Factory Mut. Liability Ins. Co. of America v. Cooper
| Decision Date | 24 February 1970 |
| Docket Number | No. 752-A,752-A |
| Citation | 262 A.2d 370,106 R.I. 632 |
| Parties | FACTORY MUTUAL LIABILITY INSURANCE COMPANY OF AMERICA v. Carol COOPER et al. ppeal. |
| Court | Rhode Island Supreme Court |
This proceeding was brought by the plaintiff to determine the extent of its liability to the defendants, who are judgment creditors of the plaintiff's insured, and to require defendants to interplead their rights to certain funds. The case was heard by a justice of the Superior Court on crossmotions of the parties for summary judgment. The narrow issue presented by these motions was whether plaintiff was liable in excess of its policy limits for prejudgment interest that was included in the judgments in accordance with the provisions of G.L.1956, § 9-21-10, P.L.1966, chap. 1, sec. 10. 1 After the hearing the trial justice rendered a decision granting the plaintiff's motion and denying the defendants' motions. An amended judgment, based on the trial justice's decision, was entered, and from such decision the defendants prosecuted this appeal.
This action arose our of an automobile accident which occurred in 1961 and pertains to the judgments entered in the litigation resulting therefrom. In Cooper v. Johnson, R.I., 241 A.2d 613, we affirmed the judgments entered therein in favor of the present defendants against Richard N. Johnson and Shirley A. Johnson, insureds of the plaintiff. 2 The judgments included prejudgment interest calculated in accordance with § 9-21-10.
The limits of liability of the policy in effect at the time of the accident provided coverage for bodily injury of $10,000 for each person and $20,000 for each occurrence.
On June 13, 1968, plaintiff filed a motion to deposit in the registry of the court its policy limit of $20,000, plus $4,710.62 representing interest after judgment and $165 for taxable costs, a total of $24,875.62.
On June 26, 1968, by agreement of the parties, an order was entered in the Superior Court denying plaintiff's motion to deposit such funds with the registry of the court. The order went on to apportion plaintiff's policy limits, the costs which had been taxed against the insureds, and the interest from the date of entry of the judgment to June 21, 1968, on the entire amount of the judgment recovered by each defendant. 3 The order also provided that, upon making such payments, the plaintiff would be discharged from all liability under the policy; however, the discharge of the plaintiff and its insureds was limited to certain conditions set forth in a letter to plaintiff's counsel dated June 25, 1968. It is undisputed that compliance with the June 26 order was, by agreement, subject to the terms and conditions contained in the June 25th letter. One of those conditions, and the only one germane to this appeal, provides that nothing contained in the June 26th order should '* * * be deemed to discharge the plaintiff, or its assureds, from interest accruing from the date of the writs in the original tort action to the date of verdicts therein.'
The only question raised by this appeal is whether, under the provisions of the policy involved in this action, plaintiff is obligated to pay, in excess of its policy limit, interest added to the verdicts in accordance with the mandate in § 9-21-10. We hold that it is not liable for such payment and that the only interest it is obligated to pay, in addition to the applicable limits of liability, is all the interest which accrued on the entire amount of the judgments after entry of such judgments and before the company paid or tendered or deposited in court those parts of the judgments which did not exceed the limit of plaintiff's liability.
An insurance policy is a contract between the insurer and the insured. When the terms of a contract are clear and unambiguous, it must be applied as written, and, absent fraud, mutual mistake or other similar cause, the parties are bound by the terms of a written instrument. Phillips v. Columbus Wholesale Grocery Co., 60 R.I. 47, 197 A. 197. If the language of a contract is ambiguous, it is ordinarily interpreted more strongly against the writer thereof, Connors v. Dagiel, 88 R.I. 113, 143 A.2d 297; when the language of an insurance policy admits to two reasonable constructions, the fault must be charged to the insurer who selected the language, and the language is interpreted in favor of the insureds. But, in seeking to ascertain the intent of the parties, an insurance policy must be examined in its entirety and language used must be given its plain, ordinary and usual meaning. Nagy v. Lumbermens Mutual Casualty Co., 100 R.I. 734, 219 A.2d 396.
With these rules in mind we examine the language of the policy involved in this case. 4 In Part I plaintiff promised 'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of * * *' (italics supplied) bodily injury up to the $20,000 limit set forth in the policy's coverage. In the portion of Part I dealing with 'Supplementary Payments,' plaintiff obligates itself to pay, in addition to the limits of liability, '* * * all expenses incurred by the company, all costs taxed against the insured in any * * * suit and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid * * *.' (Italics supplied.) What does the policy mean by the word 'damages' as used in its clauses? It is clear from the provisions of Part I that the insurance company promises to pay on behalf of the insured, up to the policy limits, only 'all sums which the insured shall become legally obligated to pay as damages.' (Italics supplied.) What 'sums' did the insured become legally obligated to pay as 'damages' within the language of this clause? The insureds became legally obligated to pay the total amount of all the verdicts returned by the jury against them. In addition, by virtue of the provisions of § 9-21-10, they became legally obligated to pay interest thereon from the date of commencement of the action. This prejudgment interest is thus included in the judgments. Therefore, these judgments represent the sums which the insureds were 'legally obligated to pay as damages' as a result of the 1961 automobile accident.
In our judgment, the policy language 'all sums which the insured shall become legally obligated to pay as damages' and 'damages which are payable under the terms of this policy' is unambiguous, and the clause 'legally obligated to pay as damages' refers to the judgments entered by the clerk of the court under our practice and not to the amount of the verdicts.
The obligation of the plaintiff is, of course, different from that of the...
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