
    The Lake Erie & Western Railroad Co. v. Falk and The Phoenix Insurance Co.
    
      Liability of railway company for loss from fire on adjacent property— Act of April 26, 1894 — Question of evidence as to cause of fire — Limitation of liability — Subrogation of insurer of property to rights of owner.
    
    
      1. In an action against a railroad company to recover the value of property destroyed by fire, the liability of the company is, under the provisions of the act of April 26, 1894, “making railroad companies liable for loss or damage by fire in certain cases, and prescribing rules of evidence,” (91 O. L., 187) established when it is admitted or proved that the fire which caused the destruction originated on the land of the company and was caused by the operation of its road.
    
      2. When the property so destroyed under circumstances which make the company liable therefor is insured, the right of the owner as against the railroad company and the insurer is limited to indemnity for his loás.
    3. The ultimate liability for such loss is upon the railroad company, and in an action brought for its enforcement, the owner and the insurer being parties, there should be a recovery for the value of the property destroyed without deduction on account of payments made to the owner by the insurer in discharge of-the obligation imposed by its policy.
    4. In an action brought by the owner against the railroad company to enforce such liability an insurer, having before the termination of the action, made payment to the owner on account of such loss, should intervene for the purpose of being subrogated to the rights of the owner to the extent of such payment, and the amount recovered from the railroad- company should be adjudged to the owner and the insurer according to their respective interests.
    (Decided March 20, 1900.)
    Error to the Circuit Court of Hancock County.
    Falk brought suit in the court of common pleas against the railroad company to recover the value of a grain elevator and chattel property within it, which were destroyed by fire on the 17th of August, 1895. He alleged that his said property was near the line of the defendant’s railroad and that the fire originated upon the land belonging to the railroad company and was caused by operating the road. He also alleged that the company negligently omitted to use a spark arrestor or other appliance to prevent the emission of sparks from the locomotive, from which negligence the fire originated. The value of the building was alleged to have been $2,100, the value of the chattels sufficient to increase his loss to $2,519.95, for which he prayed judgment.
    In its answer the Railroad Company admitted its corporate character and the destruction by fire of the plaintiff’s property on the day stated. It denied every other allegation of the petition. Its answer also contained the following allegations:
    
      Tlie defendant for further answer says, that the damage to plaintiff on the loss of said elevator by the fire set out in the petition was $1,437 34-100 and no more, and such loss to the amount of $1,200.00 was compensated and paid to plaintiff by the Phoenix Insurance Company of Brooklyn, New York, and the only loss on said elevator was tbe sum of $237 34-100 at the time this actipn was brought.
    Defendant says that all loss and damage to plaintiff by reason of the loss of grain by said fire was the sum of $264.95 and no more, and such loss and damage was fully and wholly compensated to plaintiff by the payment to him by The Phoenix Insurance Company of Brooklyn, New York, the sum of $264.95 in money.
    Such payments were made to plaintiff by said The Phoenix Insurance Company, of Brooklyn, New York, in the regular course of business of said company, for the consideration of a cash premium to said company, paid by plaintiff, in the sum of $29 75-10,0, for which consideration said company agreed in writing to make good to plaintiff such loss if it should occur.
    Defendant says that said The Phoenix Insurance Company, prior to the filing of said amended petition, has filed a written claim with defendant for the payment to said company of the value of the said buildings and property so by said fire destroyed, in the whole sum claimed by plaintiff, and claiming that they, said company, alone has the right to recover from defendant therefor under the terms of the said contract between plaintiff and said company.
    Defendant says that by the terms of the contract aforesaid, and by reason of the payment of said sums by The Phoenix Insurance Company to plaintiff, the plaintiff has no right to recover against defendant in this action.
    Defendant therefore prays that plaintiff be required to bring in said The Phoenix Insurance Company as a party to this action, and that said The Phenix Insurance Company be required to set up any claim they may have in the subject matter of this action within a time to be named by the. court, and that in default of such claim being set up herein by said company, said company be debarred from ever setting up such claim against defendant hereafter, and that on the trial of this action defendant may be dismissed hence with costs, and for all proper relief.
    Replying to the Railroad Company’s allegations as to payment made by the Insurance Company on account of said loss, the plaintiff made the following allegations:
    The facts as to the insurance of said property are as follows, not otherwise, to-wit: On or about June 15, 1895, for the consideration of $29.75 he purchased a policy of insurance from the Phoenix Insurance Company, of Brooklyn, New York. That he paid for said policy and contract of insurance, and thereby for said consideration said The Phoenix Insurance Company, of Brooklyn, New York, insured plaintiff against loss and damage by fire on his said elevator building in the sum of $1,200, and on his grain and seed therein the sum of $500, both said items being in said policy, the same being the only insurance he had on. any of said property.
    That said policy was in force at the time of said fire mentioned in his amended petition herein.
    After said fire said insurance company paid him under said policy on account of loss on said elevator building twelve hundred dollars, as it was bound by its contract to do, and at the time of said fire the grain and seed mentioned in said amended petition was in said building and was destroyed by said fire, and said insurance company paid him on account of loss to his said grain and seed, as it was bound to do3 the sum of two hundred and sixty-four dollars and ninety-five cents; in all said insurance company paid him $1,464.95 and no more.
    
      He says said insurance policy belonged to plaintiff, and said $1,464.95 so received from said insurance company also belongs to plaintiff, and said defendant railroad company is not entitled, as against plaintiff or at all, to credit for said insurance money or any part thereof against plaintiff’s said loss by said fire, or any part of said loss, and said railroad company is not entitled to offset any of said insurance money or any part of the amount thereof against plaintiff’s claim in his amended petition herein set forth, but he says lie is eneitled to recover from said railroad company the full amount of his said loss and damage in his amended petition herein set forth.
    The Phoenix Insurance Company, having been made a party, alleged that by its policy to Falk it had insured the building destroyed in the, sum of $1,200 and personal property within it for $500; that the fire occurred during the life of the policy and was caused by the negligence of the Railroad Company, and that it paid to the insured the full amount of the policy on the building and the further sum of $264.95 which, upon adjustment, was found to be the loss on chattels which were covered by the policy. It therefore prayed that by subrogation to the rights of Falk it might recover from the Railroad Company the money which it had so paid. There was further pleading, but of an argumentative character, by the Railroad Company as a part of its contention that it was liable only for the difference between Falk’s loss and the amount which the Insurance Company had paid. There was further pleading of a like character by Falk as a part of his contention that, notwithstanding the indemnity which he had received from the Insurance Company, he was entitled as against both it and the Railroad company to recover from the latter the entire value of the property destroyed. The pleading of this character did not at all affect the issues and they are therefore omitted from the statement. The allegation of the Insurance
    
      Company that it had paid Falk $1,464.95 on account of tbe loss was admitted by all tbe parties. Its allegation that tbe fire was caused by tbe negligence of tbe Railroad Company was denied by tbe latter.
    Upon tbe trial it appeared without contradiction that the fire originated upon the lands of tbe Railroad Company. Tbe court, not requiring proof of negligence, directed tbe jury to return a verdict in favoi of tbe plaintiff for 'the value of the property destroyed if they Avere satisfied from tbe evidence that tbe fire Avas caused by the operation of tbe railroad. Tbe jury returned a verdict for the plaintiff for $2,-394.94, being tbe estimated value of tbe property with interest thereon. Tbe Railroad Company filed a motion for a neAV trial, the material grounds being that tbe verdict Avas contrary to the law and tbe evidence and that tbe court erred in tbe charge, and the motion was overruled. Tbe court thereupon rendered judgment against tbe Railroad Company for tbe amount of tbe verdict and tbe costs of tbe suit and further adjudged that the Insurance Company was entitled to receive out of the judgment the sum which it had paid to Falk in discharge of its policy obligation and- ordered tbe clerk to pay that sum to it out of tbe proceeds of tbe judgment, and to pay the balance thereof to Falk.
    To tbe judgment so rendered both Falk and tbe Railroad Company excepted. On petition in error in the circuit court the judgment of tbe common pleas was affirmed.
    
      Jason Blackford; John B. Cockrum and A. Black-ford, for tbe Railroad Company.
    
      John Poe, for Falk. ,
    
      Burket & Burket, for the Insurance Co.
   Shauck, C. J.

It being conceded that tbe fire originated upon the land of the Railroad Company, tbe instruction that tbe jury should return a verdict against the Railroad Company for the value of the property destroyed, if satisfied by the evidence that the fire was caused by operating its road, was justified by the act of April 26, 1894, “making railroad companies liable for loss or damage by fire in certain cases and prescribing rules of evidence” (91 O. L., 1ST). That the act is valid and that it renders proof of negligence unnecessary in cases of fire so originating was decided in Lake Erie & Western Railroad Co. v. Kreager et al., 61 Ohio St., 312. The record shows that counsel for Falk contended below that, notwithstanding the previous payment to him of the larger part of his loss by the insurance company in discharge of the liability imposed by its policy on the. property destroyed, he is entitled to recover from the railroad company the full amount of his loss and to retain it against the insurance company’s assertion of a right of indemnification by way of subrogation. That point having been decided against him in the courts below we should perhaps infer from the absence of a petition in error by him here that that proposition is no longer .insisted upon. It is quite manifest that it could not be urged successfully, for although both companies had a liability with respect to the loss, his right was to recover only the value of the property destroyed. Good morals and important considerations of public policy forbid that conflagrations should be made profitable. This view of the subject has always been taken by the courts, and it has controlled all judgments which were not affected by statute.

The remaining questions arise upon the exceptions of the railroad company to the instruction that upon the condition named there should be a verdict for the value of the property destroyed without deduction on account of the payment made by the insurance company, and to the order permitting that company to plead in the action and to the judgment rendered in its favor. Upon these exceptions it is insisted that the insurance company is without right as against the railroad company, and that if a right exists, it can not be enforced in this action.

If we assume that the railroad company has an insurable interest in the property of others along the' line of its road because of the liability imposed on it by the statute referred to, it does not seem to aid the view of its counsel. The owner of such property retains his insurable interest therein, and be may desire indemnity as against loss or damage by fire not caused by the operation of the road as well as further indemnity against loss by fire for which the railroad company is liable. For one or both of these reasons Falk secured this contract of indemnity, the consideration therefor being a premium paid by himself. If the railroad company desires indemnity against its liability under the.statute it may, upon this assumption, secure it for a consideration by it paid. It can not claim any immunity because of the contract relations existing between the insurer and the owner. The rule that an insurer who has "paid the loss resulting from a peril insured against may be subrogated to all the claims which the insured may have against any person by whose negligence the injury was caused, was recognized by this court in the Globe Insurance Co. v. Sherlock, 25 Ohio St., 50. It is said that the rule cannot apply to the case under consideration, because here the injury was not caused by the negligence of the railroad company. It is true that, although such negligence-was alleged in the petition, the instruction given .to the jury permitted a recovery without a'finding'of negligence, unless it is included in the fact admitted, that the fire originated on the land of the railroad company, and the fact which the instruction required to be found, that it was caused by the operation of the railroad. The evidence upon which the jury found that the fire was caused by operating the road all shows that it was communicated by a passing.locomotive. The second section of the act referred to provides: “In all actions against any person or incorporated company for the recovery of damages on account of any injury to any property, whether real or personal, occasioned by fire communicated by any locomotive engine while upon or passing along any railroad in this state, the fact that such fire was so communicated shall be taken as prima facie evidence to charge with negligence the corporation or person or persons who shall, at the time of such injury by fire be in the use and occupation of such railroad.” The cases in which there may be recoveries under the statute are cases in which, without its aid, there might be recoveries upon plenary proof of negligence. The statute does not change the ground of the liability. In effect, it provides that the negligence which constitutes the ground of recovery is an inference of law from the facts which in this case were admitted or proved. There is, therefore, no ground for the insistence that the rule which was recognized in Insurance Co. v. Sherlock, is inapplicable here. The rule was there stated in language appropriate to the facts presented by the case which was under consideration. It was not intended to place an arbitrary restriction upon the doctrine of subrogation. Under that doctrine one is substituted for another as creditor or possessor of property or any other rightful claim.. When one is substituted to the rights of a creditor, it is to the end that a liability may be alleged and adjudged against him upon whom it should ultimately rest, and in favor of another by whom it has been discharged in the performance of any legal obligation. The right does not depend upon contract nor upon privity of obligation. The cases collected by Mr. Sheldon in his work on subrogation justify his statement that “The doctrine is broad enough to include every instance in which one party pays a debt for which another is primarily answerablec and which in equity and good conscience should have been discharged by the latter.” Of course the right does not belong to a mere volunteer who discharges an obligation for which he is in no sense answerable. But the qualification is not important here in view of the insurance company’s obligation to Falk by the terms of its policy. The cases in which the doctrine of subrogation has been recognized as applicable to cases not differing from this in any material aspect are very numerous. They are collected in the works on subrogation and insurance.

It is true that the insurance company did not allege either that Falk had assigned the policy to it, or that by the terms of the policy it had reserved the right, upon payment, to be subrogated to the right of action of the insured against the company. Neither averment is required by reason or authority. The right of subrogation arises out of the relation of the parties to the subject of the action. Liverpool & Great Western Steam Co. v. Phenix Insurance Co., 129 U. S., 397.

Notwithstanding the prayer of the railroad company that the insurance company should be brought into the action, it is now contended that it should not have been permitted to intervene and to assert its right of subrogation in the action brought by the owner against the railroad company. But the subject of the action was the loss sustained in consequence of the destruction of the property. The object of the suit was to recover the value of the property from the party ultimately liable, and to apportion the proceeds of the judgment recovered between the injured parties according to their interests in the amount recovered. The recovery sought was for a single wrongful act and the railroad company could have objected with more force if it had been subjected to two actions by those interested in the recovery. This mode of asserting the rights of parties in the subject of a single cause of action, all being brought into the same suit and each asserting his own interest, is in conformity with the requirements of modern procedure. Swarthout et al. v. Chicago & Northwestern Ry. Co., 49 Wis., 625; Insurance Company v. Frost, 37 Ill., 333.

Judgment affirmed.

Burket, J., not sitting.  