Court Opinion

ID: 9570759
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:25:58.512203+00
Date Added: 2024-06-11T12:16:00.834151
License: Public Domain

DOOLIN, Justice,
dissenting:
While I agree with the majority the principle of equitable subrogation by operation of law certainly exists and is applicable to an insurer who has paid a loss; it is not applicable under the facts and circumstances here. I therefore dissent.
Buyers’ attorney neglected to make a requirement regarding a second mortgage existing on the property. After the purchase, buyers paid off the second mortgage. Buyers then made a claim against the errant attorney for malpractice. The attorney’s malpractice insurance carriers (insurers) paid the buyers’ malpractice claim.
As the majority points out there are indeed two types of subrogation. Conventional subrogation arises from subrogation by agreement; in other words by a subro-gation clause in the contract of insurance providing that the insurer will be subrogat-ed to the rights of the insured. The equitable or legal right of subrogation, as the legal effect of payment under the policy, inures to insurer without a provision to that effect in the policy.
Conventional subrogation arises because of a contractual provision for subrogation either express or implied. Equitable subro-gation does not require an expression in the contract but may be granted to an insurance company who has paid a liability of its insured. Conventional subrogation clauses merely confirm equitable rights that exist without them.1
All subrogation rights of an insurance company are derivative from the rights of the insured, whether they arise from a conventional subrogation clause or from equitable principles. These subrogation rights, being derivative, can rise no higher than the rights from which they are derived.2 In this case the rights are the rights of the insured attorney, not the buyers.
While the principle of equitable subrogation may certainly be applied to an insurer where no conventional subrogation exists, the majority cites no case based on either conventional or equitable subrogation wherein an insurer was entitled to be subro-gated to anyone other than its insured.
Jorski Mill & Elevator Co. v. Farmers Elevator Mut. Ins. Co., 404 F.2d 143 (10th Cir. 1968) stands only for the general principles of subrogation enunciated by the majority. In Jorski equitable subrogation was used to permit an insurer to be subrogated to rights of its insured to collect from an elevator company who failed to deliver wheat stored with it by the insured.
In Sutton v. Jondahl, 532 P.2d 478 (Okl.App.1975) an insurer attempted to sue a tenant to recover moneys it had paid the lessor for a fire loss allegedly caused by the tenants. The Court of Appeals did not allow the insurer to be subrogated to any rights of the lessor to an action against the tenant.
General Creditors of Estate of Harris v. Cornett, 416 P.2d 398 (Okl.1966) was an action in probate court. The administrator paid a preferred claim out of funds which were available for payment of general creditors. The court permitted the general creditors to be paid out of funds later acquired by the administrator; a correct decision, if somewhat inaccurately based on subrogation.
In this case, the insurer might have protected itself by taking an assignment of the buyers’ right of action against the sellers.3 No such assignment was pleaded. The insured was the attorney who wrote the title *458opinion, not the buyers. Insurers paid the attorney’s debt. Insurers could only be sub-rogated to the rights of the attorney whom they insured. The attorney had ho right of action against the sellers. Because insurers’ rights are derived from the attorney’s and are limited to his rights, the insurers have no right of action against the sellers.
An insurer’s obligation is to make its insured whole. In consideration of this obligation it receives premiums from its insured. It cannot be indemnified through subrogation for all its payments made pursuant to contractual obligations.
There can be no subrogation where insured has no cause of action against defendants.4 Accordingly I would affirm the trial court.

. See generally Kimball and Davis “The Extension of Insurance Subrogation” 60 Mich.L.Rev. 841 (1962).

. PaR Truck Leasing Incorporated v. Bonanza Incorporated, 425 F.2d 695 (10th Cir. 1970); Hartford Accident and Indemnity Company v. First National Bank and Trust Company of Tulsa, Oklahoma, 287 F.2d 69 (10th Cir. 1961); 44 Am.Jur.2d Insurance § 1821 and cases cited therein.

.For example see Douberley v. Angelini, 240 So.2d 98 (Fla.App.1970).

. International Insurance Company v. Medical-Professional Building of Corpus Christi, 405 S.W.2d 867 (Tex.Civ.App.1966); also see generally 46 C.J.S. Insurance § 1208(b).