Cayard v. Robertson & Hobbs

• Decision Date: 22 October 1910
• Citation: 131 S.W. 864
• Parties: CAYARD et al. v. ROBERTSON & HOBBS et al.
• Court: Tennessee Supreme Court

131 S.W. 864

CAYARD et al. v. ROBERTSON & HOBBS et al.

Supreme Court of Tennessee.

October 22, 1910.

Appeal from Chancery Court, Knox County; Hu L. McClung, Chancellor.

Suit by Mrs. E. C. Cayard and others against Robertson & Hobbs and others. From a decree overruling a demurrer to the bill, defendants appeal. Reversed, and bill dismissed.

Lucky, Sanford & Fowler, for appellants. Pickle, Turner & Kennerly, for appellees.

BEARD, J.

The complainants, in part as owners and in part as lienors, are interested in a judgment for $5,000, rendered against Robertson & Hobbs for a fatal injury received by an employé while in their service, as a result of their actionable negligence. This judgment has not been paid, and, on account of the insolvency of the judgment debtors, cannot be collected out of them. At the time of the injury Robertson & Hobbs were carrying an employer's indemnity policy, issued to them by the New Amsterdam Casualty Company, which covered the injury that constituted the original cause of action, to the extent of $5,000. The present bill is filed against these parties and the Casualty Company, in which, after making all necessary allegations of fact, the complainants ask a decree against all the parties defendant, and especially against the Casualty Company, upon the policy referred to. While conceding by its demurrer the averments of fact made in the bill, the company denies, as a conclusion of law, all privity with the complainants, or any liability to them by reason of the issuance of the policy for the injury or death of the employé in question.

The introductory provision of the policy is as follows: "In consideration of one hundred and fifty dollars premium, * * * the New Amsterdam Casualty Company * * * does hereby agree to indemnify Robertson & Hobbs * * * for the term of twelve months * * * against loss from common-law or statutory liability for damages on account of bodily injuries, fatal or nonfatal, accidentally suffered by any employé or employés of the assured while on duty, * * * caused by the negligence of the assured, * * * and against the expense of defending any suit for such damages."

After limiting the liability of the company "from an accident resulting in injuries to or in the death of one person" to $5,000, under the head of "General Agreements" the following provisions or conditions were made:

"(1) The assured, upon the occurrence of an accident, shall give notice in writing within five days of the event causing the injury, with full particulars thereof, to the home office of the company at New York City, or its duly authorized agent. He shall give like notice, with full particulars, of any claim which may be made on account of such accident.

"(2) If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, immediate notice thereof shall be given to the company, and the company shall defend such suit in the name and on behalf of the assured, or settle the same.

"(3) The assured shall not settle any claim except at his own costs, nor incur any expense, nor interfere in any negotiations for settlement, or in any legal proceeding, without the consent of the company previously given in writing. * * * The assured, when requested by the company, shall aid in securing information and evidence, and in effecting settlements, and in case the company calls for the attendance of any employé, or employés, as witnesses at inquests and in suits, the assured will secure his or their attendance, making no charge for his or their loss of time.

* * * * *

"(7) No action shall lie against the company as respects any loss under this policy, unless it shall be brought by the assured himself, to reimburse him for loss actually sustained and paid by him in satisfaction of a final judgment after trial of the issue."

We had occasion in Finley v. Casualty Company, 113 Tenn. 592, 83 S. W. 2, to consider a policy in all material respects like the one at bar. We there recognized the distinction made by the authorities between a policy insuring an employer against liability and one agreeing to indemnify the assured "against loss from liability for damages," and it was held that the policy then in question was of the latter character, and, further, that the amount of the insurance provided for in the policy did not become available until the payment of the loss by the assured, and could not be impounded by an employé and appropriated by him to an unsatisfied judgment against his employer.

We are entirely satisfied with the conclusions announced in that opinion, and it is necessarily controlling here, unless the two cases can be materially distinguished. This, it is insisted by counsel for complainants, they have succeeded in doing. The facts relied upon as radically distinguishing this from the earlier case and relieving complainants from its authority are that upon the occurrence of the accident and notice thereof the New Amsterdam Casualty Company, conceding that it fell within the terms of the policy, "undertook and assumed exclusive control of negotiations for settlement and of the defense of the suit" instituted by the injured employé, and "conducted the same in the name of Robertson & Hobbs, who were excluded from all participation therein, except as agents and assistants of" the defendant company. It is upon these facts, as well as under the terms of the policy, the contention is made by the complainants that the insurance company became the real defendant in that case, and that thus the benefit of the policy and liability of the company "inured" to them, and entitles them to a decree in this cause.

It is true, in the Finley Case, that the indemnity company did not interfere in any way with the suit which the injured employé brought against the master, but, to the contrary, denied liability for the injury, yet pending the suit it did pay the employer $50 in compromise and settlement of all claim under the policy. After the judgment obtained therein by the injured employé, he sought by a bill in equity to hold the Casualty Company liable for the amount of his recovery on two grounds: First, that the policy taken out by the employer upon the injury sustained by him inured at once to his benefit; and, second, if mistaken in this, then he had a right to impound the alleged debt in...