Government Emp. Ins. Co. v. Woods
| Decision Date | 14 December 1961 |
| Docket Number | No. 35954,35954 |
| Citation | 59 Wn.2d 173,367 P.2d 21 |
| Parties | GOVERNMENT EMPLOYEES INSURANCE COMPAMY, an insurance corporation, Respondent, v. Lucy WOODS, as Administratrix of the Estate of Marion F. Woods, deceased, Defendant, Sam Alder, individually, and as guardian for Donald Alder, a minor, Appellant. |
| Court | Washington Supreme Court |
Gladstone & Day, Richland, for appellant.
Loney, Westland & Koontz, Kennewick, for respondent.
This is an appeal from a summary judgment for the plaintiff in a declaratory judgment action brought by an insurance company to determine its liability under a public liability policy issued by it. The defendants were the insured named in the policy and one Sam Alder, who had brought suit against the named insured and his former wife to recover damages for alleged negligent operation of a motor vehicle.
The facts as agreed to by the parties and set out in the pretrial order are substantially as follows:
December 29, 1957, Marion F. Woods (hereafter called husband) and Maxie Woods (hereafter called wife) were remarried. At that time, husband was the owner of a 1948 Studebaker, and wife was in the process of purchasing, under a conditional sale contract, a 1948 Plymouth automobile, which was registered in her name. The latter automobile became, and, for purposes of this case, is treated as community property. In June, 1958, the parties separated, wife taking the Plymouth with her. The parties have not resided together since. About two months later, husband commenced a divorce action against his wife. Shortly after the divorce action was commenced, husband took out an automobile liability insurance policy which named him as the insured and described his Studebaker as the insured vehicle.
The situation, then, at the time husband applied for and obtained this insurance policy, was that he and wife were separated and a divorce action had been commenced; wife was in possession of the Plymouth car, which was registered in her name; and husband was the 'owner' of that car in so far as it was community property.
November 4, 1958, while driving the Plymouth registered in her name, on her own business, wife collided with the automobile of Sam Alder, resulting in damage to said vehicle and injury to Sam's minor son Donald.
November 20, 1958, a default decree of divorce was entered against wife.
In March, 1959, Sam Alder, individually, and as guardian for his son Donald Alder, brought a property damage and personal injury action against both husband and wife in the Benton County Superior Court. The defense of the action was tendered to respondent insurance company, which rejected the tendered defense on the basis that there was no coverage afforded by the policy for the automobile involved nor for the defendants involved.
Thereupon, respondent brought this action against the insured husband, wife, and Sam Alder, for a declaratory judgment determining that the policy of insurance did not cover liability for the injuries or damages allegedly resulting from the automobile accident described in Sam Alder's complaint.
Since the present action was brought under RCW 7.24, it is appropriate to discuss the jurisdictional question before discussing what happened in the trial court. Do the facts stated in the pretrial order present a sufficiently justiciable controversy to sustain a declaratory judgment action? We hold that they do. The terms of the policy require the company to defend, on behalf of the named insured, any suit brought against him (whether bona fide or fraudulent) which is based on a cause of action which is within the coverage of the policy. 1 The respondent has already refused to defend the pending action brought by Sam Alder against the insured. Such refusal can be legally justified only if the policy does not afford insurance coverage for the defense of the pending action involving the automobile collision described above. Therefore, a judgment declaring that the policy does not cover the collision involved herein would establish the only possible legal justification for respondent's refusing to defend the action brought by Alder against the insured. Since respondent seeks an answer to the one question which must necessarily be answered in order to establish whether or not it has a legal right to refuse to defend a pending suit (which it has already been asked to defend), there is a justiciable controversy. See National Indemnity Co. v. Smith-Gandy, 50 Wash.2d 124, 309 P.2d 742 (1957), and Conaway v. Time Oil Co., 34 Wash.2d 884, 210 P.2d 1012 (1949). Cf. Adams v. City of Walla Walla, 196 Wash. 268, 82 P.2d 584 (1938).
The next question the court must decide is substantially the same as that decided in Trinity Universal Insurance Co. v. Willrich, 13 Wash.2d 263, 124 P.2d 950, 954, 142 A.L.R. 1 (1942), where the plaintiff claimed the policy had been canceled prior to the time of the accident involved therein. The question, as decided in that case, is
'* * * whether the court, in a declaratory judgment action brought to determine disputed questions relative to the coverage and cancellation of an insurance policy, has jurisdiction to adjudicate the rights of third parties who are asserting claims for damages against the insured and who have for that reason been brought into the declaratory action. Stated in another form, the question is whether third party claimants are proper parties in a declaratory action of this sort.
'Rem.Rev.Stat.Supp., § 784-11 [now RCW 7.24.110], provides:
"When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding. * * *' The appellants in this action have claims which may, and probably will, be vitally affected by the declaration in this case, for if they recover judgment against Willrich, they will have the right to compel respondent to pay that judgment, unless in some proceeding binding on them the respondent establishes its nonliability as insurer at the time of the accident. Were appellants not made parties herein, the declaration now sought by respondent could not be asserted to the prejudice of appellants' rights.
'Whenever the question has arisen, at least in recent years, it has been held that third party damage claimants, such as appellants in this case, are proper, and in some cases even necessary, parties to the declaratory action. * * *'
See, also, Annotation, 71 A.L.R.2d 723, and 16 Am.Jur., Declaratory Judgments §§ 55-62.
After this action was brought, a pretrial hearing was had, resulting in the entry of a pretrial order which resolved certain of the factual issues in the case. Thereafter, respondent insurance company moved for a summary judgment which the court granted after hearing argument of counsel and considering the written briefs of the parties. The trial court found that the Plymouth car registered in wife's name is not covered by the insurance policy, and that, therefore, the insurance company could not be liable for any damages which might arise from wife's accident.
The memorandum decision of the trial court was filed October 24, 1960. Thereafter, on December 29, 1960, in open court, it was ordered that Lucy Woods administratrix of the estate of Marion F. Woods, be substituted as a party defendant in this action in...
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