Clark v. Exchange Ins. Ass'n

• Decision Date: 20 February 1964
• Docket Number: 6 Div. 922
• Citation: Clark v. Exchange Ins. Ass'n, 161 So.2d 817, 276 Ala. 334 (Ala. 1964)
• Parties: Walter P. CLARK v. EXCHANGE INSURANCE ASSOCIATION et al.
• Court: Alabama Supreme Court

Page 817

161 So.2d 817

276 Ala. 334

Walter P. CLARK v. EXCHANGE INSURANCE ASSOCIATION et al.

6 Div. 922.

Supreme Court of Alabama.

Feb. 20, 1964.

Rehearing Denied March 26, 1964.

Geo. S. Brown, Bowers, Dixon, Dunn & McDowell, Birmingham, for appellant.

London, Yancey, Clark & Allen, and Thos. R. Elliott, Jr., Birmingham, for Exchange Insurance Ass'n.

Rives, Peterson, Pettus & Conway, Birmingham, for Employers Fire Ins. Co.

HARWOOD, Justice.

Counsel for the respective litigants agree and we concur, that the sole question raised by this appeal is whether an insured is entitled to recover attorney fees incurred in a declaratory judgment proceeding brought by the insurer in an effort to relieve itself of liability under an automobile liability insurance policy issued by the insurer, the issues in such proceeding having been determined adversely to the contentions of the insurer.

The lower court denied the respondent's (insured's) claim for reimbursement for such fee in the declaratory judgment action, hence this appeal.

Counsel for appellant (insured) argue that such fee should have been allowed under two theories:

(1) The contractual provision in the policies whereby the insurer agreed to pay expenses incurred by the insured at the request of the insurer, and,

(2) The general authority of the court to grant further or supplemental relief under the provisions of our declaratory judgment statute, particularly Section 163, Title 7, Code of Alabama 1940.

The policy provisions are indentical in both policies, and set forth that the insurer will:

'Reimburse the insured for all reasonable expenses * * * incurred at the Company's request.'

Counsel for appellant argue that the insured being compelled to appear and oppose the position of the insurer in the declaratory judgment proceedings, was in effect not only invited to incur attorney fees, but was compelled to do so by the act of the insurer in initiating such proceedings.

In support of their position, counsel for appellant cite Standard Accident Insurance Co. of Detroit v. Hull, (D.C.Cal.1950), 91 F.Supp. 65. The federal district court held, where the contractual provision in the policy was the same as in the policies now under consideration, that the fees of the attorneys for the insured incurred in a declaratory action constituted expenses incurred at the Company's request, the complainant not merely requesting, but requiring the insured to appear and set up their claim in the declaratory judgment instituted by the insurer.

A question similar in all respects to the one now being considered, and under a similar provision in the insurance contract involved, was before the Fifth Circuit Court of Appeals in Milwaukee Mechanics Ins. Co. v. Davis, 198 F.2d 441 (1952). The court therein stated:

'The decisions * * * support the view * * * that ordinarily an insurer is not liable for attorney's fees and expenses incurred by an insured in a declaratory judgment action instituted by the insurer to determine its liability under the policy.'

The court cites in support of the above statement, Standard Surety and Casualty Co. of New York v. Perrin (La.App.), 19 So.2d 783; Carter v. Virginia Surety Co., 187 Tenn. 595, 216 S.W.2d 324; Maryland Casualty Co. v. Dalton Coal and Material Co. (8CCA), 184 F.2d 181. There might also be added to the above citations, Maryland Casualty Co. v. Sammons, 63 Ga.App. 323, 11 S.E.2d 89. See also O'Morrow v. Borad (Cal.App.), 161 P.2d 28; Fazzino v. Insurance Co. of North America, 152 Cal.App.2d 304, 313 P.2d 178.

In commenting on the conclusion of the District Court in the Standard Accident Insurance Co., case, supra, the court observed in Milwaukee Mechanics Ins. Co., supra:

'No authority is cited in support of the court's ruling, and the question remains whether the reasoning of the district court in that case is sound.'

And further:

'To say that a plaintiff in a declaratory judgment action, or for that matter in any law suit, 'requests' the defendant to employ attorneys to contest the action, is a mere play upon words and is contrary to the real substance of the transaction. Due process would, of course, accord the insured the privilege of resisting the company's claim of non-liability and to that end the insured would have the right to employ attorneys, but it would be contrary to every interest of the company to say that the company 'requested' such action. We do not think that either the insurance company or the insured could have had the intention that the insurance company could defend a suit on its policy or could file a declaratory judgment action only at the risk of being liable for attorney's fees incurred by the insured. In our opinion, the attorney's fees incurred by the insured in the declaratory judgment action were not recoverable from the insurance company.'

In the comparatively recent case of Inland Mutual Insurance Co. v. Hightower, 274 Ala. 52, 145 So.2d 422, in denying an insured's right to attorney's fees in a declaratory judgment action instituted by the insured to establish liability under a policy after denial of liability by the insurer, and in which the insured prevailed, the court wrote:

'We have accepted the principle in this State that, in the absence of contract, statute, or recognized ground of equity, there is no right to have an attorney's fee paid by the opposing party. Low v. Low, 255 Ala. 536, 540, 52 So.2d...