Canal Ins. Co. of Greenville, S. C. v. Sturgis, B-155

• Citation: 114 So.2d 469
• Decision Date: 08 September 1959
• Docket Number: No. B-155,B-155
• Parties: CANAL INSURANCE COMPANY, OF GREENVILLE, SOUTH CAROLINA, a corporation, Appellant, v. Hezekiah STURGIS, Appellee.
• Court: Court of Appeal of Florida (US)

Page 469

114 So.2d 469

CANAL INSURANCE COMPANY, OF GREENVILLE, SOUTH CAROLINA, a corporation, Appellant, v. Hezekiah STURGIS, Appellee.

No. B-155.

District Court of Appeal of Florida, First District.

Sept. 8, 1959.

Rehearing Denied Oct. 2, 1959.

Decision Certified Nov. 17, 1959.

Boyd, Jenerette & Leemis, Jacksonville, and Cobb, Cole & Pierce, Daytona Beach, for appellant.

Wesley A. Fink, Daytona Beach, for appellee.

Lazonby, Dell, Graham & Willcox, Gainesville, amicus curiae.

CARROLL, DONALD K., Judge.

There has been certified to this court by the Circuit Court of Volusia County the following question:

Where plaintiff in an automobile accident suit has recovered a judgment in excess of the policy limits of the defendant's insurance policy, and where said policy contains the following provision:

'any person or organization, or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy.'

And where plaintiff has received payment of said policy limits but holds an unsatisfied judgment as to the excess, may the plaintiff maintain a suit directly against the insurer for recovery of the judgment beyond the limits of the policy, based upon the alleged negligence or bad faith of the insurer in the conduct or handling of said suit.

The Florida Appellate Rule, 31 F.S.A., governing our actions in matters of this kind is as follows:

'Rule 4.6 Certified Questions

'a. When Certified. When it shall appear to a judge of the lower court that there is involved in any cause pending before him questions or propositions of law that are determinative of the cause and are without controlling precedent in this state and that instruction from the Court will facilitate the proper disposition of the cause, said judge, on his own motion or on motion of either party, may certify said question or proposition of law to the Court for instruction.'

The appellee, Hezekiah Sturgis, contends that the question propounded is not properly certifiable under the rule for the reason that the decision of the Florida Supreme Court in Auto Mutual Indemnity Co. v. Shaw, 134 Fla. 815, 184 So. 852, 855, is a controlling precedent in this state and is determinative of the question, answering it in the affirmative.

Analyzing the Shaw case, it does appear on the surface to sustain the appellee's contention, for the cause of action alleged in the second count of the declaration involved in that case is substantially similar to that stated in the certified question. In its opinion, however, the Court did not specifically approve such a cause of action, holding only that the evidence at the trial under the second count was insufficient and granting a new trial.

A closer examination of the Shaw case leads us to the conclusion that the decision therein is not a controlling precedent on the certified question before us. It is axiomatic, of course, that every judicial decision must be read in the light of the particular factual situation that gave rise to that decision. Analyzing the facts in the Shaw case, we find that the insurance policy involved therein contained this significant provision:

'Insolvency or Bankruptcy of Assured. The insolvency or bankruptcy of Assured shall not release the Company from any payment otherwise due hereunder, and if, because of such insolvency or bankruptcy, an execution on a judgment against Assured is returned unsatisfied, the judgment creditor shall have a right of action against the Company to recover the amount of said judgment to the same extent that Assured would have had if he paid the judgment. * * *'

It was shown in the case that a judgment was obtained against the insured and an execution was returned unsatisfied, and thus the provision just quoted came into play. The judgment creditor then had 'a right of action against the Company to recover the amount of said judgment to the same extent that Assured would have had if he paid the judgment.' Apparently the Supreme Court considered that the insured's right of action against the insurer for negligence and bad faith for not paying or settling the claim against it, was part of the cause of action accruing to the judgment creditor under the quoted provision when the judgment was returned unsatisfied.

The comparable provision in the policy as set forth in the certified question before us is distinctly different, we think, from that in the Shaw case. The provision involved here is that the judgment creditor shall be 'entitled to recover under this policy to the extent of the insurance afforded by this policy.'

In our opinion, the 'insurance afforded by this policy' should be construed to mean the insurance provided by the policy up to the policy limits. As we view it, the amount in excess of the policy limits which an insured might in a proper case be able to recover against the insurer because of its negligence or bad faith in failing to compromise or settle a claim, is not truly of the character of 'insurance', but rather constitutes damages resulting from the insurer's tort or breach of contract.

Many logical reasons will occur to the legal mind why the certified question should be answered in the negative. No one can today question the legal right of the insured to sue the insurer for negligence or bad faith in failing to settle a claim whithin the policy limits for, if he has had to pay a part of the judgment, he had indeed suffered damages because of such failure of the insurer; but, when the judgment creditor directly so sues the insurer for an amount...