Barrett v. International Underwriters, Inc.

• Citation: 346 F.2d 345
• Decision Date: 16 June 1965
• Docket Number: 14819.,No. 14818,14818
• Parties: William J. BARRETT, Plaintiff-Appellee, v. INTERNATIONAL UNDERWRITERS, INC., Judgment Defendant-Appellee, The Department of Insurance of Indiana, as substituted defendant for International Automobile Insurance Exchange and International Automobile Insurance Association Judgment Defendant-Appellant, Merchants National Bank & Trust Company of Indianapolis, American Fletcher National Bank and Trust Company, Garnishee Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

346 F.2d 345 (1965)

William J. BARRETT, Plaintiff-Appellee, v. INTERNATIONAL UNDERWRITERS, INC., Judgment Defendant-Appellee, The Department of Insurance of Indiana, as substituted defendant for International Automobile Insurance Exchange and International Automobile Insurance Association Judgment Defendant-Appellant, Merchants National Bank & Trust Company of Indianapolis, American Fletcher National Bank and Trust Company, Garnishee Defendants-Appellees.

Nos. 14818, 14819.

United States Court of Appeals Seventh Circuit.

April 28, 1965.

Rehearing Denied June 16, 1965.

Edwin K. Steers, Atty. Gen., of Indiana, J. Van Brown, Asst. Atty. Gen., James J. Breen, Jr., Deputy Atty. Gen., Indianapolis, Ind., for the Dept. of Insurance of Indiana, defendant-appellant.

Edward B. Raub, Jr., William A. Wick, Carl T. Reis, Indianapolis, Ind., for plaintiffs, White, Raub, Reis & Wick, Indianapolis, Ind., of counsel.

Before SCHNACKENBERG, KILEY and SWYGERT, Circuit Judges.

KILEY, Circuit Judge.

This is an appeal from a judgment in a proceeding supplementary to execution¹ brought by a judgment creditor to reach bank accounts and securities in the custody of the defendant garnishee banks, alleged to be the property of judgment debtors International Automobile Insurance Association, International Automobile Insurance Exchange, and International Underwriters, Inc.² Plaintiff and the Department of Insurance of Indiana, substituted as defendant in lieu of the Exchange and the Association,³ each moved for summary judgment, and the Department moved in the alternative to dismiss. The district court's judgment declared that plaintiffs "have and hold equal liens" on the moneys in the accounts and on the securities, held by garnishees, and the Department of Insurance has appealed. We affirm.

William J. Barrett, in his individual capacity and as administrator of his wife's estate, recovered judgments against an uninsured motorist in the Circuit Court of Norfolk County, Virginia for his personal injuries and the wrongful death of his wife. The judgments were not paid by the tortfeasor. At the time of the occurrence Barrett carried liability insurance with a reciprocal insurance group composed of the International Automobile Insurance Exchange and International Underwriters, Inc. as attorney-in-fact for the Exchange. Under Virginia's uninsured motorist law, because of the default of the uninsured tortfeasor, Barrett's insurer was required to satisfy the judgments.

An unsuccessful demand for satisfaction was made by plaintiff upon defendants. He then sued upon the policy in the United States District Court for the Eastern District of Virginia and recovered judgments for his own injuries and for his wife's death. No appeal was taken from these judgments, which have not been paid, and the time for appeal has expired.

Following rendition of the Virginia district court judgments against Underwriters and the Exchange on January 22, 1964, certified copies were filed with the Clerk of the United States District Court for the Southern District of Indiana on February 25, 1964. The following day the United States Marshal levied execution against the garnishees, who refused to surrender the property of the Exchange in their custody. The executions were returned unsatisfied on February 28 and these proceedings supplementary were filed on March 4, 1964. The garnishee defendants admitted possession of the property and asked the court to determine the rights of all parties.

The International Automobile Insurance Exchange was organized under Indiana law⁴ by a group of subscribers to exchange reciprocal insurance contracts. In the Virginia suits on the policy the reciprocal insurer was named as a defendant under the names "Exchange" and "Association," and International Under-writers, Inc. was also named as a defendant. Underwriters was not designated in the captions in those cases as attorney-in-fact for the Exchange. Originally it moved to dismiss the complaints on jurisdictional grounds, but later withdrew the motions and appeared generally and filed answers. The answers asserted, among other things, "that the undersigned Underwriters could not and did not act as the agent or employee of any reciprocal exchange or association outside or beyond the law of its corporate existence."

The Department contends that Underwriters does not own the property in custody of the garnishees, that it was not sued in Virginia as attorney-in-fact for the subscribers at the Exchange as required by Indiana Law,⁵ and consequently that the property owned by the subscribers is not subject to execution based on the Virginia judgments against Underwriters.

The complaint in the Virginia suits on the policies is not in the record before us, but Underwriters' answer impliedly admitted its agency with the Exchange; it merely asserted that this agency was not extra-territorial. The suits were on policies whose only connection with Underwriters was the latter's status as attorney-in-fact for the reciprocal insurer through which the policies were exchanged. We think the district court did not err in deciding that the factual allegations before the United States District Court in Virginia sufficiently identified the relationship of Underwriters to the subscribers so that Underwriters, the attorney-in-fact, was sued and the judgments were rendered against it "as such" within the meaning of Bu...