Hartford Accident and Indemnity Company v. Wainscott, Civil 3240

• Court: Supreme Court of Arizona
• Citation: 41 Ariz. 439,19 P.2d 328
• Docket Number: Civil 3240
• Parties: HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Corporation, GUARDIAN INSURANCE AGENCY, INCORPORATED, a Corporation, PHIL C. ENSIGN, BUD AUSTIN and H. C. GILBERT, Appellants, v. R. T. WAINSCOTT, Appellee
• Decision Date: 01 March 1933

19 P.2d 328

41 Ariz. 439

HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Corporation, GUARDIAN INSURANCE AGENCY, INCORPORATED, a Corporation, PHIL C. ENSIGN, BUD AUSTIN and H. C. GILBERT, Appellants, v. R. T. WAINSCOTT, Appellee

Civil No. 3240

Supreme Court of Arizona

March 1, 1933

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment affirmed.

Messrs Baker & Whitney and Mr. Lawrence L. Howe, for Appellants Hartford Accident & Indemnity Company and Guardian Insurance Agency, Incorporated.

Mr. L M. Laney, for Appellant A. G. Austin.

Mr Frank H. Lyman, for Appellant H. C. Gilbert.

Mr Henry J. Sullivan, for Appellant Phil C. Ensign.

Mr. L. C. McNabb and Mr. O. B. DeCamp, for Appellee.

OPINION

LOCKWOOD, J.

R. T. Wainscott, hereinafter called plaintiff, brought suit against Hartford Accident & Indemnity Company, a corporation, Guardian Insurance Agency, Incorporated, a corporation, Phil C. Ensign, Bud Austin and H. C. Gilbert, hereinafter called defendants, under the provisions of sections 790 and 791, Revised Code of 1928, to recover from them certain sums of money paid by the individual defendants, who were at the time of payment the members of the board of supervisors of Maricopa county, out of the county treasury to the other defendants for premiums on policies of insurance covering the county's entire fleet of motor vehicles and protecting the county against any loss by fire or theft or liability for damage to property or persons.

There are four causes of action set up in the complaint, covering premiums paid at different times. Defendants demurred on the ground that the statute of limitations had run and that the complaint did not state a cause of action. There was also a general denial, and the statute of limitations was pleaded in bar. The court overruled the demurrers, but finally sustained the plea of statute of limitations as to the first, second and third causes of action, and rendered judgment in favor of plaintiff on the fourth cause, and, after the usual motion for new trial had been overruled, this appeal was taken.

There are six formal assignments of error, but we will consider them in accordance with the legal propositions raised thereby. The suit was brought under sections 790 and 791, Revised Codes 1928, which provide that, "whenever a board of supervisors shall, without authority of law, order any money paid out of the county treasury for any purpose, . . . " any taxpayer may under certain circumstances bring suit to recover such amount from the supervisors and the parties to whom the money was paid, together with certain statutory penalties.

Most of the facts necessary to a determination of the case are not in dispute, and we state them as follows, leaving any controverted issues to be taken up as necessary: Maricopa county is the owner of a large number of motor vehicles which were used by the county for various purposes. The board of supervisors, believing it to be in the interest of the county to do so, insured these vehicles with the defendant corporations against fire and theft and also against "public liability and property damage." These last elements are for injuries caused by negligence in the use of the motor vehicles, and the liability of the insurer is stated in the policy as follows:

"Section I -- Public Liability. To pay within the limits specified in the declarations, any loss by liability imposed by law upon the assured for such bodily injuries or death (excluding loss by liability accepted by the assured, in contract or otherwise, or under any Workmen's Compensation Law, or loss by injury to or death of any employee of the assured while engaged in the maintenance or use of any automobile);

"Section II -- Property Damage. To pay within the limit specified in the declarations, any loss by liability imposed by law upon the assured for such property damage (excluding property of the assured or in his custody, or property carried in or upon any of the described automobiles), including loss of use of such property; . . .

A. Where it is stated in the declarations that the use of any automobile therein described is for 'Pleasure and Business' or 'Commercial' purposes, as these terms are defined on the reverse of the declarations, but not otherwise, this policy shall automatically be extended to cover as additional assured, any person or persons while riding in or legally operating any such automobile, and any person, firm or corporation legally responsible for the operation thereof (excepting always, a public garage, automobile repair shop and/or sales agency and/or service station, and the proprietors, agents, or employees thereof), provided such use or operation is with the permission of the named assured or, if the named assured is an individual, with the permission of an adult member of the assured's household, other than a chauffeur or domestic servant, and provided further that the insurance under this policy shall be available first to the named assured, and the remainder, if any, to other persons entitled to benefits hereunder. . . . "

It is contended by plaintiff that payment out of the county treasury for insurance of this kind was void, for two reasons: First, that the assured named in the policy is not "Maricopa County," the corporate name of the county by which under section 760, Revised Code 1928, it must be designated, but "Maricopa County Board of Supervisors," and, second, that even though Maricopa county was the assured in the policy, there was no authority of law for such county, acting through its board of supervisors or otherwise, to spend any money for insurance of the kind covered by the policy. We think the first contention of plaintiff is somewhat hyper-technical. Even though it be true that the policy should have named the assured as "Maricopa County," yet it was well known by all of the parties that the motor vehicles covered by the policy were owned by Maricopa county, and that the purpose of the policy was to insure the county against any liability imposed by law upon it, and the insuring corporation collected the premium with full knowledge of that fact. Under these circumstances, if any liability on the part of Maricopa county arose for any of the acts covered by the policies, the insurers would certainly be estopped from contending that the mistake in the legal name of the assured affected their liability. Lenning v. Retail Merchant's Mutual Fire Ins. Co., 129 Minn. 66, 151 N.W. 425; Couch, Cyc. Ins., vol. 1, par. 221.

The second and, indeed, the vital question in the case is whether or not there was any authority of law whatever for the payment of money out of the treasury of Maricopa county for public liability or property damage insurance as defined in the policy on motor vehicles owned by the county. It is contended by plaintiff, and, indeed, admitted by defendant, that neither the state nor any political subdivision thereof, which last term obviously includes counties, is liable for the negligence of its agents when such agents are engaged in a governmental function. State v. Sharp, 21 Ariz. 424, 189 P. 631; Larsen v. Yuma County, 26 Ariz. 367, 225 P. 1115; Jones v. City of Phoenix, 29 Ariz. 181, 239 P. 1030.

It is, however, claimed by defendants, and not denied as an abstract proposition by plaintiff, that, if a political subdivision of the state is lawfully acting, not in a governmental capacity, but as a private corporation in private business, it is liable for the negligence of its servants. City of Proscott v. Sumid, 30 Ariz. 347, 247 P. 122; Jones v. City of Phoenix, supra.

Plaintiff, however, urges that under the law of Arizona, Maricopa county could not legally have engaged in or used its motor vehicles in anything but a governmental function, and that, if they were used otherwise, it was done without authority of law, and the members of the board of supervisors individually and not the county would have been responsible for any liability arising out of such use.

In determining this question, we consider first the nature of a county. This court in the case of Haupt v. Maricopa County, 8 Ariz. 102, 68 P. 525, said:

". . . A county is the local subdivision of a state or territory. It is created by the state for the purposes of government. Its functions, political and administrative, have direct relation to the policy of the state. It is possessed of only such powers as the state chooses to give it. It can incur no liability except in pursuance of law. It cannot be made to respond for wrongs committed by its officers or agents unless the statute so declares. . . ."

And again, in Hunt v. Mohave County, 18 Ariz. 480, 162 P. 600.

". . . The counties are political subdivisions of the state created to aid in the administration of the state's laws and for the purpose of local self-government."

Most of the adjudicated cases distinguish between the powers and liabilities of counties and ordinary municipal corporations such as towns or cities. The reason generally given for the distinction is that towns and cities are voluntary corporations organized at the request and by the approval of the inhabitants thereof for special and local...