American Fidelity & Casualty Co. v. McClendon

• Court: Texas Supreme Court
• Writing for the Court: German
• Citation: American Fidelity & Casualty Co. v. McClendon, 81 S.W.2d 493, 125 Tex. 41 (Tex. 1935)
• Decision Date: 03 April 1935
• Docket Number: No. 1830-6547.,1830-6547.
• Parties: AMERICAN FIDELITY & CASUALTY CO., Inc., v. McCLENDON, Chief Justice, et al.

81 S.W.2d 493

AMERICAN FIDELITY & CASUALTY CO., Inc., v. McCLENDON, Chief Justice, et al.

No. 1830-6547.

Commission of Appeals of Texas, Section A.

April 3, 1935.

Original petition by the American Fidelity & Casualty Company, Inc., for a writ of mandamus against James W. McClendon, Chief Justice, and others, to compel respondents, as members of the Court of Civil Appeals for the Third District, to certify certain questions of law involved in a suit brought by Charles F. Newman against the relator and another, wherein an order overruling the relator's plea of privilege was affirmed by the respondent court [60 S.W.(2d) 482].

Writ granted in accordance with opinion.

A. E. Wood, J. W. Wheeler, and Dan Moody, all of Austin, for relator.

GERMAN, Commissioner.

In this action the relator seeks a mandamus to require the honorable Court of Civil Appeals for the Third Supreme Judicial District of Texas at Austin to certify to this court for determination certain questions of law involved in the case of American Fidelity & Casualty Company, Inc., v. Charles F. Newman, 60 S.W.(2d) 482, 483, in which an opinion has recently been rendered.

The suit was originally brought in the district court of Caldwell county, Tex., by Charles F. Newman, as plaintiff, against G. J. Merritt and American Fidelity & Casualty Company, Inc., as defendants. The plaintiff alleged that he sustained an injury, through the negligence of the defendant Merritt, his agents, servants and employees, while he (the plaintiff Newman) was traveling as a passenger on a motorbus operated by the defendant G. J. Merritt; that the American Fidelity & Casualty Company, Inc., was the carrier of the liability and property damage insurance of the defendant Merritt as the operator of such motorbus; and that said American Fidelity & Casualty Company, Inc., had issued to the defendant Merritt and filed with the Railroad Commission of Texas a policy of liability and property damage insurance, under the provisions of section 11, chapter 270, Acts of the Regular Session of the Fortieth Legislature (Vernon's Ann. Civ. St. art. 911a, § 11), covering the motorbus operated by the defendant Merritt and on which the plaintiff, Newman, was riding as a passenger at the time of his claimed injury. In making the American Fidelity & Casualty Company, Inc., a party defendant in the suit, the plaintiff, Charles F. Newman, asserted that said American Fidelity & Casualty Company, Inc., was, by reason of said contract of insurance, liable to him for the damages he had suffered as a result of said alleged injuries.

The American Fidelity & Casualty Company, Inc., filed a plea of privilege in said case, claiming its right to be sued in the county of its residence, which was alleged to be Dallas county, Tex. The plea of privilege conformed to the statutes governing such a pleading.

The plaintiff, Charles F. Newman, filed a controverting affidavit, alleging that the American Fidelity & Casualty Company, Inc., had issued to the defendant Merritt a policy of liability and property damage insurance under the terms of section 11, chapter 270, Acts of the Regular Session of the Fortieth Legislature; and claiming that the American Fidelity & Casualty Company, Inc., was, by reason of said policy of insurance, a necessary and proper party to the suit of Charles F. Newman against the defendant G. J. Merritt, and that the district court of Caldwell county had venue by reason of subdivision 4 of article 1995, Revised Civil Statutes of Texas 1925, and by reason of section 2, chapter 72, Acts of the First Called Session of the Fortieth Legislature (subdivision 29a, art. 1995, Vernon's Ann. Civ. St.).

It is not necessary to set out the provisions of the policy of insurance, but it is sufficient to say that it was executed in compliance with section 11 of article 911a of what is known as the Motor Bus Act.

The plea of privilege was overruled, and the judgment of the trial court was affirmed by the Court of Civil Appeals. The gist of the opinion of the court is disclosed by the following language:

"The first issue presented is whether appellant is, under subdivisions 4 and 29a of article 1995, Vernon's Ann. Civ. St., a proper or necessary party to appellee's suit. If so, the Caldwell county district court had jurisdiction over appellant. If not, appellant's plea should have been sustained. This in turn depends upon whether appellant's undertaking was a liability policy or merely an indemnity policy; that is, whether appellant was primarily liable for the damages sustained, or was liable only as indemnitor to repay to Merritt what he was compelled to pay out as such damages after final judgment against him.

"While said policy did provide, among other things, that appellant would not be liable thereunder `until a final judgment shall have been recovered against the assured,' it indemnified the assured against loss imposed by law resulting from claims upon the assured, and stipulated that the policy was written pursuant to the provisions of the Motorbus Act above referred to; and that its liability was to be fixed in keeping with the provisions of subdivision 11 of said act, anything in the policy to the contrary notwithstanding. Clearly, therefore, appellant's liability is determinable under the provisions of subdivision 11 of said Motorbus Act.

"We do not deem any extended discussion of this issue necessary. The express language of the act itself requires `the owner or operator to first procure liability and property damage insurance' before permit to operate is authorized to be granted by the Railroad Commission. It also provides that `such policy or policies shall furthermore provide that the insurer will pay all judgments which may be recovered against the insured * * * on claims for loss or damage from personal injury * * * and that such judgment will be paid by the insurer irrespective of the solvency or insolvency of the insured.' These provisions of the statute both as a matter of law and by the express terms of the policy itself are to be read into the policy. It is clear, we think, that such provisions fix not only a primary but an absolute liability on the insurer, not merely to indemnify the assured against what he might be compelled to pay out after judgment, but to itself pay such judgment or claim regardless of whether the insured motorbus owner had or could pay same; and that this protection clearly inured to the benefit of the injured party. That being true, appellant was a proper party to appellee's suit in Caldwell county."

It will be observed that the honorable Court of Civil Appeals predicates its holding upon these propositions:

(a) That the terms and provisions of the statute are to be read into the insurance policy and will determine the nature of the liability.

(b) That the provisions of the statutes which are imported into the policy "fix not only a primary but an absolute liability on the insurer, not merely to indemnify the assured against what he might be compelled to pay out after judgment, but to itself pay such judgment or claim regardless of whether the insured motorbus owner had or could pay same; and that this protection clearly inured to the benefit of the injured party."

(c) That by reason of the foregoing the insurance company was a proper party to the suit.

Relator alleges that this decision is in conflict with the decisions of the Court of Civil Appeals for the Fourth Supreme Judicial District in Cuellar v. Moore, 55 S.W.(2d) 244; Lander et al. v. Jordan, 59 S.W.(2d) 959; Cannon Ball Motor Freight Lines et al. v. Grasso, 59 S.W.(2d) 337, 339; and American Fidelity & Casualty Company, Inc., v. Jones Transfer and Storage Company, 46 S.W.(2d) 1054; and with the decision of the Court of Civil...