Draper v. Great Am. Ins. Co.

• Decision Date: 21 September 1970
• Citation: 458 S.W.2d 428,224 Tenn. 552,2 Pack 552
• Parties: , 224 Tenn. 552 Paul DRAPER v. GREAT AMERICAN INSURANCE COMPANY.
• Court: Tennessee Supreme Court

Page 428

458 S.W.2d 428

2 Pack 552, 224 Tenn. 552

Paul DRAPER v. GREAT AMERICAN INSURANCE COMPANY.

Supreme Court of Tennessee.

Sept. 21, 1970.

Joe M. Haynes and Luther E. Cantrell, Jr., Nashville, for complainant- appellant.

Goodpasture, Carpenter, Woods & Courtney, Nashville, for defendant-appellee.

OPINION

McCANLESS, Justice.

This is an action upon a policy of garage liability insurance commenced in the Chancery Court of Davidson County on April 18, 1963, by Paul Draper, appellant, against Great American Insurance Company, appellee, to recover interest upon a judgment of $85,000.00 rendered by the Circuit Court of Davidson County on June 24, 1957. The Chancellor heard the evidence upon the entire record and entered a decree dismissing appellant's bill. A subsequent decree overruled a motion for a new trial and provided for an appeal which, thereafter, was duly perfected.

The Court of Appeals reversed the Chancellor's decree and entered judgment in favor of appellant, allowing recovery in the amount of $8,275.00. Both appellant and appellee filed petitions for writ of certiorari in this Court, and both petitions were granted.

A preliminary question is presented by appellee's first assignment of error. Appellee contends the bill of exceptions should be struck from the record because the bill of exceptions contains exhibits which were not separately identified by the trial judge, although the exhibits were introduced into evidence at the trial with depositions, and the depositions were properly authenticated by the trial judge and the depositions contain references to the exhibits. We overrule this assignment of error for we do not consider the exhibits to be material for a determination of the issues presented by this appeal. Van Dyke v. Inman, 50 Tenn.App. 493, 362 S.W.2d 795.

The main question presented by this appeal is raised by appellant's assignment of errors Nos. 1 and 2, and appellee's assignment of error No. 2. The question is whether or not under the provisions of a policy of insurance issued by appellee's predecessor in interest to appellee's insured, E. B. Sadler, appellee has agreed to pay all interest accruing upon the total amount of an $85,000.00 judgment, where appellee's liability on the judgment itself is limited to $10,000.00, the face amount of the policy.

Appellant commenced the present action against appellee on April 18, 1963, in the Davidson County Chancery Court, Part II, seeking the recovery of accrued interest on $75,000.00 (which is the difference between the total amount of the $85,000.00 judgment less $10,000.00, the policy limits previously paid with interest) at the rate of six per cent per annum for a period of years beginning on October 5, 1957 (date motion for new trial overruled), and ending at the present date. At the conclusion of the trial, the Chancellor entered a decree dismissing appellant's cause of action and held appellee has fulfilled its obligations under the terms of the policy by paying the policy limits of its policy together with interest thereon to date of payment.

The Court of Appeals reversed the Chancellor and determined that under the provision of the insurance policy, appellee was liable for all interest accruing upon the total amount of the judgment computed at the rate of six per cent per annum for a period of years beginning on October 5, 1957 (date motion for a new trial was overruled), and ending on August 7, 1959 (date of payment to the Clerk of the Supreme Court of $10,000.00, the face amount of the policy, plus $1,269.71 interest thereon, plus $285.95 court costs). Since appellee had previously paid the face amount of the policy of $10,000.00 and interest thereon, the Court of Appeals computed interest upon $75,000.00 and determined appellee's liability to be $8,275.00.

Appellant contends the Court of Appeals was correct in determining appellee is liable for all interest accruing upon the total amount of the judgment, but, nevertheless, contends the Court of Appeals erred in determining the ending date of the interest period to be August 7, 1959, the date of payment of $10,000.00 plus interest thereon to the Clerk of the Supreme Court. Appellant contends the interest period is still running, and that the interest period will continue to run until such time when appellee has fulfilled the total obligations of the policy. For this proposition appellant cites River Valley Cartage Company v. Hawkeye-Security Ins. Co., 17 Ill.2d 242, 161 N.E.2d 101.

Further, appellant contends, assuming that the Court of Appeals correctly determined the ending date of the interest period to be August 7, 1959, appellee is liable for accrued interest computed on $8,275.00 at the rate of six per cent per annum for a period beginning on August 7, 1959, and ending on such date when appellee makes a full and complete payment of the principal of the judgment and interest thereon.

Appellee contends that the Chancellor was correct in determining appellee has fulfilled its obligations under the terms of the policy in paying the policy limits of its policy together with interest thereon to date of payment, and that the Couret of Appeals committed error in overruling the Chancellor's decree.

The pertinent language of the policy at issue is contained in the last paragraph, wherein the company agrees to:

'Pay all expenses incurred by the company, all costs taxed against the insured in any such suit, and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon; * * *'

The law in Tennessee is well settled that where a policy of liability insurance provides, 'The Company at its own expense will settle or defend said suit, whether groundless or not; the moneys expended in said defense shall not be included in the limitation of liability fixed under this policy', the insurer is liable for interest accruing during an appeal on so much of a judgment as the insurer was liable for. Casey-Hedges Co. v. Southwestern Surety Co., 139 Tenn. 63, 201 S.W. 137.

The opinion of the Court in Casey-Hedges Co. v. Southwestern Surety Co., supra, was delivered by Mr. Justice Green, who said:

'It is said, however, that the whole matter rests in the domain of contract, and that it is competent for the parties to agree that the liability of the insurer shall be so much and no more.

'Is the interest on the part of a judgment for which the insurer is ultimately liable, accruing during the prosecution of an appeal, taken at the instance of the insurer, a part of the expense of the litigation or of the defense?

'We think it is. The interest on a judgment during such period is fixed by law. It applies to every case and is taxed on every judgment which is not reversed in the appellate courts. It is incident to every appeal and part of the expense of every unsuccessful appeal. The prosecution of an appeal or a writ of error is a part of the defense, and expense so incurred is an expense of the defense. We can see no reason for excluding such an item from the obligation of the policy to reimburse the assured for 'moneys expended in said defense."

The decision of the Court in Casey-Hedges is sound but distinguishable from the case at bar and is not authority for a determination of the issues now presented. In Casey-Hedges, the Court was asked to construe the phrase 'moneys expended in said defense', so as to include the word 'interest' which was not specifically mentioned in the policy provisions. After determining that the phrase 'moneys expended in said defense' included 'interest', the Court then computed insurer's liability upon the total amount of the judgment but calculated the insurer's liability for interest according to a ratio obtained by dividing the face amount of the policy, not exceeding the total judgment, by the total judgment.

In the language of the policy of insurance in this case, there is a phrase which specifically provides that the appellee agrees to pay 'all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon; * * *' The words 'all interest accruing' are plain and unambiguous, and the Court cannot construe the words to make a new and different contract for the parties. United States Stove Corp., for the Use and Benefit of Henderson v. Aetna Life Ins. Co., 169 Tenn. 264, 84 S.W.2d 582; Lewellyn v. State Farm Mut. Auto. Ins. Co., Tenn., 438 S.W.2d 741.

By express language contained in the policy of insurance, appellant has agreed to pay 'all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the...