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Safeco Insurance Co. of America v. Nationwide Mutual Insurance

Citations: 142 S.E.2d 694; 264 N.C. 749; 1965 N.C. LEXIS 1273Docket: 543

Court: Supreme Court of North Carolina; June 18, 1965; North Carolina; State Supreme Court

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In Safeco Insurance Company of America v. Nationwide Mutual Insurance Company, the North Carolina Supreme Court addressed the liability of Nationwide Mutual Insurance for damages resulting from the negligent operation of vehicles by Blue and Elliott, as well as Parnell. Phillips had successfully obtained a judgment against Parnell for his injuries and elected to seek compensation from him. Parnell, in turn, sought contribution from Blue and Elliott, which led to their liability being established in the judgment against Parnell. 

The court noted that Parnell's payment to Phillips made him a judgment creditor of Blue and Elliott, who did not contest their liability. Parnell had the right to assign his judgment against Blue and Elliott, allowing him to execute the judgment in his name. The plaintiff, Safeco, as Parnell's insurer, discharged Parnell's liability and thus became an equitable assignee of Parnell’s rights to enforce payment from Blue and Elliott.

The court emphasized that while Safeco, as subrogee of Parnell, could enforce the judgment liability of Blue and Elliott, this did not impose any obligation on Nationwide Mutual unless such an obligation existed under the insurance contract. The contract required that any action against Nationwide could only be initiated after the insured's obligation to pay had been determined by judgment or written agreement. Safeco claimed that the contract was intended to protect Blue and Elliott from liability judgments, and as an equitable assignee, it could compel Nationwide to fulfill its contractual obligations. 

The court concluded that the facts alleged supported the claim of liability against Nationwide, although it allowed for the possibility that Nationwide could dispute these facts in its answer. The court reversed the lower court’s decision, indicating that Safeco's claims had sufficient merit to proceed.