Federal Automobile Ins. Ass'n v. Abrams

• Decision Date: 17 May 1928
• Docket Number: 6 Div. 36
• Citation: 217 Ala. 539,117 So. 85
• Parties: FEDERAL AUTOMOBILE INS. ASS'N v. ABRAMS.
• Court: Alabama Supreme Court

117 So. 85

217 Ala. 539

FEDERAL AUTOMOBILE INS. ASS'N v. ABRAMS.

6 Div. 36

Supreme Court of Alabama

May 17, 1928

Appeal from Circuit Court, Jefferson County; William M. Walker Judge.

Bill in equity by Constance Abrams against the Federal Automobile Insurance Association and another. From a decree overruling its demurrer to the bill, defendant insurance association appeals. Affirmed.

London Yancey & Brower, and Frank Bainbridge, all of Birmingham, for appellant.

Leader & Ullman and C.S. Wurtzburger, all of Birmingham, for appellee.

THOMAS J.

The appeal was from the ruling on demurrer. This is a proceeding in equity under the provisions of sections 8376 and 8377 of the Code of 1923. The complainant was injured in an automobile accident, and obtained a judgment against the respondent therefor. The bill, as last amended, alleges that the respondent, Federal Automobile Insurance Association, a reciprocal insurance association, issued a policy of insurance to the said respondent, Fannie E. Jordan, on April 14, 1925, under the terms of which it agreed to indemnify her against loss resulting directly from the operation of the automobile which injured the complainant. The chancellor overruled the amended demurrer to the bill as last amended and this action of the trial court is presented for review.

The constitutionality of the two sections of the Code (sections 8376, 8377) under which the instant suit was brought has not been passed upon by this court. These sections were first enacted in Massachusetts, and its Supreme Court announced that both sections were constitutional. Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, 1 A.L.R. 1374. This case was adverted to in Globe Indemnity Co. v. Martin, 214 Ala. 646, 108 So. 761, and these sections are held not to be retroactive. And in the case of United States Fidelity & Guaranty Co. v. Yeates (Ala.Sup.) 115 So. 174, said sections of the Code were again considered on a demurrer to the bill, where the question of the constitutionality was not involved or decided. The cases of Globe Indemnity Co. v. Martin and Lorando v. Gethro, supra, are cited with approval in the Yeates Case, supra. It should be further noted that Alabama and Massachusetts are the only states that have adopted the provisions of our statutes now under consideration, and that the decision sustaining the constitutionality (Lorando v. Gethro, supra) was rendered prior to the enactment here. This fact, however, will not prevent us from passing upon the constitutionality of said statutes.

It is urged that it does not sufficiently appear, from the allegations of the bill, that the defendant in the law court (Jordan) was insured against the damage or loss sustained by complainant at the time the right of action against her arose. These facts are shown by the amended pleading. The date of the injury and duration of the contract of insurance are specifically averred, when the bill as amended and its exhibits are considered together. Grimsley v. First Ave. C. & L. Co. (Ala.Sup.) 115 So. 90, and authorities. The bill as last amended was not subject to demurrer directed thereto, as to the foregoing ground of demurrer challenging the sufficiency of the averment of injury within the life of the contract period.

The averments of paragraphs 5, 6, and 7 of the bill, as amended, and their relation to the other averments contained therein, are sufficient averments of due process to a final judgment in favor of complainant and against defendant in such trial--the assured--duly rendered and entered in accordance with the verdict of the jury, that the same had not been satisfied, and more than 30 days had elapsed since the rendition of said judgment. It was the averment of such a final judgment (Lewis v. Martin, 210 Ala. 401, 410, 98 So. 635) entered upon and pursuant to the verdict that was within the purview of sections 8376, 8377 of the Code, and the general acceptation of the words "final judgment." For general definitions of a final judgment, see 3 C.J. 441, and that by this court in Lewis v. Martin, supra; Ex parte Jonas, 186 Ala. 567, 574, 64 So. 960; Beall v. Lehman, Durr Co., 128 Ala. 165, 29 So. 12; Tatum v. Yahn, 130 Ala. 575, 29 So. 201; Stallworth v. Brown, 155 Ala. 217, 46 So. 467; De Graffenried v. Breitling, 192 Ala. 254, 68 So. 265. It was not necessary for complainant to aver that neither a motion for new trial nor an appeal was pending when the instant bill was filed. If such be the fact, it would have been the subject of appropriate defensive pleading to show that the bill was prematurely filed. The trial court, in equity, or this court, will presume such appeal or motion, in the absence of an appropriate plea or answer raising the question of right to maintain the bill.

Thus we are brought to the assignment of error that deals with the constitutionality of the statute. The case of Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, is made the subject of report and annotations in 1 A.L.R. pp. 1374, 1375, to the effect that a state statute for the attaching of liability of indemnity insurance becomes absolute when loss occurs that is covered by the contract and does not "destroy any ground of defense which may exist against the claim made"; that those entering into contracts given "special force and effect by statute are held to contemplate and assent to the force and effect which the statute attributes to them"; and that no organic right is invaded by the Legislature establishing appropriate forms of relief for existing rights, or such as are rightly created, and providing equitable procedure for the protection and enforcement of the rights of such respective parties. That suit in equity was by reason of Stat.Mass.1914, c. 464, §§ 1, 2; the same being in form and effect as our sections 8376, 8377.1 A.L.R. 1375, 1376, 1378. And the demurrer challenged its constitutionality. The court said of the term "loss" as used in section 1 (section 8376, Code of Ala. 1923):

"A 'loss occurs on account of a casualty' as the words here are used, not when the casualty happens, but when the damages resulting from that casualty have been fixed in any legal way. 'Loss' in this connection means the actual financial obligation of the insured, measured in money, in respect of the casualty against which he is insured. Ordinarily in cases of dispute that loss can be ascertained only by the judgment of a court. It can 'occur,' in the sense of the statute only when so ascertained.

"The clause following, namely, 'the liability of the insurance company shall become absolute,' in its context, means only that the liability of the insurance company, so far as concerns the amount of the loss, shall not thereafter be open to dispute. The insurer's liability is absolute only in respect of the amount of the loss and not in other respects."

The Massachusetts court said of the provisions of section 8377, Code:

"The second section establishes a temporary lien in favor of one who has put the damages resulting to him from the casualty insured against in the form of a judgment, on the amount due under the policy as between the insured and the insurer. It also affords him the usual remedies of a judgment creditor (Rioux v. Cronin, 222 Mass. 131 109 N.E. 898), or the special equitable attachment provided by Rev.Laws, c. 159, § 3, cl. 7.

"The Legislature has power, under the Constitution, to enact the statute as thus interpreted. Said Chief Justice Knowlton in New York L. Ins. Co. v. Hardison, 199 Mass. 190, 198, 85 N.E. 413, 127 Am.St.Rep. 478: 'The Legislature has large powers for the regulation of the business of insurance. It may act under the police power for the protection of the public, or it may act as the creator and controller of corporations, domestic and foreign, which are subject to this power. This has been decided in many cases in this commonwealth and elsewhere.' ***

"No constitutional right of the insurer or of the insured is violated by enabling one who has recovered a judgment against the latter on a liability, against loss from which he is protected by contract with the insurer, to bring a suit in his own name. Such a judgment creditor has a direct interest in the performance of the undertakings in the contract of casualty insurance. It may be that the only source from which his debtor can secure money enough to pay his judgment will be from the proceeds of that insurance contract. See German Alliance Ins. Co. v. Home Water Co., 226 U.S. 220, 230, 57 L.Ed. 195, 199, 42 L.R.A. (N.S.) 1000, 33 S.Ct. 32.

"The subject of insurance is of such general public interest as to be under the control of the Legislature within rational limits. When a statute has been enacted governing any particular part of the field of insurance, the parties entering into contracts respecting that field are presumed to do so with reference to the obligations and terms established by that statute. ***

"The instant statute is a declaration of public policy by the general court respecting one aspect of casualty insurance. It is a declaration as to a subject within its general power of regulation. It governs contracts made after it took effect. It is not retroactive. Its terms are reasonable, and violate no right secured by the Constitution. It is well within the principle of numerous decisions where statutes more or less interfering with the freedom of contract have been upheld. Mutual Loan Co. v. Martell, 200 Mass. 482, 86 N.E. 916, 43 L.R.A. (N.S.) 746, 128 Am.St.Rep. 446, affirmed in 222 U.S. 225, 32 S.Ct. 74, 56 L.Ed. 175, Ann.Cas.1913B, 529; Dewey v. Richardson, 206 Mass. 430, 92 N.E. 708; Com. v. Strauss, 191 Mass. 545, 78 N.E. 136, 11 L.R.A. (N.S.) 968, 6 Ann.Cas. 842; Com. v. Libbey, 216 Mass. 356, 103 N.E. 923, 49 L.R.A. (N.S.) 879, Ann.Cas.1915B, 659;

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