United States Fidelity & Guaranty Co. v. Pierson

• Decision Date: 01 July 1938
• Docket Number: No. 11104.,11104.
• Citation: 97 F.2d 560
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. PIERSON et al.
• Court: U.S. Court of Appeals — Eighth Circuit

97 F.2d 560 (1938)

UNITED STATES FIDELITY & GUARANTY CO. v. PIERSON et al.

No. 11104.

Circuit Court of Appeals, Eighth Circuit.

July 1, 1938.

Jesse Reynolds, of Clarksville, Ark., for appellant.

G. O. Patterson, of Clarksville, Ark. (R. W. Robins, of Conway, Ark., on the brief), for appellee Pierson.

Hays & Wait, of Russellville, for appellee Shrigley.

Before GARDNER, SANBORN, and THOMAS, Circuit Judges.

GARDNER, Circuit Judge.

Appellant brought this suit seeking relief under the Federal Declaratory Judgment Act, 28 U.S.C.A. § 400. We shall refer to the parties as they were designated in the lower court.

The bill alleged diversity of citizenship and a sufficient amount involved to confer on the lower court jurisdiction. It appears from the allegations of the complaint that on November 25, 1931 plaintiff issued to defendant Guy Shrigley a policy of insurance by which plaintiff agreed that it would pay the assured all sums, not exceeding $25,000, which he should become liable to pay as damages imposed upon him by law for bodily injury, including death at any time resulting therefrom, accidentally sustained by any person or persons, if caused by the ownership, maintenance or use of the automobile of assured; that it would defend the assured against any suit seeking damages on account of bodily injury or property damage, even if such suit were groundless, false, or fraudulent; that irrespective of the limit of its liability it would pay all costs taxed against assured in any such defended suit, all expenses incurred by the company, and all interest accruing after entry of judgment until the company should pay, tender or deposit in court the amount of the judgment, not exceeding the limit of its liability; that bankruptcy or insolvency of the assured should not relieve plaintiff of any of its obligations under the policy; that plaintiff should have the right to settle any claim or suit and to make such investigation or negotiation as might be deemed expedient by it; that in April, 1933, the defendant L. H. Pierson commenced an action in the Circuit Court of Johnson County, Arkansas against the assured; that in that action Pierson alleges that his wife received bodily injuries caused by the operation of the automobile of the assured, at a time when the policy was in force, by reason of which she was permanently disabled to perform the ordinary functions of a wife or to attend to the ordinary duties of the household, to his damage in the sum of $10,000.

In the instant suit, it is alleged that the damages claimed in the state court action are not covered by the policy; that there is no duty on plaintiff's part to defend the action for the reason that the damages sought are not for "bodily injuries;" that it is imperative that it be determined that plaintiff is under no obligations to assured under the terms of the policy to defend said action or to pay any judgment that may be recovered against assured; that a controversy exists with reference to the rights, duties and obligations of plaintiff under the policy in reference to what protection, if any, the policy affords the assured or inures to the benefit of the defendant Pierson; that declaratory judgment is asked, construing the policy and determining that it does not apply to or protect the assured or inure to the benefit of the defendant Pierson in respect to the loss of services and consortium of Pierson's wife; that the plaintiff is under no obligation to defend the state court action or pay any judgment that might be rendered in that action and that proceedings in the state court action be enjoined, if necessary, to prevent a determination of the issues therein before judgment in this suit. Copy of the policy is attached to the complaint.

Both defendants interposed motions to dismiss the complaint, which the court sustained, and from the decree of dismissal entered this appeal is taken by the plaintiff. Broadly stated, plaintiff's contentions are; (1) That the complaint presents a justiciable controversy upon which a declaratory judgment may be rendered; and (2) that it is not liable under its policy for the damages sought to be recovered in the state court action.

Defendants' motions to dismiss having been sustained, we must accept as true all the well-pleaded facts in the complaint.

It is urged particularly on behalf of the defendant Pierson, that there is no present controversy between plaintiff and him because there is no allegation that assured is insolvent or bankrupt, and the policy provides that the injured party has no right to proceed against the insurer until judgment is recovered against the assured and the execution issued is returned unsatisfied because of insolvency or bankruptcy; that if Pierson should recover judgment against assured, it might be satisfied by assured, in which event Pierson would have no claim against the plaintiff, and if judgment were not obtained against assured in the state court action, Pierson would have no claim against the plaintiff.

It appears that the action against assured is actually pending; that Pierson and his attorneys are contending that plaintiff is the insurer of the assured, and that the assured, in turn, has demanded that plain...