United States Fidelity & Guaranty Co. v. Pierson, 691.
| Decision Date | 31 December 1937 |
| Docket Number | No. 691.,691. |
| Citation | 21 F. Supp. 678 |
| Parties | UNITED STATES FIDELITY & GUARANTY CO. v. PIERSON. |
| Court | U.S. District Court — Western District of Arkansas |
Reynolds & Maze, of Clarksville, Ark., for plaintiff.
Patterson & Patterson, of Clarksville, Ark., and R. W. Robins, of Conway, Ark., for defendant L. H. Pierson.
Hays & Wait, of Russellville, Ark., for defendant Guy Shrigley.
The United States Fidelity & Guaranty Company issued a policy for indemnity insurance to Guy Shrigley, which among other things provided, under agreement A of section 1, "To pay all sums which the assured shall become liable to pay as damages imposed upon him by law for bodily injury, including death at any time resulting therefrom (hereinafter called `Bodily Injury'), accidentally sustained by any person or persons if caused by the ownership, maintenance, or use of any automobile disclosed in the declarations for the purposes therein stated." The policy also carried a provision, "To defend in the insured's name any suit against the assured seeking damages on account of such bodily injury or property damage, even if such suit is groundless, false or fraudulent." The limit of liability for injury to one person under agreement A was $25,000.
The wife of the defendant L. H. Pierson was injured in the operation of an automobile belonging to Guy Shrigley and described in the aforesaid policy. She instituted suit for and recovered damages against Shrigley as a result of her operating said car. The defendant L. H. Pierson instituted suit in the Johnson county circuit court against Shrigley for damages sustained by him, as a result of the said injuries to his wife, for the loss of her services and society and sums expended for medical attendance. His suit is based on agreement A of section 1.
The United States Fidelity & Guaranty Company instituted suit against Pierson and by an amendment Guy Shrigley has been made a party; the plaintiff asked for a declaratory judgment under the provisions of 28 U.S.C.A. § 400, and for an injunction against the proceedings in the Johnson county circuit court pending the trial of the issues in this court.
There are two questions involved in this suit: (1) Whether there is that actual controversy existing upon which a declaratory judgment may be rendered. (2) Whether the injuries for which damages are sought are covered by the terms of the policy.
It is contended by the defendant Pierson that there is no controversy now existing between Pierson and the United States Fidelity & Guaranty Company which is of a justiciable nature. He contends that before there is any controversy between Pierson and the insurance company Pierson must first secure a judgment against Shrigley, and that there must be a nulla bona return on an execution against Shrigley on such judgment. The first question, therefore, calls for a consideration of the legal rights and obligations arising from this contract of insurance and whether this dispute is definite and concrete. It must be more than hypothetical or abstract. The rights and other legal relations of the interested parties must be determined by the contract.
The insurance policy in question carries two separate and distinct obligations upon the part of the company. The first one is found in agreement A of section 1, and engages to indemnify the assured against damages to the limit of $25,000; and the other arises under paragraph (a) of subsection 4 of section 2, which obligates the company to defend in the name and behalf of the assured any suit against him seeking damages on account of such bodily injury. The rights and obligations and other legal relations of the parties are separate and distinct in these two agreements as clearly defined by the policy. The engagement under agreement A of section 1 is to pay the damages the assured suffers, conditioned upon a recovery against the assured, while the agreement to defend is without prescribed condition.
Counsel for neither side have called attention in their brief to what seems to me a very significant provision of the policy found in paragraph (c) of section 5, which provides: "No recovery against the company shall be had under Agreements `A' and `B' of Section 1 until the amount of loss or expense shall have been determined either by final judgment against the assured after actual trial in an action defended by the company or by written agreement of the assured, the claimant and the company, nor in either event unless suit is instituted within two years after the date of such judgment or written agreement."
Under the terms of this provision there is an agreement between Shrigley and the company that the company will not indemnify him for any damages that he may sustain under agreement A of section 1 until the party claiming the damages against Shrigley has procured a final judgment after an actual trial defended by the company, or by agreement of the assured, the claimant, and the company. Under this clause of the contract neither Shrigley nor Pierson has any right or other legal relation which can constitute an actual controversy until first there has been a final judgment rendered after an actual trial, or the parties (the company, the assured, and the claimant) have reached a written agreement. These are the terms of the contract agreed upon between Shrigley and the insurance company. Could Shrigley under these stipulations, mutually agreed upon between him and the company, have any actual controversy of a justiciable nature until these conditions developed? Any right or other legal relation which Pierson has or may ever have must necessarily arise out of the provisions of the contract between Shrigley and the insurance company. Therefore, if the plain provisions of the policy places the company under no obligation to indemnify Shrigley until Pierson has recovered against him a final judgment, then certainly Pierson or Shrigley could not until this time have any actual controversy of a justiciable nature with the company. Under the express provisions of the contract there are no legal rights and obligations that place Shrigley and the company or Pierson and the company in adverse positions until the rendition of final judgment or the written agreement is reached. In other words, there is no matured claim upon which either Pierson or Shrigley can presently maintain any action. In the case of Aetna Life Insurance Company v. Williams, 8 Cir., 88 F.2d 929, 930, in commenting upon the effect of the decision of Aetna Life Insurance Company v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L. R. 1000, decided ...
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