Fireman's Fund Ins. Co. v. North Carolina Farm Bureau Mut. Ins. Co., 534
| Decision Date | 03 February 1967 |
| Docket Number | No. 534,534 |
| Court | North Carolina Supreme Court |
| Parties | FIREMAN'S FUND INSURANCE COMPANY and the Insurance Company of the State of Pennsylvania, v. NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY. |
Dupree, Weaver, Horton, Cockman & Alvis, Raleigh, for plaintiff appellants.
Broughton & Broughton, Raleigh, for defendant appellee.
Each of the plaintiffs, by its policy, contracted with Jerry Denning to do two different things. First, it contracted to pay on his behalf all sums for the payment of which he became legally liable, because of bodily injury sustained by any person arising out of the use of an automobile not owned by him, to the extent that such liability exceeded other valid and collectible insurance and did not exceed the limit fixed by its policy. Second, it contracted to defend, at its expense, on his behalf, any suit, even though groundless, brought against him, alleging such bodily injury and seeking damages payable under the terms of the policy.
It will be observed that the first of these undertakings requires the plaintiff company to step into the shoes of Jerry Denning and pay a sum for the payment of which he became liable. The second undertaking is not of that nature. In the performance of it the company does not step into the shoes of the policyholder. Its liability under that undertaking is not contingent upon the existence of a liability on his part, and its performance of that undertaking does not impose any liability upon him. That undertaking is absolute.
The attorneys employed to defend such suit were selected by the company and looked to it for their compensation. At no time did Jerry Denning have any liability to the attorneys. He made no payment to them. He, therefore, never had a right of recovery, against any person or organization, because of fees paid to these attorneys. Consequently, the subrogation provisions of the policies issued to him by the plaintiffs have no application, since they provide only that the issuing company will be subrogated 'to all the insured's rights of recovery' for any payment made by the company.
The plaintiffs are, therefore, not entitled to recover of the defendant in this action unless, as a matter of law, apart from these subrogation clauses, there is a right in the plaintiffs to such recovery.
It is elementary that provisions of an insurance policy, if ambiguous, are to be construed in favor of the insured. Anderson v. Insurance Co., 266 N.C. 309, 145 S.E.2d 845; Walsh v. Insurance Co., 265 N.C. 634, 144 S.E.2d 817; Mills v. State Life & Health Insurance Co., 261 N.C. 546, 135 S.E.2d 586.
The policy issued by the defendant provided, 'with respect to such insurance as is afforded by this policy for bodily injury liability,' the defendant would defend any suit against the insured (i.e., Jerry Denning), alleging such injury and seeking damages on account thereof, the expenses of defending such suit to be 'in addition to the applicable limit of liability of this policy.' When this provision in the defendant's policy and the above mentioned 'excess insurance' provisions of the plaintiffs' policies are construed in favor of Jerry Denning, it is apparent that the 'excess' clauses of the plaintiffs' policies relate to the amount to be paid in discharging the liability, if any, of the insured to a third party claimant. Irrespective of the existence of other insurance availabel to Jerry Denning, each of the plaintiffs, by its own policy, came under a duty to him to defend on his behalf a suit against him by a third party claimant, even though groundless, if in such suit the third party claimant alleged facts which, if true, imposed upon Jerry Denning a liability to such claimant within the coverage of such plaintiff's policy.
If the complaint of Edith Denning alleged a right to recover damages within the liability coverage afforded to Jerry Denning by the policy issued by either plaintiff, its duty to defend on his behalf, at its expense, such suit was absolute and was separate and apart from any right in him to call upon the defendant for such a defense. He was entitled under the several policies to demand of each, or all, or any two, of the companies a full and complete defense against the suit so brought against him. As to him, none of the three promises to defend was 'excess' protection or secondary to the undertaking of either of the other two companies, assuming the claim of Edith Denning to be within the liability coverage of all of the policies.
These contractual obligations of the three insurance companies to defend a suit brought against Jerry Denning do not arise out of a single contract to which all three companies are parties either jointly or severally, or primarily or secondarily. The obligation of each company arises out of its own, separate contract and is an absolute, unqualified undertaking to defend on behalf of Jerry Denning a suit brought against him.
It was the defendant in this action, not the plaintiffs, who brought to a...
To continue reading
Request your trial
-
Signal Companies, Inc. v. Harbor Ins. Co.
...855, for authorities and views contrary to the Occidental Fire & Casualty, supra, premises; and see Fireman's Fund Ins. Co. v. North Carolina Ins., 269 N.C. 358, 152 S.E.2d 513, 518; 7C Appleman, Insurance Law and Practice (1980 supp.) § 4691; American F. & C. Co. v. Pennsylvania T. & F. M.......
-
Craige v. Gov't Emps. Ins. Co., 1:19-cv-408
...is absolute. Indiana Lumbermen's Mut. Ins. Co. v. Champion, 80 N.C.App. 370, 343 S.E.2d 15 (1986) (citing Insurance Co. v. Insurance Co., 269 N.C. 358, 152 S.E.2d 513 (1967) ). An insurer has a duty to defend against even groundless, false, or fraudulent accusations. Waste Mgmt. of Carolina......
-
State Capital Ins. Co. v. Nationwide Mut. Ins. Co.
...Co., 303 N.C. 648, 280 S.E.2d 907 (1981); Grant v. Emmco Insurance Co., 295 N.C. 39, 243 S.E.2d 894 (1978); Insurance Co. v. Insurance Co., 269 N.C. 358, 152 S.E.2d 513 (1967). Provisions which exclude liability of insurance companies are not favored. Therefore all ambiguous provisions are ......
-
National Mortg. Corp. v. American Title Ins. Co.
...Co., 295 N.C. 39, 243 S.E.2d 894 (1978); Pleasant v. Insurance Co., 280 N.C. 100, 185 S.E.2d 164 (1971); Insurance Co. v. Insurance Co., 269 N.C. 358, 152 S.E.2d 513 (1967). In applying a similar rule of construction, the courts in other jurisdictions have consistently concluded that policy......