American Fidelity & Cas. Co. v. Werfel, 3 Div. 123

• Decision Date: 23 May 1935
• Docket Number: 3 Div. 123
• Parties: AMERICAN FIDELITY & CASUALTY CO. v. WERFEL et al.
• Court: Alabama Supreme Court

162 So. 103

230 Ala. 552

AMERICAN FIDELITY & CASUALTY CO. v. WERFEL et al.

3 Div. 123

Supreme Court of Alabama

May 23, 1935

Rehearing Denied June 20, 1935

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Suit in equity by Joseph Werfel, a minor, suing by his father and next friend, Jacob Werfel, against the American Fidelity &amp Casualty Company and another. From a decree overruling demurrers to the bill, the named respondent appeals.

Injured person's bill to subject proceeds of automobile liability policy to satisfaction of judgment, alleging that judgment debtor was insured when accident occurred, held not demurrable because alleging conclusion. Code 1923, §§ 8376, 8377.

Affirmed.

The bill alleges the filing of suit by complainant against respondent W.E. Graham, claiming damages for personal injuries caused by Graham's automobile; that, after due service and upon a trial of the suit, a judgment was rendered in favor of complainant; that Graham appealed from said judgment to the Supreme Court of Alabama, and same was affirmed; and that said judgment remains wholly unsatisfied. It is further alleged that when said cause of action arose respondent Graham was insured by respondent American Fidelity & Casualty Company against loss or damage on account of bodily injury or accident to any person, for which he should be responsible, caused by reason of the use of the automobile described; that the policy was in force and effect on the date the cause of action arose and the automobile involved in the injury was the automobile described. It is prayed that the insurance money provided for in said policy with appellant company be applied to the satisfaction of said judgment.

Pertinent provisions of the policy of insurance made an exhibit to the bill are as follows:

"This policy is issued by the company subject to the following conditions, limitations and agreements which are a part of the policy and to which the assured, by the acceptance of this policy, agrees:

"Subject to the following conditions: ***

"Co-operation of Assured; Expense. (B) Whenever requested by the Company, the Assured shall render all possible

aid in securing information, evidence, and the attendance of witnesses; in effecting settlements; and in prosecuting appeals. The Assured shall at all times render to the Company all cooperation and assistance within his power. The Assured shall not voluntarily assume any liability; nor interfere in any negotiations or legal proceedings conducted by the Company on account of any claims; nor, except at his own cost, settle any claim, nor incur any other expense without the written consent of the Company previously given in writing; except that he may provide at the time of the accident, and at the cost of the Company, such immediate surgical relief as is imperative. ***

"Assured's Right of Recovery, etc. (E) The Company shall not be liable to pay any loss nor shall any action be brought against the Company, to recover under this Policy until a final judgment shall have been recovered against the Assured in the court of last resort after the trial of the issue. The insolvency or bankruptcy of the Assured shall not release the Company from any payment for which it would otherwise be liable under this Policy, and if such insolvency or bankruptcy shall occur and an execution on a judgment recovered in a case against the Assured covered by this Policy is returned unsatisfied, the judgment creditor shall have a right of action to recover the amount of such judgment against the Company to the same extent that the Assured would have had to recover against the Company had the Assured paid the said judgment; but in no event shall the liability of the Company exceed the limits expressed in the Policy. In no event shall any action be maintained against the Company under this Policy unless brought within one year after right of action accrues, provided, however, that the minimum time set by the statutes of the State in which the Assured resides shall govern.

"The Company does not prejudice by this condition any defenses against such action that it may be entitled to make under this Policy."

John S. Tilley, of Montgomery, for appellant.

Hill, Hill, Whiting Thomas & Rives, of Montgomery, for appellees.

THOMAS Justice.

The bill was filed under sections 8376, 8377, of the Code to have applied to the satisfaction of a judgment for complainant against the individual respondent the insurance money provided for in the contract with the respondent casualty company.

The demurrers were overruled; hence this appeal. The questions presented by the ruling and several grounds of demurrer will be grouped and so considered.

The bill is illustrated by a copy of the insurance policy, referred to and made a part thereof. Grimsley v. First Ave. Coal & Lumber Co., 217 Ala. 159, 115 So. 90.

It is insisted that these statutes (sections 8376, 8377) impair the obligation of the contract and are unconstitutional (Const.U.S. art. 1, § 10). They permit the injured party to subject to the satisfaction of his judgment assured's rights under the policy as an equitable asset in the nature of a lien--extending the policy to an indemnity against liability. Continental Auto Ins. Underwriters v. Menuskin et al., 222 Ala. 370, 132 So. 883. And it has been further held that such an injured party has an interest therein, in the nature of hypothecation. George v. Employers' Liability Assur. Corporation, Limited, of London, England et al., 219 Ala. 307, 122 So. 175, 72 A.L.R. 1438.

In short, the statute has been upheld by our recent decisions Kratz et al. v. Bonner, 228 Ala. 607, 155 So. 77; Federal Automobile Ins. Ass'n v. Abrams, 217 Ala. 539, 117 So. 85; Ft. Dearborn Ins. Co. et al. v. Heaton, 224 Ala. 334, 140 So....