American Southern Ins. Co. v. Dime Taxi Service, Inc.

• Decision Date: 04 April 1963
• Docket Number: 3 Div. 960
• Citation: 275 Ala. 51,151 So.2d 783,4 A.L.R.3d 611
• Parties: , 4 A.L.R.3d 611 AMERICAN SOUTHERN INSURANCE CO., et al. v. DIME TAXI SERVICE, INC.
• Court: Alabama Supreme Court

Page 783

151 So.2d 783

275 Ala. 51, 4 A.L.R.3d 611

AMERICAN SOUTHERN INSURANCE CO., et al. v. DIME TAXI SERVICE, INC.

3 Div. 960.

Supreme Court of Alabama.

April 4, 1963.

J. O. Sentell, Jr., Montgomery, for appellants.

Hill, Hill, Stovall & Carter, Montgomery, for appellee.

LIVINGSTON, Chief Justice.

This is an appeal by the American Southern Insurance Company and Homer C. Sanders, as Administrator of the estate of Hubert Ledbetter, deceased, from a final decree of the Circuit Court of Montgomery County, Alabama, in Equity, in a suit brought by Dime Taxi Service, Inc.

The bill alleges, in substance, the following facts:

That on October 30, 1958, Hubert Ledbetter was employed by the Dime Taxi Service, Inc.; that on said day, Hubert Ledbetter, while acting in the line and scope of his employment with the Dime Taxi Service, Inc., was transporting a passenger for hire, namely, one Edna V. Daniel, and that he so negligently drove the motor vehicle in which the said Edna v. Daniel was riding as a passenger that as a proximate result and consequence thereof, the vehicle collided with another motor vehicle upon a public street of Montgomery, Alabama, and that as a proximate result and consequence thereof, Edna V. Daniel sustained personal injuries and the said Hubert Ledbetter was killed; that at the time of said accident, there was on file with the State Director of Public Safety, in accordance with the Motor Vehicle Safety Responsibility Act, a written certificate of the respondent, American Southern Insurance Company, that there was then in effect a motor vehicle liability policy for the benefit of the intestate, Hubert Ledbetter; and that the insurance so certified provides liability coverage of $5000 for each person to a limit of $10,000 for each accident:

That on June 26, 1959, Edna v. Daniel filed suit against Dime Taxi Service, in the Circuit Court of Montgomery County, Alabama for damages for personal injuries sustained in said accident; that Dime Taxi Service employed counsel and actively defended the suit; but that on February 3, 1960, a judgment was rendered in favor of Edna V. Daniel against Dime Taxi Service for $11,000 and cost of court; and Dime Taxi Service became responsible for the payment of same by reason of the negligence of said Hubert Ledbetter;

That Hubert Ledbetter died on October 30, 1958, the same day of the accident; that letters of administration upon his estate were issued to Homer C. Sanders by the Judge of Probate of Montgomery County, Alabama, on April 28, 1960; and that Dime Taxi Service filed a claim against the estate of Hubert Ledbetter, deceased, for the sum of $10,000, on to wit, May 4, 1960; that said claim was disallowed; that the estate of Hubert Ledbetter is without funds but that American Southern Insurance is liable to your complainant, Dime Taxi Service, in the sum of $5,000 and the further sum of $1,000 as a reasonable attorney's fee, all with interest from March 3, 1960.

The bill prays (1) to be subrogated to the rights of Edna V. Daniel in her judgment against Dime Taxi Service; (2) a judgment for $6,000, with interest from March 3, 1960, against Homer C. Sanders, as administrator, and American Southern Insurance Company; and (3) general relief.

Edna V. Daniels, who was made a party respondent to the bill of complaint, admitted all the allegations of the bill.

The American Southern Insurance Company filed a plea in abatement, which it later amended.

The plea in abatement, as amended, relied on a provision of the policy which provided that no action arising from bodily injury, or based upon bodily injury liability, shall lie against the insurer unless, as a condition precedent thereto, the amount of the insured's obligation to pay shall have been finally determined either by judgment against insured after an actual trial, or by written agreement of the insured, the complainant and this respondent.

It was further averred in the amended plea that the amount of the insured's obligations to pay has never been finally determined, either by judgment against the insured, or his estate, after actual trial, or by written agreement of the insured (or his personal representative), the claimant and this respondent.

The court, on a hearing to test the sufficiency of the plea, as amended, held the same insufficient.

The insurance company and the administrator of the estate of Hubert Ledbetter filed separate demurrers to the bill as a whole, and to each of the several alleged aspects thereof, separately and severally. The demurrers were overruled.

The facts are not in dispute and are essentially as alleged in the bill of complaint and outlined above. The assignments of error raise only the questions raised by the plea in abatement and the demurrers.

On the Plea in Abatement

The basic and fundamental issue in this case is the right of the master or employer to collect from the liability insurer of his servant or employee damages which the master has been required to pay by reason of his legal responsibility for the negligent act of the servant.

A master is entitled to recover from his servant damages which the master has been required to pay by reason of the negligence of his servant. Huey v. Dykes, 203 Ala. 231, 82 So. 481, 35 Am.Jur. § 101, p. 530. Our cases establish the rule that where a defendant is held liable only because he is responsible for the act of another, he cannot be held liable if such other is exonerated. Great A & P Tea Co. v. Traylor, 239 Ala. 497, 195 So. 724; Griffin v. Bozeman, 234 Ala. 136, 173 So. 857; Waters v. Anthony, 252 Ala. 244, 40 So.2d 316. And where the master and servant are sued jointly, a judgment against the master absolving the servant of liability for tort committed by the servant is inconsistent and must be set aside. Carter v. Franklin, 234 Ala. 116, 173 So. 861; Sibley v. Odum, 257 Ala. 292, 58 So.2d 896. The rule that there is no contribution between joint tort-feasors does not apply in instances in which one tort-feasor is liable only by reason of the negligence or fault of the other. In such instance, as between the parties, the one acting in the representative capacity and himself guilty of negligence must first respond in damages. Huey v. Dykes, supra.

The principle of the foregoing cases requires that if a servant is liable to the master for tort committed by the servant, the servant's insurer will also be liable. While we have been cited to no Alabama case, nor has our research revealed one where this precise question has been decided in this jurisdiction, the authorities in other jurisdictions where the question has arisen, hold that the insurer of the servant is obligated to pay up to the limits of the servant's policy the amount that the master has become liable to pay by reason of the tort of the servant. Continental Casualty Co. v. Phoenix Construction Co., 46 Cal.2d 423, 296 P.2d 801, 57 A.L.R.2d 914; Maryland Casualty Co. v. Employers Mutual Liability Insurance Co. of Wisc., 208 F.2d 731 (2nd Cir.); Canadian Indemnity Co. v. United State Fidelity & Guaranty Co., 213 F.2d 658 (9th Cir.); Employers Mutual Liability Insurance Co. of Wisc. v. Pacific Indemnity Co., 167 Cal.App.2d 369, 334 P.2d 658 (Cal.). As stated by the court in the Continental Casualty Company case, supra:

'Under equitable principles of subrogation the insurer of the employer who has been compelled to pay the judgment against the employer may recover against the negligent employe or the employe's insurer * * *.'

The foregoing principles are not controverted by appellants, but their contentions are largely predicated upon questions of procedure rather than substance.

The first issue raised by appellant, American Southern Insurance Company, is set forth in its contention that it can be sued only after judgment is rendered against its insured (or the administrator of the servant), and that...