Maryland Cas. Co. of Baltimore, Md., v. Omaha Elec. Light & Power Co.

Citation157 F. 514
Decision Date06 November 1907
Docket Number2,553.
PartiesMARYLAND CASUALTY CO. OF BALTIMORE, MD., v. OMAHA ELECTRIC LIGHT & POWER CO.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

This was a suit instituted by the Omaha Electric Light & Power Company against the casualty company to recover on an employer's indemnity contract issued by defendant to plaintiff's assignor, the New Omaha Thomson-Houston Electric Light Company, hereinafter called the Thomson Company, to indemnify it for the period of one year against loss for damages sustained by its employes and caused by its negligence. While the policy was in force one Dent, an employe, was accidentally injured and died. The administratrix of his estate brought an action in the district court of Nebraska against the Thomson Company claiming that the injury and death resulted from its negligence. The action resulted January 3, 1902, in a judgment against the Thomson Company for $5,000 and costs. This was taken by petition in error to the Supreme Court of Nebraska, where, on April 22, 1903, the judgment was affirmed. Later a rehearing was granted, and on June 8, 1905 the judgment was again and finally affirmed. After the rendition of the judgment and its first affirmance in the Supreme Court, when the corporate existence of the Thomson Company was about to expire by limitation, the plaintiff in this action, the Omaha Electric Light & Power Company, was incorporated to take over its assets, assume its liabilities and succeed to its business. As contemplated, it took over by assignment, amongst other assets, the claim against the casualty company on its policy of indemnity, and assumed the liability of that company on the judgment obtained by Dent's administratrix. These things it did without consent of the casualty company. After this reorganization on June 8, 1905, the Supreme Court finally affirmed the Dent judgment, and the casualty company requested the Thomson Company to pay the same, and recognized its obligation to reimburse it. The successor of the Thomson Company, the plaintiff herein, pursuant to that request upon its assignor and pursuant to its agreement with its assignor to pay all its liabilities, on July 21, 1905, paid the judgment, amounting in principal to $5,000, in interest from January 3, 1902, to July 21, 1905, to $1,326.10, and in costs $115.30, making an aggregate of $6,441.40, and presented a receipt to the defendant and demanded to be reimbursed in that sum. The casualty company denied liability totally (1) because its contract was not with the plaintiff but only with its assignor, the Thomson Company, and because it had never consented to an assignment of the claim against it by the Thomson Company to the plaintiff, and (2) because the Thomson Company had not itself ever paid the judgment debt, and denied liability partially on the ground that in any event the limit of its liability for the death of any one person was $5,000, and that it was not liable for the interest which accrued between the date of the rendition of the original judgment, January 3, 1902, and the date of the payment by the plaintiff, July 21, 1905, or for the costs of the suit of Dent against the Thomson Company.

The rights of the parties upon the issues joined between them depend upon the application of the following provisions of the policy of indemnity: (1) 'Any assignment of interest under this policy shall be void unless the written consent of the company is indorsed hereon by one of its officers.' (2) '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 and in satisfaction of a judgment after trial of the issue.' (3) 'The company's liability for an accident resulting in injuries to or in the death of one person is limited to $5,000 and subject to the same limit for each person. The total liability for any one accident resulting in injuries to or in the death of any number of persons is limited to $10,000.' (4) 'If any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy immediate notice thereof shall be given to the company and the company will defend against such proceeding in the name and on behalf of the assured or settle the same at its own cost unless it shall elect to pay the assured the indemnity provided for in clause A of the special agreements as limited therein. ' (Clause A there referred to is the third provision of the policy just quoted.)

On the foregoing facts the court below rendered a judgment for the full amount paid by plaintiff in satisfaction of the Dent judgment, including the interest of $1,326.10 and costs, $115.30, as well as for interest which accrued after plaintiff paid the judgment. The defendant brings the case here by writ of error, and assigns error in the rendition of any judgment against it on the foregoing facts, and also that the court erred in awarding to the plaintiff any sum in excess of $5,000, with interest from the date of payment thereof by the plaintiff.

Matthew A. Hall (Carroll S. Montgomery, on the brief), for plaintiff in error.

W. W. Morsman, for defendant in error.

Before VAN DEVANTER and ADAMS, Circuit Judges, and RINER, District judge.

ADAMS Circuit Judge (after stating the case as above).

1. Do the first and second provisions of the policy above set forth defeat plaintiff's right to recover as assignee or successor of the Thomson Company, the assured named in the policy? The provisions referred to avoid the policy in the event of its assignment without the written consent of the insurer and declare that no action to recover on the policy shall lie against the insurer unless brought by the assured himself to reimburse him for loss actually sustained in the payment of a final judgment on the merits. The assignment in question was made after the assured sustained the loss and after it had been adjudged to be a legal liability against it. Dent had been injured. His administratrix had instituted suit and had prosecuted it to final judgment against the assured before the latter transferred its claim against the insurer for reimbursement, to the plaintiff. At that time the term of the policy had expired, and the character of the assured for integrity and prudence, on the strength of which the insurer might have relied in making its contract, could no longer affect its liability. The recognized reasons for the prohibition of assignments without the consent of the insurer had ceased. Its liability had become fixed, and like any other chose in action was assignable regardless of the conditions of the policy in question. This is settled by the great weight of authority. Beach on the Law of Insurance, vol. 2, Sec. 1114; May on Insurance, Sec. 386; Dogge v. Northwestern National Ins. Co., 49 Wis. 501, 5 N.W. 889; Roger Williams Ins. Co. v. Carrington, 43 Mich. 252, 5 N.W. 303; Combs v. Shrewsbury Mut. Fire Ins. Co., 32 N.J.Eq. 512; Archer v. Merchants' & Manufacturers' Ins. Co., 43 Mo. 434; Nease v. AEtna Ins. Co., 32 W.Va. 283, 9 S.E. 233; Aultman v. McConnell (C.C.) 34 F. 724.

In Wood on Fire Insurance, vol. 2, Sec. 361, the doctrine is stated thus:

'Where the policy prohibits an assignment, an assignment without the insurer's consent invalidates it, but, in the absence of such a condition, the validity of the policy is not affected thereby, but still remains operative as to the assured; nor does an assignment after a loss has transpired invalidate it.

In such case the insurer becomes absolutely a debtor to the assured for the amount of the actual loss, to the extent of the sum insured, and it may be transferred or assigned like any other debt. After a loss the delectus personae no longer becomes material, and even though the policy prohibits such an assignment, and provides that if so assigned the policy shall be void, it is held that such prohibition is void, as the insurer cannot restrict the assignment of a debt. The reasons that induce the restrictive clause have no existence or application after the risk has ceased.'

The cases relied upon by defendant's counsel have been carefully examined. They declare that conditions in policies of insurance against assignments without the consent of the insurer are valid and enforceable notwithstanding the general policy of the law which condemns covenants in restraint of alienation. But we find in them nothing to disturb the conclusion already reached.

In view of this conclusion the other contention of the defendant based on the provision of the policy, to the effect that no action can be maintained against the insurer except by the assured after satisfaction by it of a judgment rendered against it, requires little consideration. On familiar principles the assignee stands in the shoes of the assignor, and must perform all the conditions...

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