O'Connor v. Hartford Acc. & Indem. Co.

• Decision Date: 30 November 1921
• Parties: O'CONNOR v. HARTFORD ACCIDENT & INDEMNITY CO.
• Court: Connecticut Supreme Court

115 A. 484

97 Conn. 8

O'CONNOR v. HARTFORD ACCIDENT & INDEMNITY CO.

Supreme Court of Errors of Connecticut.

November 30, 1921

Appeal from Superior Court, New London County; Isaac Wolfe and John W. Banks, Judges.

Action by Daniel F. O'Connor, administrator, against the Hartford Accident & Indemnity Company, the surety in a bond substituted for an attachment, alleging breach of condition by the principal. A demurrer to the reply was overruled, a demurrer to the rejoinder sustained, and judgment rendered for plaintiff on the pleadings for $2,413.55, and defendant appeals. Error, and judgment directed for defendant.

The plaintiff's intestate died July 25, 1919, because of injuries accidentally sustained by her on that day, and caused by the negligence of Harry Zavaritis in operating his automobile. On the same day, the plaintiff brought an action against Zavaritis to recover damages on this account, and therein placed an attachment on the property of Zavaritis consisting of money deposited by him in a savings bank. The actual value of Zavaritis' interest in this property, not exempt from attachment and execution, was at that time $2,339.52. Subsequently this attachment was dissolved upon the substitution of a bond in the sum of $2,500, taken to the plaintiff, in which Zavaritis was principal and this defendant was surety, and in which the condition was as follows:

" Now therefore, if the said Harry Zavoritas shall pay toward the satisfaction of any judgment which may be recovered against him in said action the sum of twenty-five hundred (2,500) dollars or in default of such payment shall pay the officer having the execution issued on such judgment on demand, the actual value of the interest not exempt from attachment and execution of the said Harry Zavoritas in said attached property above described at the time of said attachment, not exceeding the sum of twenty-five hundred (2,500) dollars, then this bond shall be void, but otherwise in full force and effect."

In March, 1919, the Travelers' Insurance Company had made and delivered to Zavaritis its policy of insurance wherein it agreed with him, called " the assured," to " indemnify the assured against loss by reason of the liability imposed upon him by law for damages on account of" and " injuries accidentally sustained" by any person " including death at any time resulting therefrom," " by reason of the ownership or maintenance" of his automobile, and by reason of accidents occurring between March 3, 1919, and March 3, 1920. The insurer agreed also " to defend in the name and on behalf of the assured" any suit brought on account of such injuries and to pay all costs and all interest accruing after entry of judgment. This contract was expressly subject to the conditions, among others, that the policy might be canceled at any time by either party upon written notice, and that the unearned premium should then be returned to the assured; and that-

"No action shall lie against the company to recover upon any claim or for any loss under" its provisions " unless brought after the amount of such claim or loss shall have been fixed and rendered certain, either by judgment against the assured *** or by agreement between the parties with the written consent of the company."

This policy appears in the record as Exhibit 1. Pursuant to the terms of the policy, the Travelers' Insurance Company undertook and conducted the defense in the action by the plaintiff against Zavaritis, which resulted in a judgment of $10,000 for the plaintiff. Upon appeal to the Supreme Court of Errors, this judgment was affirmed July 20, 1920.

On August 25, 1920, the Travelers' Insurance Company paid to the plaintiff $5,367.61, and took from him a release and satisfaction of judgment in the following form:

" In consideration of the sum of five thousand three hundred sixty-seven dollars and sixty-one cents (5,367.61) received to my full satisfaction of the Travelers' Insurance Company of Hartford, Connecticut, I do hereby fully release and discharge said company and the Travelers' Indemnity Company of Hartford, Connecticut, from any and all liability under or on account of the verdict and judgment for ten thousand (10,000) dollars and costs of suit rendered in and by the superior court for New London county in the case of Daniel F. O'Connor, administrator of the estate of Ellen M. O'Connor, late of Groton, Connecticut, deceased, v. Harry Zavoritas and from any and all claims and demands of every nature growing out of or arising from said suit, and the subject-matter thereof, and said judgment is hereby declared to be satisfied to the extent of the aforesaid sum of five thousand three hundred sixty-seven dollars and sixty-one cents (5,367.61)."

This release appears as Exhibit B. On September 21, 1920, the plaintiff brought this action against this defendant, the surety on the bond substituted for the attachment in the suit against Zavaritis, setting up this bond and the final judgment in that suit, and alleging that Zavaritis had not paid, and upon demand on execution had refused to pay, $2,500 toward the satisfaction of that judgment. In its answer, this defendant set up that the Travelers' Insurance Company had paid to the plaintiff, " for and on behalf of said Zavaritis, the sum of $5,367.61, toward the satisfaction of said judgment." This allegation the plaintiff denied in his reply, and, referring to the policy of insurance, set up the claim that the insurance company " discharged its liability thereunder upon the judgment mentioned in the complaint by paying to the plaintiff" the sum named, and referring to the satisfaction of judgment Exhibit B quoted above. To this reply the defendant demurred because it appeared therefrom and from Exhibit B that the payment was made for and on behalf of Zavaritis toward the satisfaction of the judgment. This demurrer was overruled.

The defendant then filed a rejoinder in which it repeated its assertions concerning the payment made to the plaintiff by the Travelers' Insurance Company, and further alleged that the policy of insurance was made before July 1, 1919, and the Travelers' Insurance Company was not liable thereunder to the plaintiff on account of the judgment in his suit against Zavaritis, and not liable at all, until the claim or loss had been fixed or rendered certain by judgment or agreement between the parties, according to the terms of the policy. The plaintiff demurred to this rejoinder because it had been disposed of in part by the demurrer to the reply, and because it was immaterial that the policy was issued before July 1, 1919, inasmuch as it was in force the day when the plaintiff's intestate died. This demurrer was sustained.

Thereupon the defendant amended its rejoinder by denying the allegations concerning the payment made by the Travelers' Insurance Company and the discharge and satisfaction expressed in Exhibit B. It was then stipulated that the plaintiff claimed that Exhibit B proved his material allegations, and that the defendant claimed that Exhibit 1 proved its; and no other evidence was offered. Thereupon the court rendered judgment for the plaintiff to recover from the defendant a sum equal to the amount of Zavaritis' deposit in the savings bank at the time of the attachment in the suit against him, with interest.

Arthur M. Brown and Charles V. James, both of Norwich, for appellant.

Arthur T. Keefe, of New London, for appellee.

BURPEE, J.

The defendant claimed that the payment made by the Travelers' Insurance Company to the plaintiff, in the circumstances surrounding the transaction, discharged the defendant from liability as surety in the bond substituted for the attachment in the plaintiff's suit against Zavaritis, which is the basis of this action, and the condition of which is quoted in the foregoing statement of facts. This claim was overruled by the court below in its decisions upon the demurrer to the reply and to the rejoinder. In both memoranda of decision, the court applies the provisions of chapter 331 of the Public Acts of 1919 to the facts and conditions disclosed by the pleadings, and its conclusions are controlled by this statute. It declares that the payment made by the Travelers' Insurance Company was made " under and by virtue of the statute in question," that " this fund, by force of the statute and not by any voluntary act on the part of Zavaritis, became the property of the plaintiff, to be applied toward the satisfaction of the judgment obtained by him," and that therefore this payment " did not fulfill the terms of the bond given by the defendant company." We think this conclusion was erroneous.

It appears that the contract of insurance went into effect March 3, 1919. Chapter 331 of the Public Acts of 1919 took effect July 1, 1919. Public Acts of 1919, c. 225. Hence, if the act must be construed as applicable to this contract, the question arises whether it falls under the prohibition of section 10, art. 1, of the Constitution of the United States, because it impairs the obligation of a pre-existing contract, and is invalid to that extent. To impair the obligation of a contract is to weaken it, or lessen its value, or make it worse in any respect or in any degree. " The obligation of a contract includes everything within its obligatory scope." Edwards v Kearzey, 96 U.S. 595, 600 (24 L.Ed. 793). Any law which changes the intention and legal effect of the original parties, giving to one a greater and to the other a less interest or benefit in the...