Employers Cas. Co. v. Transport Ins. Co.
Decision Date | 30 July 1969 |
Docket Number | No. B--1302,B--1302 |
Citation | 444 S.W.2d 606 |
Parties | EMPLOYERS CASUALTY COMPANY, Petitioner, v. TRANSPORT INSURANCE COMPANY, Respondent. |
Court | Texas Supreme Court |
Burford, Ryburn & Ford, James H. Holmes, III, Dallas, Graves, Dougherty, Gee, Hearon, Moody & Garwood, J. Chrys Dougherty and Ben F. Vaughan, III, Austion, for petitioner.
Jackson, Walker, Winstead, Cantwell & Miller, D. L. Case and Jack Pew, Jr., Dallas, for respondent.
Petitioner, Employers Casualty Company, and Respondent, transport Insurance Company, were the respective public liability insurance carriers of Prior Products, Inc., and Hunsaker Truck Lease, Inc. Prior Products leased a truck from Hunsaker that was involved in a collision with an automobile being occupied by Peter and Hazel Siegel who suffered personal injuries. The Siegels sued Prior Products. Transport denied that Prior Products was an insured under the policy issued to Hunsaker and refused a tender to defend the suit. Employers assumed defense of the suit and negotiated a settlement under which it paid the Siegels, on behalf of Prior Products, the sum of $6,750.00, and paid a fee to its own attorney in the sum of $607.50. It is not questioned that the settlement was fair and reasonable. Employers' liability limit was $300,000; that of Transport was $500,000. Each policy had this provision, commonly called a 'pro rata' or 'other insurance' clause:
Employers sued Transport for contribution and, in response to its motion for summary judgment in the trial court, was awarded a judgment for $4,598.44, or five-eighths of the total sum of the settlement with the Siegels and its attorney's fee. Transport appealed from the summary judgment, and the court of civil appeals asserted the controlling force of Traders & General Ins. Co. v. Hicks Rubber Co., 140 Tex. 586, 169 S.W.2d 142 (1943), under a single point of error reading as follows:
'The trial court erred in granting Employers' Motion for Summary Judgment against Transport because, under the policies involved, Employers did not have any right to contribution from Transport and could not recover any excess payment from Transport.'
On the authority of Hicks, the court of civil appeals reversed the judgment of the trial court and remanded the cause for trial. 434 S.W.2d 704. We affirm.
There is a difference in the facts of Hicks and this case in that the claim for contribution of which the court was speaking in Hicks was only for a pro rata part of expenses incurred in defending a suit against the insured, whereas the claim here is for a pro rata part of the sums paid in settlement of the suit against the insured and as expenses in defending the suit. This difference in the facts is not, however, material to our decision, and we agree with the holding of the court of civil appeals that, in its present posture, this case is controlled by our decision in Hicks.
The rule relied upon by this court in deciding Hicks was taken from 29 AM.JUR. 998, Insurance § 1333, and the authorities there cited, and was announced in this language (169 S.W.2d 142, at 148):
* * *'
Employers Casualty argues that the rule of Hicks is not a sound rule of decision, is contrary to the current trend of authority, and should be disapproved. We disagree.
The rule followed in Hicks is almost universally recognized as the proper rule of decision in strictly contribution cases. See 44 AM.JUR.2d 742--743, Insurance § 1818; 7 AM.JUR.2d 546, Automobile Insurance § 203; 21 A.L.R.2d 611, at 612--613; 46 C.J.S. Insurance § 1207, pp. 150--152; 8 Appleman, Insurance Law & Practice 397, § 4913; 16 Couch on Insurance 2d 568, § 62:157. The rule as stated in Couch, reads:
'Where there are two insurers and the policies of each contains a pro rata or coinsurer clause, each insurer is liable to the insured to its proportion of the loss, and payment by one of a larger amount in no way affects the liability of the others, and gives the one so paying no right to recover the excess paid from the other insurers.'
However, after stating that there is a division of authority, Couch continues (16 2d 569):
'On the other hand, some courts refuse to follow the view stated in the preceding paragraph, on the basis that the excess part of the payment made by the prorata insurer was in effect the payment of part of the sum which the other insurer was required to pay under its policy, that by making such excess payment, the other insurer has been relieved of its liability to the extent of such payment, and that to refuse to allow contribution on the behalf of the overpaying insurer would allow the other insurer to be unjustly enriched.'
Three cases are cited in support of the latter statement: Commercial Standard Ins. Co. v. American Employers Ins. Co., 209 F.2d 60 (CA6th Cir. 1954); Continental Casualty Co. v. American Fidelity & Cas. Co., 275 F.2d 381 (CA7th Cir. 1960), and United States Guarantee Co. v. Liberty Mut. Ins. Co., 244 Wis. 317, 12 N.W.2d 59, 150 A.L.R. 632 (1943). With due respect for the author of the Couch treatise, none of the cited cases supports the statement. All three are cases in which the paying and suing insurer was seeking recovery from a non-paying insurer in the right of the insured through contractual or conventional subrogation, and not in its own right to contribution, as is self-evident from the following quotations from the three opinions: 'In the instant case, we are not concerned with legal or equitable subrogation, but with conventional subrogation, which arises from the express insurance contract entered into between the insured, Dodd, and appellant insurer, Commercial Standard Insurance Company.' 209 F.2d 65. 275 F.2d 385. 'By the terms of its policy plaintiff was subrogated to the rights of the assured which, under the decisions, is a substitution of one person in the place of another with reference to a lawful claim or right.' 12 N.W.2d 61. These three cases are also cited to us by Employers Casualty.
Other cases are cited by Employers Casualty in support of its position. As with the cases cited by Couch, none of the cited cases, decided by appellate courts, is strictly a contribution case. One, like those cited by Couch, is a contractual or conventional subrogation case. See Detroit Auto. Inter-Ins. Exch. v. Detroit Mut. Auto. Ins. Co., 337 Mich. 50, 59 N.W.2d 80 (1953). Two, are equitable subrogation cases. Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 17 Cal.Rptr. 12, 366 P.2d 455 (1961); Employers Mut. Liab. Ins. Co. of Wis. v. Pacific Ind. Co., 167 Cal.App.2d 369, 334 P.2d 658 (1959). There is a lot of writing about contribution in Clow v. National Indemnity Co., 54 Wash.2d 198, 339 P.2d 82 (1959), but the actual holding rests on anything but contribution. The paying insurer took an agreement from the insured acknowledging payment above its pro rata part to be a loan, and suit was brought against the nonpaying insurer in the name of the insured. Recovery was allowed. The court concluded:
Our research has led us to only one case in which one pro rata insurer, paying the entire loss, was permitted to recover from another insurer strictly on a plea for contribution. See Carolina Casualty Ins. Co. v. Oregon Auto. Ins. Co., 242 Or. 407, 408 P.2d 198 (1965). Just as 'one swallow does not a summer make,' so one case does not a current trend of authority establish. We reject the suggestion that Hicks should be overruled, and we adhere to the rule there followed. The obligations of Employers Casualty and Transport were separate and independent, and they did not share a common liability. If both were liable to the insured, each was liable for only its pro rata part of the loss, and neither was liable for the other's pro rata part. The facts do not present a case for contribution. The general contribution rule is announced in 18 AM.JUR.2d 16, Contribution § 7, in this language:
'The primary requisites of the equitable right to contribution and the obligation to contribute, and the corresponding right and obligation at law, are (1) a situation wherein the parties are in aequali jure under some common...
To continue reading
Request your trial-
Interfirst Bank Dallas, N.A. v. U.S. Fidelity and Guar. Co.
...597 S.W.2d at 344 (fire insurance); Thoreson v. Thompson, 431 S.W.2d 341, 347 (Tex.1968) (fire insurance); Employers Casualty Co. v. Transport Ins. Co., 444 S.W.2d 606, 610 (Tex.1969) (public liability insurance); State Farm Fire & Casualty Co. v. Leasing Enterprises, Inc., 716 S.W.2d 553, ......
-
American Centennial Ins. Co. v. Canal Ins. Co.
...Equitable subrogation has been recognized in Texas, although not in this particular context. See, e.g., Employers Casualty Co. v. Transport Ins. Co., 444 S.W.2d 606, 610 (Tex.1969); Interfirst Bank Dallas, N.A. v. United States Fidelity and Guar. Co., 774 S.W.2d 391, 397 (Tex.App.--Dallas 1......
-
Hanover Ins. Co. v. Fireman's Fund Ins. Co.
...Government Employees Ins. Co. v. Travelers Ins. Co., 63 A.D.2d 957, 958, 405 N.Y.S.2d 492, 494 (1978); Employers Casualty Co. v. Transport Ins. Co., 444 S.W.2d 606, 607-609 (Tex.1969), aff'd, 470 S.W.2d 757 (Tex.Civ.App.1971); 2 G. Richards, supra; G. Couch, Insurance 2d (Rev.Ed.1983) § 62:......
-
Texas Employers Ins. v. Underwriting Members
...Co. v. General Ins., 517 S.W.2d 791, 797 (Tex.Civ.App. — Tyler, 1974, writ ref'd. n.r.e.)5; see also Employers Casualty Co. v. Transport Insurance Co., 444 S.W.2d 606, 610 (Tex.1969)6. No Texas court, however, appears to have considered whether a primary carrier is entitled to equitable con......