Home Ins. Co. v. Highway Ins. Underwriters

• Decision Date: 15 December 1952
• Docket Number: No. 40537,40537
• Citation: Home Ins. Co. v. Highway Ins. Underwriters, 222 La. 540, 62 So.2d 828 (La. 1952)
• Parties: HOME INS. CO. et al. v. HIGHWAY INS. UNDERWRITERS.
• Court: Louisiana Supreme Court

Page 828

62 So.2d 828

222 La. 540

HOME INS. CO. et al. v. HIGHWAY INS. UNDERWRITERS.

No. 40537.

Supreme Court of Louisiana.

Dec. 15, 1952.

Rehearing Denied Jan. 12, 1953.

Nicholls Pugh, Jr., and Charles J. Boudreaux, Lafayette, for plaintiff-appellant.

Porteous & Johnson, New Orleans, for defendant-appellee.

MOISE, Justice.

The Home Insurance Company, as subrogee of its insured, Ivan Carline, seeks to recover from the Highway Insurance Underwriters damages in the sum of $3,163.47, allegedly arising from a collision between a vehicle belonging to Ivan Carline, insured against collision loss by the Home Insurance Company, and a vehicle belonging to Byrnes Brothers Trucking Company, insured under a public liability policy of the defendant, Highway Insurance Underwriters.

The Highway Insurance Underwriters filed, to the supplemental petition of Home Insurance Company in which Carline was joined as plaintiff, exceptions of no right or cause of action, misjoinder of parties plaintiff, and also a plea of prescription.

The trial court sustained the plea of prescription against Carline. The exception of no right of action was also sustained, and plaintiffs' suit was dismissed.

The Court of Appeal affirmed the judgment as to the dismissal of the suit with respect to Carline and, because of its lack of jurisdiction, transferred the appeal of the Home Insurance Company to this Court, there being only property damage and no personal injury involved.

On this appeal, the sole issue before us is the correctness of the judgment of the trial court sustaining the defendant's exception of no right of action.

The trial court held that the subrogee, the Home Insurance Company, Carline's insurer, has no right of action as sole plaintiff against the insurer of the tort feasor, as sole defendant, under the provisions of Act No. 55 of 1930, LSA-R.S. 22:655. The case of World Fire & Marine Insurance Company v. American Auto. Insurance Company, La.App., 42 So.2d 565, was authority for this holding, and in this Court defendant-appellee cites that case in support of its argument.

Plaintiff, the Home Insurance Company, alleges that it obtained from its insured, Ivan Carline, two conventional subrogations, duly executed in writing, totalling $3,163.47, copies of said subrogations being attached to and made a part of its petition. These subrogations are identical, except for amounts stated, and read in part as follows:

'* * * in consideration of the sum of * * * ($1609.38 in one instance and $1554.09 in the other) * * * the undersigned hereby sells, assigns, transfers, sets over unto, and subrogates to the said Home Insurance Company all of his rights, title, interest, claims and causes of action, including any note or notes, mortgages, claims for debt, damages or negligence, to the amount above mentioned, had or held by the undersigned against any person, firm or corporation under, by virtue of, or in any wise connected with the property described in said insurance policy above mentioned, the loss suffered to said property as the result of the peril above mentioned or the consideration above described paid to the undersigned.'

The Home Insurance Company predicated its right of action on the above quoted conventional subrogation--notarially executed. The trial court failed to consider this subrogation.

In its petition the plaintiff specifically sets forth the negligence of defendant's insured, and in Article 7 it pleads the proximate cause of the accident. It then alleges that the vehicle involved in the accident was insured by the Highway Insurance Underwriters, and that under the terms of the policy, Byrnes Brothers Trucking Company was insured for loss and injury in the manner set forth. In Article 9 plaintiff insurance company alleges that as conventional subrogee of its insured, it made demand for payment on Byrnes Brothers Trucking Company and the Highway Insurance Underwriters.

The trial court sustained the exception of no right of action by virtue of Act No. 55 of 1930, as amended, LSA-R.S. 22:655.

Defendant contends that the right of action under the provisions of Act No. 55 of 1930, as amended, is limited to an insured person or his heirs, and that plaintiff--not being in either category--has no right of action against it.

Before the enactment of our present remedial public liability legislation, policy provisions were to the effect that there must be a judgment against the tort feasor before bringing action against the insurer. The following quotations from the jurisprudence exemplify the change:

In Hudson v. Georgia Casualty Co., D. C., 57 F.2d 757, 759, it was stated:

'* * * Act No. 55 of 1930, permitting the party injured to sue the insurer of the one responsible therefor in a direct action, is merely remedial and does not affect any substantial right under the contract of insurance.'

In Rogers v. American Employers' Ins. Co., D.C., 61 F.Supp. 142, 143, the court said:

'* * * the Louisiana statute, as above pointed out, does not affect the obligation of the contract, but merely the order in which persons, parties to it (being clearly tripartite in its nature, since the very purpose was to provide for the payment or indemnification of the insured for any and all claims of every person lawfully ascertained against him), could sue upon it.

'* * * The state of Louisiana attempted in the Act (55 of 1930) in question to protect its citizens against such difficulties and since it has been held to affect only procedure and not substantive rights, both by the courts of the State and by this court and the Court of Appeals for this circuit, I am constrained to overrule the motion to dismiss.'

In Rossville Commercial Alcohol Corp. v. Dennis Sheen Transfer Co., Inc., 18 La.App. 725, 138 So. 183, 188, it was stated:

'By the earlier act of 1918, in case of insolvency of the insured, the injured party was given the right to a direct action against the insurer, so that already, by the 1918 act, the insured was deprived of the right to shield itself behind an insolvent principal. As the situation stood at the time of the adoption of the act of 1930, an insurer had no technical defense left, and its obligation was contingent upon one thing only, the liability of the principal. It is and was of no substantial importance to an insurer that a suit must first be brought against its principal. It has and had no vested interest in the right to be sued only by its principal. Its obligation to pay in the event of damage caused by its principal cannot be said to be impaired by the fact that payment may be demanded directly by the injured party, instead of indirectly through the insured. * * *'

In Robbins v. Short, La.App., 165 So. 512, 514, the court declared:

'If the plaintiff here is permitted to avail herself of the provisions of Act No. 55 of 1930 and join the insurance company in the same suit with the insured and have her rights with respect to both adjudicated in the same action rather than by way of the circuitous route of first suing the insured and having her rights fixed and then suing the insurance company in the courts of this state, in what respect can it be said that the insurance company is deprived of any substantial right under the Missouri contract? The primary obligation of the insurance company could not be made more onerous by joining it in the same suit with the insured because Act No. 55 of 1930 provides that nothing in the act shall prevent the insurer from urging all defenses against the plaintiff as it could urge if the action was brought against it by the insured himself, nor does the act in any way attempt to enlarge or change the contract of insurance between the insured and the insurer. This act is purely remedial and does not affect any substantial rights under the contract of insurance. Hudson v. Georgia Casualty Company, D.C., 57 F.2d 757. Nor does the act impair the obligation of contracts. Rossville Commercial Alcohol Corporation v. Dennis Sheen Transfer Co., Inc., 18 La.App. 725, 138 So. 183; Ruiz v. Clancy, 182 La. 935, 162 So. 734.'

See also Ruiz v. Clancy, 182 La. 935, 162 So. 734.

Act No. 253 of 1918 was remedial legislation and Section 1 reads as follows:

'Be it enacted by the General Assembly of the State of Louisiana, That, after the passage of this act, it shall be illegal for any company to issue any policy against liability unless it contains a provision to the effect that the insolvency or bankruptcy of the assured shall not release the company from the payment of damages for injury sustained or loss occasioned during the life of the policy, and, in case of such insolvency or bankruptcy, an action may be maintained within the terms and limits of the policy by the injured person or his or her heirs, against the insurer company.'

Act No. 55 of 1930 amended Act 253 of 1918. It provided for direct action within the terms and limits of the policy by the injured person, his or her heirs, at their option, against the insurer company alone. It also provided that an action might be brought against the assured and the insurer company, jointly and in solido.

It is manifest that both of these acts treat of provided remedies and not of contractual obligations; they are not restrictions of rights of action but are remedial enlargements and remedies of procedure to better insure recovery for an injured person, or a person suffering property damage. The Legislature evidently felt that our courts should not be made to become circumlocution officers winding and unwinding red tape, but felt that the nearest point to a given object was a straight line--it enacted the provision of a direct action and with due care gave an interpretation of the provisions of Act No. 55 of 1930, as amended, when it expressed its intent as to the limitation of the scope of operation on the remedial act. The proviso reads:

'It is the intent of this Section that any action brought hereunder shall be...