Homan v. Employers Reinsurance Corp.

• Decision Date: 23 January 1940
• Docket Number: 36087
• Parties: Homer Homan and Homer Homan, Assignee, Appellants, v. Employers Reinsurance Corporation, a Corporation
• Court: Missouri Supreme Court

136 S.W.2d 289

345 Mo. 650

Homer Homan and Homer Homan, Assignee, Appellants, v. Employers Reinsurance Corporation, a Corporation

No. 36087

Supreme Court of Missouri

January 23, 1940

[Copyrighted Material Omitted]

Rehearing Granted, Reported at 345 Mo. 650 at 667.

Appeal from Jackson Circuit Court; Hon. Emory H. Wright Judge.

Reversed and remanded (with directions).

O. H. Swearingen and Robert L. Holder for appellant.

The court erred in sustaining defendant's demurrer to plaintiff's petition and rendering judgment against plaintiff. R. S. 1929, secs. 5898, 5899; Schott v. Continental Auto Ins. Underwriters, 31 S.W.2d 7; Lorando v. Gethro, 117 N.E. 185; Sofia Bros. v. General Reins. Corp., 274 N.Y.S. 565; Gutride v. General Reins. Corp., 4 N.Y.S. (2d) 387; McKinney's Consolidated Laws of N. Y. Annotated Book 27, Title "Insurance Law," sec. 109; Globe Natl. Fire Ins. Co. v. Amer. Bonding & Cas. Co., 217 N.W. 268; Gant v. Amer. Central Life Ins. Co., 68 Mo. 503; Klotzbach v. Bull Dog Ins. Co., 267 S.W. 39.

Cowgill & Popham and Guy W. Green, Jr., for respondent.

(1) The demurrer to the petition was properly sustained because it did not state facts sufficient to constitute a cause of action against the reinsurer. (a) The contract was one of indemnity against loss rather than one of insurance and no liability on the part of defendant accrued until the primary insurer actually paid the loss. Staggs v. Gotham, etc., Co., 208 Mo.App. 596, 235 S.W. 511; State ex rel. Western Auto. Ins. Co. v. Trimble, 249 S.W. 902; Klotzbach v. Bull Dog Auto Fire Ins. Assn., 267 S.W. 39; Pickering v. Hartsock, 221 Mo.App. 868, 287 S.W. 819; Wehrhahn v. Fort Dearborn, etc., Co., 1 S.W.2d 242; Baltica Ins. Co. v. Carr, 330 Ill. 608, 162 N.E. 178; Union Central Life Ins. Co. v. Lowe, 349 Ill. 424, 182 N.E. 611; American Bonding Co. v. Amer. Surety Co., 127 Va. 209, 103 S.E. 599; Clark Co. v. Bergstresser, 57 S.D. 424, 233 N.W. 276; Vera Democrazia Co. v. Bankers Life Ins. Corp., 160 A. 767; Fidelity & Deposit Co. v. Pink, 58 S.Ct. 162, 302 U.S. 224. (b) There is no privity of contract between the plaintiff and the defendant and consequently plaintiff has no right of action on the reinsurance treaty against this defendant. Thomas v. Land, 30 S.W.2d 1035; Morrow v. Burlington Basket Co., 66 S.W.2d 746; Nacy's v. LePage, 111 S.W.2d 25; Frohoff v. Casualty Reciprocal Exch., 113 S.W.2d 1026; Commercial Cas. Ins. Co. v. Columbia Cas. Co., 125 S.W.2d 493; Vial v. Norwich Fire Ins. Assn., 257 Ill. 355, 100 N.E. 929; Baltica Ins. Co. v. Carr, 330 Ill. 608, 162 N.E. 178; Union Central Life Ins. Co. v. Lowe, 182 N.E. 611; Greenman v. General Reins. Corp., 262 N.Y. 701, 188 N.E. 128; Insurance Co. v. Park & Pollard Co., 180 N.Y.S. 143; Greenman v. General Reins. Corp., 262 N.Y.S. 569; People ex rel. Sea Ins. Co. v. Graves, 209 N.Y.S. 177; Sophia Bros. v. General Reins. Co., 274 N.Y.S. 565; In re People's Metal Ware Co. v. General Reins. Co., 282 N.Y.S. 993; Johannes v. Phoenix Ins. Co., 66 Wis. 50, 27 N.W. 414; Barnes v. Hekla Fire Ins. Co., 57 N.W. 314; Bradley & Co. v. Brown, 112 N.W. 331; Clark v. Bergstresser, 57 S.D. 424, 233 N.W. 276; Moseley v. Liverpool, etc., Ins. Co., 61 S.E. 428; North British, etc., Co. v. Speer, 66 S.E. 815; American Bonding Co. v. Amer. Surety Co., 103 S.E. 599; Strong v. Phoenix Ins. Co., 89 Mo. 289; United States ex rel. Colonial Brick Co. v. Fed. Surety Co., 72 F.2d 964; Bethke v. Cosmopolitan Life Ins. Co., 262 Ill.App. 506; Grabavach v. Casualty Co., 180 P. 835. (c) Section 5898, Revised Statutes 1929, does not apply to reinsurance contracts and therefore does not change or alter the rights or liabilities of the reinsurer, the insured, or the judgment creditor as fixed by the contract of insurance and as interpreted by the general law. Sec. 5898, R. S. 1929. (d) Section 5899, Revised Statutes 1929, does not give plaintiff any right of action herein. Sec. 5899, R. S. 1929. (e) The petition did not state any facts which would give rise to liability under the reinsurance contract since no loss covered by the contract was alleged. Klotzbach v. Bull Dog Ins. Co., 267 S.W. 39; Schott v. Continental Auto Ins. Underwriters, 31 S.W.2d 7; Morrow v. Burlington Basket Co., 66 S.W.2d 746; Gantt v. Amer. Central Ins. Co., 68 Mo. 503; Lorando v. Gethro, 117 N.E. 185; Greenman v. General Reins. Corp., 262 N.Y.S. 569.

Paul R. Stinson, amicus curiae.

Dalton, C. Hyde and Bradley, CC., concur.

OPINION

DALTON

This is an action in equity against a reinsurance company. Plaintiff the holder of two unsatisfied judgments for personal injuries against an insolvent bus company which was insured by an insolvent insurer seeks to collect the balance due on said judgments from the reinsurer of the bus company's insurer. According to appellant this proceeding is an equitable garnishment by which "plaintiff seeks to apply insurance money to a judgment debtor under the provisions of Sections 5898 and 5899, Revised Statutes 1929" (Mo. Stat. Ann., secs. 5898, 5899, pp. 4499, 4500). The trial court sustained a demurrer to plaintiff's amended petition. Plaintiff declined to plead further and judgment was entered dismissing plaintiff's petition and taxing costs against him. The plaintiff has duly appealed.

The petition alleges that defendant is an insurance company, formerly known as the Employers Indemnity Corporation (hereinafter referred to as Corporation), and engaged in the general insurance business in this State; that plaintiff and his wife were passengers on a bus of the Capital Stage Lines Company, when a collision occurred due to the company's negligence, and plaintiff and his wife were injured; that judgments against the bus company and a railroad company for a total of $ 67,500 were obtained ($ 32,500 for plaintiff and $ 35,000 for plaintiff's wife); that plaintiff's wife has assigned her judgment to plaintiff; that there is due and owing on the said judgments the sum of $ 3500 as principal and $ 21,195 as interest; that Capital Stage Lines Company carried a policy of liability insurance (in full force and effect on the date of the accident) insuring it against loss by reason of adverse judgments arising by virtue of its negligence in the operation of any of its buses, including the one in which plaintiff and his wife were riding; that the policy was issued by the Continental Auto Insurance Underwriters of Springfield, Illinois (hereinafter referred to as Continental); that the insured complied with all of the terms of said policy; that said policy was attached to and made a part of the petition; that the Continental, the insurer of the Capital Stage Lines Company (hereinafter referred to as Stage Lines) had a blanket reinsurance agreement with defendant (in full force and effect on the date of the accident) by which defendant agreed to indemnify said Continental "and all parties insured by it and expressly the Capital Stage Lines Company for all amounts in excess of $ 5000 to one person and for all amounts in excess of $ 10,000 accruing from one accident;" that the agreement, attached to and made a part of the petition, re-embodied all of the terms of the policy issued by the Continental to the Stage Lines, and that the Continental had complied with the terms and conditions of said reinsurance agreement.

The petition further alleged that the particular bus of the Stage Lines involved in the accident had a capacity of more than twenty-four passengers and the total liability of the Continental and of the defendant corporation under the policy and agreement was $ 50,000 for one accident or collision; that the Continental had gone into receivership in 1931; that the Receiver had been discharged in 1934 and its debts and liabilities had been "dissolved and for naught held;" that its creditors took nothing; that since plaintiff's judgments were not final at said date, the plaintiff could make no claims and was now precluded from relief in the receivership; that plaintiff had collected $ 64,000 from the other judgment debtor; that defendant corporation had paid some claims for the Continental under its reinsurance agreement but had not discharged its full liability; and that defendant corporation in the trial of said causes against the Stage Lines had employed counsel and taken charge of and managed the defense on behalf of Stage Lines in each of said causes. Plaintiff prayed for issuance of equitable garnishment and for general relief.

The parties by stipulation have filed copies of the policy and agreement, as attached to and made a part of the petition, and have agreed that said exhibits be incorporated in the abstract of the record. In their briefs appellant and respondent have pointed out and discussed at length various provisions of the policy and agreement, as if both exhibits were before us for all purposes involving their application and construction. Respondents have also set out the said exhibits in full in an appendix to their brief and further state, "The facts must, therefore, be taken solely from the allegations of the petition and attached exhibits." No evidence however was taken in the court below, and the cause was ruled on demurrer to the petition.

In the case of Highland Investment Co. v. Kansas City Computing Scales Co., 277 Mo. 365, 374, 209 S.W. 895, 897, this court said, "It has always been held that an instrument filed with a pleading as an exhibit is not to be considered in determining the sufficiency of the pleading. . . . And that is true even though the petition allege expressly that the exhibit is made a part thereof. But it will be noticed that in all such cases the exhibit is to be ignored only in determining the sufficiency of the pleading as such. 'An exhibit attached to the petition is not so far a...