Bashor v. Northland Ins. Co.
| Decision Date | 08 December 1970 |
| Docket Number | 24041,Nos. 70--507,s. 70--507 |
| Citation | 480 P.2d 864,29 Colo.App. 81 |
| Parties | Thomas C. BASHOR, Plaintiff in Error, v. NORTHLAND INSURANCE COMPANY, a Minnesota corporation, Defendant in Error. . II |
| Court | Colorado Court of Appeals |
Daniel S. Hoffman, Denver, for plaintiff in error.
Sheldon, Nordmark & Bayer, Charles W. Sheldon, Jr., Douglas E. Bragg, Denver, for defendant in error.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
This is an action to recover damages due to the alleged failure of an insurer to accept a third party's offer of settlement within the policy limits. The parties appear in the same order as in the trial court, the plaintiff being the insured (Bashor) and the defendant, the insurer (Northland).
Bashor was involved in an automobile accident in which Hilda Owens was injured. Bashor's insurance policy with Northland had a liability limitation of $10,000. Owens subsequently filed suit against Bashor and obtained a judgment for $18,000 with interest and costs. Northland paid Owens the limit of the policy, $10,000, with interest and costs, leaving an $8,000 personal judgment against Bashor unpaid.
Bashor, in this action alleges that, pending trial of the personal injury action, Owens' attorney repeatedly offered to settle within the insurance policy limits and Northland rejected all offers. Further, that Northland's attorneys under the terms of the policy conducted the defense of plaintiff both prior to and throughout the trial.
The judgment creditor, Owens, was pressing Bashor for satisfaction of the $8,000 judgment which Bashor was unable to pay. Prior to the filing of this suit, Owens and Bashor entered into a written agreement. A brief summary of this agreement reveals that Bashor paid Owens $1,500 on the judgment; he agreed to attempt to collect the overage from the insurer for its failure to settle; Bashor's attorney was to be one of Owens' selection with the consent of Bashor; if full recovery were made, Bashor would retain $1,500 and Owens would receive the balance; if less than full recovery were made, Bashor would retain less than the $1,500 paid out and the balance determined by a formula in the agreement would go to Owens. In consideration for Bashor's agreement, Owens agreed to release all liens on Bashor's property, refrain from further efforts to collect on the judgment and execute a 'satisfaction of judgment' which was placed in escrow to be delivered to Bashor after Owens received payment of any recovery under the terms of the agreement of after Bashor exhausted his legal remedies, including appeal, against the insurer. The agreement further provided that if Bashor exercised his right not to appeal an adverse judgment in the trial court then the satisfaction of judgment would be returned to Owens, the agreement would become null and void, and Owens could pursue her efforts to collect the judgment from Bashor.
Northland in this action filed a 'Motion to Reduce Prayer', which the trial court granted, reducing Bashor's potential recovery to $1,500. This order was apparently based on Northland's argument that Bashor, by his agreement with Owens, had actually obtained a satisfaction of the personal judgment by the payment of $1,500 and therefore, this had to be the limit of his damage.
On the morning of trial, Northland moved to dismiss the case upon the ground that the contract between Bashor and Owens was champertous, illegal, and void. This motion was denied. Northland then moved for the dismissal of the complaint on the ground that the real party in interest (Owens) was not a party to the action. The court ruled that Owens was a necessary party to the action, dismissed the action and entered judgment for Northland.
Bashor alleges as errors the trial court's ruling that Owens was a necessary party and the order reducing the prayer in the complaint from $8,000 to $1,500. Northland alleges the court erred in failing to find the contract between Owens and the Bashor to be champertous, illegal, and void.
Was Owens a necessary party to this action? We hold that she was not. Owens was a judgment creditor of Bashor and had no contractual claim or tort claim against the insurer. Owens can benefit from this action only after plaintiff, as the insured, secures a judgment against the insurer. This point was clearly decided in Steen v. Aetna Casualty & Surety Co., 157...
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