Ford v. Aetna Life Ins. Co. of Hartford, Conn.

• Decision Date: 26 August 1912
• Citation: 126 P. 69,70 Wash. 29
• Parties: FORD v. AETNA LIFE INS. CO. OF HARTFORD, CONN., et al.
• Court: Washington Supreme Court

126 P. 69

70 Wash. 29

FORD v. AETNA LIFE INS. CO. OF HARTFORD, CONN., et al.

Supreme Court of Washington

August 26, 1912

Department 1. Appeal from Superior Court, Spokane County; Wm. A. Huneke Judge.

Garnishment by Charles F. Ford against the AEtna Life Insurance Company of Hartford, Conn., as garnishee of John Gerrick and another. Judgment for plaintiff. Garnishee appeals. Reversed, with directions.

Post Avery & Higgins, of Spokane, for appellant.

Belt &amp Powell and Merritt, Oswald & Merritt, all of Spokane, for respondents.

GOSE, J.

In 1910, the defendants Gerrick were engaged as contractors in doing the structural ironwork on the Old National Bank building in the city of Spokane. The plaintiff was working on the building, but not in their employ, and while so engaged was injured through their negligence. He thereupon commenced an action against them for damages, which terminated in a judgment in his favor for $2,476 and costs, on the 29th day of October, 1910. The AEtna Life Insurance Company, hereafter called the appellant, having theretofore issued to the Gerricks a casualty policy, assumed the defense for and in the name of the Gerricks. No part of the judgment has been paid. On the 20th day of January, 1911, one of the attorneys for the plaintiff filed his affidavit for a writ of garnishment in harmony with the provisions of the Code. Rem & Bal. § 682 et seq. The affidavit alleges the recovery and nonpayment of the judgment; that the plaintiff has reason to believe, and does believe, that the appellant 'is indebted to the above-named defendants; and that it has in its possession and under its control personal property and effects belonging to the said defendants.' On the same day a writ of garnishment was issued, directed to the appellant as garnishee, commanding it to appear and answer upon oath 'what, if any, you are indebted to said defendants, and were when this writ was served upon you, and what effects, if any, of the said defendants you have in your possession or under your control, and had when this writ was served upon you.' In due time the appellant answered that it was not then, and was not when the writ was served upon it, indebted to the Gerricks in any sum, and that it did not then have, and did not have when the writ was served upon it any of their effects in its possession. The plaintiff in reply alleged that prior to April 16, 1910, the appellant issued to the Gerricks 'an employer's liability policy,' insuring them against liability for damages up to the sum of $5,000 for any accident or injury to any one, suffered through their negligence or the negligence of their employés; that on the date stated the Gerricks were engaged in the erection of the Old National Bank building in the city of Spokane; that on that day the plaintiff, while working on the building, sustained an injury through the negligence of the Gerricks; that he thereafter commenced an action against them to recover damages for the injuries, which terminated in a judgment in his favor, on the 29th day of October, for the sum of $2,476 and costs; that the appellant employed counsel to represent them to resist and contest the action; and that 'about the time of the entry of the judgment' the Gerricks became and have since remained insolvent. With the consent of the court, the appellant answered, admitted the issuance of a 'casualty policy,' set forth its terms, and alleged that, before the commencement of the garnishment proceedings it settled with the assured all of its liability under the policy. The plaintiff, in his amended reply to the answer, alleged that he was threatening to enforce the judgment against the Gerricks and the appellant, and that his attorney 'was informed by Vincent A. Hancock, auditor and agent of the said insurance company, and authorized to act for and bind said company in the matter of the settlement of said judgment, that said company would pay said judgment, but that it would require two or three weeks to obtain the money from the head office of said company in the East to pay said judgment, and if plaintiff would take no steps to collect or enforce said judgment said company would pay it within two or three weeks;' that he relied on that statement, and delayed taking any steps to enforce or collect the judgment until the commencement of the garnishment proceedings; that if the policy was settled the settlement was made without consideration and fraudulently, for the purpose of preventing him from collecting or enforcing the judgment; and that the appellant had knowledge at all times that the financial condition of the Gerricks was such that the judgment could not be enforced against them, and knew that they had no property on which execution could be levied. The appellant seasonably moved against all affirmative matter pleaded by the plaintiff subsequent to the original affidavit. There was a judgment for the plaintiff against the appellant for the sum of $2,729.35 and costs. This appeal followed.

Mr. Powell, one of the attorneys for the respondent, testified that he went from Spokane to Seattle as a representative of the respondent, for the purpose of collecting the judgment against the Gerricks; that he there had a conversation with Mr. Hancock, the appellant's inspector and auditor, in which witness told him that he wanted the judgment paid; that he believed the appellant had to pay it; that 'we' were expecting it to pay it; that 'we' were going to collect it from the appellant or the Gerricks, 'one or both of them'; that it was 'liable to pay it direct to us;' and that Hancock finally said that if witness would let the matter rest 'they would pay the judgment.' The respondent relies upon this testimony and the provisions of the policy to sustain the judgment.

The policy runs direct to the Gerricks, and provides that, in consideration of the premium, the appellant 'does hereby agree to indemnify the assured against loss * * * arising or resulting from claims upon the assured for damages on account of bodily injuries * * * suffered * * * by any person or persons not employed by the assured' by reason of the business covered by the policy. It provides that 'the insurance is subject to the following conditions:

'(B) If suit is brought against the assured to enforce a claim for damages covered by this policy, he shall immediately forward to 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 such suit in the name and on behalf of the assured.

'(C) The assured, whenever requested by the company, shall aid in effecting settlements, securing information and evidence, the attendance of witnesses and in prosecuting appeals, but the assured shall not voluntarily assume any liability or interfere in any negotiation for settlement, or in any legal proceeding, or incur any expense, or settle any claim, except at his own cost, without the written consent of the company previously given, except that the assured may provide at the company's expense such immediate surgical relief as is imperative at the time of the accident.

'(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.'

'(N) The company's liability for loss on account of an accident resulting in bodily injuries and/or death to one person is limited to five thousand and no/dollars ($5,000.00); and, subject to the same limit for each person, the company's total liability for loss on account of any one accident resulting in bodily injuries and/or death to more than one person is limited to ten thousand & no/dollars ($10,000.00). The company will, however, as provided in conditions B and C hereof, pay the expense of litigation in addition to the sum herein limited and will also pay all costs taxed against the assured in any legal proceeding defended by the company, and interest accruing after entry of judgment upon such part thereof as shall not be in excess of the limits of the company's liability herein expressed.'

Counsel for the respondent state their position as follows: 'It is our contention that when the assured defends the insurance is indemnity insurance; and when the company defends the insurance is liability insurance. In other words, that by defending and by taking entire charge of the litigation the company assumes the payment of the judgment rendered against the assured, and condition D does not apply, and the insurance is changed from indemnity to liability insurance.' As we have stated, the appellant conducted the defense for the Gerricks ricks in the suit wherein the respondent recovered the judgment against them. We cannot assent to the respondent's interpretation...