Employers Ins. Co. of Alabama v. Johnston, 6 Div. 442.

Citation189 So. 58,238 Ala. 26
Decision Date18 May 1939
Docket Number6 Div. 442.
PartiesEMPLOYERS INS. CO. OF ALABAMA v. JOHNSTON.
CourtSupreme Court of Alabama

Appeal from Circuit Court, Jefferson County; E. M. Creel, Judge.

Bill in equity by Eloise W. Johnston against the Employers Insurance Company of Alabama, to subject insurance money to satisfaction of judgment for personal injury, etc., under Code 1923, §§ 8376, 8377. From a decree for complainant respondent appeals.

Affirmed.

Smith Windham, Jackson & Rives, of Birmingham, for appellant.

Chas W. Greer, of Birmingham, for appellee.

FOSTER Justice.

The bill by appellee seeks to make available the remedy provided by section 8377, Code, whereby a plaintiff, with judgment for bodily injury or death against one insured against such loss, is entitled to have the insurance money so provided for applied to the satisfaction of the judgment. This is a supplement to section 8376, Code, whose terms are not here particularly important.

On September 22, 1936, complainant obtained a judgment for bodily injuries and property damage against Webb and Rogers for $2500, besides costs, sustained as the result of a collision of the automobile in which she was riding with an automobile truck and trailer which defendant Rogers had been granted a permit to operate as a contract motor carrier by the Alabama Public Service Commission, and which was being operated by defendant Webb for Rogers under said permit, issued under authority of the Act of October 28, 1932, section 26. See Acts 1932, Ex.Sess., page 185. This Act is generally referred to as the Contract Motor Carrier Act, distinguishable from the Common Carrier Act, so called, of June 19, 1931. Acts 1931, page 303.

There had been issued by appellant a policy of automobile liability and property damage insurance, which was filed by Rogers with the probate judge of Mobile County in conformance with the Act of October 28, 1932, supra, containing an omnibus clause effective as to the driver Webb.

The Public Service Commission had issued in accordance with said Act an order touching the terms, conditions and provisions of bonds and insurance policies provided for by it, in which it was ordered as to bonds: "Indemnity bonds, to be acceptable, must provide (a) that the motor carrier, in respect to all vehicles lawfully operated under his (her) (its) permit, is duly indemnified as provided by the statute against all damages or injury, to the extent indicated in paragraph 1 hereof, suffered by any person from the operations of such vehicles, other than damage to, or injury of, the insured or his employees, or passengers of, or the shippers of freight by, such carrier; (b) that no condition, provision, stipulation or limitation contained in any such indemnity bond, nor the violation of the same by the motor carrier, shall affect in any way the right of any person injured in person or property to recover the damages recoverable under such bond, and (c) that such bond may not be cancelled without written notice to the Alabama Public Service Commission at least fifteen days prior thereto," and as to insurance policies, as follows:

"All public-liability insurance policies shall contain the following endorsement (A.P.S.C.):
"1932 Act
"P.L. & P.D.
"(Revised)
"A.P.S.C. Endorsement No. 4.
"The policy to which this endorsement is attached is a public-liability and property-damage policy for the protection of the public in the collection of damages for which the motor carrier may be liable by reason of the operation of the motor vehicle or vehicles insured, and is written in pursuance of and is to be construed in accordance with an Act of the Legislature of Alabama approved October 28, 1932 (H. 113), and the reasonable and legal rules and regulations of the Alabama Public Service Commission adopted thereunder and applicable thereto. The policy is to be filed with the State in accordance with said statute."

The policy contained the usual cooperation clause in the following language: "Assured shall at all times, upon request, render any assistance or cooperation in his power in the investigation, settlement or defense of the cause, and aid in securing the attendance of witnesses and in prosecuting appeals."

It also contained clause "J" as follows: "Statutory provision. If any of the provisions or conditions of this policy shall conflict with or are inconsistent with the law of the state where this contract is entered into, then such provisions and conditions shall be inoperative in such state, and the state law shall prevail."

Also the following: "The terms and conditions of this policy shall remain in full force and effect and be binding between the company and the assured, and if the assured, or any other person covered by this policy, violates any of the terms or conditions of this policy and the company shall be obliged to pay and shall pay a loss hereunder which it would not have paid but for the requirements of such law and this paragraph, then the assured, or any other person, shall reimburse the company to the extent of such loss."

And: "It is understood and agreed that should the company be obliged to pay any loss under this policy which it would not have been obliged to pay but for the provisions of the 'Alabama Motor Carrier Act of 1932' and amendments thereto, or similar laws of other states, then the assured shall, upon demand, reimburse the company to the extent of such loss."

Together with the following endorsement, in part:

"The policy to which this endorsement is attached is a Public Liability and Property Damage policy for the protection of the public in the collection of damages for which the motor carrier may be liable by reason of the operation of the motor vehicle or vehicles insured, and is written in pursuance of and is to be construed in accordance with an Act of the Legislature of Alabama approved October 28, 1932 (H. 113), and the reasonable and legal rules and regulations of the Alabama Public Service Commission adopted thereunder and applicable hereto. The policy is to be filed with the State in accordance with said statute. * * *

"Neither is it intended by this endorsement to require insurance to protect the passengers of, or the shippers of freight by, the motor carrier insured, but this shall not affect any stipulation that may be contained in the policy itself affording such protection."

It is agreed that facts occurred which, we think, mean that the defendants Rogers and Webb violated the cooperation clause, supra, whereupon this appellant, as such insurance carrier, withdrew from the defense of that case, and a judgment nil dicit was entered for plaintiff against Rogers and Webb.

In the agreed statement of facts it is stipulated that: "Only one question is thereby presented for decision, viz: Upon the failure on the part of the assured, operating under the Motor Carrier Act of 1932, to cooperate in the defense of a damage suit filed against him, as required by the terms of his policy under the circumstances above outlined, and upon the retirement from the litigation by his insurance carrier for that reason is the latter liable to the plaintiffs in these actions." No other question of law or fact will therefore be treated by us on this appeal.

We have held along with the generally accepted view that the right and remedy provided for in sections 8376 and 8377, Code (not influenced by other provisions of the law or contract), did not extend to plaintiff a primary claim as a contractee of such a policy of insurance with a power to sue to enforce it independent of the status created between the assured, against whom judgment had been rendered, and his insurance carrier. That plaintiff's status was derivative and depended upon the liability of the insurer to the assured under the contract, provided that after the accident and injury they cannot cancel or annul the contract, but the cooperation clause, supra, was not affected, and by its breach, not waived, the liability of the insurer to the assured and through him to the injured party was forfeited and lost. George v. Employers' Liability Ass'r Corp., 219 Ala. 307, 122 So. 175, 72 A.L.R. 1438; Metropolitan Casualty Ins. Co. v. Blue, 219 Ala. 37, 121 So. 25; see 72 A.L.R. 1448 et seq.

So that complainant cannot have the benefit of the relief provided for in those Code sections, unless there is something here presented which operates to relieve this case from the effect of that principle.

It is contended that since the policy is controlled by the Contract Carrier Act of 1932, its provisions serve to create a different legal status.

That Act provides (section 26) that no permit shall be issued under it until there has been filed and accepted by the judge of probate an insurance policy (not now considering a right in the alternative to file a bond) "for the protection of the public [not including passengers and shippers] in the collection of damages for which the carrier may be liable by reason of the operation of any motor vehicle subject to the provisions of this Act." And "It shall be the duty of the [Alabama Public Service] Commission to prescribe by general order the terms, conditions and provisions of such bonds", and "It shall be the duty of the Commission by general order to prescribe the form of such bond." (In printing section 26 there is an error at this point. There should be a period after "bonds," and a new sentence begins: "No bond or insurance policy executed in accordance [etc.] shall be cancelled [etc.].)" There seems to be no express provision authorizing the commission to prescribe the terms, conditions or form of an insurance policy. But we have shown that by an endorsement on the policy it is stipulated that it is written in pursuance and to be...

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