Allen v. Pomroy

• Decision Date: 01 June 1971
• Parties: Terri S. ALLEN, Pro Ami, and Frank R. Allen v. Elizabeth POMROY, et al.
• Court: Maine Supreme Court

Page 727

277 A.2d 727

Terri S. ALLEN, Pro Ami, and Frank R. Allen v. Elizabeth POMROY, et al.

Supreme Judicial Court of Maine.

June 1, 1971.

Pierce, Atwood, Scribner, Allen & McKusick, by Ralph I Lancaster, Jr., Peter L. Murray, Portland, for plaintiffs.

Verrill, Dana, Philbrick, Putnam & Williamson, by Roger A. Putnam, Charles L. Cragin, III, Portland, for Amicus Curiae.

Richardson, Hildreth, Tyler & Troubh, by Harrison L. Richardson, Robert L. Hazard, Portland, for Elizabeth Pomroy and Liberty Mutual Ins. Co.

Mahoney, Desmond, Robinson & Mahoney, by Lawrence P. Mahoney, Portland, for Durwood Worster and Maine Bonding and Casualty Co.

Before DUFRESNE, C. J., and WEBBER, WEATHERBEE, POMEROY, WERNICK and ARCHIBALD, JJ.

ARCHIBALD, Justice.

This case comes before us on appeal from a decision of a Justice of the Superior Court ordering a dismissal of the action against Defendants Maine Bonding and Casualty Company and Liberty Mutual Insurance Company.

The Plaintiffs claim damages resulting from an automobile accident caused by the concurrent negligence of Defendants Elizabeth Pomroy and Durwood Worster, each of them having automobile liability insurance, then in force, and issued, respectively, by the two Defendant Insurance Companies. The Plaintiffs' complaint, dated January 7, 1970, joins both Companies as Parties Defendant and seeks a judgment for the damages sustained against all Defendants. Each Company filed identical motions ¹ asking that the complaint be dismissed as to it, and each motion was granted.

The only issue before us is this: May parties injured by insured motorists maintain a civil action seeking damages for personal injuries directly against the automobile liability insurers of the negligent motorists and join the insurers as parties defendant in an action against the insureds?

Each insurance policy, the form of which had been filed with and approved by the Maine Insurance Commissioner, contained essentially similar clauses agreeing to pay, on behalf of the insured, 'all sums which the insured shall become obligated to pay as damages * * * sustained by any person, * * * arising out of the ownership, maintenance or use * * *' of an insured automobile. Each policy here in issue contains a clause precluding action against the company until 'the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial, or by written agreement of the insured, the claimant and the company.' Likewise, each policy contains 'non-joinder' clauses, both of which, although not in identical language, prohibit any person from joining the company as a party, or codefendant, in any action against the insured to 'determine the insured's liability.'

The 'Reach and Apply' statute, 24-A M.R.S.A. § 2904, effective January 1, 1970, is premised upon the recovery of a 'final judgment against any other person for any loss or damage' (emphasis added), the last paragraph of which expressly limits the right to bring a civil action in these words:

'No civil action shall be brought against an insurer to reach and apply such insurance money until 20 days have elapsed from the time of the rendition of the final judgment against the judgment debtors.' (Emphasis added)

The history of this statute is briefly summarized in Camire v. Commercial Ins. Co., 160 Me. 112 at 119, 198 A.2d 168, but it is clear that a statute substantially the same as 24-A M.R.S.A. § 2904 governed Maine procedure for nearly forty-four years. After the Massachusetts 'parent statute' had been construed by Lorando v. Gethro (1917) 228 Mass. 181, 117 N.E. 185, our Legislature, ten years later, enacted P.L.1927, Ch. 146, Sec. 3, which specifically provided: 'No bill in equity shall be brought against an insurance company to reach and apply said insurance money until twenty days shall have elapsed from the time of the rendition of final judgment against the judgment debtor.' In the Legislative revisions since 1927 there has been no deviation from this mandate. R.S.1930, Ch. 60, Sec. 179; R.S.1944, Ch. 56, Sec. 262; R.S.1954, Ch. 60, Sec. 303; 24 M.R.S.A. § 425 (1964).

In the actions before us it is clear that this limiting statute is being challenged. Here, the Plaintiffs have sought, by a civil action, to recover judgments against the Insurance Companies at least simultaneously with the rendition of judgments against the insured Defendants. In short, these actions attempt to 'reach' the insurance company in advance so that, if and when liability is established, the insurance funds can be 'applied' to such judgments as may be obtained.

We cannot agree with this procedure in view of the long established Maine practice. The right to the application of insurance proceeds to a judgment has been, in Maine, equitable in nature. Until the adoption of our Civil Rules, it was necessary to bring a 'Bill in Equity' for this purpose, the term 'civil action' being substituted by P.L.1961, Sec. 203, to bring the act into procedural conformity with the newly adopted Civil Rules. The adoption of these Rules altered only the procedure and modified prior modes of practice, but did not change the right to grant all remedies which had been traditionally considered equitable in nature. The change affected only the form of the remedy, not the substantive right to claim the relief requested.

The Defendant Insurers place great reliance upon this 'Reach and Apply' statute and urge that it is an absolute prohibition against the maintenance of this action against them. In arguing against this the Plaintiffs assert that this statute was not intended by the Legislature to preclude a direct action against an insurance company. It is said that the statute is applicable only where the injured party elects not to press a direct claim against a company and to pursue his claim against only the insured. The distinction which is urged upon us is thus stated:

'And the limitation upon the remedy therein expressly granted does not extend to a common law action brought against the insurer as obligor by a third-party beneficiary. That limitation only applies to a 'civil action * * * brought * * * to reach and apply such insurance money' (24 M.R.S.A. § 2904-Emphasis supplied).'

Our analysis of the 'Reach and Apply' statute does not lead us to this conclusion. The only remedy recognized in Maine in this type of proceeding has been by an equitable process and were we to adopt the Plaintiffs' theory we would be compelled to proceed in defiance of the legislative mandate and completely circumvent the intent and purpose of this well entrenched procedure. In reaching this result we do not close our eyes to the basic purpose for making insurance companies direct defendants in cases of this nature. It is obvious that unless the Plaintiffs can establish liability on the part of the insured Defendants, they have no claim against the Defendant Insurers and it is also obvious that if the Plaintiffs do recover judgments against the insured Defendants, any judgment they might recover against the Defendant Insurers would be necessarily limited to the amount of insurance in force. It, therefore, becomes obvious that the end result to be reached in the procedures adopted by the Plaintiffs can only be to have the insurance proceeds applied to the judgments which might be obtained against the insured Defendants. This procedure, therefore, contravenes 24-A M.R.S.A. § 2904.

The Plaintiffs have cited Shingleton v. Bussey (Fla.1969) 223 So.2d 713 in support of the argument that they are third party beneficiaries and have the right to proceed directly against the Defendant Insurers. The case held that, under Florida law, a direct cause of action inures to a third party beneficiary against an insurer in motor vehicle liability insurance coverage cases 'as a product of the prevailing public policy of Florida'. The Court there held that the 'no joinder' clause violated the constitutional right of the Plaintiff to a full, complete and adequate remedy at law, and that, unless the Legislature expressly gave the insurer the substantive right to insert 'no joinder' clauses, there was no basis in law for them to assume such right, in view of the Florida Rules of Civil Procedure, Rule 1.210, 30 F.S.A. ² It should be notd that this opinion does not comment on any Florida statute, or procedure, comparable to the Maine 'Reach and Apply' statute.

M.R.C.P. Rule 17(a) does not contain the emphasized clause (see Note 2) found in the Florida Rule but does provide: 'Every action may be prosecuted in the name of the real party in interest. * * *' In the Commentary on this Rule the Reporter, speaking about the problem created by subrogated insurance companies, described Maine police against informing a jury of the presence of insurance by such expressions as these: 'prejudicial effect'; 'improper'; 'may result in a mistrial'; 'the strong Maine policy against * * *.'

In 1897, Sawyer v. Arnold Shoe Co., 90 Me. 369, 38 A. 333, the public policy of Maine was thus expressed: 'We think that to allow juries * * * to take into consideration the fact that an...