Gulf Am. Fire & Cas. Co. v. Gowan

• Decision Date: 23 January 1969
• Docket Number: 3 Div. 377
• Parties: GULF AMERICAN FIRE & CASUALTY COMPANY v. A. R. GOWAN.
• Court: Alabama Supreme Court

Page 688

218 So.2d 688

283 Ala. 480

GULF AMERICAN FIRE & CASUALTY COMPANY v. A. R. GOWAN.

3 Div. 377.

Supreme Court of Alabama.

Jan. 23, 1969.

Rehearing Denied Feb. 20, 1969.

Chas. A. Stakely, Jr., and Jesse M. Williams, III, of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellant.

Jones, Murray, Stewart & Varner, Montgomery, for appellee.

BLOODWORTH, Justice.

This is an appeal by defendant, Gulf American Fire & Casualty Company, a Corporation, from a judgment entered against it in the circuit court of Montgomery County, which found for the plaintiff, A. R. Gowan, in the amount of $5,028.50 based on 'uninsured motorist' coverage in a policy of automobile liability insurance issued by Gulf American to plaintiff.

Plaintiff was riding in an automobile involved in an accident with a motor vehicle driven by Willie Berry in Lowndes County, Alabama. Berry was an 'uninsured motorist' as defined by the policy of liability insurance between plaintiff and defendant.

The 'uninsured motorist' provision in the insuring agreement pertinent to this case provided as follows:

'* * * The company will pay all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury * * * sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; provided, for the purposes of this endorsement determination as to whether the insured * * * is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured * * * and the company or, if they fail to agree, by arbitration.

'No judgment against any person * * * alleged to be legally responsible for the bodily injury shall be conclusive, as between the insured and the company, of the issues of liability of such person * * * or of the amount of damages to which the insured is legally entitled Unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company.' (Emphasis supplied.)

Notice of the accident was given to Gulf American. It admitted its liability and coverage, and the sole matter in dispute was the amount owed plaintiff. The parties could not reach an agreement. They agreed to waive arbitration. ¹

Plaintiff then filed suit against the uninsured motorist in the circuit court of Lowndes County, Alabama, for damages and notified defendant, prior to bringing suit, requesting that it defend the suit. Defendant did not do so. Plaintiff secured a default judgment in the Lowndes County court for $5,000 and $28.50 costs.

Plaintiff then filed suit against defendant seeking the damages recovered against the uninsured motorist. The circuit court of Montgomery County rendered judgment against defendant for $5,028.50, with interest and costs, holding the Lowndes County judgment was both admissible and 'conclusive' to show the amount of damages that plaintiff was legally entitled to recover.

There are eleven assignments of error on this appeal.

Defendant's first assignment of error argues that the trial court erred in overruling the motion to strike portions of the plaintiff's bill of complaint as being irrelevant and prolix.

The law is well settled in this jurisdiction that motions to strike out irrelevant portions of pleadings are directed to the sound discretion of the trial court and may be overruled without injury. Clements v. Olive, 274 Ala. 210, 147 So.2d 818; Gaines v. Stevens, 248 Ala. 572, 28 So.2d 789. See, also, Kelley v. Osborn, 269 Ala. 392, 113 So.2d 192. We find no abuse of discretion by the trial court in overruling defendant's motion to strike.

The remaining assignments of error Nos. 2--11, inclusive, direct the court to the single issue before it on this appeal as we paraphrase it from appellant's second reply brief, viz:

Will the Court enforce the policy provision between the parties that a judgment against an uninsured is not conclusive against the insurer unless the judgment is entered pursuant to an action prosecuted by the insured with the written consent of the Company?

Defendant contends that the judgment against the uninsured motorist is not 'conclusive' as to the amount which plaintiff is 'legally entitled to recover' from the insurance company, nor is it admissible in such a suit as this. Defendant argues that an insured and insurer may contract and include such limitations and restrictions upon the insurer's liability as each is willing to accept and adopt so long as it is not inconsistent or violative of public policy or contrary to statute. Since the insurer has no duty to defend the uninsured motorist, defendant says it should not be bound by any determination in a negligence action against the uninsured by the insured without its express written permission. Defendant also contends that a judgment recovered in such action is not admissible in the subsequent suit by the insured against the insurer, the insurer being a stranger to the first suit and not in privity with the parties therein.

Plaintiff, on the other hand, contends that the judgment in the action against the uninsured motorist is conclusive of the issues therein determined and the insurer is bound thereby. Plaintiff argues the insurer had full knowledge of the pendency of the suit, was requested to defend the uninsured motorist but did not do so. It may not therefore sit idly by, awaiting determination of liability and then insist that it is not bound by the result of that action because it did not give its written consent. Plaintiff says that the insurer should be bound by the result of the litigation between the insured and the uninsured motorist because the insurer was required under the insurance contract to protect the insured from the uninsured motorist, and had notice of the litigation and an opportunity to control it.

Uninsured motorist coverage is intended to provide financial recompense to innocent persons who are injured and to dependents of those who are killed because of the wrongful conduct of uninsured motorists. American Universal Insurance Company v. Ranson (1962), 59 Wash.2d 811, 370 P.2d 867.

It came into being as the result of 'public concern over the increasingly important problems arising from injuries by motorists who are uninsured and financially irresponsible.' Anno. 79 A.L.R.2d 1252; 'Problems That May Arise Concerning Uninsured Motorist Coverage In Alabama'--Allen, The Ala. Law., Vol. 27, No. 3, p. 280. As pointed out in 79 A.L.R.2d 1252, the construction of uninsured motorist clauses is still in an early stage of development, and the existing decisions are too few and too fragmentary to permit the controlling rules or principles to be stated.

As expressed by the Court of Appeals of Missouri in Kisling v. MFA Mutual Insurance Co. (Mo.App.1966), 399 S.W.2d 245, viz.:

'Uninsured motorist coverage is pregnant with potentially perplexing problems, both procedural and substantive * * *. Since the courts must resolve each such problem as and when it is presented for determination on the facts and circumstances of a given case * * * '(W)hat we have said and held is of course applicable only to this case' and 'we express no opinion and intend no holding except as applied to the specific situation before us.' * * *' (Emphasis supplied.)

This observation is particularly apt with respect to the clause which we are called on to interpret in this case.

In 1963 the earlier 'consent to sue' clause exclusion was eliminated from the uninsured motorist coverage in the standard form of automobile insurance and was replaced with the clause above quoted which appeared in the suit policy. None of the cases quoted by counsel on either side is exactly in point. Our independent research has disclosed but one case in the United States which appears to be on 'all fours.' We will allude to these cases presently.

Nearly all the cases cited involve construction of the older 'consent to sue' exclusion. Some courts have enforced such provision, others have not.

In Andeen v. Country Mutual Ins. Co., 70 Ill.App.2d 357, 217 N.E.2d 814 (1966), where such a 'consent to sue' exclusion was involved, and where the insurance company had failed to consent but was given written notice of suit, such provision was held not to prevent the judgments obtained from being binding on the insurer. No provision such as in the suit policy in this case is involved, though the opinion does refer to the fact that some insurers were at that time including such provision in their policies of insurance. There is a vast difference between a policy provision, such as in the Andeen case, which specifically provides 'this policy does not apply' where consent to sue was not obtained before judgment was entered, and a case such as here where no prohibition against suit is contained but simply the provision that judgment shall not be conclusive unless written consent is first obtained.

In Boughton v. Farmers Ins. Exchange, 354 P.2d 1085, 79 A.L.R.2d 1245 (Okl.1960), relied on by plaintiff, a policy exclusion states the insurance does not apply where judgment is obtained without consent of the insurer. The Oklahoma Supreme Court held such provision to be void and unenforceable. It held the arbitration clause to be void as well. The court there reasoned the suit by the uninsured motorist was not binding upon the insurer in the sense it is a judgment against the insurer, but that the suit against the insurer was not to recover the judgment but for sums which the insurer is 'legally entitled to recover as damages.' It said the judgment represents such sums and when the insurer had notice of the action, was furnished with the complaint, and was requested to participate and did not, this supplied 'privity' between the insurer and the insured.

The court held under Oklahoma law that one who is required by contract to protect another from liability...