the judgment was to be paid to appellees when collected from the railroad company, and as the amount was paid at the time agreed appellees are not entitled to interest.
    Appeal from the Circuit Court of McLean county; the lion. O. T. Beeves, Judge, presiding.
    Opinion filed December 4, 1885.
    Mr. William E. Hughes, for appellant;
    that a court of equity can not change a contract, cited Vallette v. White Water V. C. Co., 4 McLean, 192; Cassady v. Woodbury, 13 Ia. 113.
    Messrs. Stevenson & Ewing and Mr. Hamilton Spencer, for appellees.
   Conger J.

This was an agreed case the facts of which necessary to an understanding of the point at issue are substantially as follows:

February 14,1872, the Mormal Hotel, a building owned by William A. Pennell, at Mormal, 111., was destroyed by fire, through the negligence, as alleged, of the Chicago & Alton B. B. Co. A suit was instituted against the railroad company for the loss, which finally resulted in a judgment against the company on the 17th day of April, 1882, for $18,000, and on the 17th day of September, 1884, the company paid this judgment, which, with interest thereon, amounted to $20,-527.40 to the cleric of the Circuit Court of McLean county.

When the building was burned the Hartford Fire Ins. Co. and the AEtna Fire Ins. Co. each had a policy of $2,500 thereon, which, within sixty days after the loss, they paid to Pennell, and afterward, in 1877, filed their bill of interpleader against said Pennell and others, claiming the right to be subrogated ■ to the amount of the $5,000 they had paid. The bill was dismissed by the circuit court, and on appeal to the appellate court this decision of the circuit court was reversed and the cause remanded; whereupon, instead of re-docketing the case, the parties made an agreement setting forth that the insurance companies should pay Pennell $250, as their contribution to the costs and expenses of prosecuting the suit against the railroad company; should also furnish attorneys to assist in such suit; and Pennell, in consideration thereof, recognizes the right of the insurance companies to be subrogated to any judgment recovered against the railroad company, and agrees to waive further claim on them foi; contribution for costs jand expenses. April 22, 1882, being a few days after the recovery of the judgment against the railroad company, Pennell assigned the same to Wm. E. Hughes, and Wm. D. Haynie for various purposes, one of which is expressed in .the following language, i. e.;

“The sum of $5,000 is to be received by said Wm. E. Hughes in trust for said Hartford Fire Ins. Co., and the iEtna Fire Ins. Co., in full of their rights of subrogation to said judgment, to be paid to them, or to their attorneys, $2,500 to each company with full power hereby given to said Hughes to re-assign out of the judgment the amount so secured above to said insurance companies or their attorneys. The residue of the said judgment and interest, and all my right, life and interest therein, is hereby assigned absolutely to Wm. E. Hughes, to pay him for his time and attention to said cause; etc.” To carry out the foregoing assignment, Wm. E. Hughes ? on the 25th of April, 1882, executed to Jas. S. Ewing, as attorney for the two insurance companies, an assignment which, after reciting the provision above set forth, says:

“How, therefore, by virtue of the said assignment so made to me by the said Wm. A. Pennell, I do hereby transfer, set over and assign to James S. Ewing, attorney for the Hartford Fire Insurance Company, and for the JEtna Fire Insurance Company, the sum of $5,000, part and parcel of the said judgment now remaining of record in the McLean Circuit Court, to be paid out of said judgment when collected, in favor of Wm. A. Pennell, plaintiff, and against the C. & A. E. E. Co., defendant, dated on or about April 17, 1882, and the said Ewing is hereby authorized to receipt for and settle the said part of said judgment hereby assigned to him, etc.”

On the 18tli day of September, 1884, being the next day after the railroad company paid into court the amount of the judgment against it, by the consent and agreement of counsel the sum of $5,000 was paid to Ewing for the two com anies by the clcik of the court, under.'an order of the court directing such payment.

Upon the foregoing facts it is claimed by the insurance companies that they are entitled to receive so much of the interest upon said judgment of $18,000 against the C. & A. E. E. Co. as accrued upon their $5,000, amounting to $725, and the circuit court so held, which decision is assigned for error.

It is insisted by appellant that the rights of the appellees arise out of and must be governed by the contract of assignment; while appellees deny this proposition and urge that no claim for subrogation ever grows out of a contract. It arises, if at all, by operation of law, and that appellees’ right of subrogation arose at the moment they paid the amount of their insurance.

We fully assent to this latter proposition, but are unable to see its application to the case at bar. While it is true the right of subrogation does not arise by contract, such a right, like all other legal or equitable rights, may be qualified, or extinguished by contract. We are therefore of opinion that the question presented must be determined by the construction to be given to the assignments; for whatever the original rights of the parties may have beén under the doctrine of subrogation, they are now controlled and defined by the contract of assignment.

By the assignment of Pennell it will be noticed it is the sum of $5,000 that is to be received by Hughes in trust for the insurance companies, to be paid to them, with full power given Hughes to re-assign, out of the judgment, the amount so secured, leaving the residue of the judgment and interest in Hughes as compensation for his services to Pennell.

It is not a portion of the judgment itself which is thus transferred, but a sum of money to be paid out of the judgment. In Hughes’ assignment the same language’ is used, except the words “ part and parcel of the said judgment” are added; but these words do not change the meaning it had before; they only serve to point out more definitely the source from which the money was to be derived.

Again, the language, “to be paid out of said judgment when collected,” is inconsistent with the theory that a portion of the judgment itself was intended to he transferred, for in such case tlie assignee would own and control such portion so assigned him, and the further statement that such portion should be paid him would be useless.

We think the reasonable construction of all lie language contained in the two assignments is, that So,000 of the money to be realized out of the judgment was to he paid to appellees when collected from the railroad company. The amount was so paid in strict accordance with tlie terms of the contract, and at the time agreed upon, and therefore we think appellees were not entitled to the interest claimed, but that it must be left in the hands of appellant, where it seems Pennell, by his deed of assignment, intended to leave it. The judgment will he reversed and the cause remanded.

Be versed and remanded.  