Fidelity Union Casualty Co. v. Hanson

• Decision Date: 06 January 1932
• Docket Number: No. 1492-5768.,1492-5768.
• Citation: 44 S.W.2d 985
• Parties: FIDELITY UNION CASUALTY CO. v. HANSON et al.
• Court: Texas Supreme Court

44 S.W.2d 985

FIDELITY UNION CASUALTY CO. v. HANSON et al.

No. 1492-5768.

Commission of Appeals of Texas, Section A.

January 6, 1932.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by P. E. Hanson against the Fidelity Union Casualty Company, during pendency of which Barbara Haymann and others sued out writs of garnishment against defendant. The garnishment proceedings were consolidated with the suit, after which plaintiffs in garnishment filed a plea in intervention, and the petition in intervention by T. J. Holbrook, trustee in bankruptcy of the estate of P. E.

Hanson, bankrupt, was dismissed. A judgment in favor of plaintiff and intervening plaintiffs was affirmed by the Court of Civil Appeals [26 S.W.(2d) 395], and defendant brings error.

Affirmed.

Collins & Houston, of Dallas, and Williams, Neethe & Williams, of Galveston, for plaintiff in error.

McDonald & Wayman and Jas. B. & Chas. J. Stubbs, all of Galveston, for defendants in error.

SHARP, J.

This case is the sequel to the case of Hanson et al. v. Haymann et al. (Tex. Civ. App.) 280 S. W. 869. The judgment recovered by Barbara Haymann and her minor children against P. E. Hanson was affirmed, and the judgment against the Fidelity Union Casualty Company, which was in favor of plaintiffs for $5,000 of the $12,000 judgment against Hanson, was reversed and rendered on the ground that there was no privity of contract between the Haymanns and the Fidelity Union Casualty Company.

In this case P. E. Hanson, as plaintiff, sued the Fidelity Union Casualty Company, as defendant, to recover $5,000, interest and costs upon the policy of insurance, by the terms of which the Fidelity Union Casualty Company insured P. E. Hanson against loss and/or expense arising from liability imposed by law, or claims of damages on account of personal injuries and/or deaths accidentally suffered or alleged to have been suffered by any person or persons not employed by the insured; that the Union Fidelity Casualty Company agreed in paragraph A of the policy as follows: "In the event of a final judgment upon any suit covered by this policy being rendered against the assured, the company will pay and satisfy said judgment and protect the assured against the levy of any execution issued on said judgment, subject to the limitations in paragraph C herein."

Paragraph C, referred to above, limits the amount to be paid by the company for the death of one person to $5,000.

Plaintiff also alleged that judgment had been recovered against him by Mrs. Barbara Haymann and her three minor children for a total sum of $12,000; that the insurance company had taken charge of that case as covered by the policy and conducted the defense, and the said judgment had become final and is now in full force and effect, and that execution has issued and levy thereof is threatened, and the Union Fidelity Casualty Company after demand to pay had failed and refused.

The Union Fidelity Casualty Company filed a general denial and specially alleged that plaintiff had been adjudicated a bankrupt and discharged from his debts, and that the trustee in bankruptcy, T. J. Holbrook, had become invested with all the assets belonging to the bankrupt.

The trustee of P. E. Hanson intervened and alleged that "the policy of insurance was not a proper asset, but a contract asset only for the benefit of the said P. E. Hanson and for those who might recover damages against the said P. E. Hanson, by reason of accidents, injury or negligence for which the said P. E. Hanson might be responsible," and the trustee prays recovery of the amount of the policy, and that the court determine and direct to whom said fund shall be paid; whether to the Haymanns or to the general creditors.

By plea in abatement, the Fidelity Union Casualty Company objected to the intervention of Holbrook, on the ground that the bankruptcy was closed and the trustee had thereby ceased to be such. This plea was sustained, and the trustee's intervention was dismissed.

By supplemental petition, P. E. Hanson answered and averred that he did not seek to be relieved in bankruptcy of $5,000, being that part of the judgment that was secured to be paid by the Fidelity Union Casualty Company, and that he is entitled to specific performance of the contract of the company to pay and satisfy the judgment.

The judgment rendered against the Fidelity Union Casualty Company provides the amount that P. E. Hanson is entitled to have paid shall be paid to Barbara Haymann and the three children, "the payment of said sum by said Fidelity Union Casualty Company to satisfy the judgment above rendered against it in favor of P. E. Hanson; and upon the payment by said Fidelity Union Casualty Company of said sum to said interveners, or their attorneys of record, satisfaction shall be entered of record by said attorneys of the above judgment rendered in favor of the said P. E. Hanson against said Insurance Company; but no execution shall issue upon this judgment in favor of interveners, who are the plaintiffs in said garnishment suit, against the Fidelity Union Casualty Company, until the controversy between plaintiff and defendant herein may have been fully litigated on appeal, if the defendant perfects and prosecutes an appeal; and, upon judgment becoming final, let execution issue in favor of interveners." The Court of Civil Appeals affirmed the judgment of the trial court. 26 S.W.(2d) 395. The case is now before the Supreme Court.

Plaintiff in error contends that the Court of Civil Appeals erred in holding that under the bankruptcy statutes of the United States, the judgment obtained by Mrs. Barbara Haymann et al. against P. E. Hanson was not a provable debt against his estate and discharged as such by his discharge in bankruptcy.

In support of this contention, the following authorities are cited: Lewis v. Roberts, 267 U. S. 467, 45 S. Ct. 357, 69 L. Ed. 739, 37 A. L. R. 1440; Moore v. Douglas (C. C. A.) 230 F. 399, cited with apparent approval in Lewis v. Roberts, supra; In re De Bock (D. C.) 14 F.(2d) 675.

The facts show that Mrs. Haymann et al. secured judgment for $12,000 against P. E. Hanson for the death of Joseph F. Haymann caused by the negligence of P. E. Hanson; that P. E. Hanson duly perfected his appeal therefor, giving only a cost bond, but gave no supersedeas bond. After the perfection of the appeal, but prior to the affirmance of the judgment, Hanson was on June 8, 1925, adjudged a bankrupt upon a voluntary petition which had been filed on June 6, 1925. T. J. Holbrook was appointed as trustee in bankruptcy of his estate on July 7, 1925, and qualified by giving the requisite bond on December 4, 1925. The Court of Civil Appeals rendered its opinion, whereby the case was affirmed in part and reversed and rendered in part. On January 21, 1926, a motion for a rehearing was overruled, and on March 17, 1926, the petition for writ of error was dismissed by the Supreme Court of this state.

The question raised for decision, Was the judgment a provable debt under the Bankruptcy Act? The record discloses that the parties to this suit agreed that such judgment was one in a pure tort action based upon negligence on the part of the servants of the defendant therein. For some time there was some doubt or uncertainty among the courts as to whether or not a judgment for personal damages caused by negligence was provable in bankruptcy. The Supreme Court of the United States in its opinions has established the rule that claims based upon a mere tort are not provable debts under the Bankruptcy Law.

In the case of Schall v. Camors, 251 U. S. 239, 40 S. Ct. 135, 136, 64 L. Ed. 247, the Supreme Court of the United States, in a very able and exhaustive opinion, in construing section 63 of the Bankruptcy Act (11 USCA § 103) among other things, held: "Historically, bankruptcy laws, both in England and in this country, have dealt primarily and particularly with the concerns of traders. Our earlier bankruptcy acts invariably have been regarded as excluding from consideration unliquidated claims arising purely ex delicto. [Citing authorities.]"

Again it was said: "Upon every consideration we are clear that claims based upon a mere tort are not provable. Where the tortious act constitutes at the same time a breach of contract, a different question may be raised, with which we have no present concern; and where, by means of the tort, the tort-feasor obtains something of value for which an equivalent price ought to be paid, even if the tort as such be forgiven, there may be a provable claim quasi ex contractu. [Citing authorities.]

That a final judgment for personal damages caused by negligence is a provable debt in bankruptcy, was definitely settled by the Supreme Court of the United States in the case of Lewis v. Roberts, supra. In that case, the rule was announced that a judgment to recover in an action for tort or ex delicto is provable in bankruptcy proceedings against the judgment debtor under section 63a of the Bankruptcy Act (now sec. 103, title 11, c. 7, Bankruptcy, USCA), which provides that "debts of the bankrupt may be proved and allowed against his estate which are (1) a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then...