The facts 'alleged, summarily stated, are: Plaintiff insured the Chevrolet automobile of James C. Hardee against damage by collision; the policy obligated plaintiff to pay any loss in excess of $100; the Chevrolet was, on 27 February 1961, in a collision with an automobile operated by defendant Roger Spivey as the agent of defendant Bonnie M. Spivey; Hardee sustained personal injuries in the collision and the insured automobile was damaged to the extent of $534; the collision was caused by the negligence of defendant Roger Spivey; plaintiff, on 7 April 1961, complying with its policy provision, paid its insured $434 on account of the damage to the automobile and took from him a release and assignment of his claim to the extent of the amount paid; defendants were notified of the payment and assignment so made; in December 1961 Plardee instituted an action against defendant Spivey to recover for personal injuries sustained by him and for the $100 uncompensated loss to the automobile, therein specifically alleging the payment which plaintiff had made to him as required by its policy of insurance and waiving any right to recover tlhe sum which he had received from plaintiff; a consent judgment was entered in said action, settling the claims there asserted by Hardee against defendants.
Unless defendants have succeeded in escaping liability by settling with Hardee, the facts alleged and admitted by the demurrer impose liability on defendants to pay full compensation for the loss resulting from their tortious conduct.
The rights of insured and insurer, paying the loss in whole or in part, and how those rights may be enforced are stated in
Burgess v. Trevathan,
*734 The language used is an accurate statement of the law. It does not, however, as defendant contends, require an affirmance of the judgment sustaining the demurrer. It should be noted, as we have done by italicizing, that Judge Ervin says the insured may recover, not that he must recover, the full loss. True the tort-feasor cannot be compelled against his will to defend two actions for the same wrong. His remedy, if sued by the injured party for the uncompensated portion of the loss and he wishes to settle the entire controversy in one action, is to require a determination of the entire damage to the motor vehicle. To accomplish that purpose he would be entitled to have the insurance carrier made a party.
The law as stated by Judge Ervin in
Burgess v. Trevathan, supra,
had been similarity stated some thirty-six years prior thereto by Allen, J., in
Powell v. Water Co.,
It is said in 46 C.J.S. 179, cited with approval in Burgess v. Treva-than, supra: “After the loss has been paid by the insurer, or the insurance is in the process of adjustment, a third person, having knowledge of the fact, cannot make settlement with insured for the loss, his liability being to insurer to the extent of the insurance paid; and if a third person makes such settlement it is no defense to a suit by insurer against him.”
The right of a tort-feasor to defeat the claims of an insurer who has been subrogated to the rights of its insured was again considered in
Phillips v. Alston,
The fact that the right remaining in the insured for which he sought compensation was disposed of by a consent judgment can make no difference. Such a judgment is a contract and must be interpreted as other contracts.
Owens v. Voncannon,
*735 To hold that an insured seeking only his uncompensated loss defeats the rights of his insurer by settling that claim with a tort-feasor who has knowledge of insurer’s claim would make an innocent insured an instrumentality in the perpetration of a fraud on his insurer. Fire Ass’n. of Philadelphia v. Wells, 94 A 619, Ann. Cas. 1917A 1296. If the tort-feasor acts in good faith and without knowledge of any injustice which would result from a settlement, he is of course protected; but he is not protected' when both he and the injured party understand that he is only paying for the portion of the damage for which the injured party has not received compensation.
Reversed.