Fenton v. Poston

• Decision Date: 21 January 1921
• Docket Number: 15714.
• Citation: 114 Wash. 217,195 P. 31
• Court: Washington Supreme Court
• Parties: FENTON et ux. v. POSTON et al. (MUTUAL UNION INS. CO., Garnishee.

195 P. 31

114 Wash. 217

FENTON et ux. v. POSTON et al. (MUTUAL UNION INS. CO., Garnishee.

No. 15714.

Supreme Court of Washington, En Banc.

January 21, 1921

Appeal from Superior Court, Pierce County; John D. Fletcher, Judge.

Action by C. P. Fenton and wife against James William Poston and others. Judgment for plaintiffs against the defendants Poston and Louis Lamken, and plaintiffs procured a writ of garnishment against the defendant Mutual Union Insurance Company, and from a judgment against the garnishee it appeals. Affirmed.

Fullerton and Main, JJ., dissenting.

W. R Crawford, of Seattle, and Remann & Gordon, of Tacoma, for appellant.

Browder Brown and J. W. A. Nichols, both of Tacoma, for respondents.

HOLCOMB J.

The original action was brought by respondents Fenton and wife against defendants Poston and Lamken, and appellant Mutual Union Insurance Company, to recover damages for injuries received by Mrs. Fenton upon being run down by defendants' automobile in the city of Tacoma on December 23, 1917. Plaintiffs alleged that defendants were operating this automobile for hire under a permit issued by the secretary of state, as provided by law, and for such purpose had filed with the secretary of state a bond with appellant as surety. Both defendants and appellant appeared by the same attorneys, defendants answering jointly, and appellant severally, the allegations of respondents' complaint. Thereafter the attorneys for defendants gave notice of withdrawal of their appearance for defendants in the cause. Subsequently the case went to trial against defendants, but not against appellant, the action appearing to have been dismissed as to appellant; and, judgment for $3,500 having been rendered against defendants upon the verdict of a jury respondents procured a writ of garnishment to be issued against appellant, asserting, in the affidavit filed to sustain the application for the writ of garnishment, that the judgment was unpaid and unsatisfied, and that appellant was indebted to defendants in the sum of $2,500, the amount of a bond issued by appellant to defendants under an application made October 29, 1917, the bond being in full force and effect at the time of the accident. Appellant made return to the writ, denying any indebtedness to the judgment debtors and averring that it had no property or effects belonging to them. In the garnishment proceedings, the court, sitting without a jury, gave judgment for respondents, and against appellant, for $2,400, the amount of the bond less $100 representing unpaid premiums thereunder.

From that judgment the insurance company prosecuted this appeal.

The question presented by, and decisive of, the appeal, is whether the bond is one of indemnity or one of liability.

Although we held, in Hadfield v. Lundin, 98 Wash. 657, 168 P. 516, L. R. A. 1918B, 909, Ann. Cas. 1918C, 94, that such a bond as was issued in this case did not comply with the statute, the company had, prior to the decision in that case, on October 29, 1917, issued and delivered to Poston and Lamken its bond, for a premium of $120, to be paid in monthly installments of $10 each, the first two of which were paid prior to the occurrence of the injuries to respondent Mrs. Fenton, and the installments payable subsequent thereto were not paid.

Poston and Lamken applied for the bond upon one of appellant's forms entitled, 'Application for liability bond' in the 'penal sum of $2,500, as provided by chapter 57 of the Session Laws of 1915.' The application commences with this language, which is also part of the printed form:

'The undersigned applicant, a member and policy holder of the Mutual Union Insurance Company, hereby applies to said company for a liability bond covering a liability within the corporate limits of the city of Tacoma on automobiles operated solely on what is known as the 'Army Post Route,' and to that end makes the following representations of fact. * * *'

Language of the policy which is here material is as follows:

'The Mutual Union Insurance Company, in consideration of one hundred and twenty dollars ($120), and of the statements incorporated herein, which James William Poston and Louis Lamken make as warranties by the acceptance of this policy, and subject to the conditions hereinafter contained, does hereby agree:

'1. To indemnify James William Poston and Louis Lamken, members of said company, against loss to the amount of the penal sum of twenty-five hundred dollars ($2,500) from the liability imposed by law upon said James William Poston and Louis Lamken for damages on account of all injuries which may be sustained by any person injured by reason of any careless, negligent or unlawful act on the part of said James William Poston and Louis Lamken, their agents or employees, in the conduct of the business of transporting passengers for hire in a motor propelled vehicle, or in the operation of a motor propelled vehicle used in transporting passengers for hire over or along any public street, road or highway, within the corporate limits of the city of Tacoma, Washington (except that it is understood and agreed that this bond or contract shall not apply to injuries or death suffered or alleged to have been suffered by the said James William Poston or Louis Lamken or any employee or agent or said James William Poston and Louis Lamken).

'2. To contest claims and to defend suits, even if groundless, made or brought against said James William Poston and Louis Lamken on account of such bodily injury or death, unless the company shall elect to settle such claims or suits.

'The foregoing agreement is subject to the following conditions:

'Limits of liability:

'The company's liability under this policy shall be limited in the following manner:

'A. That the liability of this company shall be limited to the penal sum of twenty-five hundred dollars ($2,500).

'B. That the liability of this company shall be limited to any damage caused to any person by the following described motor propelled vehicle, to wit: Trade-name Packard; type of body touring; Model 1911; year bought 1917; factory No. ...... Motor No. 15083; state license No. 92952; city vehicle No. 294; seating capacity seven passenger.'

Assignment: 'C. James William Poston and Louis Lamken can make an assignment of all their rights and interests under the terms of this bond, or contract to the state of Washington, for and on behalf of any person that may be injured by them in the operation of said motor propelled vehicle used, as set out hereinabove in the transporting of passengers for hire. Such assignment when made will be duly accepted by the company.' (All italics ours.)

The question as to the character of this bond is discussed in the briefs, and authorities are cited from this state and from other states. From our own state, appellant cites and relies upon the case of Ford v. AEtna Life Ins. Co., 70 Wash. 29, 126 P. 69. There the plaintiff sued the defendants, who were the contractors for certain iron work on a building in Spokane, on account of injuries he had received by reason of defendants' negligence during the course of plaintiff's employment by other parties on the same building. The defendants in that case thereafter became insolvent and the judgment was not paid; and the plaintiff procured the issuance of a writ of garnishment against the appellant in the case, an insurance company which had therefore issued a casualty policy to the defendants. This policy contained a condition as follows:

'D. No action shall lie against the company to recover for any loss * * * or expense under this policy unless it shall be brought by the assured for loss * * * or expense actually sustained and paid in money by him after actual trial of the issue. * * *'

We there held that the policy indemnified against loss and not against liability, stating that a compliance the terms of the clause quoted was a condition precedent to any right of action on the policy, and that there was no privity between the insurer and the judgment creditor.

There was no such condition in the policy now under consideration. Here the company substantially agreed, by the terms of the policy, to indemnify Poston and Lamken against loss from liability imposed by law upon them for damages 'to any person,' other than the insured themselves and their employees, on account of injuries sustained by reason of any negligent act on the part of Poston and Lamken and their agents and employees, in the conduct of their business of transporting passengers for hire in a motor propelled vehicle over any public street in the city of Tacoma.

Two conditions of the policy limited the liability of the company thereunder to $2,500, and to damage caused by the car therein described. There were no conditions or provisions, other than these, in the policy issued to Poston and Lamken, intended to limit the liability of the company.

The case of Maryland Casualty Co. v. Peppard, 53 Okl 515, 157 P. 106, L. R. A. 1916E, 597, is a case strikingly similar to the one at bar. That action arose out of an employer's liability policy of insurance, which indemnified the assured 'against loss from the liability imposed by law upon the assured for damages on account of bodily injuries, including death resulting therefrom, accidentally suffered by any employee of the assured. * * *' The assured were engaged in certain construction work upon which one of their employees was killed by a fall from a scaffold. The widow of the deceased workman recovered a judgment against defendants, which she was unable to collect, and she filed an affidavit of garnishment to the effect that the insurance company which had issued the policy was indebted to the defendants. The insurance company, as garnishee, contended that...