469_C327
INSURED
HAS RIGHT TO CLAIM RECOVERED PROPERTY
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Homeowner
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Subrogation
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Theft
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Recovered Property
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In 1975, Helen Thompson’s house in Concord, Massachusetts,
was burglarized. One of the stolen items was an ancestral portrait painted by
artist Angelica Kauffmann in 1765. The painting, a
family heirloom, had been appraised for $25,000. Thompson’s homeowners
policy, issued by Northern Assurance Company, covered the loss of stolen
unscheduled personal property up to $32,500. Thompson submitted a claim and
attached a list of the stolen property. She estimated that the value of the
items totaled $65,000, but the painting was the only item for which she had an
appraisal.
Northern agreed to pay the policy limit of $32,500, and, as part of the
claims process, required Thompson to sign a subrogation agreement. The
agreement provided that Thompson accepted the $32,500 “in full release and
satisfaction in compromise settlement” of her claim. The agreement contained
the following language: “In consideration of the payment to be made hereunder,
the assured does hereby subrogate to said insurer all right, title and interest
in and to the property for which claim is being made hereunder, and agrees to
immediately notify said insurer in case of any recovery of the property for
which claim is being made hereunder, and will render all assistance possible in
any endeavor to recover said property. Assured also agrees to turn over to said
insurer, any such recovery which may be made, or reimburse said insurer in full
to the extent of the payment for such property which may be recovered.”
In 2007, the painting was found by an art dealer and turned over to the
Concord police.
By this time, Thompson had died and Northern Assurance Company was now OneBeacon Insurance Group. Both OneBeacon
and Thompson’s estate claimed rights to the painting, now valued at no less
than $400,000. OneBeacon claimed it was entitled to
the painting under the terms of the subrogation agreement. Thompson’s estate
claimed it could obtain rights to the painting by reimbursing OneBeacon $25,000. Eventually William Apthorp,
the executor of Thompson’s estate, filed a lawsuit seeking a declaration that
the estate was entitled to possession of the painting in exchange for payment
of $25,000. The court found in favor of the estate; OneBeacon
appealed.
On appeal, the Appeals Court of Massachusetts,
Norfolk, found
that the subrogation agreement unambiguously provided that if the stolen
property was recovered, the insured had a choice: either turn it over to the insurer
or pay the insurer back. According to the court, the right of subrogation
merely allowed Northern to exercise any rights that Thompson may have had to
the extent of the payment Northern had made. This arrangement had the effect of
preventing the insured from double recovery and the insurer from obtaining a
windfall. The court concluded that the estate could choose to take possession
of the painting and pay OneBeacon $25,000.
As a side issue, OneBeacon argued that, if
the estate took possession of the painting, it should pay OneBeacon
interest on the $25,000. The court found no merit in this argument and stated
that “there was nothing in the subrogation agreement to support OneBeacon’s contention that, if the estate were allowed to
have possession and ownership of the portrait in exchange for reimbursing the
amount paid by Northern, OneBeacon also should
recover compound interest on that amount.”
The decision of the lower court in favor of
the Thompson estate was affirmed.
Apthorp vs. OneBeacon
Insurance Group, LLC-No.
09-P-1258-Appeals Court of Massachusetts,
Norfolk-October 18, 2010-2010 Westlaw 4030566