Hall & Long v. The Railroad Companies
ERROR to the Circuit Court for the Middle District of Tennessee.
Hall & Long allowed this suit in their names, for the use of certain insurance companies, against the Nashville and Chattanooga Railroad Company, to recover the value of cotton shipped by them on the road of the defendant as a common carrier, which was accidentally consumed by fire, while being transported, and 'became and was a total loss.' The cotton had been insured by Hall & Long against loss by fire, in the companies for whose use the suit was brought, and these companies had paid the amount insured by them, respectively. On demurrer the question was whether the underwriter who insures personal property against loss by fire, and pays the insurance upon a total loss by accidental burning, while in transition, can bring an action in the name of the owner, for his use against the common carrier, based upon the common-law liability of such common carrier. The court below adjudged that he could not, and the plaintiffs brought the case here on error.
Mr. Henry Cooper, in support of the judgment below:
The case is not one where the defendant has been guilty of any positive, wrongful act, resulting in loss to the owner. The defendant's liability, if it exist at all, grows out of the rigid rules of the common law, that a common carrier is liable for accidents, and against all acts but the acts of God and the public enemy.
In marine insurance, by a supposed analogy to suits in which this action has probably been brought, whenever a demand is made for payment under a policy, as for a total loss, the insurance company is subrogated to all the rights of the assured to the property insured. This is brought about by what is technically called an abandonment, which must, in all cases, be made by the assured.  The insurer thus becomes subrogated to all the title of the assured, in the goods, or in what may be saved of them, and the abandonment goes so far as to include the spes recuperandi where there is anything to be recovered.
But the doctrine of subrogation, in marine insurance, can have no application to the case now before the court, because: (1st) there is no such thing as abandonment in fire insurance on land, and (2d) there was here a total loss, and nothing, consequently, upon which a cession could operate.
It has generally been supposed that the insurer was entitled to subrogation to the rights of the assured where the insurance was of a mortgage debt; and, until recently, the doctrine was so laid down. But this was based upon a dictum of Judge Story's, in Carpenter v. Providence Washington Ins. Co.,  and has now been overruled by courts. In King v. State Mutual Fire Insurance Company,  C. J., speaking for the Supreme Court of Massachusetts, says:
'We are inclined to the opinion that when a mortgagee causes insurance to be made for his own benefit, paying the premium from his own fund, in case a loss occurs before his debt is paid, he has a right to receive a total loss for his own benefit; that he is not bound to account, to the mortgagor, for any part of the money he recovered as a part of the mortgage debt; it is not a payment in whole or in part, but he has still a right to recover his debt of the mortgagor. And so, on the other hand, when the debt is thus paid by the debtor, the money is not, in law or equity, the money of the insurer who has thus paid the loss, or money paid to his use. . . . What is there inequitable on the part of the mortgagee, towards either party, in holding both sums? They are both due upon valid contracts with him, made upon adequate consideration paid by himself. There is nothing inequitable to the debtor, for he pays no more than he originally received in money lent; nor to the underwriter, for he has only paid upon a risk voluntarily taken, for which he was paid by the mortgagee a full and satisfactory equivalent.'
The same conclusion has been reached, on a mortgagee's attempt to charge the mortgagor with the premiums of insurance, by Vice-Chancellor Wigram, in England, in Dobson v. Land,  and it has been had also in American cases. 
In equity, the insurance company could have no claim to subrogation until it had fully reimbursed the merchant, not merely the actual loss, but the premiums previously paid. The truth is, there is more intrinsic equity in the railroad company's claim to the benefit of subrogation against the insurance company, which has been fully paid for the risk it has assumed, than in the claim of the latter to be subrogated to the rights of action of the assured against the railroad company, if indeed he have any.
The English case of Mason v. Sainsbury and another,  and one or two American authorities, based upon that decision, which might be cited for a view opposed to ours, if they can be sustained at all upon principle, rest upon the doctrine of punishing the wrong-doer. But here the defendant has been guilty of no wrongful act by which loss has accrued. The loss is purely accidental, and that loss has been paid by the real plaintiffs upon a contract based upon a sufficient consideration. To allow them to recover, in the name of the owner, would be to give them the benefit of the premium without any risk. It would be, in effect, to legalize champerty. For what they claim is the right to have a right of action assigned them. It may be that where there is an equity growing out of the facts of the case the claim might be sustained; as, for example, if the cotton had been maliciously burned by the company, or lost by wilful neglect. But there can be no equity growing out of inevitable accident, and that accident expressly insured against for a valuable consideration. The railroad company and the insurance company, for whose use this suit is brought, were, so to speak, both insurers of the property lost against the risk which occurred. They both became liable by independent contracts upon independent considerations. Both are liable to the shipper, and he may recover at his election from either. But there is no equity in the premises, and each must abide by his contract with the shipper, and stand where he chooses to leave him.
Mr. W. Atwood, contra.
Mr. Justice STRONG delivered the opinion of the court.
^1 Tunno v. Edwards, 12 East, 488.
^2 16 Peters, 501.
^3 7 Cushing, 1.
^4 8 Hare, 216.
^5 White v. Brown, 2 Cushing, 412; Carter v. Rockett, 8 Paige, 437; and see Insurance Company v. Updegraff, 21 Pennsylvania State, 519.
^6 Douglas, 61.