The general view of the cases is that when an insured settles
with a tortfeasor and the settlement is intended to be a total
release of the tortfeasor, the insurer may not maintain an action
against the wrongdoer for indemnity or reimbursement because the
insurer's rights arise by subrogation to the insured's rights.
And since the insured has released the tortfeasor and therefore
has no further rights against him, neither does the subrogee.
Annot. 92 A.L.R.2d 102, 112 (1963).
In summary, Illinois' decisional law and the treatises agree
that when the insured releases a wrongdoer, the release destroys
the insurer's right of subrogation.
Stein was fully released by Sears by virtue of an accord and
satisfaction supported by adequate consideration. Because of the
release INA lost its right of subrogation against Stein.
Therefore, it is the judgment of the court that the motion of
third-party defendant Ben B. Stein for summary judgment should be
granted. Judgment will enter in favor of third-party defendant
Ben B. Stein and against third-party plaintiff Insurance Company
of North America on the third-party complaint of Insurance
Company of North America.
The court finds, pursuant to Rule 54(b) Fed.R.Civ.P. that there
is no just reason to delay the entry of this judgment, the
enforcement or appeal therefrom.
ON MOTION TO REHEAR
On October 16, 1974, third-party defendant Ben B. Stein's
motion for summary judgment against the third-party plaintiff,
Insurance Company of North America (hereinafter "INA") was
granted and judgment was entered pursuant to Fed.R.Civ.P. 54(b).
Twenty-eight days later on November 13, 1974, the plaintiff,
Sears, Sucsy & Co., filed, pursuant to Fed.R.Civ.P. 60(b)(1),
(6), the present "Motion to Rehear and Deny Ben B. Stein's
Request for Summary Judgment." Two days later the plaintiff also
filed a notice of appeal from the October 16 judgment. Although
the plaintiff has filed a notice of appeal, this court has
jurisdiction to consider the Rule 60(b) motion. Binks
Manufacturing Co. v. Ransburg Electro-Coating Corp.,
281 F.2d 252, 260-61 (7th Cir. 1960), cert. dismissed, 366 U.S. 211, 81
S.Ct. 1091, 6 L.Ed.2d 239 (1961). No motions were made under Rule
59(e) to alter or amend the judgment of October 16, 1974, and if
the present motion is intended to fall within the ambit of Rule
59, the motion is untimely.
Plaintiff's Rule 60 motion set out three reasons why the motion
for summary judgment should be reheard and denied: (1) counsel
for the plaintiff mistakenly failed to submit the affidavit of
Gerald A. Sears as an exhibit to plaintiff's answer to Ben B.
Stein's motion for summary judgment; (2) the court mistakenly or
inadvertently failed to consider the evidence of duress upon
Gerald A. Sears at the time of the alleged agreements; (3) the
court's opinion and order on the motion for summary judgment went
beyond the issues presented in the pleadings on that motion.
Before discussing these issues the salient facts surrounding the
litigation, including the granting of Stein's motion, must be
The plaintiff was afforded every opportunity to file papers in
opposition to Stein's motion. The motion for summary judgment was
filed on April 16, 1974. And although the motion was addressed to
INA, the plaintiff was given, on June 11, 1974, 30 days to
respond, since a favorable judgment to Stein might have serious
collateral effects on the plaintiff's case. Despite this
opportunity, the plaintiff did not file an answer. On September
13, 1974, the day before Stein's motion was set for ruling, the
plaintiff requested an additional 10 days to file an answer,
which was granted. On September 24, 1974, plaintiff filed the
After considering all the papers submitted by Stein and the
motion was granted on the theory that by an agreement of July 28,
1972, the plaintiff had released Stein from any and all
responsibility in connection with all trading in Leisure Trend
stock. As a result, INA had no cause of action against Stein for
indemnity or reimbursement. Whether INA could raise the defense
of release against Sears in the primary action was purposely left
The plaintiff's motion under Rule 60, simply stated, alleges
that the July 28 agreement is voidable because of duress exerted
Rule 60(b) provides:
Mistakes; Inadvertence; Excusable Neglect; Newly
Discovered Evidence; Fraud, etc. On motion and upon
such terms as are just, the court may relieve a party
or his legal representative from a final judgment,
order or proceeding for the following reasons: (1)
mistake, inadvertence, surprise, or excusable
neglect; (2) newly discovered evidence which by due
diligence could not have been discovered in time to
move for a new trial under Rule 59(b); (3) fraud
(whether heretofore denominated intrinsic or
extrinsic), misrepresentation, or other misconduct of
an adverse party; (4) the judgment is void; (5) the
judgment has been satisfied, released or discharged,
or a prior judgment upon which it is based has been
reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective
application; or (6) any other reason justifying
relief from the operation of the judgment.
Two of the objectives behind Rule 60 are both competing and
conflicting. On one hand the rule buttresses the finality of
judgments, while on the other it provides a number of grounds for
relief from final judgments. J. Moore, Federal Practice, ¶
60.27, at 340 (2d ed. 1974). In the present case the plaintiff
argues that relief should be granted either under subsection
(b)(1) or (b)(6).
The Court of Appeals for the Seventh Circuit has considered the
scope of Rule 60 on a number of occasions. In Di Vito v. Fidelity
& Deposit Co., 361 F.2d 936 (7th Cir. 1966), the defendant
appealed from an order denying relief under Rule 60(b)(3) — fraud
by an adverse party. In affirming the district court's order, the
court of appeals stated:
Rule 60(b) provides for extraordinary relief and may
be invoked only upon a showing of exceptional
circumstances. . . . A motion thereunder to vacate a
judgment is addressed to the sound discretion of the
trial court, and its determination will not be
disturbed except for abuse of discretion. 361 F.2d at
938 (citations omitted).[fn1a]
The court concluded that the defendant's conclusory affidavits
fell far short of the clear and convincing evidence of fraud
needed to invoke Rule 60(b)(3).