Alabama Farm Bureau Mut. Cas. Ins. Co. v. Dalrymple, 8 Div. 990

• Decision Date: 17 December 1959
• Docket Number: 8 Div. 990
• Citation: Alabama Farm Bureau Mut. Cas. Ins. Co. v. Dalrymple, 116 So.2d 924, 270 Ala. 119 (Ala. 1959)
• Parties: ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, Inc. v. Ralph L. DALRYMPLE.
• Court: Alabama Supreme Court

Page 924

116 So.2d 924

270 Ala. 119

ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, Inc. v. Ralph L. DALRYMPLE.

8 Div. 990.

Supreme Court of Alabama.

Dec. 17, 1959.

Lusk & Lusk, Guntersville, for appellant.

Clark E. Johnson, Jr., Albertville, for appellee.

STAKELY, Justice.

This is an action by the insured, Ralph L. Dalrymple (appellee), against the insurer, Alabama Farm Bureau Mutual Casualty Insurance Company, Inc. (appellant), when the verdict of the jury exceeded the policy limits and when it is claimed the insurer had an opportunity to settle within the policy limits prior to the verdict. This case has been before this court on a previous occasion. Dalrymple v. Alabama Farm Bureau Mut. Ins. Co., Inc., 267 Ala. 416, 103 So.2d 711.

In due course the defendant filed its pleas and the case was tried with the result that there was verdict and judgment for the plaintiff in the amount of $6,000. There was a motion for new trial which was overruled, the court, however, requiring the reduction of the judgment to $5,600 to which the plaintiff agreed.

The case was tried on two counts. Count 1-A charged a negligent failure or refusal to settle the suit resulting in a judgment in favor of Joseph H. Croft for $10,000 and Count 1-C charging that the defendant in bad faith failed or refused to settle the suit which resulted in a judgment in favor of Joseph H. Croft in the amount of $10,000. We have held both such counts good. Waters v. American Cas. Co. of Reading, Pa., 261 Ala. 252, 73 So.2d 524.

The defendant filed its pleas of (1) the general issue and (2) 'that plaintiff has not paid said Joseph H. Croft said excess of $5,000.00 in said judgment.' A demurrer to plea 2 was sustained. There was a motion for new trial which was overruled and some of the grounds assigned in the motion was the refusal of the court to give certain written charges requested by the defendant to the effect in substance that the plaintiff had not paid Joseph H. Croft the excess of $5,000 in the judgment.

On April 9, 1955, Ralph L. Dalrymple was insured by Alabama Farm Bureau Mutual Casualty Insurance Company, Inc., under its policy No. A-25560 to the extent of $5,000 for legal liability accidentally sustained by any person arising out of plaintiff's use of his automobile. On that date the plaintiff, Ralph L. Dalrymple, while driving on the Albertville-Boaz Highway overtook a car driven by Joseph H. Croft and was about to pass it when he perceived either an approaching car or a yellow line and resumed his place behind the Croft car but due to a fault in his brakes could not check his speed in time and hit the Croft car in the rear. We shall refer later to further tendencies of the evidence.

The case of Joseph H. Croft against Ralph L. Dalrymple, which the appellant here undertook to defend, resulted in a judgment for $10,000. Five Thousand Dollars of this judgment with interest and costs was paid by the Alabama Farm Bureau Mutual Casualty Insurance Company, Inc., on January 23, 1957. It was stipulated that Joseph H. Croft had tried to collect the balance of the judgment but had not succeeded in collecting anything.

I. There are a number of propositions on which the appellant bases its right to a reversal. It is insisted that there can be no recovery for an excess judgment in cases of this kind prior to the actual payment thereof. So far as we can ascertain this is the first time this question has been before this court. There appear to be a number of cases which present this question in other jurisdictions. There are some cases which hold that in order to warrant a recovery the plaintiff must prove either that he has paid the excess or at least that his financial status is such that it is sure to be collected. The theory of these cases seems to be that unless such proof is made there is no proof of pecuniary loss and, therefore, there can be recovery. We refer in this connection to State Automobile Mutual Ins. Co., etc. v. York, 4 Cir., 104 F.2d 730; Duncan v. Lumbermen's Mutual Casualty Co., 91 N.H. 349, 23 A.2d 325; Dumas v. Hartford Accident & Indemnity Co., 92 N.H. 140, 26 A.2d 361.

In other jurisdictions it is held that such proof is not necessary and we are of the opinion that these latter cases take the sounder view. In Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785, it was held in substance that while logical in the abstract, a contrary view only serves as a windfall to an insurer fortunate enough to have an insolvent as its insured. In other words, the insurer is in the position of having been derelict in the performance of its duty under a policy for which it accepted a premium paid by the insured in good faith and if the insured had not felt the need of the protection offered by the policy and the services of the company in handling claims against him, it is to be assumed that he would not have taken the policy. The claim which is an adjudged liability can be escaped only by bankruptcy (See 8 C.J.S. Bankruptcy § 562, p. 1502, also 8 C.J.S. Bankruptcy § 574, p. 1526), or by payment. If the policyholder chooses the former course his credit is impaired. If he does not, the outstanding judgment against him is likely to prove too difficult to discharge.

Furthermore if prepayment is required in cases of this kind the company is likely to be less responsive to its trust where the insured is insolvent than in cases where the insured is able to discharge any judgment in excess of the policy limits which may be rendered against him. In support of its views the Tennessee Court has cited certain Wisconsin and Texas cases and other authorities. See Schwartz v. Norwich Union Indemnity Co., 212 Wis. 593, 250 N.W. 446; Universal Automobile Ins. Co. v. Culberson, Tex.Civ.App., 54 S.W.2d 1061.

As stated, we think the position taken by the Tennessee Court and the other courts taking a view similar to the Tennessee Court represent the sounder view. Accordingly we hold that in the instant case the plaintiff in order to recover was not required to prove that he had paid...