Allen v. Aetna Life Ins Co.

Citation145 F. 881
Decision Date18 May 1906
Docket Number5.
PartiesALLEN v. AETNA LIFE INS. CO.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Latimer P. Smith, Walter C. Douglas, Jr., and Francis Fisher Kane for plaintiff in error.

Robert W. Archbald, Jr., and Simpson & Brown, for defendant in error.

Before DALLAS and GRAY, Circuit Judges, and LANNING, District Judge.

LANNING District Judge.

On December 13, 1902, the Aetna Life Insurance Company issued to Gilman & McNeil, a corporation, a policy of insurance, by which it agreed 'to indemnify' that corporation, for one year from the date of the policy, subject to certain 'general agreements' contained in the policy 'against loss from common law or statutory liability for damages on account of bodily injuries, fatal or nonfatal accidentally suffered within the period of this policy by any employe or employes of the assured,' etc. On February 27 1903, within the term covered by the policy, Allen, the plaintiff in error, then employed by the Gilman & McNeil Company, the assured, received bodily injuries, for which he subsequently obtained judgment against the assured. After the date of his accident and before commencing his suit, the assured was placed in the hands of a receiver, and after obtaining his judgment he caused an attachment execution to be issued against the assured, as defendant, and the insurer, as garnishee, which was returned nihil habet as to the defendant and 'served' as to the garnishee. On this proceeding the circuit court gave judgment before us for review. There is a general rule in garnishment proceedings that the plaintiff in the suit acquires no greater rights against the garnishee than the defendant himself possesses. A few exceptions to the rule exist, one of which is in a case where the defendant has fraudulently transferred property to the garnishee, but in the present case the general rule is applicable. The service of a garnishment order does not operate as an assignment, legal or equitable, of a debt due from the garnishee to the defendant, nor establish as between the plaintiff and the garnishee the relation of creditor and debtor. It simply gives to the plaintiff the statutory right to collect from the garnishee a debt due from the garnishee to the defendant, not in excess of the amount due from the defendant to the plaintiff, and, in default of voluntary payment by the garnishee, the right to have execution therefor. Rolling Mill Co. v. Ore & Steel Co., 152 U.S. 596, 619, 14 Sup.Ct. 710, 38 L.Ed. 565; Drake on Attachment (6th Ed.) Sec. 458; The Olivia A. Carrigan (C.C.) 7 F. 507. If, then, the assured, or its receiver, has no present right of action against the insurer the judgment of the circuit court must be affirmed.

The counsel for the insurer contend that the policy of insurance is a contract of pure indemnity against actual loss sustained by the assured, and that it is not a contract by which the insurer guarantied the payment of any obligation or liability of the assured. The distinction between a contract to indemnify against loss and one to pay a liability has often been pointed out. Some of the cases on the subject are referred to in the opinion of the learned judge who tried this case in the Circuit Court. See 137 F. 136. But the counsel for the plaintiff in error, not denying the reasonableness of this distinction, contend that, in the present case, the policy of insurance is a contract to pay a liability, and not a mere contract of indemnity against loss. This contention is based on the language of the second and third clauses of the 'general agreements' of the policy. The legal effect of these clauses can be understood only by reading them in connection with the first and seventh clauses. These four clauses are as follows:

'(1) The assured upon the occurrence of an accident shall give immediate written notice thereof, with the fullest information obtainable at the time, to the home office of the company at Hartford, Conn., or to its duly authorized local agent. He shall give like notice with full particulars of any claim that may be made on account of such accident, and shall at all times render to the company all co-operation and assistance in his power.
'(2) If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, the assured shall immediately forward to the company every summons or other process as soon as the same shall have been served on him, and the company will at its own cost defend against such proceeding in the name and on behalf of the assured, or settle the same, unless it shall elect to pay to the assured the indemnity provided for in clause A of special agreements as limited therein. (Clause A limited the indemnity to $5,000.)
'(3) The assured shall not settle any claim except at his or its own cost, nor incur any expense, nor interfere in any negotiation for settlement or in any legal proceeding, without the consent of the company previously given in writing; but he may provide at the time of the accident such immediate surgical relief as is imperative. The assured when requested by the company shall aid in securing information, evidence, and the attendance of witnesses and in effecting settlements and in prosecuting appeals.'
'(7) No action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within 60 days from the date of such judgment and after trial of the issue. No such action shall lie unless brought within the period within which a claimant might sue the assured for damages unless at the expiry of such period there is such an action pending against the assured, in which case an action may be brought against the company by the assured within 60 days after final judgment has been rendered and satisfied as above. The company does not prejudice by this clause any defenses to such action which it may be entitled to make under this policy.'

Sanders v. Frankfort, etc., Ins. Co., 72 N.H. 485, 57 A. 655 101 Am.St.Rep. 688, sustains the position of the plaintiff in error. In that case, which was one in equity, it appears that judgment in an action at law had been obtained by the plaintiff against the assured for personal injuries received while in the employment of the assured; that the insurer had issued a policy similar to the one before us, and had assumed the defense of the action at law until the rendition of the judgment, but took no writ of error and prosecuted no proceedings for...

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