Finley v. U.S. Cas. Co.

• Decision Date: 16 November 1904
• Parties: FINLEY v. UNITED STATES CASUALTY CO. et al.
• Court: Tennessee Supreme Court

83 S.W. 2

113 Tenn. 592

FINLEY v. UNITED STATES CASUALTY CO. et al.

Supreme Court of Tennessee.

November 16, 1904

Appeal from Chancery Court, Washington County; Hal H. Haynes Chancellor.

Suit by Robert G. Finley against the United States Casualty Company and another. From a decree of the Court of Chancery Appeals affirming a judgment for defendants, complainant appeals. Affirmed.

A. R Johnson and S.E. Miller, for appellant.

Watkins & Thompson, for appellee U.S. Casualty Co.

NEIL J.

The plaintiff was formerly an employé in the factory of one E. F Smith, then doing business under the name of the Johnson City Veneer Mills. He was injured in the mill, and thereupon brought suit against Smith, and recovered judgment for $1,000 damages; it having been alleged that the injury was caused by the negligence of Smith. Prior to this time, Smith had obtained a policy of indemnity in the defendant company. Pending the action above mentioned, Smith proposed to accept $50 from the company in full compromise and settlement of his claim under the policy. He had failed to give notice of the injury sustained by Finley, or of Finley's claim, until more than a month thereafter. The company had refused to pay on the ground that it was not liable, by reason of such failure to give notice. It had refused to pay anything whatever. However, upon receiving notice from its agent of an offer of compromise, as above mentioned, it decided to accept the offer and make the compromise.

After this time, and when Finley's claim against Smith had proceeded to judgment, he filed his bill in this cause against the company, placing his right to recover upon substantially two grounds: Firstly, that the policy taken out by Smith inured to his benefit, upon injury being sustained by him; and, secondly, that, if this ground of action be not well sustained, then that he had a right to impound the alleged debt in the hands of the company, and subject it to his judgment, because the compromise was made for the fraudulent purpose of defeating the collection of his judgment.

The chancellor rendered a decree in favor of the defendants. On appeal to this court the cause was referred to the Court of Chancery Appeals, and that court rendered a decree against complainant on both of the points above stated. From this decree complainant, Finley, has appealed again to this court and assigned errors.

The policy, so far as it need be quoted, is as follows:

"In consideration of $28.80 premium the United States Casualty Company herein called the company, does hereby agree to indemnify the Johnson City Veneer Mills of Johnson City, County of Washington, State of Tennessee, herein called the assured, for the term of twelve months *** subject to the following special and general agreements, which are to be construed as coordinate, as conditions; against loss from common law or statutory liability for damages on account of bodily injuries, fatal or nonfatal, accidentally suffered, within the period of this policy by any employee or employees, of the assured while on duty within the factory, shop or yards mentioned in the schedule hereinafter given, or upon the ways immediately adjacent thereto provided for the use of such employees or the public, in and during the operation of the trade or business described in the said schedule.

"The company's liability for an accident resulting in injuries to or the death of one person is limited to $5,000. ***

"General Agreements.

"(1) The assured upon the occurrence of an accident shall give immediate written notice thereof with the fullest information obtainable at the time, to the home office of the company at New York, or to its duly authorized agent. He shall give like notice with full particulars of any claim that may be made on account of such accident, and shall at all times render to the company all co-operation and assistance in his power.

"(2) If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, the assured shall immediately forward to the home office of the company every summons or other process as soon as the same shall have been served on him, and the company will at its own cost, defend against such proceeding in the name and on behalf of the assured or settle the same, unless it shall elect to pay to the assured the indemnity provided for in clause A of special agreements as limited therein.

"(3) The assured shall not settle any claim except at his own cost, nor incur any expense, nor interfere in any negotiation for settlement or in any legal proceeding, without the consent of the company previously given in writing, but he may provide at the time of the accident such immediate surgical relief as is imperative. The assured, when requested by the company, shall aid in securing information, evidence, and the attendance of witnesses and in effecting settlements and in prosecuting appeals. ***

"(7) No action shall lie against the company as respects any loss under this policy, unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within sixty days from the date of such judgment and after trial of the issue. No such action shall lie unless brought within the period within which a claimant might sue the assured for damages unless at the expiry of such period there is such an action pending against the assured, in which case an action may be brought against the company by the assured within sixty days after final judgment has been rendered and satisfied as above. The company does not prejudice by this clause any defense to such action which it may be entitled to make under this policy."

In our judgment, the Court of Chancery Appeals decided the case correctly upon both points.

There is a difference between the effect of a policy which insures directly against liability, and one that insurer against loss or damage by reason of liability. Under contracts of the first description, the amount of the policy, up to the extent of the liability incurred by an employer on account of an accident to an employé, becomes, immediately upon the happening of the event on which the liability depends, and the giving of such notice as the policy provides for, an asset of the assured, which, in the absence of any provisions to the contrary in the policy, may be assigned by him, or taken for his debt, subject, of course, to the making of such proofs to perfect the demand as...