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Timestamp: 2016-12-06 08:36:32
Document Index: 158726338

Matched Legal Cases: ['§ 1820', '§ 61', '§ 1821', '§ 4092', '§ 4092', 'art, 439']

| Aetna Insurance Co. v. Gilchrist Brothers Inc.
Aetna Insurance Co. v. Gilchrist Brothers Inc.
AETNA INSURANCE COMPANY, AS SUBROGEE OF HIGINIO OTERO, PLAINTIFF-APPELLANT,v.GILCHRIST BROTHERS, INC. AND JOHNNIE S. BELL, DEFENDANTS-RESPONDENTS
For modification and affirmance -- Justices Pashman, Clifford, Schreiber, Handler and Pollock. For reversal and remandment -- Justice Sullivan. The opinion of the Court was delivered by Schreiber, J. Sullivan, J., dissenting. Pashman, J., concurring and dissenting in part. Pashman, J., concurring in the result.
[85 NJ Page 554]
Higinio Otero was the named insured under an automobile liability policy issued by the Aetna Insurance Company (Aetna), covering his Ford automobile. The policy contained a New [85 NJ Page 555]
Jersey Basic Personal Injury Protection Endorsement (PIP) which required that Aetna pay Otero certain losses (medical expense, income loss, etc.) related to personal injury caused by accidents arising out of the use "of a private passenger automobile." N.J.S.A. 39:6A-4. Aetna paid Otero approximately $30,000 because of that obligation.
The Appellate Division affirmed but not on the basis of the trial court's holding regarding subrogation rights. It held that Aetna should have asserted its claim in Otero's suit against Bell and Gilchrist and that its failure to have done so violated the "single controversy" doctrine. Accordingly, Aetna's action was now barred. [85 NJ Page 556]
We granted plaintiff's petition for certification. 82 N.J. 297 (1980).
The Appellate Division erred when it held that the single controversy doctrine is applicable to this situation.*fn1 The single or entire controversy doctrine evolved "to eliminate delay, prevent harassment of a party and unnecessary clogging of the judicial system, avoid wasting the time and effort of the parties, and promote fundamental fairness." Barres v. Holt, Rinehart and Winston, Inc., 74 N.J. 461, 465 (1977) (Schreiber, J., dissenting). These goals motivated the judicial reform expressed in the Constitution of 1947. The Report of the Committee on the Judiciary in that Constitutional Convention reminds us that an outstanding defect in the then existing court structure was
This policy requires that a party include in the action all related claims against an adversary and its failure to do so [85 NJ Page 557]
precludes the maintenance of a second action.*fn2 Several decisions of this Court have advocated that proposition. The leading opinion is that of Justice Brennan in Ajamian v. Schlanger, 14 N.J. 483 (1954), cert. den. 348 U.S. 835, 75 S. Ct. 58, 99 L. Ed. 659 (1954). The plaintiff's assignor had unsuccessfully sought rescission of a contract, the court holding that ratification barred recovery. Thereafter, the plaintiff sued for damages based on the deceit which had induced him to enter into the agreement. Justice Brennan, after calling attention to a "fundamental objective" of the constitutional reform "to avoid the delays and wasteful expense of the multiplicity of litigation which results from the splitting of a controversy" and the "simple and flexible procedural framework designed and proposed for the just and expeditious determination in a single action of the ultimate merits of an entire controversy between litigants," id. at 485, held that, since both remedies -- rescission and damages -- could have been maintained in the first action, preclusion of the action for damages "must follow if the policy to avoid undue litigation is not to be emptied of substance," id. at 488.
The effect of Ajamian was to require a party to join all its claims against its adversary when those claims were related to and part of the same controversy. Tevis v. Tevis, 79 N.J. 422, 434 (1979); Applestein v. United Board & Carton Corp., 35 N.J. 343, 356 (1961); Silverstein v. Abco Vending Service, 37 N.J. Super. 439, 449 (App.Div.1955).
In any event, elemental considerations of fairness to the other party and the urgent need for eliminating the delay and wastage incident to the fragmentation of litigation dictated that all of the aspects of the plaintiff's controversy with [85 NJ Page 558]
the defendant be included within his legal proceeding. See 2 Schnitzer and Wildstein, New Jersey Rules Service A-IV-933 et seq. (1957). [ Id. at 94, 219 A.2d 505.]
In McFadden v. Turner, 159 N.J. Super. 360 (App.Div.1978), Judge Pressler commented on this distinction. In that case an injured plaintiff, who had recovered against an employer via vicarious liability, was permitted to maintain a second action against the employee when the plaintiff could not recover all her damages from the employer. Judge Pressler wrote:
Although we are convinced that it is far preferable for the co-obligors to be joined in a single action and while the temptation to require that to be done by an application of the entire controversy doctrine is formidable, we nevertheless adhere to our former determination that in those circumstances the joinder rule is permissive and not mandatory. We reach that conclusion because of our continued perception of the entire controversy doctrine as a rule of mandatory joinder of claims, not of parties. As we understand the doctrine, its essential purpose is to assure a party to litigation that that litigation will be conclusive as to the entire matter which is its real subject. It is in effect a principle of repose intended to protect one who is already a party to litigation from the expense, delay and harassment implicit in multiple successive actions whose individual [85 NJ Page 559]
scopes are limited to only a fragment of the complete dispute. As we said in Wm. Blanchard Co. v. Beach Concrete Co., Inc., 150 N.J. Super. 277, 293-294 (App.Div.1977), the jurisprudential basis of the doctrine is the conception that litigants in an action should not be required, after final judgment therein is entered, "to engage in additional litigation in order to conclusively dispose of their respective bundles of rights and liabilities which derive from a single transaction or related series of transactions." Thus the entire controversy doctrine operates, and was intended to operate, to prevent a party from being compelled to successively litigate. Being compelled to successively litigate does not, however, mean that one may not elect to successively litigate so long as he has a viable cause of action to litigate and so long as his election does not result in another's compulsion. [ Id. at 369-370]
Our research has not disclosed any case in this State where the single controversy doctrine precluded a second action because of a failure to join parties. Thatcher v. Jerry O'Mahony, Inc., 39 N.J. Super. 330 (App.Div.1956), referred to the principle in a situation where indispensable parties had not been joined. There, plaintiff in his capacity as a stockholder sued a corporation to invalidate a stockholder's ratification of an agreement which provided for stock options. Plaintiff, if successful in that action, intended then to seek to invalidate three stock options granted to certain directors. In dismissing the action Judge Goldmann referred to the policy "against subdividing a single controversy by resort to fractional litigation," id. at 335, and suggested the entire controversy doctrine justified dismissal. However, the suit was dismissed not because there had been a prior final adjudication between the parties, but because of the absence of indispensable parties, the three directors.
It may be that under some circumstances the failure of a party to be joined or to intervene in a prior action should, after adjudication, bar a second action against that party involving the same subject matter. Thus, if Aetna, subrogated to Otero's claim for medical expenses against Gilchrist and Bell, were an indispensable party, then that action should not have proceeded without it and it would not be barred from now pursuing relief. Or if Aetna, though not an indispensable party but a proper or desirable one, was aware of Otero's ongoing lawsuit, sat idly by and permitted the action to proceed to judgment without intervening, [85 NJ Page 560]
perhaps preclusion of subrogation litigation by Aetna against Gilchrist should be in order. However, our Rules have not required such intervention and, even if we were so inclined, it would be unfair to state a new procedural rule to preclude a party from having its day in court.*fn3 Moreover, we do not reach that issue because, the matter having been settled, no trial was held and Otero did not obtain a judgment.
The defendant also advocates that the general release received from Otero in the settlement is a complete defense. However, the release would not operate to that extent unless that was the intent of the parties, including Aetna. See Cartel Capital Corp. v. Fireco of New Jersey, 81 N.J. 548, 559-561 (1980); Breen v. Peck, 28 N.J. 351 (1958); Daily v. Somberg, 28 N.J. 372 (1958). The correspondence between the insurance companies prior to the release, in which Home rejected Aetna's claim for reimbursement, reveals that defendant had notice of Aetna's claim. Therefore, the release could not affect Aetna's rights unless it participated in the settlement and release. See Melick v. Stanley, 174 N.J. Super. 271 (Law Div.1980).
Subrogation may exist by virtue of (1) an agreement between the insurer and the insured, 44 Am.Jur. 2d, Insurance, § 1820 at 746, (2) a right created by statute, 16 Couch on Insurance 2d, § 61:6 at 240 (1966), or (3) a judicial "device of equity to compel the ultimate discharge of an obligation by the one who in good conscience ought to pay it." Standard Accident Ins. Co. v. Pellecchia, 15 N.J. 162, 171 (1954); Ambassador Ins. Co. v. Montes, 76 N.J. 477, 484 (1978). The underpinning of subrogation is its derivative nature. The insurer obtains only [85 NJ Page 561]
the right of the insured against the tortfeasor subject to defenses of the wrongdoer against the insured. Hartford Fire Ins. Co. v. Riefolo Constr. Co., 81 N.J. 514, 523 (1980). The general rule has been stated as follows:
Consequently, the insurer can take nothing by subrogation but the rights of the insured, and is subrogated to only such rights as the insured possesses. This principle has been frequently expressed in the form that the rights of the insurer against the wrongdoer cannot rise higher than the rights of the insured against such wrongdoer, since the insurer as subrogee, in contemplation of law, stands in the place of the insured and succeeds to whatever rights he may have in the matter. [44 Am.Jur. 2d, Insurance, § 1821 at 748.]
The issue then is what rights Otero had which would have entitled him to recover from Gilchrist and Bell those expenses incurred as a result of the automobile accident and [85 NJ Page 562]
paid as part of the PIP coverage under the Aetna policy. The answer is none. It is none because the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 et seq., which mandates that every automobile liability insurance policy must provide PIP coverage, has eliminated the ability of the insured in an action in this State to recover damages from the tortfeasor for the amounts collectible or paid under PIP. N.J.S.A. 39:6A-12 states that:
In enacting the No Fault Act the Legislature determined that subrogation should not be allowed for PIP benefits and expressed the policy that an insured was not entitled to double recovery of the same damages. Iavicoli,*fn4 No Fault & Comparative Negligence in New Jersey at 117 (1973), points out that:
Aetna argues that Cirelli v. The Ohio Casualty Ins. Co., 72 N.J. 380 (1977), must lead to a contrary result. Not so. Cirelli involved an accident which occurred in New York between a New Jersey vehicle owned and operated by New Jersey residents (Cirelli) and a New York automobile owned and operated by New York residents (Natelli). Cirelli brought a declaratory judgment action against his insurance carrier (Ohio Casualty) to compel it to abide by the terms of the PIP payments in accordance with the New Jersey act. Also involved in the suit was Ohio's claim that its policy provision required Cirelli to reimburse [85 NJ Page 563]
Ohio for PIP payments to the extent that Cirelli recovered those payments in the New York suit against Natelli.
We did not find this provision relevant in Cirelli because it was a New York accident involving a New York automobile and Cirelli contemplated New York litigation. We noted that it was doubtful whether the Legislature had the power to compel an out of state insurer to arbitrate. The mandatory arbitration provision did not, therefore, apply in Cirelli. 72 N.J. at 386. [85 NJ Page 564]
Reference was also made in Cirelli to a policy purpose enhanced by sections 9 and 12 to eliminate the uneconomic shifting of dollars from one insurance company to another. See Iavicoli, No Fault & Comparative Negligence in New Jersey at 117 (1973). This policy would not be contravened by permitting reimbursement against the New York residents or their insurance carrier. Though elimination of subrogation rights among New Jersey carriers may operate to reduce premium costs due to lower administrative expenses, that factor may be absent when out of state insurance carriers are involved and the reciprocal benefits among insurance companies operating in New Jersey are missing.
The evidence rule in N.J.S.A. 39:6A-12 which prohibits the introduction into evidence of the PIP payments, thereby preventing double recovery, could not be enforced in the New York Cirelli litigation, whereas it could be in Otero's New Jersey litigation. There is no reason why in the New Jersey litigation the principle against double recovery should be thwarted.*fn5 Aetna's rights being dependent upon those of Otero, it has no subrogation standing with respect to those PIP payments. Cirelli [85 NJ Page 565]
on the other hand suffered from no such restriction. This is the sine qua non of the Cirelli rule.*fn6
The dissent argues that it is inequitable to deny subrogation when the tortfeasor is not covered for the accident by a New Jersey automobile liability policy. The wisdom of the legislative decision which eliminated the injured person's ability to prove and collect PIP damages from a third person is not for us to judge. Section 12 of the Act plainly and clearly has effectively [85 NJ Page 566]
eliminated that element of damages. According to the dissent, in New Jersey litigation the operative effect of section 12 with respect to the rights of the insurance carrier which paid PIP benefits depends on whether the tortfeasor is covered by a New Jersey automobile liability insurance policy. The language draws no such distinction. In the absence of a clearly expressed legislative intent to the contrary, we regard the language in section 12 as conclusive, irrespective of the nature of the tortfeasor's insurance coverage. The rights of plaintiff's insurance carrier as subrogee cannot exceed those of its insured. Since the injured plaintiff could not recover PIP damages from the tortfeasor, neither could plaintiff's insurance carrier.
Some confusion has arisen because of N.J.S.A. 39:6A-9. That section created a statutory right of "subrogation" by providing that an insurer paying PIP benefits "shall be subrogated to the rights of any party to whom it makes such payments, to the extent of such payments." However, the right was a limited one. It could be exercised only against the insurer of the tortfeasor, and then processed, as we have previously indicated, [85 NJ Page 567]
only through intercompany arbitration or agreement. The provisions of the section became inoperative after December 31, 1974. Penna. Manu. Assoc. Ins. Co. v. Gov't Emp. Ins. Co., 72 N.J. 348 (1977). After that date, an insurer's right to "subrogation," if any, would be the same as prior to its enactment.
While I concur in parts I and II of the majority opinion, I disagree with the majority's conclusion in part III, that subrogation law bars Aetna's claim in this case. Since I am convinced that today's ruling will result in private automobile owners "subsidizing" the cost of insurance on non-PIP-covered commercial vehicles in this State, and since such a result is unreasonable [85 NJ Page 568]
and inequitable on its face and clearly conflicts with the purposes of the No Fault Act,*fn1 I respectfully dissent.
Under today's ruling the tortfeasor is given immunity from liability for the PIP damages he caused and Aetna's right to reimbursement for PIP obligations incurred is limited to requests for rate increases from the Department of Insurance. In essence, the PIP insurer's own customers will ultimately pay, through higher PIP premiums, for tortious conduct by operators of commercial vehicles.*fn2 Commercial insurers, on the other hand, are not subject to the provisions of the No Fault Act and, thus, suffer from no similar restriction on their right to sue private automobile operators and their PIP insurers for PIP-type expenses paid to their commercial insureds. They enjoy reimbursement and subrogation rights under our workers' compensation statute. N.J.S.A. 34:15-40(a), (b), (f). As a result, workers' compensation carriers are free to recover for benefits paid their insureds as a result of negligence by private automobile operators, and thus, are able to avoid unwarranted increases in the liability rates of their insureds. This imbalance in the subrogation rights of insurance carrier will necessarily result in higher liability insurance premiums for private automobile owners [85 NJ Page 569]
in this State with a corresponding windfall for commercial vehicle owners.
where the accident occurs outside New Jersey and a New Jersey and an out of state vehicle are involved, the predicate for the PIP provisions preventing subrogation does not exist. Elimination of subrogation rights among New Jersey carriers may operate to reduce premium costs because of reduced administrative expenses, including counsel fees. This factor may be absent when an out of state insurance carrier is involved. The shifting of dollars among New Jersey and out of state carriers may be an element in fixing the cost of automobile liability policies in New Jersey. If insurers of New Jersey vehicles are deprived of subrogation rights, liability carriers in foreign jurisdictions may reap an unjustifiable benefit. In other words the New Jersey insurance company could not collect from the New York tortfeasor or his insurance carrier. Those out of state insurance companies in turn may not be subject to such deprivation in favor of the New Jersey carrier. The Legislature certainly did not intend that New Jersey residents should subsidize residents of other jurisdictions. [ Id. at 387-388; emphasis added]
A more reasonable interpretation of the No Fault Act, first, recognizes N.J.S.A. 39:6A-12 as an evidentiary exclusionary rule only, having no effect on the subrogation rights of PIP insurers. The majority's analysis, which utilizes the plain language of N.J.S.A. 39:6A-12 and strict enforcement of traditional principles of subrogation law to deny plaintiff's subrogation claim, overlooks the unique circumstances posed by the No Fault Act's applicability in this case. The equitable principles of subrogation law cannot be routinely applied in a situation where the Legislature has dramatically altered the contractual rights and liabilities of the parties to an insurance contract. Moreover, it is [85 NJ Page 570]
axiomatic that a court will not strictly enforce equitable doctrines where to do so would lead to an unjust result. See Midland Bank & Trust Co. v. Fidelity & Deposit Co. of Md., 442 F. Supp. 960, 973 (D.N.J.1977); Fidelity & Cas. Co. of New York v. First Nat'l Bank in Fort Lee, 397 F. Supp. 587, 589 (D.N.J.1975), app. dism., 538 F.2d 319 (3d Cir. 1976).
Second, I read N.J.S.A. 39:6A-9 as eliminating, as of January 1, 1975, all subrogation rights of PIP insurers for PIP obligations incurred, but only where all the insurance carriers involved in a given dispute are subject to the requirements of the No Fault Act.*fn3 Only when all vehicles involved in an accident are PIP-covered is the policy behind the Act's subrogation bar served (the elimination of cumbersome and uneconomic shifting of dollars from one insurance company to another) because only in this instance do all insurance carriers involved stand on equal footing.*fn4 Under this interpretation of N.J.S.A. 39:6A-12 and 39:6A-9, in cases where section 9's subrogation bar would be inapplicable, the contractual subrogation rights of the PIP carrier would be fully recognized.
The majority asserts that "significant economic reasons" justify the denial of subrogation rights here. It points out, first, that today's ruling guarantees the fast and efficient reimbursement of medical expenses of all injured persons, regardless of fault. Second, it states that administrative costs and counsel [85 NJ Page 571]
fees will be saved as a result of the decrease in litigation. Finally, while the majority concedes that its ruling will not benefit the vast majority of New Jersey residents who own only private passenger vehicles, it claims the ruling will have some, unstated, "favorable financial impact" on those New Jersey consumers who own and insure both commercial and private passenger motor vehicles. I am not persuaded that any of these claimed "economic reasons" justify the result reached in this case.
Furthermore, the majority apparently believes that the primary goal of N.J.S.A. 39:6A-12, barring an insured from introducing in any civil action evidence of PIP-covered expenses, was to prevent double recovery by insureds for PIP damages. In attempting to distinguish the ruling in Cirelli, the majority notes that "[t]here is no reason why in New Jersey litigation the principle against double recovery should be thwarted." 85 N.J. at 564. This perception of the primary purpose of section 12 is incorrect and the majority's concern that the principle against double [85 NJ Page 572]
recovery would be thwarted were we to uphold Aetna's right to subrogation in this case is unjustified.
First, as Iavicoli points out, the "principal reason" for the passage of section 12 was to deter plaintiffs from seeking unneeded medical treatment and thereby inflating medical expenses in hopes of currying jury sympathy at trial. Iavicoli, supra at 90. If in drafting section 12, the Legislature merely intended to preclude double recovery by insureds for PIP damages, it would not have constructed such an elaborate evidentiary rule. A provision stating that an insured shall hold in trust for his insurer any PIP-type damages recovered in an action against a tortfeasor would have been sufficient. A recognition of the unique evidentiary purpose underlying the passage of section 12 reinforces the conclusion that it was intended only to affect the admissibility of evidence in suits brought by insureds -- it was not intended to affect the subrogation rights of PIP insurers. Moreover, interpreting section 12 as having no effect on the subrogation rights of PIP insurers would in no way "thwart" the principle against double recovery. Under my interpretation of the Act, section 12 would continue to bar insureds from introducing evidence of PIP-covered expenses in any civil action. Section 9, meanwhile, would allow PIP insurers to assert contractual subrogation rights against non-PIP-insured tortfeasors.
I agree with the majority that Aetna's suit was properly dismissed on the ground that, in light of N.J.S.A. 39:6A-12, there [85 NJ Page 573]
was no claim to which Aetna could be subrogated. Although this ground alone would support its decision, the majority has nevertheless addressed the general question whether the single controversy doctrine is applicable in the context of subrogation. Because I believe that the majority has incorrectly treated this issue, I write separately to express my disagreement with the majority on that subject.
Contrary to the belief of the majority, the single controversy doctrine is directly relevant to the law of subrogation and bars any action by an insurer-subrogee on its subrogation claim after its insured has settled with the tortfeasor. The doctrine applies because the rights of a subrogated insurer rise no higher than the rights of its insured against the third party -- a principle recognized by the majority, ante at 561. Consequently, a subrogee is subject to all the legal and equitable defenses that the third party enjoys against the subrogor. Standard Accident Insurance Co. v. Pellecchia, 15 N.J. 162, 172-73 (1954). After a settlement with the insured, the third party obviously could raise the single controversy doctrine as a defense against a subsequent action brought by the insured arising from the same accident, since dismissal of an action pursuant to a settlement operates as a judgment for the purposes of res judicata. See Kelleher v. Lozzi, 7 N.J. 17, 26 (1951). Therefore, the third party can also raise the defense against an action brought by the insurer to enforce its subrogation rights. See 6A Appleman, Insurance Law and Practice § 4092 at 239-40 (1972) (citing cases). [85 NJ Page 574]
The majority reasons that the single controversy doctrine is not a bar in the context of this case because the doctrine does not require joinder of parties. Ante at 557-59. But this principle, even if valid, is not relevant here. The question is not whether the insured must join the insurer in its action as a party plaintiff, but whether the insurer must intervene in the action, or at least give notice to the tortfeasor of the existence of its subrogation claim, in order to avoid the merger of its claim in any judgment or settlement obtained in the insured's action. In my opinion, such intervention or notice by the insurer is necessary to preserve its claim as the subrogee.
The majority's reliance on McFadden v. Turner, 159 N.J. Super. 360 (App.Div.1978), is misplaced. In McFadden, where the issue did involve failure to join parties, the court held that the single controversy doctrine does not prevent a plaintiff from electing to litigate successively against two defendants liable on the same claim. The court correctly observed that the doctrine is based on the principle that "litigants in an action should not be required, after final judgment therein is entered, 'to engage in additional litigation in order to conclusively dispose of their respective bundles of rights and liabilities which derive from a single transaction or series of transactions.'" Id. at 369-70. The plaintiff's action in McFadden did not implicate this principle, because a single defendant was not compelled to litigate successively claims arising from the same transaction. In contrast, the policy underlying the single controversy doctrine is relevant in the present case. The defendant here would be required to engage in multiple litigation to resolve claims arising from a single accident in favor of a single plaintiff or of parties, like Aetna, whose interests derive from that plaintiff.
The majority indicates that even if a procedural rule requiring a subrogee to intervene in an action by its insured were appropriate, it would be unfair to apply the rule in this case because our procedural rules have not previously required such intervention. Ante at 559-60. This statement overlooks the fact that no such procedural rule is necessary, since well-established principles [85 NJ Page 575]
of res judicata already require a subrogee to take action to protect its interests as a matter of substantive law. See, e.g., Story v. Rivers, 220 Ga. 232, 138 S.E. 2d 304 (1964); Travelers Insurance Co. v. Hartford Accident & Indemnity Co., 222 Pa.Super. 546, 294 A.2d 913 (1972); United Services Automobile Association v. Hartford Accident & Indemnity Co., 220 Tenn. 120, 414 S.W. 2d 836 (1967); Southern Pacific Transport Co. v. State Farm Mutual Insurance Co., 480 S.W. 2d 59 (Tex.Civ.App.1972); State Farm Mutual Automobile Insurance Co. v. De Wees, 143 W.Va. 75, 101 S.E. 2d 273 (1957); 6A Appleman, supra, § 4092 at 239-40.
Although a settlement between an insured party and a tortfeasor will normally bar maintenance of an action to enforce subrogation rights, this rule should not apply to cases where the tortfeasor has actual knowledge or is chargeable with knowledge of the subrogated claim at the time of the settlement. See, e.g., Melick v. Stanley, 174 N.J. Super. 271 (Law Div.1980); Sentry Insurance Co. v. Stuart, 439 S.W. 2d 797 (Ark.1969); Home Insurance Co. v. Hertz Corp., 71 Ill. 2d 210, 16 Ill.Dec. 484, 375 N.E. 2d 115 (1978); Travelers Indemnity Co. v. Vaccari, 310 Minn. 97, 245 N.W. 2d 844 (1976); State Farm Mutual Insurance Co. v. Farmer's Insurance Exchange, 27 Utah 2d 166, 493 P. 2d 1002 (1972); Hardware Dealers Mutual Fire Insurance Co. v. Farmers Insurance Exchange, 4 Wash.App. 49, 480 P. 2d 226 (1971). In those circumstances, a general release would constitute "such a fraud upon the subrogee as will avoid it both at law and in equity so far as it affects the rights of the subrogee." Standard Accident Insurance Co. v. Pellecchia, supra, 15 N.J. at [85 NJ Page 576]
175, quoting Fire Association of Philadelphia v. Wells, 84 N.J. Eq. 484, 486 (E & A 1915).