Goldmann, Conford and Haneman. The opinion of the court was delivered by Conford, J.A.D.
This is an action on an automobile collision insurance policy. The amount of recovery sought is $410. The Morris County District Court, trying the case without a jury, held for the defendant, "the only question for determination" being stated as "whether the plaintiffs did anything which would affect the defendant's rights of subrogation, if any," under the policy.
The statement of the case certified by the trial judge reveals the following factual situation. The defendant issued its collision automobile policy to plaintiffs as the "Named Insured" with a $75 deductible clause. Paragraph 11 of the policy under the head, "CONDITIONS," reads as follows:
"11. Subrogation: In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights." (Emphasis supplied.)
During the policy term there was an accidental collision between plaintiff's car, then being driven by plaintiff Marjorie Rogers' sister, Mary Parker, and a motor vehicle owned and operated by Albert Wershing. At the time, Mary Parker "was taking the plaintiffs' two children" to the Parker home "for a visit" and was using the car by loan from Mrs. Rogers. Subsequent to the accident, as set forth in the statement of the case,
"Mrs. Rogers, who did not carry liability insurance, was informed by the Motor Vehicle Department, that, unless she posted security or obtained a release from Mr. Wershing, she would lose her driving privileges. Thereupon, Mrs. Rogers contacted Mr. Wershing at the latter's home for the express purpose of obtaining from Mr. Wershing a release so that the provisions of the Financial Responsibility Law would not be invoked. Mr. Wershing referred the matter to his insurance company, Selected Risks, whereupon a Settlement Agreement was entered into between Mr. Wershing and Miss Parker providing for payment of Mr. Wershing's damages in the sum of $710.00 at the rate of $5.00 every other week. Upon payment of
this sum, the Agreement provided for Miss Parker, who signed the Agreement, to be fully and completely released from any and all claims of Mr. Wershing."
Miss Parker, over objection, testified on behalf of defendant that she had entered into the agreement referred to and was making payments thereon to Mr. Wershing's insurance carrier.
Wershing, called by the defendant, was permitted to testify over objection that Miss Parker told him the collision was her fault. There is no other evidence bearing upon the circumstances surrounding the accident.
The plaintiffs raise the following points on appeal: (1) In the absence of evidence by defendant showing that plaintiffs "might have recovered" for their loss in an action against Wershing there was no showing of "prejudice" to defendant's rights as subrogee of plaintiffs by what was done here, the subrogation right having no greater substance than plaintiffs' cause of action against Wershing. (2) Plaintiffs were not bound by what Miss Parker said or did, there being no agency between them. Moreover, a settlement agreement is not admissible as to liability. (3) Plaintiff Clayton Rogers is particularly free of responsibility as he had nothing whatever to do with the settlement with Wershing.
For purposes of clearness in exposition of the legal problem involved in the first point of appeal we treat the matter initially as though Mrs. Rogers had herself been operating the car when the accident occurred and had made the settlement Miss Parker did. There would seem little basis for doubt that in such a case Mrs. Rogers would be estopped against subsequently bringing an action against Wershing predicated upon his negligence and her own freedom from contributory negligence, within the rationale of ...