Bianco v. Concepts 100, Inc.

• Court: Superior Court of Pennsylvania
• Writing for the Court: HOFFMAN
• Citation: 436 A.2d 206,291 Pa.Super. 458
• Parties: Anthony BIANCO, Appellant, v. CONCEPTS "100", INC. Formost Insurance Co., Garnishee.
• Decision Date: 09 October 1981

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436 A.2d 206 291 Pa.Super. 458 Anthony BIANCO, Appellant,
v.
CONCEPTS "100", INC.
Formost Insurance Co., Garnishee. Superior Court of Pennsylvania. Argued Dec. 4, 1980.
Filed Oct. 9, 1981.

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[291 Pa.Super. 460] Daniel L. Thistle, Philadelphia, for appellant.

Judith B. Reap, Philadelphia, for participating party.

Before SPAETH, BROSKY and HOFFMAN, JJ.

HOFFMAN, Judge:

Appellant contends in the present attachment execution proceedings that the lower court erred in concluding that it lacked jurisdiction over appellee, a foreign insurance company authorized to do business in Pennsylvania. We agree and, accordingly, reverse the order of the court below and remand for further proceedings.

I.

On January 14, 1977, appellant commenced an action in trespass against a local retail establishment and appellee's insured, Concepts "100", Inc. (hereinafter Concepts), a now-defunct New York corporation then doing business in Pennsylvania. ¹ [291 Pa.Super. 461] ¹ Appellant alleged that he had been injured due to a defect in a hair dryer manufactured by Concepts and purchased by him in Philadelphia. Pursuant to its contractual obligation, appellee undertook Concepts' defense, instructing its local counsel to enter an appearance and answer appellant's complaint on Concepts' behalf. Because of Concepts' recalcitrance, however, appellee, relying upon a condition in its policy, withdrew its representation of Concepts and disclaimed coverage for appellant's cause of action. Appellant obtained a $700,000 judgment against Concepts on November 5, 1979. On December 12, 1979, appellant commenced execution proceedings by filing a writ of execution and interrogatories in attachment against appellee as garnishee pursuant to Pa.R.Civ.P. 3101-3149. Appellee thereafter filed preliminary objections to the interrogatories in which it asserted, inter alia, that the courts of Pennsylvania lacked jurisdiction over it. See Pa.R.Civ.P. 3142(a), (c) (a garnishee must raise a question of jurisdiction by filing preliminary objections before entering an appearance or answering interrogatories). Appellee asserted that our courts lacked jurisdiction because it is a Michigan insurance company having no property in Pennsylvania, and because it

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had issued the relevant policy in New York to a New York corporation. Appellant responded that appellee had breached its contractual duty to defend and/or indemnify Concepts and, therefore, was subject to garnishment in Pennsylvania. On April 18, 1980, the lower court sustained appellee's preliminary objection as to jurisdiction and ordered the writ of execution stricken. ² Appellant subsequently petitioned for reconsideration on the ground that appellee was subject to jurisdiction as a foreign insurance company authorized to do business in Pennsylvania for the last twenty-three years. [291 Pa.Super. 462] On July 8, 1980, the lower court affirmed its earlier order, reasoning that although appellee was indeed subject to in personam jurisdiction, our courts lacked jurisdiction over it in the present garnishment proceedings because such proceedings are in rem in nature and appellee had no property within the territorial reach of Pennsylvania process. ³ This appeal followed.

II.

It is well settled that garnishment, or attachment execution as it was formerly known, is a viable remedy for a judgment creditor to collect its judgment from the judgment debtor's insurer. In Helms v. Chandler, 423 Pa. 77, 80, 223 A.2d 30, 31 (1976), our Supreme Court stated:

In a motor vehicle trespass action resulting in a judgment against an insured defendant, execution against the defendant's insurer as garnishee has long been recognized under prior practice and under the Rules of Civil Procedure as a means of satisfying plaintiff's judgment. The defendant insurer is a garnishee within the meaning of Rule 3101(b) defining a garnishee. Service of the writ of execution under Rule 3111 constitutes the attachment. The interrogatories under Rule 3144 are "directed to the garnishee respecting property of the defendant in his possession". The form of interrogatories is set forth in Rule 3253. In the case of an insurer garnishee the standard form of interrogatories must be supplemented by additional appropriate interrogatories directed toward the existence of the insurance policy, the coverage and its terms.

See also Ryan v. Furey, 437 Pa. 96, 262 A.2d 305 (1969); Paul v. Dwyer, 410 Pa. 229, 188 A.2d 753 (1963); Dariano v. Blocksom, 389 Pa. 96, 132 A.2d 186 (1957); Vrabel v. Scholler, 369 Pa. 235, 85 A.2d 858 (1952); Renschler v. Pizano, 329 [291 Pa.Super. 463] Pa. 249, 198 A. 33 (1942); Collins v. O'Donnell, 325 Pa. 366, 191 A. 22 (1937); Zenner v. Goetz, 324 Pa. 432, 188 A. 124 (1936); Jennison v. Aacher, 201 Pa.Super. 583, 193 A.2d 769 (1963); Koenig v. Curran's Restaurant & Baking Co., 121 Pa.Super. 201, 183 A. 451 (1936); Shaffer v. Hebenstreit, 119 Pa.Super. 159, 180 A. 725 (1935); Johnson v. Hermann, 101 Pa.Super. 198 (1930); Bank of New Bethlehem ex rel. Maikranz v. Maikranz, 44 Pa.Super. 225 (1910). See generally 1 A. Goldin, The Law of Insurance in Pennsylvania, P 644 (2d ed. 1946); 9 Goodrich-Amram 2d § 3111(b):3.4 (1977); 18 G. Couch, Insurance 2d §§ 74:83 to 74:114 (1968). The insurer's liability qua garnishee is based upon its breach of the insurance contract with the judgment debtor, Ryan v. Furey, supra, 437 Pa. at 103, 262 A.2d at 309, and the attachment execution operates as an equitable assignment to the judgment creditor of the judgment debtor's claim against the garnishee. See Boyd Estate, 394 Pa. 225, 242, 146 A.2d 816, 824 (1959); Tremont Township School District v. Western Anthracite Coal Co., 381 Pa. 276, 281, 113 A.2d 234, 237

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(1955); Goldstein v. Penny, 328 Pa. 78, 79-80, 195 A. 27, 28 (1937); Mignatti v. General Mortgage Financing Corp., 325 Pa. 113, 116, 189 A. 296, 297 (1937); Joseph Melnick Building & Loan Assoc. v. Melnick, 318 Pa. 120, 122, 178 A. 144, 145 (1935); Aarons v. Public Service Building & Loan Assoc., 318 Pa. 113, 117, 178 A. 141, 142 (1935); Wheatcroft v. Smith, 239 Pa.Super. 27, 32, 362 A.2d 416, 419 (1976) (plurality opinion); Folmar v. Shaffer, 232 Pa.Super. 22, 24-25, 332 A.2d 821, 823 (1974); Trainer Estate, 166 Pa.Super. 472, 475, 71 A.2d 833, 834 (1950); LaBarre v. Doney, 53 Pa.Super. 435, 438 (1913); Almi, Inc. v. Dick Corp., 31 Pa.Cmwlth. 26, 34, 35-36, 375 A.2d 1343, 1348, 1349 (1977).

(A)s to the (garnishee, attachment execution) is the beginning of a new proceeding. By it this garnishee (is) brought into a court having complete jurisdiction to determine what, if anything, it owed to the defendant upon its policy of insurance. When thus brought into court it possessed every right of defense that it would have had to a common-law action brought by the assured directly on the policy. True, the proceeding was not instituted by the [291 Pa.Super. 464] assured in person but by one who had become clothed, by force (of law), with every right which the assured himself could assert.

Bank of New Bethlehem ex rel. Maikranz v. Maikranz, supra at 227. This remedy has, historically, been extended to reach foreign insurers doing business, or authorized to do business, in the Commonwealth. See id. at 227-28. See also Werron v. Metropolitan Life Ins. Co., 166 Pa. 112, 30 A. 1008 (1895); Kennedy v. Agricultural Ins. Co. of Watertown, 165 Pa. 179, 30 A. 724 (1895); Barr ex rel. Berst v. King, 96 Pa. (15 Norris) 485 (1880). However, merely to acknowledge the existence of the remedy does not answer the question before us, namely whether the lower court erred in concluding that it lacked jurisdiction over appellee. To that question we now turn.

III.

The lower court's conclusion that it lacked jurisdiction over appellee necessarily depended upon its determination that garnishment proceedings against insurance companies are in rem in nature. Our Supreme Court recognized that post-judgment garnishment proceedings are not wholly in rem:

"It is true that the attachment process in a proceeding in rem, but it is equally true that it is something more. It is also a proceeding against the garnishee personally, for the purpose of compelling him to answer for the value where the thing itself is not produced. The summons, the judgment, and execution contain the bones and sinews of a proceeding in personam against the garnishee." From this it is clear that the execution attachment is not solely a proceeding in rem.

Breading v. Siegworth, 29 Pa. (5 Casey) 396, 399 (1857), quoting Childs & Co. v. Digby, 24 Pa. (12 Harris) 23, 26 (1854). Accord, Koenig v. Curran's Restaurant & Baking Co., supra, 121 Pa.Super. at 207, 183 A. at 453; Bank of New Bethlehem ex rel. Maikranz v. Maikranz, supra at 227. The issues presented in such proceedings and the intangible [291 Pa.Super. 465] nature of the garnishable res further demonstrate that post-judgment garnishment of an insurer is a species of in personam actions. Because a judgment creditor necessarily claims through his judgment debtor, garnishment becomes a "lawsuit within a lawsuit," 9 Goodrich-Amram 2d § 3144(a):1 (1977), wherein the judgment creditor must establish the existence of: (1) his judgment, which operates as the assignment to him of the judgment debtor's claims, see, e. g., Ryan v. Furey, supra; Boyd Estate, supra; Goldstein v. Penny, supra; Trainer Estate, supra; and (2) the...