Clougherty v. Royal Ins. Co.

• Decision Date: 10 August 1967
• Docket Number: 71,Nos. 70,s. 70
• Citation: 102 R.I. 636,232 A.2d 610
• Parties: Joseph CLOUGHERTY v. ROYAL INSURANCE COMPANY, Ltd. et al. Sheila CLOUGHERTY v. ROYAL INSURANCE COMPANY, Ltd. et al. Appeals
• Court: Rhode Island Supreme Court

Page 610

232 A.2d 610

102 R.I. 636

Joseph CLOUGHERTY v. ROYAL INSURANCE COMPANY, Ltd. et al.

Sheila CLOUGHERTY v. ROYAL INSURANCE COMPANY, Ltd. et al.

Appeals Nos. 70, 71.

Supreme Court of Rhode Island.

Aug. 10, 1967.

[102 R.I. 659] Higgins, Cavanagh & Cooney, Kenneth P. Borden, Providence, for plaintiffs.

Francis V. Reynolds, Bernard W. Boyer, Providence, for defendant.

OPINION

PAOLINO, Justice.

These actions of case were brought to recover damages for personal injuries suffered by Sheila Clougherty, a minor, and consequential damages incurred by her father, Joseph, which resulted from a collision with a motor vehicle owned by defendant Royal Indemnity Company's insured, Reuben and Edgar Billowitz. The cases are before us on the plaintiffs' appeals from judgments entered pursuant to a decision rendered by a justice of the superior court in the sum of $200 for Joseph and $800 for his daughter against Royal Indemnity Co., a New York corporation licensed to do business in Rhode Island, and hereinafter sometimes referred to as defendant.

The plaintiffs brought these actions under G.L.1956, § 9-2-1 against Royal Insurance Co., Ltd. and Royal Indemnity Co. because they were in doubt as to which company insured the automobile which allegedly negligently collided with the automobile in which plaintiff Sheila was a passenger. The Royal Insurance Co., Ltd. denied it had issued any such policy and a judgment was entered in its favor. However, this doubt has been resolved since Royal Indemnity Co. admits that it issued a liability policy covering the motor vehicle in question. We shall treat the appeals accordingly.

This controversy results from an accident which occurred on April 27, 1963 in the city of East Providence. On that date Sheila was injured when the automobile in which she was a passenger collided with a motor vehicle operated by Edgar Billowitz and owned by Reuben Billowitz, both of Snyder, New York. The Billowitz car was insured by defendant, the policy coverage being limited to $20,000.

Sheila and her father commenced separate actions at law in the superior court in Providence against Reuben and Edgar Billowitz. These actions were tried before a jury and resulted in verdicts for the plaintiffs on June 30, 1965 in the following amounts: Sheila Clougherty, p.a. vs. Reuben Billowitz, C.A. No. 172423, $14,677.80; Joseph Clougherty vs. Reuben Billowitz, C.A. No. 172424, $3,318.60; Sheila Clougherty, p.a. vs. Edgar Billowitz, C.A. No. 173915, $14,417.80; and Joseph Clougherty vs. Edgar Billowitz, C.A. 173916, $3,260.01. On July 16, 1965, judgments were entered on the verdicts as of June 30, 1965.

On July 29, 1965 plaintiffs notified the insured's attorney of record and defendant insurer of the entry of the judgments. The judgments having remained wholly unsatisfied although more than thirty days had expired from the time of the service of such notice, plaintiffs instituted the instant actions on September 20, 1965 to recover a sum not exceeding the amounts of said judgments or the amount of the applicable limit of coverage under the policy of insurance, whichever may be the lesser, pursuant to New York law. ¹ The defendant Royal Indemnity Co., having paid.$19,000 of the $20,000 coverage, made an offer of judgment to plaintiffs on March 4, 1966 in the amount of $1,000 in accordance with rule 68(a) of the rules of civil procedure of the superior court. This offer was refused. The parties agree that New York law governs.

The defendant filed a plea of the general issue together with notice that it intended to offer evidence of the applicable New York law. It appears from the sworn answers of defendants to plaintiffs' interrogatories that the following claims and cases against the Billowitzs arose out of the same accident and resulted in the following dispositions and payments on the following dates:

                 1.   Susan T. and Russell Gibaud  $ 6,300
                      Judgment, February 9, 1965
                 2.   Frank Petrone                $ 2,700
                      Settlement, June 17, 1965
                 3.   Judith and Nathan Reich      $10,000
                      Judgment, June 16, 1965
                      Paid, November 11, 1965
                

In the Reich cases a jury in the Supreme Court of New York rendered a verdict on June 9, 1965 and a written judgment was filed on June 16, 1965. It is not disputed that under the New York statute there is an appeal period of thirty days from the entry of the judgment and that the appeal period would have expired on July 16, 1965.

The instant cases were heard before a justice of the superior court on the pleadings, interrogatories, an agreed statement of facts, and a stipulation between the parties. The plaintiffs did not challenge the validity of the payment of $9,000 out of the coverage of $20,000 to the Gibauds and Petrone. The only question was whether defendant properly paid $10,000 to the Reichs on the basis of the judgments entered in New York. The plaintiffs contended in the superior court, as they do now, that they had a right to share pro rata with the Reichs in the balance of $11,000 of the policy proceeds. They base this contention on their argument that the judgments in their cases and those in the Reich cases ripened into final judgments on the same day, July 16, 1965. It appears that the Reich judgments ² were entered in New York on June 16, 1965, but defendant paid the Reichs $10,000 on November 11, 1965.

After the hearing the trial justice entered a written decision. After noting that the parties agreed that New York law applied, he held that the judgments in the plaintiffs' cases were entered in Rhode Island on July 16, 1965 and at that time, and not before, plaintiffs had a right to sue defendant and defendant had a duty to pay. He also held that the Reich judgments were final on June 16, 1965, with execution subject to a stay order if an appeal was taken before July 16, 1965; that since no appeal was taken so that no stay order was ever entered, the Reichs had a cause of action against defendant on June 16, 1965 upon which execution could issue; that defendant was required by the terms of its policy to pay when judgment was entered against the insured on June 16, 1965; and that the payment of $10,000 to the Reichs was a valid payment and a discharge pro tanto of its liability under the policy. Accordingly, he decided that plaintiffs could recover their proportionate share of $1,000 from defendant Royal Indemnity Co., plus costs; and he also entered a decision for Royal Insurance Co., Ltd. for its costs. Thereafter judgments based thereon were duly entered.

It is undisputed that under the Rhode Island statutes in force at that time, G.L.1956, § 9-21-1 the Clougherty judgments became final on July 16, 1965 because no appeal had been taken therefrom by defendant. Neither is there any dispute that under New York law, priority among automobile tort claimants is determined by the date of the judgment and that the 'first in time, first in right' principle applies whether the priority is by way of judgment or by way of settlement. See David v. Bauman, 24 Misc.2d 67, 68, 196 N.Y.S.2d 746, 748, where the court said:

'Case law going back to 1935 in New York and even earlier elsewhere makes clear that the right granted by Insurance Law, § 167(7) does not alter the 'first in time, first in right' principle whether the priority is by way of judgment or by way of settlement.'

The narrow question raised by these appeals is whether the Reich judgments became final on June 16, 1965, the day they were filed, or on July 16, 1965, the date on which the time for appeal expired, no appeal having been taken nor stay of execution requested.

The plaintiffs contend that under the policy provisions ³ defendant was under no duty to pay claimants until final judgment; that under the New York rule, priority by date of judgment means priority by date of final judgment; that under the New York statute ⁴ judgments do not become final until the time to appeal therefrom has expired; and that on this record the Reich judgments did not become final until July 16, 1965, the date on which the time to appeal had expired.

The plaintiffs further argue that, applying this law, the New York courts, if confronted with the question, would hold that if two judgments are equal in time they are equal in right and would share pro rata. They argue that when defendant paid the sum of $10,000 to the Reichs on November 11, 1965, it unlawfully gave them priority over plaintiffs whose judgments had equal status.

The defendant argues that the Reich judgments were entered before the Clougherty judgments and therefore the Reichs were entitled to prior payment. In our opinion defendant's contention has merit. We reach this conclusion based on the language of the policy and the law of New York.

The policy states that no action shall lie against the company '* * * until the amount of the insured's obligation to pay shall have been finally determined * * * by judgment against the insured after actual trial * * *.' In order to determine the result in this case, it is necessary to ascertain when the amount of the insured's obligation is '* * * finally determined * * * by judgment * * *.'

This phrase has been subject to many various constructions. In Tucker v. State Automobile Mut. Ins. Co., 280 Ky. 212, 132 S.W.2d 935, 125 A.L.R. 751, appellant Tucker successfully procured a judgment against Saxton in an action arising out of a collision. Saxton thereupon appealed to the Court of Appeals but did not supersede the entire amount of the judgment. Execution was returned with the notation 'No property found,' and appellant filed a petition in equity in the nature of a bill of discovery. In this action it was discovered that Saxton carried an insurance policy with appellee. Thereupon, appellant amended his petition by setting up the policy and making appellee a party defendant and alleging his right to proceed against appellee. The appellee filed a plea in abatement alleging that the...