Elliott v. Belt Auto. Ass'n

• Decision Date: 09 June 1924
• Citation: 87 Fla. 545,100 So. 797
• Parties: ELLIOTT v. BELT AUTOMOBILE ASS'N et al.
• Court: Florida Supreme Court

100 So. 797

87 Fla. 545

ELLIOTT v. BELT AUTOMOBILE ASS'N et al.

Florida Supreme Court

June 9, 1924

Error to Circuit Court, Hillsborough County; F. M. Robles, Judge.

Action by M. Leo Elliott against the Belt Automobile Association and others. Judgment for defendants, and plaintiff brings error.

Reversed.

Ellis J., dissenting.

Syllabus by the Court

SYLLABUS

Interpretation giving greater indemnity will prevail. Where two interpretations equally fair may be given, that which gives the greater indemnity will prevail.

Effect stated of provision in liability insurance policy as to necessity of actual payment by insured before recovery thereon. A provision in a policy that no action shall lie against the company, unless it shall be brought by the assured for loss or expense actually sustained and paid in money by him after trial of the issue, applies only in case the company denies liability and refuses to defend.

COUNSEL

[ELLIOTT V BELT AUTO ASS'N 100 So. 797(1924)] McKay & Withers, of Tampa, for plaintiff in error.

Shackleford & Shackleford, of Tampa, for defendants in error.

OPINION

BROWNE, J.

This is an action on an insurance policy issued by M. Leo Elliott plaintiff in error, by the Belt Automobile Indemnity Association.

The policy, as read by the ordinary person, would seem, among other things, to insure the owner of an automobile against liability for injuries to persons or property accidentally inflicted by the owner, or by any member of his immediate family over 16 years of age. It is because the insurance company does not so regard its contract that the case is here.

Under the title 'Liability' there is a provision----

'against actual loss sustained by subscriber on account of legal liability imposed upon him on account of bodily injuries (including death resulting therefrom) accidentally inflicted upon any person, while this contract is in force, through the ownership, maintenance or use of said automobile. The liability of this association is limited to not more than $5,000 for injury to, or death of, any one person, and subject to the same limit for each person, limited to not more than $10,000 for any one accident involving injury to or death of more than one person.'

In the rider attached to and made a part of the policy are these clauses:

'Defense. 3. The association will also defend in the name and on behalf of the subscriber or other person or persons covered any suits, even if groundless, brought against the subscriber or other person or persons covered to recover damages on account of such happenings as are provided for by the terms of the two preceding paragraphs, where the loss sustained by subscriber as a result of the judgment, if rendered against the subscriber or other person or persons, would be covered by this policy.

'Costs. 4. In addition to the coverage granted above, the association will also pay the cost and expenses attendant upon the investigation, adjustment, and settlement of claims, and will reimburse subscriber or other person or persons covered for all costs taxed and paid by subscriber or other person or persons covered, in any legal proceedings defended by this association, and all interest accruing after entry of judgment upon such part thereof as shall not be in excess of the association's liability as above limited, where the suit is appealed by or with the consent of the association.'

On February 21st, during the life of the policy, the plaintiff's wife, while driving the automobile, inflicted personal injuries on O. D. Knowles, who brought an action for damages against the plaintiff, and recovered a judgment for $3,500.

The insurance company, in accordance with its contract, defended the action, but did not take writ of error, and the judgment stands of record unpaid.

Upon the refusal of the insurance company to pay the judgment, Elliott brought suit against it, in which he alleges his inability to pay the judgment without sacrificing his property at forced sale, and that he is embarrassed in transacting his ordinary business and dealing with his property because of the existence of the unsatisfied judgment.

The defendants demurred to the declaration upon the grounds that it does not allege any actual loss by the plaintiff; the contention being that until the judgment is paid by the plaintiff the defendants are not liable upon the contract of indemnity.

The demurrer was sustained, and the plaintiff obtained a writ of error, and brought the case to this court for review.

Notwithstanding the peculiar language used in the rider under the title 'Liability,' we cannot see how the plaintiff below could have alleged that he had sustained any actual loss, if the policy is good for anything, unless the unpaid judgment against him constitutes a loss. What other loss could the insurer have sustained? If the answer be 'that he must have paid the judgment,' that would not be a loss, if the policy is with a responsible company. Paying the judgment would not be a loss, but a mere outlay of money that would be promptly repaid to him by the insurance company. At least the insurance company says it would do so.

Money paid to satisfy a judgment is not a loss if a responsible person is obligated to reimburse the one against whom the judgment is held and who pays it.

If we adopt the contention of the insurance company that, upon the payment of the judgment by the insured, the company then becomes liable to indemnify him, and will do so, the insured could sustain no loss.

Handing money to a judgment plaintiff with one hand, and receiving the same amount of money from the insurance company in the other, is certainly not a loss. On the other hand, an unpaid, valid judgment may be very substantial loss to a person against whom it stands. It works a loss of credit, and stands over him with strong hand extended to take from him his property as fast as he acquires any, until the judgment is satisfied.

We do not, however, rest our decision upon the proposition that a judgment against a person is a loss, but we hold that the words 'actual loss sustained' as used in the policy and taken in connection with the entire policy are meaningless, and serve only to make the policy uncertain and ambiguous.

This part of the policy must therefore be considered as insuring the owner against 'legal liability imposed upon him on account of bodily injuries (including death resulting therefrom) accidentally inflicted upon any person, while this contract is in force.'

Clause P of the policy, under the title 'Suit on Policy,' provides that----

'No suit or action on this contract for the recovery of any loss or expense covered by this contract arising or resulting from claims upon the subscriber for damages, either for personal injuries or property damage, shall be sustainable in any court of law or equity * * * unless such action shall be brought by the subscriber for loss or expense actually sustained and paid in money by the subscriber after trial of the issue.'

This seeks to defer the insured's right of recovery until he has paid in full the judgment obtained against him.

We cannot reconcile the provisions of the rider under the title 'Liability,' with clause P, under the title 'Suit on Policy.'

If we accept the first and exclude the second, the liability of the insurance company to pay the judgment is clear; if we accept the second and exclude the first there seems to be no liability on the part of the insurance company until the insured pays the judgment in full; and if we consider them together, as we must do in construing the contract, the policy is ambiguous and uncertain.

The rule is well established in this jurisdiction that, where 'two interpretations equally fair may be given, that which gives the greater indemnity will prevail.' L'Engle v. Scottish Union & National Fire Ins. Co., 48 Fla. 82, 37 So. 462, 67 L. R. A. 581, 111 Am. St. Rep. 70, 5 Ann. Cas. 748; Caledonian Ins. Co. v. Smith, 65 Fla. 429, 62 So. 595, 47 L. R. A. (N. S.) 619; Queen Ins. Co. v. Patterson Drug Co., 73 Fla. 665, 74 So. 807, L. R. A. 1917D, 1091; National Surety Co. v. Williams, 74 Fla. 446, 77 So. 212; Massachusetts Bonding & Insurance Co. v. Gramling, 75 Fla. 409, 78 So. 337.

Passing from this phase of the case to the next, we find that clauses similar to these have received consideration in other jurisdictions, and there is conflict in the authorities.

Some, that seem to us to be founded on the soundest reasoning, hold that, where the defendant insurance association undertakes to defend the action, and does so, its liability to pay any valid judgment obtained against the insured is established, and, if it fails or refuses to pay the judgment, the insured may recover in an action on the policy.

The doctrine is thus stated in Patterson v. Adan, 119 Minn. 308, 138 N.W. 281, 48 L. R. A. (N. S.) 184:

'A provision in the policy that no action shall lie against the company, 'unless it shall be brought by the assured for loss or expense actually sustained and paid in money by him after trial of the issue,' applies only in case the company denies liability and refuses to defend.'

The cases that support this doctrine are those of Sanders v. Frankfort Marine, Accident & Plate Glass Ins. Co., 72 N.H. 485, 57 A. 655. 101 Am. St. Rep. 688; Standard Printing Company v. Fidelity & Deposit Company of Maryland, 138 Minn. 304, 164 N.W. 1022; Reilly v. Linden, 151 Minn. 1, 186 N.W. 121; Davies v. Maryland Casualty Co., 89 Wash. 571, 154 P. 1116, 155 P. 1035, L. R. A. 1916D, 395, 398; American Indemnity Co. v. Fellbaum (Tex. Civ. App.) 225 S.W. 873;[ELLIOTT V BELT AUTO ASS'N 100 So. 797(1924)] Elliott v. AEtna Life Ins. Co., 100 Neb. 833, 161 N.W. 579, L. R. A. 1917C, 1061.

...