United Services Automobile Ass'n v. Zeller

• Citation: 135 S.W.2d 161
• Decision Date: 30 August 1939
• Docket Number: No. 10513.,10513.
• Parties: UNITED SERVICES AUTOMOBILE ASS'N v. ZELLER et al.
• Court: Court of Appeals of Texas

135 S.W.2d 161

UNITED SERVICES AUTOMOBILE ASS'N v. ZELLER et al.

No. 10513.

Court of Civil Appeals of Texas. San Antonio.

August 30, 1939.

Rehearing Denied December 30, 1939.

Appeal from District Court, Bexar County; Everett F. Johnson, Judge.

Action on automobile liability policy by Monica Flanigan Zeller and others against the United Services Automobile Association. From a judgment for the plaintiffs, defendant appeals.

Affirmed.

Russell, McMillan & Russell, of San Antonio, for appellant.

Eskridge & Groce and Russell Talbott, all of San Antonio, for appellees.

SMITH, Chief Justice.

This action was brought by Monica Flanigan Zeller, joined pro forma by her husband, John Batiste Zeller, and her mother, Pearl K. Flanigan, against United Services Automobile Association, to subject the proceeds of a policy of automobile insurance issued by it to Captain Homer Chandler to the payment of a judgment rendered by the Superior Court of San Diego County, California, in favor of the plaintiffs against Captain Chandler's son, Homer Chandler, Jr. The cause was tried to a jury upon whose findings judgment was rendered in favor of plaintiffs in the amount of $6,326, being the limit of liability under the policy. The defendant Association has appealed.

Captain Homer Chandler will be referred to hereafter as Captain Chandler, and his son, Homer Chandler, Jr., who was twenty years of age at the time of the transaction under inquiry here, will be referred to as Junior. When the accident hereinafter mentioned occurred and the judgment based thereon was rendered by the California court, the appellee, Monica Flanigan Zeller, was a single woman, her maiden name being Monica Flanigan. She will be referred to herein as Monica Zeller.

The appellant, a reciprocal insurance exchange organized under the laws of Texas, and being engaged principally in writing automobile insurance for warrant officers and officers of the United States army and navy, with its home office in San Antonio, Texas, issued its policy of insurance to Captain Chandler, then stationed at Rockwell Field, Coronado, near San Diego, California. Under the terms of the policy, which designated Captain Chandler as "the subscriber," the appellant agreed to indemnify the assured for "loss resulting from claims or suits arising from bodily injuries or death accidentally suffered or alleged to have been suffered by any person or persons, based on the operation or maintenance of the automobile insured hereunder * * as the result of an accident occurring while this policy is in force * * *". The policy further provided: "The liability of the exchange is extended to cover as additional assureds * * * though not subscribers, any persons riding in or legally operating said automobile, * * * provided that such use * * * is with the permission of the Subscriber or an adult member of his household * * *," and that "the Exchange will indemnify the Subscriber against loss incurred in connection with any final judgment against the Subscriber * * * and the Exchange will defend at its cost, but in the name of and on behalf of the Subscriber, all suits for damages alleged to have been suffered by reason of an accident during the contract period, even though such suits are groundless, false or fraudulent."

The policy also required the Subscriber to forward to the appellant "every notice, summons, citation or other process delivered to or served on the Subscriber on behalf of third persons," as well as the names of witnesses to the accident, and to render to appellant all requested aid "in securing information, effecting settlement and prosecuting suits, defenses and appeals," and prohibited the Subscriber from assuming or admitting any liability, and from compromising, adjusting or settling any claim, without the written consent of appellant.

The policy contained, in effect, the familiar "no action clause", providing that appellant shall not be liable unless suit be brought against it "by the Subscriber in his own name for monies actually paid out by the Subscriber in satisfaction of a final judgment of a court of competent jurisdiction after trial of the issues of liability and amount."

The automobile covered by the policy was owned by Captain Chandler, and on July 20, 1934, this car, while being driven by Junior, was involved in an accident in the City of San Diego, California, resulting in personal injuries to appellee, Monica Zeller (then Monica Flanigan), who was riding as a guest therein and who thereafter instituted suit in the Superior Court of San Diego County, California, against Junior and Captain Chandler to recover damages for said injuries. The appellant insurance company, through its attorney, John Coker, took complete charge of the defense of that suit, filed answers for both Junior and Captain Chandler, took depositions of witnesses, and conducted the defense of Junior in the trial of the case, until a final judgment in excess of $15,000 was rendered against him on March 20, 1935, Captain Chandler having been dismissed from the case at the close of plaintiff's evidence. Coker abandoned the defense after judgment, which thereupon, and by reason of that abandonment, became final.

A writ of execution was issued on said judgment and returned "nulla bona", Junior being insolvent and having no assets out of which the judgment could be satisfied; and the judgment not having been paid, this action was brought in a district court of Bexar County, Texas, against appellant by Monica Zeller, the injured party, joined pro forma by the other appellees, to subject the proceeds of the policy to the payment of the judgment, with the result stated.

Appellant contends that the injured party, Monica Zeller, had no right of recovery under the policy for the following reasons:

1. That Junior was not an additional assured under the policy, because he drove the automobile without the permission of the subscriber, Captain Chandler, or of an adult member of the subscriber's household, and therefore did not come within the provisions of the policy covering additional assureds.

2. That the "no action clause" of the policy provided that the appellant shall not be liable unless suit be "brought by the subscriber in his own name for monies actually paid out by the Subscriber in satisfaction of a final judgment," the policy being a contract of indemnity against loss actually suffered by such subscriber and not one of indemnity against liability imposed against the subscriber.

3. That the policy contained no "bankruptcy or insolvency clause" giving the injured third party a right to bring suit thereon in the event the judgment in favor of such party be unsatisfied by reason of the insolvency or bankruptcy of the assured; and that under the terms of the policy, no right of recovery thereon could inure to anyone other than the named subscriber.

4. That said injured party's recovery in the California suit being based solely on "willful misconduct" of Junior in operating the automobile in question, the injuries suffered in that case were willfully inflicted and therefore not covered by the policy, which insured the subscriber against loss resulting from suits arising from bodily injuries accidentally suffered as a result of an accident, this contention being based on the theory that injuries resulting from "willful misconduct" under the California Guest Injury Statute, St.Cal.1929, p. 1580, § 141¾, as amended by St.1931, p. 1693, as defined by the trial court in that suit, are not the result of an "accident".

5. That the policy, by reason of its provisions obligating the insurance company to defend suits on behalf of the assured, was a contract to practice law on the part of the insurer, which was not a licensed attorney, and was therefore void as against public policy.

In response to special issue No. 11, the jury found that Junior had "implied permission" of Captain or Mrs. Chandler to drive the Hudson automobile on the night of the accident. Junior's mother, Mrs. Chandler, was an "adult member" of the subscriber's household, within the contemplation of the policy. Appellant complains of the action of the trial court in submitting this issue and in not giving a peremptory charge in its favor on the grounds that there was no evidence, or the evidence was insufficient, to warrant the submission of such issue or to support the jury's finding in response thereto. We overrule that contention, being of the opinion, after careful study of the record, that the evidence was sufficient to take that issue to the jury, whose finding thereon is binding upon this Court as it was upon the court below Appellees contend that the evidence was not only sufficient to support the jury's finding on the issue of implied permission, but that appellant is estopped to deny non-coverage, because it took complete charge of the defense of Junior in the California suit throughout the litigation, with full knowledge of all the facts and without raising any question as to liability or non-coverage. While we are of the opinion that appellant is estopped to deny coverage, as appellees contend, we need not definitely so hold as a basis for this decision, since the issue of coverage is settled by the jury finding of implied permission to Junior to drive the car on the occasion of the accident.

Appellant contends that under the "no action clause" of the policy it should not be held liable unless suit be "brought by the Subscriber in his own name for monies actually paid out by the Subscriber in satisfaction of a final judgment," and that the policy was a contract of indemnity against loss and not one of indemnity against liability. The policy provided that "the Exchange will defend at its cost, but in the name of and on behalf of the Subscriber, all suits for damages alleged to have been suffered by reason of an...