Dewalt v. State Farm Mut. Automobile Ins. Co.

• Decision Date: 09 December 1938
• Docket Number: No. 11160.,11160.
• Citation: 99 F.2d 846
• Parties: DEWALT v. STATE FARM MUT. AUTOMOBILE INS. CO. OF BLOOMINGTON, ILL.
• Court: U.S. Court of Appeals — Eighth Circuit

99 F.2d 846 (1938)

DEWALT v. STATE FARM MUT. AUTOMOBILE INS. CO. OF BLOOMINGTON, ILL.

No. 11160.

Circuit Court of Appeals, Eighth Circuit.

November 23, 1938.

Rehearing Denied December 9, 1938.

David A. Thompson, of Richmond, Mo., for appellant.

Thomas E. Deacy, of Kansas City, Mo. (Henderson & Deacy, of Kansas City, Mo., on the brief), for appellee.

Before STONE, WOODROUGH, and VAN VALKENBURGH, Circuit Judges.

WOODROUGH, Circuit Judge.

The plaintiff in this action at law alleged that the defendant insurance company, in consideration of the payment by him of a certain premium, had issued its insurance policy to him whereby, among other things, it insured him against legal liability to an amount not exceeding ten thousand dollars for death suffered by a third person resulting from an accident by reason of his use of his automobile; that his use of his car within the insurance period accidentally caused the death of one Elmer Steva; that a claim resulted in favor of the widow of the deceased who sued the plaintiff thereon and recovered judgment against him for ten thousand dollars and costs; that the judgment had become final and remained unsatisfied of record except that the sum of four thousand dollars and no more had been paid by the insurance company in partial payment and satisfaction thereof; that the plaintiff remained liable on the remainder of the judgment, amounting to six thousand dollars interest and costs; that under the provisions of the policy, the defendant insurance company was bound to pay or satisfy the judgment, but has at all times denied any liability to the plaintiff and vexatiously refused to pay the outstanding balance of the judgment; that it thereby breached its contract and by reason of the breach of the terms of the policy, plaintiff has been damaged in said sum of six thousand dollars, interest and costs. Plaintiff demanded judgment for said sum and also for an additional amount of ten per cent and attorney's fees for wrongful and vexatious refusal to pay.

The insurance company demurred to the amended petition on the grounds that (1) no cause of action was stated; (2, 3) that the plaintiff was not the real party in interest or the proper party plaintiff; (4) that Sections 5898, 5899, Revised Statutes of Missouri, Mo.St.Ann. §§ 5898, 5899, pp. 4499, 4500,¹ preclude the plaintiff from maintaining the action; (5) and that no damage was shown. The demurrer was sustained. On the plaintiff's refusal to plead further, the action was dismissed and the plaintiff appeals.

The insurance company contends that the sections of the Missouri statute referred to in the demurrer operate to make the widow of the decedent the exclusive real party in interest to maintain an action against the company to recover under the policy on account of the judgment; that by virtue of those sections; she obtained a lien on the fund due under the terms of the policy and became subrogated to the rights of the assured, and because of her exclusive right the plaintiff's petition did not allege facts showing that he had suffered damage.

It appears that the sections of the statute have been considered by the Missouri courts in several cases, Taverno v. American Auto. Ins. Co., Mo.App., 112 S. W.2d 941; Lajoie v. Central West Casualty Co., 228 Mo.App. 701, 71 S.W.2d 803; Schott v. Continental Auto Ins. Underwriters, 326 Mo. 92, 31 S.W.2d 7, but we find no intimation in any of them to support the contention that the sections according rights to a person who has suffered injury within the purview of the insurance policy operate to divest the insured himself of his right to sue an insurance company at law for breach of the insurance contract made and entered into with him. Prior to the statute an injured person who had obtained judgment against a policy holder under such circumstances as are presented, could have had a writ of garnishment against the insurance company for the amount of the judgment within the limits of the policy. But the existence of such a right of garnishment would not destroy the insured's right to sue for breach of the policy.

The new statute gives the injured person who has obtained judgment against an insured the right to proceed directly against the insurance company by suit in equity to compel satisfaction of the judgment within the policy limits. But by the terms of the policy, the company agreed to insure the plaintiff against the liability of a judgment. When that liability accrued against the plaintiff here by the rendition of judgment against him, the duty devolved upon the company to perform its contract with plaintiff to insure him against his liability by securing discharge of the judgment. Miller v. Collins, 328 Mo. 313, 40 S.W.2d 1062, 1065; Brucker v. Georgia Casualty Co., 326 Mo. 856, 32 S.W.2d 1088. When it failed to do so, as alleged in this petition, it breached the contract it made with the plaintiff. The detriment of having a judgment hanging over him is what the plaintiff insured himself against. He suffers that detriment by reason of the company's alleged breach of its contract with...