Casualty Reciprocal Exchange v. Bounds

• Decision Date: 02 December 1935
• Docket Number: 4-4057
• Citation: 88 S.W.2d 836,191 Ark. 934
• Parties: CASUALTY RECIPROCAL EXCHANGE v. BOUNDS
• Court: Arkansas Supreme Court

88 S.W.2d 836

191 Ark. 934

CASUALTY RECIPROCAL EXCHANGE v. BOUNDS

4-4057

Supreme Court of Arkansas

December 2, 1935

Appeal from Crawford Circuit Court; J. O. Kincannon, Judge affirmed.

Judgment affirmed.

Warner & Warner, for appellant.

Partain & Agee, for appellee.

OPINION

BUTLER, J.

The appellee, Joe Bounds, recovered judgment against F. W Dickson in the sum of $ 2,500 for personal injuries. After the affirmance of tat judgment in this court, he sued out an execution against Dickson which was returned nulla bona. At the time of his injury, Dickson was a member of the Casualty Reciprocal Exchange of Kansas City, Missouri, and, as such, had been issued "an indemnity agreement" by which he was indemnified against loss from liability for damages on account of bodily injuries occasioned from accidents occurring during the life of the contract in a sum not to exceed $ 5,000 for injury or death to any one person. After the return of the execution, Bounds brought this suit against the appellant, basing his authority on act No. 196, of the Acts of 1927. Appellant answered admitting the injury suffered by Bounds, the recovery of the judgment, the issuance of the execution against Dickson, and its return nulla bona. Appellant also admitted that Dickson was a subscriber of the Casualty Reciprocal Exchange, and, as such, had been issued a contract of indemnity against loss from liability for damages arising from injuries such as had been suffered by appellee. It denied that it had issued to Dickson any liability insurance or that it was an insurance company. It alleged in extenso the nature of the business engaged in by it, the agreement between its subscribers, and particularly the contract executed and delivered to Dickson. Appellant further alleged that it was operating in the State of Arkansas by virtue of the provisions of act No. 152 of the Acts of 1915, appearing in Crawford & Moses' Digest as §§ 6045 to 6057, both inclusive. It pleaded, as a defense to appellee's action, § No. 8 of its contract with Dickson, which is as follows:

"No action shall lie against the attorney or any subscriber at the Exchange, to recover for any loss under this contract unless brought by the subscriber himself, nor to recover for any loss arising under clauses (A), (B) or (C) of the special agreements or under any indorsement attached hereto unless brought by the subscriber himself to recover for moneys actually paid by him in satisfaction of a judgment after trial of the issue in a suit instituted within the period limited by the statute of limitations, and in no event shall any action lie unless brought within ninety days after the right of action accrues as herein provided." Appellant denied that it was subject to the provisions of act No. 196, supra, or bound by any of the provisions thereof.

A demurrer to the answer was interposed which was sustained by the court, and the appellant electing to stand upon its answer, judgment was rendered for the sum sued for, and this appeal followed.

The appellant contends that its contract with Dickson was one of indemnity which justified the incorporation into the contract of § 8 quoted. It contends that act No. 196, supra, has no application to contracts of this nature entered into between its subscribers (1) because act No. 196 applies only to corporations doing an insurance business, and that, as it is not an insurance corporation, the act would have no application, and (2) because it operates under a special statute, and act No. 196 does not repeal any part thereof.

Act No. 196 is as follows: "Section 1. On and after the passage of this act no policy of insurance against loss or damage resulting from accident to or injury suffered by an employee or other person and for which the person insured is liable, or against loss or damage to property caused by horses or by any vehicles drawn, propelled or operated by any motive power, and for which loss or damage the person insured is liable, shall be issued or delivered to any person in this State by any corporation authorized to do business in this State, unless there shall be contained within such policy a provision that the insolvency or bankruptcy of the person insured shall not release the insurance carrier from the payment of damages for injury sustained or loss occasioned during the life of the policy, and stating that in case execution against the insured is returned unsatisfied in an action brought by the injured, or his or her personal representative in case death results from the accident, because of such insolvency or bankruptcy, that then an action may be maintained by the injured person, or his or her personal representative, against such corporation under the terms of the policy for the amount of the judgment in the said action not exceeding the amount of the policy.

"Section 2. Whenever any policy of insurance shall be issued in this State indemnifying any person, firm or corporation against any actual money loss sustained by such person, firm or corporation for damages inflicted upon the property or person of another, such policy shall contain a provision that such injured person, or his or her personal representative, shall be subrogated to the right of the assured named in such policy, and such injured person, or his or her personal representative, whether such provision be inserted in such policy or not, may maintain a direct cause of action against the insurance company issuing such policy for the amount of the judgment rendered against such assured, not exceeding the amount of the policy.

"Section 3. All laws, and parts of laws in conflict herewith are hereby repealed, and this act shall take effect and be in force from and after its passage."

The occasion for the passage of this act was doubtless the decision of this court in McBride v. AEtna Life Insurance Co., 126 Ark. 528, 191 S.W. 5, holding that in contracts of indemnity the insured must sustain an actual loss by reason of an enforced payment of a judgment liability by him before the obligation of the insurer matures. In that case an insurance corporation was the insurer, but the principle there announced applied to all contracts of insurance by whomsoever issued, whether a corporation, or an insurer which was not a corporation. Thereafter the Legislature enacted the above-quoted law, § 1 appearing to have been copied from the New York statute, but in that statute there was no section corresponding to § 2 of our act. It will be observed that either of the sections of act No. 196, standing alone, is a complete enactment, so that if, for any reason, one of the sections might be inoperative, the other would stand.

Section 1 relates to policies of insurance issued by any...