Opinion
39220.
DECIDED NOVEMBER 21, 1961.
Breach of contract. Augusta Municipal Court. Before Judge Cooper.
Harris, Chance, McCracken Harrison, Henry T. Chance, for plaintiff in error.
Fulcher, Fulcher, Hagler Harper, William C. Reed, contra.
1. An insured cannot be permitted, after accepting money under a loan receipt, to breach the terms of the loan receipt by settling the claim with and releasing the tortfeasor, thus destroying the insurer's right of subrogation.
2. A material term of a contract may not be varied or contradicted by parol under the guise of inquiring into the consideration.
DECIDED NOVEMBER 21, 1961.
State Farm Mutual Automobile Insurance Co. brought an action for breach of contract against A. R. Kirkendohl. The petition alleged in substance that the plaintiff had issued a certain policy of collision insurance covering defendant's automobile; that while the policy was in effect the defendant's automobile was damaged by a collision on or about December 24, 1959, with an automobile owned and operated by Roger Claud Miller; that as a result of such collision and pursuant to the terms of the policy the plaintiff paid to the defendant the sum of $211.35, in consideration for which the defendant executed, on January 19, 1960, a loan receipt in which he agreed that said sum was a loan repayable only to the extent of any net recovery he might make from any person or persons, corporation or corporations, on account of loss by collision to his property. As security for such repayment, defendant pledged to the plaintiff the said recovery and delivery to it of all documents necessary to show his interest in said property, and he agreed to enter and prosecute suit in his name against such person or persons, corporation or corporations, on account of said claim for said loss, with all due diligence, at the expense and under the exclusive direction and control of the plaintiff. The defendant covenanted in said loan receipt that he had made no settlement with anyone who might be responsible for said loss, and that any money paid him by any other participant in loss was held in trust pending instructions by the plaintiff. A copy of the loan receipt was attached as an exhibit to the petition.
The petition alleged that after the execution of said loan receipt by the defendant, the defendant in March 1960, in violation of and in breach of the aforesaid loan receipt, together with his wife, did enter into an agreement with the said Roger Claud Miller and his wife, whereby in consideration of the sum of $1,500, the defendant and his wife did release and forever discharge the said Roger Claud Miller and his wife from all actions, causes of action, suits, debts, accounts, judgments, claims and demands whatsoever in law or equity as a result of or growing out of injuries to person or damage to property resulting from the aforesaid collision, and upon payment of the said $1,500 did execute and deliver to the said Roger Claud Miller and his wife a general release, a copy of which was attached to the petition. The petition further alleged that by the execution of said release, the defendant had deprived himself and the plaintiff of a recovery against the said Roger Claud Miller whose negligence caused said damage. The petition alleged that as a result of the execution of the release by the defendant the plaintiff had been injured and damaged in the sum of $211.35, said sum representing the amount paid under the terms of the loan receipt and which sum the defendant had failed and refused to pay in spite of repeated demands for the payment of the same by the plaintiff.
The defendant demurred generally to the petition and subsequently filed an answer thereto. In paragraph 6 of the answer the defendant alleged that the release referred to in the plaintiff's petition and set out in plaintiff's Exhibit B was without any consideration whatsoever insofar as this defendant was concerned, "that he received not one penny nor any other consideration from Mr. or Mrs. Roger C. Miller and that he was not supposed to receive any consideration from them, and that the amount paid as recited in said release was paid as a compromise settlement for personal injuries that this defendant's wife, Mrs. A. R. (Frances N.) Kirkendohl received and that said instrument, insofar as this defendant was concerned, was and is nudum pactum." The plaintiff demurred specially to the allegations of paragraph 6 of the defendant's answer and moved to strike the same for the reason that "the facts alleged therein have the effect of changing, varying, and altering the written contract signed by the defendant, and for the further reason that the same seeks to contradict and vary the terms of a valid written instrument by parol evidence."
On September 25, 1961, the trial court passed an order in which it overruled the defendant's demurrer to the plaintiff's petition, and sustained the plaintiff's demurrer to the defendant's answer and ordered paragraph 6 of said answer stricken. The exception is to that judgment.
1. Under the decisions of this court in the cases of Service Fire Ins. Co. v. Powell, 70 Ga. App. 213 ( 27 S.E.2d 896); Clark v. American Cas. Co., 96 Ga. App. 328 ( 99 S.E.2d 897); and Coleman v. State Farm c. Ins. Co., 104 Ga. App. 328 (3) ( 121 S.E.2d 833), the plaintiff's petition clearly stated a cause of action against the defendant for breach of the provisions of the loan receipt. As stated by the court in headnote 3 of the Coleman case, supra, "An insured can not be permitted, after accepting money under a loan receipt, to breach the terms of the loan receipt by settling the claim with the tortfeasor, thus destroying the insurer's right of subrogation. . ." The loan receipt in the Coleman case, supra, was identical with that in the instant case.
Under the allegations of the plaintiff's petition, the defendant, by settling with and releasing the tortfeasor, Roger C. Miller, deprived himself and the plaintiff insurer of the right to enter and prosecute suit against Miller on account of the loss, which right was pledged as security for repayment of the loan, under the terms of the loan receipt. The trial court therefore did not err in overruling the defendant's general demurrer.
The contention of the defendant that the first two cases cited above are erroneous and should be reviewed and overruled is without merit.
2. "A material term of a contract may not be contradicted under the guise of inquiring into the consideration." Wade v. Ballard, 69 Ga. App. 669, 672 ( 26 S.E.2d 542). In the alleged release agreement executed between the defendant and his wife and the tortfeasor and his wife, the defendant released and discharged the tortfeasor and his wife from all "actions, causes of action, suits, debts, accounts, judgments, claims and demands whatsoever in law or equity (including loss of services of any other person to which I/we might be entitled) as a result of or growing out of any and all injuries both to persons and/or damages to property resulting or to result or which might result" from the accident in question. In paragraph 6 of the answer the defendant, under the guise of an inquiry into the consideration, attempted to vary the terms of this contract to show that the amount paid as recited in said release was paid only as a compromise settlement for personal injuries that the defendant's wife received, and this he manifestly cannot do. It has been said that whether such a defense is true or not cannot be inquired into. It simply cannot be asserted, even if it is true. Wellmaker v. Wheatley, 123 Ga. 201 (2) ( 51 S.E. 436); Wade v. Ballard, 69 Ga. App. 669, 670, 672, supra. See also James v. Tarpley, 209 Ga. 421 ( 73 S.E.2d 188); and Bennett v. Dove, 93 Ga. App. 57 ( 90 S.E.2d 601). The trial court did not err in sustaining the plaintiff's demurrer to paragraph 6 of the defendant's answer and striking the same.
Judgment affirmed. Nichols, P. J., and Frankum, J., concur.