Commercial Union Insurance Co. v. Postin

610 P.2d 984, 1980 Wyo. LEXIS 263

• Court: Wyoming Supreme Court
• Decided: May 2, 1980
• Docket: 5189
• Status: Published

Opinions

ROSE, Justice.

This appeal calls up the issue of whether or not an insurance company will, under a qualified subrogation policy provision, have a cause of action against alleged tortfeasors for damages the company paid upon a claim resulting from an inherent or latent defect when such cause of damage is specifically excluded from coverage.¹

The case was decided against the insurance company on a motion for summary judgment in the trial court.

We will affirm.

We will hold that the insurance company, under the doctrine of legal or equitable subrogation —did not make payment under compulsion, had no interest of its own to protect, and was, therefore, a mere volunteer. The company, therefore, could not recover against alleged third-party tort-feasors under this theory of subrogation. We will also hold that, since there was no contract by which the insured assigned effective subrogation rights to the insurance company under the facts of this case, the company cannot, therefore, recover against alleged tortfeasors in reliance upon the doctrine of conventional or contractual subro-gation.

Having resolved the appeal in the area of subrogation, it will not be necessary to consider the statute-of-limitations issue raised in the briefs.

FACTS

The Cheyenne, Wyoming, Air Terminal Building, which was built by the City of Cheyenne, Wyoming (herein referred to as “Cheyenne” or “the City”), was substantially completed in 1960, and on July 2,1975, a portion of the roof collapsed. At that time the building was insured by appellant-plaintiff, Commercial Union Insurance Company, under a policy which excluded coverage for inherent or latent defect. Even so, acting on an insurance adjuster’s report which recognized the cause of collapse in all probability to be from latent or inherent defect, i. e., “design of this building,” the company settled with the insured City and then brought suit against defendants-appellees, architects and engineers. The amended complaint charges that latent defect was the cause of the collapse and resultant damages.

For purposes of this opinion, we assume that immediately after collapse, appellant’s adjuster believed the probable cause to be inherent or latent defect. The opinion assumes that the cause was, in fact, latent or inherent defect and, furthermore, the trial judge had the right to make that assumption. This assumption is permissible since it is upon this cause that the appellant has rested its case both here and in the trial court and, no other theory of liability having been advanced, the parties and the concerned courts are bound to this concept of recovery.

The two relevant subrogation paragraphs of the policy will be referred to as “Subro-gation Paragraph 1 or 2,” and they are these:

1. “This company may require from the insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by this Company.”

2. “In the event of any payment under this policy the Company shall be sub-rogated 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.)

There is no assignment under Paragraph 1 aforesaid and no assignment of subrogation rights in the record in any respect except that which is contained in the above-quoted Paragraph 2.

“The right of subrogation may arise and sometimes must arise from contract. This is conventional subrogation. The right is sometimes given in the absence of contract, is then a creation of the court of equity, and is given when otherwise there would be a manifest failure of justice. This is legal subrogation. . . .”

ISSUE

The issue is whether or not subrogation Paragraph 2 supports the insurance company’s right to subrogation, given the facts of this case.

THE NATURE OF SUBROGATION

Subrogation has been defined as “the substitution of another person in the place of a creditor, so that the person in whose favor it [subrogation] is exercised succeeds to the rights of the creditor in relation to the debt.” Criss v. Folger Drilling Company, 195 Kan. 552, 407 P.2d 497, 500 (1965). (Bracketed matter supplied.) This would mean here that the insurance company seeks to step into the shoes of the City in relation to any “debt” the appellees-tort-feasors owe the City because of their alleged negligence.

Two Types of Subrogation

There are two kinds of subrogation — legal or equitable and conventional. Legal or equitable subrogation arises by operation of law, and conventional subrogation arises by contract.²

Legal Subrogation

The right to legal subrogation occurs upon the payment of the debt by the subrogee for the subrogor. Couch on Insurance 2d § 61:2, pp. 238-239. An insurer has the right to recover for damages that it is obligated to pay to an insured under its policy. Couch, supra, § 61:4, p. 239.

The United States Court of Appeals, Fourth Circuit, has said:

“ ‘Where the tortious conduct of a third person is the cause of a loss covered by an insurance policy, the insurer, upon payment of the loss, becomes subrogated pro tanto by operation of law to whatever rights the insured may have against the wrongdoer.’ ” United States v. South Carolina State Highway Dept., 4 Cir., 171 F.2d 893, 898 (1948), citing Rivers v. Liberty National Bank, 135 S.C. 107, 133 S.E. 210. (Emphasis supplied.)

With respect to whether the insurance company has paid “under its policy,” (Subrogation Paragraph 2 language) it is a defense in legal or equitable subrogation to show that the company paid as a mere volunteer.

VOLUNTEERS

(Compulsion and Protectable Interest)

Payment for Harm not Covered

Couch, supra, § 61:52, pp. 269-270, puts the volunteer rule this way:

“While the right of subrogation is not dependent upon legal assignment, or upon contract, agreement, stipulation, or privity between the parties to be affected by it, the person who pays the debt must not be a mere volunteer, for the payment must have been made under compulsion, or for the protection of interest of the person making it in discharge of an existing liability which must be fully satisfied,³ Hence, an insurer which pays a loss for which it is not liable thereby becomes a mere volunteer, and is not entitled to subrogation, in the absence of an agreement therefor.” (Emphasis supplied and footnote ours.)

The author goes on to say:

“The principle that the insurer is not subrogated when it makes a voluntary payment has been applied even though the ‘voluntary’ status of the payment could not be determined until the jury’s verdict established that the insurer had not been obligated to make such payment. . . .” Couch, supra, § 61:54, p. 270.

The insurance company will be regarded as a volunteer when it purports to pay under its policy but where — in fact— the payment is made for harm that was not covered.

Couch, supra, § 61:54, p. 271, says:

“ Where the harm for which the insurer has indemnified the insured is not covered by the policy, the making of such payment to the insured is deemed ‘voluntary,’ and no right of subrogation arises. . ” (Emphasis supplied.)

In this regard, see Hartford Fire Insurance Company v. Payne, 28 Ga.App. 655, 112 S.E. 736 (1922), where the insurer paid a loss under an insurance leakage policy for which it was not liable. It was not entitled to be subrogated to the claim of the insured against occupants of the building in which the sprinkler system burst. The court held that when the insurer is not liable for the loss because the insured property had been removed from the premises, it cannot pay the loss and, upon receiving an assignment from the insured, recover against the party whose negligence caused the loss.

In Nationwide Mutual Ins. Co. v. Weeks-Allen Motor Co., 18 N.C.App. 689, 198 S.E.2d 88 (1973), where the insured was involved in a collision allegedly caused by a defective master brake cylinder, insurer, who settled the claim without an adjudication of liability, did so voluntarily and did not succeed to the rights of its insured against the manufacturer, distributor and seller of the distributor.

In affirming summary judgment for the defendants, the court said:

“Plaintiff [insurance company] admitted that its policy of insurance required it to pay on behalf of its insured all sums which its insured should become legally obligated to pay as damages. Plaintiff further admits that it settled with all the claimants without an adjudication of liability because it was able to settle all claims within the limits of its policy. Plaintiff by paying the funds in settlement of claims for damages did so voluntarily. Even though suits had been filed, plaintiff’s liability under its policy had not arisen. Therefore, because plaintiff was a volunteer in paying the claims, it did not succeed to the rights of its insured. . . (Emphasis in original text) 198 S.E.2d at 92.

In Greenville Shipbuilding Corp. v. Hartford Acc. & Ind. Co., N.D.Miss., 334 F.Supp. 1228, 1237-1238 (1971), aff’d, 5 Cir., 460 F.2d 1063 (1972), the federal court, applying Mississippi law, was confronted with the situation that the “wrong” or “volunteer” insurance company had settled a claim. The “volunteer” company sued to collect from the insurance company under whose policy the claim should have been paid. The court said:

“. . . The rule is clearly stated in Southwest Mississippi Electric Power Association v. Harragill, 254 Miss. 460, 182 So.2d 220, 223 (1966) where the court said:

“ ‘The authorities hold that to recover indemnity it is necessary for the plaintiff to allege and prove that he was legally liable to the person injured, and consequently, paid under compulsion. Otherwise, the payment is a voluntary one for which there can be no recovery. (Citations omitted).

“ ‘This Court has declined to extend aid to those who make voluntary payments for which they were not legally liable. The basic purpose of courts, as far as civil cases are concerned, is to extend aid to those who have not been able by lawful means to aid themselves, and relief is not available to those who have neglected to take care of their interests. If an unjust demand is made upon a party for that which he does not owe, when he knows or ought to know all the facts, he must avail himself of the means the law affords and resist the demand.’

“Since the death of Duke resulted solely from the negligence of . . ., Kausler’s settlement of the claim was voluntary on its part, and plaintiffs cannot recover

“It is recognized that this decision works a hardship on Kausler. The court, however, cannot extend aid to one who has made a voluntary payment for which it was not legally liable. Kausler was under the duty to avail itself of the means the law affords and resist the demand. . . . ”

See, also, Bonnie v. Maryland Casualty Co., 280 Ky. 568, 133 S.W.2d 904, 906 (1939); Conant v. Giddings, 65 R.I. 79, 13 A.2d 517 (1940); and Loman v. Harrelson, 437 S.W.2d 123, 126 (Mo.App.1968).

We embraced the volunteer doctrine identified by Couch, supra, and the above authorities when, in Fulton v. Des Jardins, 67 Wyo. 517, 227 P.2d 240, 245 (1951), we said:

“. . . We must accordingly, insofar as proper, apply the rule stated in 40 Am.Juris. 820-823 as follows: ‘It is a universally recognized rule that money voluntarily paid under a claim of right to the payment, and with knowledge of the facts by the person making the payment, cannot be recovered back on the ground that the claim was illegal, or that there was no liability to pay in the first instance. * * * Although the character of a payment as voluntary depends in each case upon its own peculiar facts, a rule which will furnish a safe guide in the determination of particular eases is that where a person pays an illegal demand, with a full knowledge of all the facts which render the demand illegal, without an immediate and urgent necessity therefor, unless it is to release his person or property from detention or to prevent an immediate seizure of his person or property, such payment is voluntary.’ And in 48 C.J. 734-737, it is said: ‘Except where otherwise provided by statute, it is a well-settled general rule that a person cannot, either by way of set-off or counter-claim, or by direct action, recover back money which he has voluntarily paid with a full knowledge of all the facts, and without any fraud, duress or extortion, although no obligation to make such payment existed. * * * A voluntary payment, within the meaning of the rule that such a payment cannot be recovered, means a payment made by a person of his own motion, without compulsion; a payment made without a mistake of fact or fraud, duress, coercion, or extortion, on a demand which is not enforceable against the payor, instead of invoking any remedy or defense which the law affords against such demand; and whether in a given case a payment is voluntary depends on the facts of the particular case, as indicating an intention on the part of the payor to waive his legal rights. A voluntary payment implies a legitimate cause; and, in the absence of compulsion it includes a payment made on an illegal claim or demand with knowledge of its illegality or groundlessness.’ . . . ” (Emphasis supplied.)

If the payor cannot recover from the payee a payment voluntarily made, it follows that his prospects will not be improved by his seeking recovery against a third person who may or may not be liable to the payee.

Since, in the matter before this court, the payment was made for a harm that was not covered by the policy, the necessary element of compulsion is absent.

Persons Acting in Self-Protection (Not a Volunteer)

Within the ambit of legal-subrogation law, it is recognized that one is not a volunteer where it is shown that he made payment to protect his own interest. At 73 Am.Jur.2d, Subrogation, § 25, “Persons acting in self-protection,” p. 614, it is said:

“The right of subrogation is not necessarily confined to those who are legally bound to make the payment, but extends as well to persons who pay the debt in self-protection, since they might suffer loss if the obligation is not discharged. A person who has an interest to protect by making the payment is not regarded as a volunteer. In this class are included subsequent encumbrancers paying off a prior encumbrance, though only when they do so to protect their own interest. The extent or quantity of the subrogee’s interest which is in jeopardy is not material. If he had any palpable interest which will be protected by the extinguishment of the debt, he may pay the debt and be entitled to hold and enforce it just as the creditor could. This principle is not limited to payments made to prevent loss of the property, but extends to cases where the payor or his property is obligated and the creditor has the right to pursue him or the property. And the payment does not need to be made because of a present pressure by the creditor or present danger of loss. It would seem that one acting in good faith in making his payment, and under a reasonable belief that it is necessary to his protection, is entitled to subrogation, even though it turns out that he had no interest to protect. Thus, while an insurance company that pays a loss for which it is not liable has been held a mere volunteer, not entitled to subrogation, an insurer who acts in good faith to discharge a disputed obligation does not become a mere volunteer if it is ultimately determined that its policy did not apply.”

In Wyoming Building & Loan Ass’n, supra, fn. 2, we held that one was not a volunteer who, in good faith and under the reasonable belief that it is necessary for his protection, paid prior liens, including taxes, even though there was in fact no necessity for payment. We said in this case:

“The only remaining question, accordingly, is whether plaintiff in error may be said to have paid the taxes for the protection of its lien, or whether it should, under the circumstances, be said to have been a mere volunteer and intermeddler who had no right to undertake to pay them. And it is argued that the property could not have been sold for taxes under the laws of this state until the month of June, 1927, and that hence there was no necessity for plaintiff in error to pay them. It is apparent in this case that plaintiff in error did not mean to be a volunteer, but that it in good faith believed that the payment of the taxes was necessary to protect its lien. Pomeroy, Eq.Jur. (2d Ed.) § 2346, in discussing sub-rogation for one who pays a debt in self-protection, says:

“ ‘It would seem here, as in the first class of cases, that one acting in good faith in making his payment, and under a reasonable belief that it is necessary for his protection, is entitled to subrogation, even though it turns out that he had no interest to protect.’

“A number of cases are cited. See, also, 37 Cyc. 445; Hankins v. Minchew (Tex.Com.App.) 285 S.W. 264; Phelan v. Kennedy, 103 Misc.Rep. 441, 171 N.Y.S. 410; Id., 185 App.Div. 749, 173 N.Y.S. 687. It is apparent from these authorities that the necessity for self-protection need not be absolute. 25 R.C.L. 1347, in speaking of the payment by a subsequent lienholder of a prior mortgage, says, it is true, that ‘it must appear that the discharged mortgage was due and was about to be enforced against the property.’ In Gipps Brewing Co. v. Wasson, 193 Ill.App. 158, on the other hand, it is held that the right of subrogation of a lien-holder who pays a prior mortgage is not dependent on the fact that he was compelled to pay such prior mortgage for his protection. Harris, on Subrogation, § 13, says that ‘the right of subrogation accrues in favor of creditors, where a subsequent creditor pays an incumbrance held by a prior incumbrancer, where benefit may result to one without injury to the other.’ And in Mosier's Appeal, 56 Pa. 76, 81 (93 Am.Dec. 783), the Chief Justice, speaking for the court, said of the same rule:

“ T regard the doctrine as applicable in all cases, where a payment has been made under a legitimate and fair effort to protect the ascertained interests of the party paying, and when intervening rights are not legally jeopardized or defeated.’

“In Whitehead v. Knitting Mills, 194 N.C. 281, 139 S.E. 456, the law is stated thus:

“ ‘It has often been said that the law will not aid a mere volunteer, or one who seeks to become a creditor without right or necessity for so doing.’ ” 269 P. at 49-50.

This brings us to the question of whether the payment by the insurance company was made in good faith and with the reasonable belief that it was made in order to protect its own interest. At the outset, it is clear that the insurance company, in point of fact, had no interest to protect when it made the questionable payment because the insured could not have successfully pressed its claim against the company on the policy. The record shows that when the roof collapsed, the adjuster made a judgment call to the effect that — even though the opinion of the experts was that the cause of collapse was inherent or latent defect (“design of this building”), and even though'the insurance company had knowledge of and was bound by the knowledge that its policy excluded inherent or latent defect — nevertheless, payment would be made. We glean the excuse for this to be that, even though the cause of damage (inherent or latent defect) was excluded by the policy, the adjuster was fearful that the rest of the building might fall down. If the remainder of the building did collapse, the adjuster knew that the cost of repair or replacement would then be greatly in excess of the cost to repair or replace existing damage. This reasoning led to the conclusion that the insurance company, therefore, had a reasonable self-protectable right at stake and that the claim should be paid. This brings us to the nubbin of the legal-subrogation issue.

The cause of damage was excluded from the policy coverage and, therefore, it does not make any difference how favorable a money settlement the insurance company was able to make with the insured in anticipation of the possibility of further building damage. The company, under an assignment which contains the restrictions of Sub-rogation Paragraph 2, cannot successfully rely upon the doctrine of legal subrogation to recoup from alleged tortfeasors that which was paid with no interest to protect. In other words — if latent or inherent defect was the cause of damage (which appellant admits) and if this cause was excluded from the policy coverage (which it was) — the insurance company could not avoid becoming a mere volunteer by claiming that it was protecting its interest when it paid a claim it did not owe just because the amount of the claim might conceivably be increased upon the happening of some future event.

Under the American Jurisprudence 2d rule, supra, and the doctrine of the Wyoming Building & Loan Ass’n case, supra, the appellant cannot successfully urge latent defect as the cause of damage and at the same time rely for its subrogation rights upon a contract that excludes inherent or latent defect. Such an appellant, under such contentions, will not be heard to say that it was forced to pay the insured in order to enforce a protectable interest. It had no protectable interest. It did not make the payment under “reasonable belief that it is necessary for its protection.” Wyoming Building & Loan Ass’n, supra. It did not make payment “under the policy” (Sub-rogation Paragraph 2 language).

In holding as we do, we accept the rules of Wyoming Building & Loan Ass’n, supra, and the American Jurisprudence 2d rule, supra, which says:

“. . .It would seem that one acting in good faith in making his payment, and under a reasonable belief that it is necessary to his protection, is entitled to subrogation, even though it turns out that he had no interest to protect . .”

73 Am.Jur.2d, Subrogation, § 25, p. 615, supra (emphasis supplied),

and the part which holds:

“. . . [A]n insurer who acts in good faith to discharge a disputed obligation does not become a mere volunteer if it is ultimately determined that its policy did not apply.” 73 Am.Jur.2d, Subrogation § 25, p. 615, supra. (Emphasis supplied.)

We dispose of arguments made in this case in reliance upon these rules as follows: Here, the facts of the accident and the provisions of the policy being what they are, it must be held, as a matter of law, that the insurance company did not make its payment under a reasonable belief that it owed the insured the money. Furthermore, it cannot be said that the company (at least for purposes of ascertaining the answer to a subrogation question such as this) acted in good faith when it paid the insured.

For the reasons stated, the insurance company which relies on the cause of damage to be latent defect — an excluded cause — and which would not have had a cause of action through subrogation against builders and architects if this were not the cause, cannot urge, in order to overcome the volunteer defense, that when it paid the insured it did so under compulsion or that it had a protectable interest under the law of legal or equitable subrogation.

Conventional (Contractual) Subrogation Its Characteristics

At 73 Am.Jur.2d, Subrogation, § 9, “Conventional Subrogation,” p. 604, the encyclopedia says:

“Conventional subrogation, as the term implies, is founded on some understanding or agreement, express or implied, and without which there is no ‘convention.’ Conventional subrogation can take effect only by agreement and has been said to be synonymous with assignment. It occurs where one having no interest or any relation to the matter pays the debt of another, and by agreement is entitled to the rights and securities of the creditor so paid. . . . ” (Emphasis supplied.)

Speaking of the value of the agreement, the text goes on to say in the same section,

“. . . the so-called agreement being of value only as showing a situation where the doctrine of subrogation should be applied in order to do justice and as evidence that the lender was not a volunteer. . . . ” (Emphasis supplied.)

It is said in § 9, at page 605 of the same text:

“The contract right of subrogation is somewhat broader than legal subrogation, for the right is granted irrespective of whether the payment was necessary for the protection of the person seeking subrogation.”

How do these concepts apply to the matter here for consideration?

First we must look to see what contract provisions are available. The only one applicable is Subrogation Paragraph 2, supra, which we here requote for easy reference:

“In the event of any payment under this policy the Company shall be subrogated to all the insured’s right of recovery therefor against any person or organization. . . ”

The question is:

Did the company make a payment under the policy within the contemplation of subrogation law or not?

We have seen that the theory of conventional subrogation is utilized for various purposes — one of which is to determine that the party who pays the debt is not a volunteer. 73 Am.Jur.2d, supra, § 8, p. 604. Unless saved by the contract (i. e., the Paragraph 2 Subrogation clause), there is no question but that the insurance company was a mere volunteer since it was neither compelled to pay the claim nor did it have an interest which it was required to protect through payment. Where is the language, then, that gives the company subrogation rights as a stranger to the transaction? There is no such contractual authority.

A vital difference between legal and conventional subrogation is that in the former there must exist compulsion or the reasonable belief that there is an interest to protect in order to claim right to subrogation, while in the latter there need be only an assignment of interest and the assignee may exercise his right of subrogation under the assignment even though the elements of compulsion or protectable interest are not present. But there must, in fact, be such an assignment in existence and the assignor (insured) must be possessed of such an assignable interest as will confer rights of subrogation upon the assignee (insurance company). In other words, the assignable right of subrogation may not be so restricted by its own terms as to prevent the assignee’s exercise of it under the applicable facts and circumstances. To say it still another way — in conventional subrogation — the effectiveness of the assignment of subrogation rights is dependent upon its own terms. In this case, the assignor-insured can effectively assign its subrogation rights only if it can be concluded that payment has been made under the policy.

As has been set out above — when a company

“pays a loss for which it is not liable [it] thereby becomes a mere volunteer, and is not entitled to subrogation, in the absence of an agreement therefor.” Couch, supra, § 61:52.

and at § 61:54, the author says:

“Where the harm for which the insurer has indemnified the insured is not covered by the policy, the making of such payment to the insured is deemed ‘voluntary,’ and no right of subrogation arises.

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Therefore, the insurance company conferred the benefits upon the insured as a stranger without the required assignment or assignable interest necessary in conventional subrogation. The insurer, therefore, remains a mere volunteer without the right of subrogation.

We conclude by holding that, under the doctrine of legal subrogation the insurance company has no cause of action because it did not pay the insured under compulsion and did not, as a matter of law, have a legally protectable interest when payment was made. We further hold that the law of conventional subrogation will not rescue the company from becoming a mere volunteer because its subrogation assignment was limited by the condition that payment must have been made “under the policy.” This did not occur in view of the fact that insurance companies will be regarded as mere volunteers where payment has been made for a harm not covered.

Affirmed.

1 . The specific policy language excludes “Loss caused by: 1. wear and tear, deterioration, rust or corrosion, mould, wet or dry rot; inherent or latent defect; . (Emphasis supplied.)

2 . We said in Wyoming Building & Loan Ass’n v. Mills Const. Co., 38 Wyo. 515, 269 P. 45, 48 (1928):

3 . Couch cites the following for this proposition: "Standard Marine Ins. Co. v. Scottish Metropolitan Assur. Co. (CA6 Ohio) 39 F.2d 436, aff'd. 283 U.S. 284, 51 S.Ct. 371, 75 L.Ed. 1037 (marine policies on cargo lost by collision and fund recovered by insured divided between insurers); United States Fidelity & G. Co. v. Sweeney (CA8 Mo.) 80 F.2d 235; Shertzer v. Williams, 232 Ala. 558, 168 So. 573; London & Lancashire Indem. Co. v. Tindall, 377 Ill. 308, 36 N.E.2d 334; Bonnie v. Maryland Casualty Co., 280 Ky. 568, 133 S.W.2d 904; American Farmers Mut. Auto. Ins. Co. v. Riise, 214 Minn. 6, 8 N.W.2d 18; Agricultural Ins. Co. v. A. Rothblum, Inc., 147 Misc. 865, 265 N.Y.S. 7; United States F. & Guar. Co. v. Bramwell, 108 Or. 261, 217 P. 332, 32 A.L.R. 829; Conant v. Giddings, 65 R.I. 79, 13 A.2d 517; American Surety Co. v. Hamrick Mills, 191 S.C. 362, 4 S.E.2d 308, 124 A.L.R. 1147; and Cook v. Cook, 110 Utah 406, 174 P.2d 434.”

“Where automobile purchaser executed chattel mortgage in favor of financing bank and bank failed to record the mortgage and automobile was seized by a creditor and purchaser defaulted in payments to bank, insurer bringing action against purchaser could not recover on proof that it had paid the bank the sum due it by the purchaser under a policy of insurance absent proof of the insurer’s contract with the bank, since recovery could not be based solely on the fact that insurer had paid the bank without proof that it was obligated to do so. Security Ins. Co. v. Mangan, 250 Md. 241, 242 A.2d 482.

“Fidelity insurer could maintain subrogation action as against contention that there was no proof that it had any obligation to make payments under the policy because payee was not an insured, under evidence that the payee was either not a separate legal entity from the insured or was a subsidiary over which the insured had assumed active management and exercised financial control. Lumbermens Mut. Casualty Co. v. Jamieson, 251 Or. 608, 447 P.2d 384.

“Title insurer could not recover from property owner amount of its payment satisfying tax lien on property, on theory that it became sub-rogated to rights of its insured and government, where insurer was under no legal compulsion to make payment except as required by contract with its insured, and where owner was not a party to that contract, did not request insurer to make payment, and did not affirm or approve insurer’s act of doing so. Chicago Title Ins. Co. v. Eynard, 81 Misc.2d 931, 367 N.Y.S.2d 399, aff'd. 84 Misc.2d 605, 377 N.Y. S.2d 895.”