Title: Armijo v. Foundation Reserve Insurance Company

State: new-mexico

Issuer: New Mexico Supreme Court

Document:

408 P.2d 750 (1965) 75 N.M. 592 Bobby ARMIJO, Plaintiff-Appellee, v. FOUNDATION RESERVE INSURANCE COMPANY, Defendant-Appellant. No. 7610. Supreme Court of New Mexico. December 13, 1965. McRae, Ussery, Mims, Ortega & Kitts, Albuquerque, for appellant. Sheehan & Duhigg, Albuquerque, for appellee. COMPTON, Justice. The plaintiff instituted this action to recover for damages to his automobile under an insurance policy issued to him by the defendant. The latter appeals from a judgment allowing a recovery of the amount of the policy. As grounds for reversal of the judgment the appellant has advanced three points, under which he maintains (1) that the insurance policy was void from its inception because obtained by fraudulent misrepresentation, (2) that the appellee failed to join in his action an indispensable party, and (3) that the appellee's settlement with and release of the estate of the other driver involved in the accident which caused the damage released it from any liability under the policy. The first point set out above is the primary ground upon which the appellant resisted *751 the action in the lower court. The second and third points were first raised at the trial by the appellant's motions to dismiss and thereafter in its requested findings and conclusions. In view of our determination that the third and last point has merit and disposes of the appeal, we confine our consideration to this latter point. Consequently, only those facts pertinent to the settlement and release need be set forth here with any particularity. On May 14, 1962, the appellee purchased a used 1957 Buick automobile on which a policy of $50.00 deductible collision insurance was issued to him by the appellant. On May 19, 1962, while driving the Buick, the appellee was involved in a head-on collision with another automobile driven by one Aaron Lopez who was killed in the collision. By letter of June 29, 1962, the appellee demanded payment from the appellant under the policy, stating therein that "there is excellent subrogation on this claim and we would like to discuss that aspect with you." On July 12, 1962, the appellant advised the appellee that the policy was void for the reasons set out in point one above and that the premium was being returned. Thereafter, on July 18, 1962, the appellee filed a suit against the estate of Aaron Lopez to recover damages for his personal injuries resulting from the collision. The present action against the appellant was commenced on August 8, 1962. Thereafter, on September 25, 1962, after negotiations with an adjuster of State Farm Automobile Insurance Company, the liability insurance carrier for the decedent, the appellee settled his claim against the Lopez estate, executed to it a release and, on October 11, 1962, dismissed with prejudice his action against that estate. At no time prior to the trial of the present action did the appellant have notice or knowledge of the filing of the suit against the Lopez estate nor of the settlement with it and execution of a release by the appellee. The release, admitted into evidence, provides insofar as pertinent here that: At the trial the appellant moved for dismissal on the ground, among others, that there had been a complete settlement by the appellee of all claims arising out of the accident, thus destroying any subrogation rights it may have had both by law and under the terms of the policy, and precluding a recovery under the policy by the appellee. The court reserved a ruling on the motion and, thereafter, permitted the adjuster for State Farm to testify that at the time of settlement and execution of the release it was specifically understood by him, the appellee and the appellee's counsel, that bodily injuries only, and not property damage, were thus covered by the settlement. The appellant objected to this and other similar testimony as being in violation *752 of the parol evidence rule. Nevertheless, the court found: and concluded: We think the parol testimony of the adjuster was inadmissible as the release is complete, plain and unambiguous. It is a fundamental principle of law that where the terms of a written instrument are plainly stated, without ambiguity, the use of parol testimony to contradict or vary its terms is prohibited. Woodson v. Lee, 73 N.M. 425, 389 P.2d 196; Hyde v. Anderson, 68 N.M. 50, 358 P.2d 619; Hoge v. Farmers Market & Supply Co. of Las Cruces, 61 N.M. 138, 296 P.2d 476. A complete, valid, written contract merges all prior and contemporaneous negotiations and agreements of the parties, and an oral agreement which is an element of the written contract or which tends to vary or contradict it, either in its express provisions or legal import is inadmissible. Bell v. Lammon, 51 N.M. 113, 179 P.2d 757; Locke v. Murdock, 20 N.M. 522, 151 P. 298, L.R.A. 1917B, 267. The policy of insurance under which recovery here is sought contains the following condition: The terms of the policy expressly give the appellant insurance company the right of subrogation and obligates the appellee to do nothing after loss to prejudice such right. The release set forth above is equally clear. It is unconditional and unambiguous. It released the estate of Aaron Lopez from all claims on account of both bodily injuries and property damage arising out of the accident in question, and would be a complete defense to any action thereafter brought by the appellee, or his subrogee, for the recovery of property damage. We think it is well established that if an insured, without the knowledge of his insurer, effectively releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurance company, he destroys any right of subrogation the insurer may have against the wrongdoer and is, thereafter, precluded from a recovery from his insurer under the policy. Vol. 6, Appleman on Insurance Law and Practice, p. 580, §§ 4092, 4093; 6 Blashfield, Cyclopedia of Automobile Law and Practice, § 4181; 29A Am.Jur., Insurance, §§ 1733, 1735, pp. 810, 811. Also see Hilley v. Blue Ridge Insurance Co., 235 N.C. 544, 70 S.E.2d 570, 38 A.L.R.2d 1090; Libertin v. St. Paul Fire & Marine Ins. Co., 74 S.D. 436, 54 N.W.2d 168. *753 For the reasons stated, the judgment must be reversed. The cause is remanded to the trial court with instructions that it be dismissed with prejudice. It is so ordered. CARMODY, C.J., and CHAVEZ, J., concur.