Fidelity & Cas. Co. of New York v. Martin

Decision Date19 February 1915
PartiesFIDELITY & CASUALTY CO. OF NEW YORK v. MARTIN.
CourtKentucky Court of Appeals

Appeal from Circuit Court, McCracken County.

Action by Ed Martin against F. G. Rudolph, as administrator of Lon Wells, deceased, in which an order of attachment was issued against the Fidelity & Casualty Company of New York. From a judgment in favor of plaintiff, the Casualty Company appeals. Reversed and remanded.

Hannah and Nunn, JJ., dissenting.

Berry &amp Grassham, of Paducah, and Fred Forcht, of Louisville, for appellant.

Hendrick & Nichols, F. E. Graves, and Crossland & Crossland, all of Paducah, for appellee.

SETTLE J.

May 14 1912, the appellee, Ed Martin, was run over upon a street of the city of Paducah by an automobile owned and operated by one Lon Wells. The injuries thereby inflicted upon appellee were of a painful and permanent character. In July following appellee instituted an action in the court below to recover of Wells the damages sustained by him on account of the injuries referred to. After Wells had been duly summoned, but before the case came to trial, he died intestate, domiciled in McCracken county. Following his death his estate, by proper order of the McCracken county court, was placed in the hands of F. G. Rudolph, public administrator of that county for administration, and thereafter, by an order of the McCracken circuit court, the action which had been brought by appellee against Lon Wells was revived against F. G. Rudolph, as administrator of his estate. In the trial which followed in that court appellee recovered a verdict and judgment against the administrator for the sum of $4,500, with interest at 6 per cent. per annum from the date of the judgment until paid, and his costs expended in the action, amounting to $32.15. An execution having been issued on this judgment and returned "No property found," appellee by this action in equity, brought against F. G. Rudolph, administrator of the estate of Lon Wells, deceased, in the McCracken circuit court, sought satisfaction of the judgment by process of attachment, to this end alleging its obtention, the return of nulla bona, and the insolvency of Wells' estate, but that the appellant, Fidelity & Casualty Company, was indebted to Wells' administrator in a sum equal to the amount of appellee's judgment, upon an employer's indemnity policy which it had issued to the decedent, Lon Wells, before the accident in which the appellee, Martin, was injured, and by the terms of which policy appellant had obligated itself to pay all damages that might be sustained by any person through the negligent operation of the automobile by Wells. It was further alleged that appellee was entitled to receive and have applied to the payment of his judgment the amount thus claimed to be owing by appellant to the estate of Wells. A general order of attachment was prayed and issued against the administrator of Wells and appellant, and a copy thereof served on each of them.

After service upon it of the order of attachment appellant filed an answer as garnishee, in which it averred that at the time of the service of the attachment or garnishment upon it it did not have in its hands any money, choses in action, or other thing belonging or going to the estate of the decedent, Wells, or to the administrator thereof, and prayed to be dismissed with its costs. Several amended petitions were filed by appellee, one of which made appellant a party defendant to the action, and, in substance, alleged that the policy issued to the decedent, Wells, by appellant, by its terms imposed upon the latter the obligation to pay and satisfy the judgment which Martin had recovered against the estate of the decedent. It was further alleged in the amended petition that by virtue of the order of attachment issued on the original petition in equity and its service upon appellant as garnishee, the appellee, Martin, had a lien on the insurance money or indemnity claimed to be due from appellant to the estate of Wells, and for the amount alleged to be due under the policy judgment was asked against appellant.

In another of his amended petitions appellee further alleged that, by taking control of the assured's and his administrator's defense in the original action for damages brought by appellee, appellant became bound by the judgment recovered by the latter, and estopped to deny its liability upon the policy.

Obviously, to aid appellee in compelling, if possible, the payment of his judgment by appellant, F. G. Rudolph, as administrator of the estate of Lon Wells, deceased, filed in the suit in equity his answer, which he made a cross-petition against the appellant, and therein asked the court to adjudge that appellant be required to answer and defend the action and compelled to pay and discharge the liability of the estate of Lon Wells, deceased, to the appellee, Martin, basing the relief thus asked on the allegations in the answer and cross-petition that appellant, for a valuable consideration paid to it by the decedent, Wells, issued and delivered to him during his lifetime its policy, in and by the provisions of which it obligated itself to pay all damages that might be caused to any person through the negligent operation of the automobile owned by the decedent, and to indemnify and hold the decedent harmless as to any damages that might result to a third person by paying same when ascertained by a judgment recovered against the assured by the person injured. By an amendment the administrator made more specific various averments of his original answer and cross-petition, alleged the insolvency of the estate of his decedent, that he had received but $2.92 by way of assets of the estate, which he had paid to appellee, and prayed for himself, as administrator, a personal judgment against appellant for the amount of the judgment which appellee had recovered against him as the administrator of Wells' estate.

To the petition, as amended, and the answer and cross-petition of the administrator, as amended, appellant filed demurrers. The court sustained the demurrer to the answer and cross-petition of the administrator, as amended, and, the latter failing to plead further, his answer and cross-petition, as amended, was dismissed. From that ruling the administrator failed to appeal.

Appellant's demurrer to the petition, as amended, was overruled by the court, to which ruling it excepted. It thereupon filed an answer wherein, after traversing the affirmative matter of the petition, as amended, it in substance alleged: First, that by its terms no liability could result to it upon the policy it issued to Wells, except for a loss sustained and actually paid in money by the latter or his administrator in satisfaction of a final judgment, rendered after a trial in an action against the assured or his administrator by the person injured by the assured's negligent operation of his automobile, and that no such loss was ever paid in money by the assured or his administrator; second, that its taking control of the defense in the action brought by appellee against the assured was a right given it by the policy, the exercise of which did not make the judgment recovered by appellee binding upon it or estop it to deny liability on the policy, because by the terms of the policy the judgment is prevented from having such effect.

To this answer appellee interposed a demurrer, which, after first overruling, the court sustained. To this ruling appellant excepted, and, as it failed to plead further, the court adjudged that appellee recover of it the sum of $4,500, being the amount of the judgment previously obtained by appellee against Wells' administrator, with 6 per cent. interest from February 12, 1913, and its costs expended in this and the original action, for all of which execution was awarded. This appeal seeks the reversal of that judgment, and the question which it presents for decision has not been passed on in this jurisdiction, though it seems to have been well settled in numerous other jurisdictions.

The judgment of the circuit court, if sustained, must be made to rest upon one of two grounds: Either that the recovery of the judgment by appellee against Wells' administrator was a loss actually sustained by the estate of the assured in the meaning of the policy, for which appellant became liable, without the payment of the judgment by the assured or his administrator in money; or that appellant, having taken charge of the defense in the original action of the appellee, Martin, against Lon Wells, as its policy provided it might do, is concluded by the judgment rendered in that action, and therefore estopped to deny its liability therefor under the policy. Whether either of these propositions is sustained by the provisions of the policy we must now determine.

The character of the indemnity provided by the policy is set forth in clauses 1 and 2 thereof:

"(1) To indemnify the person, firm, or corporation, named in statement 1 of the Schedule of Statements and herein called the assured, against loss from the liability imposed by law upon the assured for damages on account of bodily injuries or death suffered by any person or persons as the result of an accident occurring while this policy is in force and caused by reason of the use, ownership, or maintenance of any of the automobiles described in statement 4 of the said schedule, while used as described in statement 6 of the said schedule within the limits of the United States of America, Canada, and Mexico.

(2) To defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim, whether groundless or not, for damages on account of bodily injuries or death suffered, or alleged to have been...

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