Hodges v. Ocean Acc. & Guarantee Corp.

• Decision Date: 05 December 1941
• Docket Number: 29137.
• Citation: 18 S.E.2d 28,66 Ga.App. 431
• Parties: HODGES v. OCEAN ACCIDENT & GUARANTEE CORPORATION.
• Court: Georgia Court of Appeals

18 S.E.2d 28

66 Ga.App. 431

HODGES v. OCEAN ACCIDENT & GUARANTEE CORPORATION.

No. 29137.

Court of Appeals of Georgia, Division No. 1.

December 5, 1941

Rehearing Granted Dec. 16, 1941.

Judgment Adhered to Dec. 18, 1941.

Syllabus by the Court.

G Seals Aiken, of Atlanta, for plaintiff in error.

John M Slaton and James J. Slaton, both of Atlanta, for defendant in error.

MacINTYRE Judge.

Mrs. J. H. Hodges brought a suit for damages for personal injuries against the Seaboard Loan & Savings Association and its employee, G. F. Langran, alleging that the injuries were sustained as a result of the negligence of Langran in operating the automobile of the Seaboard Association on the business of the Association. A verdict was directed in favor of the Seaboard Association, and such a finding was affirmed by this court. Hodges v. Seaboard Loan & Savings Ass'n, Inc., 60 Ga.App. 335, 3 S.E. 2d 843. The jury found against Langran in the amount of $7,500 and this finding was likewise affirmed by this court. Langran v. Hodges, 60 Ga.App. 567, 4 S.E.2d 489. See also Hodges v. Seaboard Loan & Savings Ass'n, Inc., 61 Ga.App. 443, 6 S.E.2d 133, where this court affirmed a judgment directing a verdict in favor of the association in a suit by Mr. Hodges. The Seaboard Association was insured by the Ocean Accident & Guarantee Corporation and Mrs. J. H. Hodges, hereinafter called the plaintiff, sued out a garnishment against the Ocean Corporation, the contention of the plaintiff being that the Ocean Corporation was indebted to G. F. Langran in the amount of the judgment which the plaintiff had secured against him, Langran being under the policy an additional insured because he was operating the automobile with the permission of said insured. The Ocean Corporation filed its answer denying that it was indebted to the G. F. Langran in any sum whatsoever, whereupon the plaintiff traversed the answer, thus making an issue for the trial court. The trial judge directed a verdict in favor of the Ocean Corporation and to the overruling of her motion for new trial the plaintiff excepted.

The Ocean Corporation (hereinafter called the defendant) contends that garnishment is not the proper method of asserting whatever rights, if any, the plaintiff may have had. Attempts have been made in various ways by injured persons to reach an alleged obligation of an insurance company to an insured on account of an injury to such injured person by the latter, or by someone else coming within the terms of the policy. In determining the liability of the insurer in such proceedings, the courts have adopted the rule that, if the policy is one which insures against loss or damage by reason of liability, or, in other words, is a contract of indemnity, the action can not be maintained against the insurance company, on the theory that the amount of insurance does not become due and payable until the insured has paid the loss. But, if the policy is one which insures directly against liability, then the courts hold the view that the insurer is liable, on the theory that the amount of the policy up to the extent of the liability incurred by the insured on account of the accident becomes, immediately upon the happening of the event upon which the liability depends, an asset of the insured, which, in the absence of any provisions to the contrary in the policy, may be assigned by him or taken for his debt. Allen v. Aetna Life Ins. Co., 3 Cir., 145 F. 881, 76 C.C.A. 265, 7 L.R.A.,N.S. 958. Garnishment proceedings were resorted to and it was held that in the first instance the decision was governed by the first rule, and therefore the insurer was not liable as garnishee, but in the second instance the insurer was liable. 4 Am. Jur. 750, 751, §§ 312, 313, 314, 315. Whether garnishment would lie in the instant case involves a construction of the policy of insurance. The policy here provides that the insurer contracts "To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages *** sustained by any person or persons caused by accident and arising out of the ownership, maintenance or use of the automobile." Such a contract has been held to be a contract to pay liabilities. It is not simply a contract of indemnity. It is more. It is also a contract to pay liabilities. The difference between a contract of indemnity and one to pay legal liabilities is that, upon the former, an action cannot be brought and a recovery had until liability is discharged; whereas, upon the latter the cause of action is complete when the liability attaches. 37 A.L.R. 645; 83 A.L.R. 677, and annotation. Thus, this being a contract to pay any liability, the insurer is subject to garnishment by an injured person who has recovered judgment on a claim which is within the protection of the policy (8 Cooley's Insurance Briefs 832), but of course, where the accident was one not covered by the policy, there is no basis for a recovery on the policy by the injured party. 4 Am.Jur. 750, § 312.

In other words, what one cannot recover himself cannot be recovered by garnishment against him. Bates & Co. v. Forsyth, 69 Ga. 365(1b). A garnishing plaintiff's position under a contract is no better than that of the debtor. Singer Sewing Machine Co. v. Southern Grocery Co., 2 Ga. App. 545(1), 59 S.E. 473. And it was held in Holmes & Co. v. Pope & Fleming, 1 Ga.App. 338(3), 58 S.E. 281, that because the debtor cannot compel the payment of money to other purposes foreign to the contract, neither can the garnishing creditor extend his rights beyond those of the debtor. Thus, applying these rulings to the facts here, if Langran was not an insured under the terms of the policy and his acts of negligence were not covered thereby, the plaintiff cannot extend her rights beyond those of Langran.

After stating the general provisions as to liability the policy here, which insured Langran's employer as the named insured, provides: "The unqualified word 'insured' whenever used in coverages A. and B. and in other parts of this policy, when applicable to coverages, includes not only the named insured but also any person while using the automobile and any person or organization legally responsible for the use thereof provided that the declared and actual use of the automobile is 'pleasure and business' or 'commercial,' each as defined herein, and provided further that the actual use is with the permission of the named insured." (Italics ours.) The policy also provides in effect that any person who has secured a judgment against one insured under the terms of the policy shall thereafter be entitled to recover under the terms of this policy in the same manner and to the same extent as the insured. Thus, we think, that the question resolves itself to a consideration of whether Langran, under the terms of the policy as applied to the facts of this case, was an insured. To narrow the question even further, it resolves itself as to whether Langran, at the time he was driving the automobile was doing so with the permission of the named insured, to-wit: Seaboard Loan and Savings Association.

Independently of the general insuring clause in an automobile liability policy, oftentimes there appears either within the policy, or by way of rider or indorsement attached thereto, a clause pur porting, or the effect of which is, to extend the protection of the policy to any person or persons coming within a defined group. This is the so-called "omnibus" clause. It is with a clause of this character that the instant case deals. Therefore, if under the terms of the insurance policy Langran was not an additional insured then the plaintiff would have no right to recover from the defendant. The omnibus clause of the policy stipulates, in so far as material to this case, that a person becomes an additional insured providing that his "actual use [of the automobile] is with the permission of the named insured." What is the meaning of this provision of the policy and how should it be applied to the facts in the present case? What is meant by the term "permission" in the omnibus clause of an insurance policy has not been ruled on by the appellate courts of Georgia so far as we have been able to ascertain. It has, however, been passed on in numerous decisions in other jurisdictions. The term "permission" is universally held to mean either express or implied permission. The only difference of opinion to be found in construing the term is whether the permission is confined to the time when the accident occurs or whether it is defined as permission "in the first instance," that is to say, permission to get possession of the car at the beginning of its operation is such permission as would render the insured liable even though at the time of the accident, the operator of the car might have been expressly prohibited to use the car, or the operator may have been using it for a purpose wholly prohibited by the named insured. Under the doctrine of "first instance permission" the insurer is liable regardless of the purpose for which the car is being used.

It is unnecessary to collate the numerous authorities in other jurisdictions which deal with the question here involved. See 72 A. L.R. 1398-1409; 106 A.L.R. 1259-1263. Their study reveals that it is the rule in some states that if the original bailment was made with the consent of the insured it is immaterial that subsequently the automobile is driven to a place or for a purpose not within the contemplation of the insured when he parted with possession; accordingly, the insurance company is held liable even though the accident happens while the car is being used on an errand not embraced within the limits of the permission. This is the...