Gulf Ins. Co. v. Plasky

• Decision Date: 15 July 1959
• Docket Number: No. 10686,10686
• Citation: 326 S.W.2d 216
• Parties: GULF INSURANCE COMPANY, Appellant, v. John PLASKY, Appellee.
• Court: Texas Court of Appeals

Page 216

326 S.W.2d 216

GULF INSURANCE COMPANY, Appellant, v. John PLASKY, Appellee.

No. 10686.

Court of Civil Appeals of Texas, Austin.

July 15, 1959.

Rehearing Denied Aug. 5, 1959.

Strasburger, Price, Kelton, Miller & Martin, Royal H. Brin, Jr., Dallas, for appellant.

Powell, Rauhut, McGinnis & Reavley, Eugene W. Nelson, Austin, for appellee.

GRAY, Justice.

Appellee, John Plasky, recovered a judgment for damages against B. A. Hodges. The damages were for personal injuries and property damage sustained in an automobile collision. It was rendered May 28, 1956 and was for $87,069.34, interest and costs. This amount included $572.50 property damage. An appeal was prosecuted from that judgment and it was affirmed by this Court. Hodges v. Plasky, Tex.Civ.App., 300 S.W.2d 955, er. ref., n. r e.

Appellant, Gulf Insurance Company, was the liability insurance carrier for Hodges and defended the suit in the trial court and on appeal. The policy of insurance insured Hodges against liability for bodily injuries to the limit of $5,000 for each person, $10,000 for each accident and for property damage to a limit of $5,000. The policy obligated appellant, Gulf, to

'(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient;

'(b) * * *

'(2) pay all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon;'

On November 28, 1956 B. A. Hodges filed his petition in bankruptcy and listed appellee's judgment as one of the claims against him. He has been duly discharged as a bankrupt by an order filed February 19, 1958.

In this suit appellee sued appellant to recover the limits of the above policy for personal injuries and property damage and also interest on $87,069.34 at the rate of 6 per cent per annum from May 28, 1956. At a nonjury trial a judgment was rendered awarding appellee a recovery against appellant for $5,572.50 together with interest on $87,069.34 from May 28, 1956 at the rate of 6 per cent per annum.

Appellant here presents five points. These are to the effect that the trial court erred: in failing to limit appellee's recovery to $5,572.50; in allowing interest on the amount of the judgment in excess of the limits of the policy of insurance; in allowing interest on the excess part of the judgment despite tenders by appellant; in allowing interest on the excess portion of the judgment after Hodges was discharged in bankruptcy, and in

'* * * allowing interest on the excess portion of the judgment even after the final action of the Supreme Court and the tender to the Appellee of the full amount of Appellant's liability in return for a pro tanto release.'

By its points and its brief appellant concedes liability for $5,000 for personal injuries and also for $572.50 property damage. It asserts that it has tendered these amounts and denies liability for interest on the amount of appellee's judgment in excess of those amounts.

The question for decision is: Does the clause above quoted obligate appellant to pay interest on the amount of appellee's judgment in excess of the policy limits?

This question has not been decided by the Texas appellate courts. It has been before courts in other jurisdictions, however those decisions are not in accord. Also the texts that we have examined do not answer the question. In 29 Am.Jur. p. 921, Sec. 1228, it is said:

'The determination of the question whether an indemnity or liability insurer is liable for interest and costs on that part of a judgment recovered against the insured by a third party which is in excess of the amount limited by the policy depends upon the language employed by the parties in their contract. Under the provisions of some policies it has been held that the insurer is liable for interest only on the amount limited by the policy, and not on the amount recovered in excess of that sum.'

In Blashfield, Cyclopedia of Automobile Law and Practice, Vol. 6, part 2, p. 176, Sec. 4105.5, it is said:

'Under a policy providing for the payment of interest accruing after the entry of judgment against insured until payment, tender or deposit in court of the part for which insurer is liable, insurer is liable only for interest on the part of the judgment for which it is liable where the policy as a whole shows such was the intent.'

The holdings of the Federal Courts are not in accord, this however may be explained by the fact that those courts interpret the policy of insurance by the law of the State where the policy was in force. In Herzog v. Fidelity & Casualty Company of New York, 10 Cir., 257 F.2d 840, 841, the court said:

'Persuasive or even convincing as these authorities may seem, they are but forecasts of controlling state law. They are binding only upon the parties and persuasive only until the respective states have spoken.'

In Standard Accident Ins. Co. of Detroit, Mich. v. Winget, 9 Cir., 197 F.2d 97, 106, 34 A.L.R.2d 250, the court considered a policy of insurance executed in the State of California which obligated the company to pay:

'* * * all costs taxed against the insured in any such suit, all expenses incurred by the company, all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon, * * *'

Winget, the appellee, contended that he was entitled to recover interest on the amount of his judgment in excess of the policy limits. The court declined to so interpret the policy and cited Sampson v. Century Indemnity Company, 8 Cal.2d 476, 66 P.2d 434, 109 A.L.R. 1162, by the Supreme Court of California. The court said:

'If we hold an insurer liable for interest, not on the portion of the judgment for which it is liable, which it does not pay, but on the whole amount recovered against the insured, we are imposing vicarious liability. And, while vicarious liability exists in our law, it is the exception rather than the rule. And a contract should not be interpreted in such a manner as to impose upon a person responsibility for the obligations of others, even if it be in the form of interest only.

'In the light of what has just been said, we do not believe that the clause under discussion lends itself to the strained construction which appellant Winget would place on it. Courts do not resort to forced construction in order to fasten liability upon an insurer which, by the terms of the policy, it has not assumed. Maryland Casualty Company v. Industrial Accident Commission, 1930, 209 Cal. 394, 397, 287 P. 468; Blackburn v. Home Life Insurance Co., 1941, 19 Cal.2d 226, 229, 120 P.2d 31.'

In the Sampson case supra [8 Cal.2d 476, 66 P.2d 435] the court had before it an insurance policy which obligated the company

'to pay all costs * * * also all interest accruing after entry of judgment until the Company had paid, tendered, or deposited in Court such part of such judgment as does not exceed the limit of the company's liability thereon. * * *'

The court said:

'All interest,' as used in the provision above quoted, means all interest on that part of the judgment for which the company was liable, and not all interest on the entire judgment as contended by the appellant. To construe this provision to mean that the company had agreed to pay the interest to become due on that part of the judgment which the company was not legally liable to pay would be an unnatural and strained construction of this provision of the policy.'

and further that:

"While uncertainties and ambiguities in insurance policies are to be resolved against the insurer, courts must avoid putting a strained and unnatural construction on the terms of a policy and thereby creating an uncertainty or ambiguity. No term of a contract is either uncertain or ambiguous if its meaning can be ascertained by fair inference from other terms thereof. There is no difficulty in so ascertaining the intention of the parties to this action as to the place of payment, and the court must give effect to that intention.' Burr v. Western States Life Ins. Co., 211 Cal. 568, 576, 296 P. 273, 276.'

Following the report of the Sampson case in 109 A.L.R. and beginning on page 1167 there are annotations interpreting insurance clauses as to interest. However the clauses are somewhat different to the one before us and for which reason we think the cases herein cited are more in point on the question here.

In Russom v. United Service Automobile Association, D.C., 143 F.Supp. 790, 796, Judge Rice sitting at San Antonio, had before him the following clause: '* * * all interest accruing after entry of judgment until he company has paid, tendered, or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon.' In holding the company liable for interest on the entire judgment he said the language was clear and unambiguous and cited and quoted from Appleman, Automobile Liability Insurance, p. 209, as follows:

'The intention of the framers is quite clear. In addition to the policy limits, the company intends to pay * * * all interest accrued, even on that portion in excess of the policy limits. This common sense interpretation is confirmed by Mr. Sawyer.'

He also cited Wilkerson v. Maryland Cas. Co., D.C., 119 F.Supp. 383, affirmed 4 Cir., 210 F.2d 245; Underwood v. Buzby, D. C., 136 F.Supp. 957. He cited contrary holdings from California, New York and Oklahoma. He followed the Wilkerson and Underwood cases as being the most logical decisions. His holding was...