Hughes v. Hartford Accident & Indemnity Co.

• Decision Date: 30 April 1931
• Docket Number: 7 Div. 12.
• Citation: 134 So. 461,223 Ala. 59
• Parties: HUGHES v. HARTFORD ACCIDENT & INDEMNITY CO.
• Court: Alabama Supreme Court

134 So. 461

223 Ala. 59

HUGHES v. HARTFORD ACCIDENT & INDEMNITY CO.

7 Div. 12.

Supreme Court of Alabama

April 30, 1931

Rehearing Denied May 21, 1931.

Appeal from Circuit Court, Calhoun County; R. B. Carr, Judge.

Action by Dessie Hughes against the Hartford Accident & Indemnity Company. Plaintiff takes a nonsuit, and appeals from adverse rulings on pleading, sustaining demurrer to the complaint.

Affirmed.

Chas F. Douglass, of Anniston, for appellant.

Merrill Jones & Whiteside, of Anniston, for appellee.

THOMAS J.

This is a damage suit against appellee as indemnitor of the Calhoun county board of education, and is based upon personal injuries resulting from the negligent operation of a school bus. The case is here on nonsuit, because of adverse ruling on demurrer to the complaint.

At the time of this injury, the Calhoun county board of education had with appellee an insurance policy carrying the following terms:

"1. To pay within the limits specified in the declarations any loss by liability imposed by law upon the insured for damages on account of bodily injuries (or death resulting therefrom) accidentally sustained during the policy period by any person or persons by reason of the ownership maintenance or use of any automobile described in the declarations.

"Agrees:

"To defend in the name and on behalf of the assured, any suit alleging such bodily injuries or death or property damages.

"E. No action shall lie against the company until the amount of the damages for which the assured is liable by reason of any casualty covered by this policy is determined, either by final judgment against the assured, or by agreement between assured and the person or corporation making the claim.

"Declarations:

"2. The liability period shall be from noon September 17, 1929 to noon September 17, 1930.

"3(a). Public) Limit, any one person $5,000.00

Liability) Limit, any accident, $10,000.00

"Indorsement:

"In consideration of the premium at which this policy is written, it is hereby understood and agreed by and between the company and the assured named in the policy, that as between the assured and the company, the company will not raise, nor permit its claim representatives to raise in any suit brought against the assured and otherwise covered by the policy, any question of governmental immunity growing out of the exercise of the assured of the governmental function."

The accident causing the injury occurred September 17, 1929. On March 18, 1930, appellant filed a suit against the Calhoun county board of education to recover for said injury, setting up negligent operation of the bus under this policy as the proximate cause. On April 7, 1930, this appellee, through its attorneys, interposed a demurrer to the complaint, the grounds of which were as follows:

"For that defendant is an agency of the State and not subject to a suit on an action of tort.

"For that defendant is not liable for any negligent act of its agents or servants.

"For that defendant is not liable for any negligent act of its driver while driving a school bus.

"For that the alleged wrong, if committed at all, was committed by defendant's said agent while performing a governmental function and defendant would not be liable.

"For that any funds in the hands of defendant could not be made liable to the payment of plaintiff's claim for damages."

Counsel for appellant admits that, when these grounds of demurrer were interposed, appellant conceded that they were well taken as a matter of law; that, as against this defense, a suit of such nature could not be maintained against the defendant, Calhoun county board of education.

It is insisted that, on the theory of estoppel, appellee, setting up this insurmountable defense, had waived its right under the contract to have judgment against the Calhoun county board of education, as a condition precedent to suit against it.

The instant complaint sets out the policy provisions above quoted, the suit against the Calhoun county board of education, grounds of demurrer shown, and describes the injury ascribed as the proximate result of the negligent operation of the school bus. The suit is in a double aspect: First, breach of agreement to refrain from setting up the immunity of the board of education from suit; and, second, that in preventing the maintenance of the suit against the Calhoun county board of education it subjected itself to a direct suit.

Appellee interposed demurrer to the complaint as amended, alleging, in substance, that the policy is not set out; that appellee agreed to meet only such liability as is by law imposed upon the insured; that appellant admits that there is no liability against the insured; that the indorsement on the policy was only for the benefit of the insured; that the agreement not to raise the point of governmental immunity was a matter solely between appellee and insured; and that appellant is without right to proceed with suit against appellee in advance of judgment against the insured. The demurrer was sustained and a nonsuit taken on account of the adverse ruling.

The contention of appellant, as stated by counsel for appellant, is to the effect that the Calhoun county board of education, in its general control over the schools, had implied authority to make this insurance contract with appellee; that if, without such implied authority, it received the premium money and still holds it, it is estopped from setting up invalidity of the contract; that this contract could not be for the benefit of the board of education as such, because it is not subject to suit in tort for damages arising from negligent operation of a school bus; that, under the wording of the clauses quoted, the contemplation of the contract was to indemnify such parties as might, through negligent bus operation, have claims against the board of education, but for its immunity from suits of this character; that the agreement not to set up governmental immunity was for the benefit of a class to which appellant belongs; and that she has a right to sue and recover damages for breach of the agreement, and through breach of this agreement it has prevented performance of the condition precedent, to wit, judgment against said board and authorizes this direct suit.

We will consider the several insistences made in argument of counsel. The authorities are abundant that contracts not contrary to law and the public policy of the state may ordinarily be made for the benefit of third parties directly interested. Jefferson County Board v. Union Ind. Co., 218 Ala. 636, 119 So. 837; Shine v. Nash Abstract & Investment Co., 217 Ala. 498, 117 So. 47; Fite v. Pearson, 215 Ala. 521, 111 So. 15; Alabama Power Company v. Hamilton, 201 Ala. 62, 77 So. 356; North Alabama Development Co. v. Short, 101 Ala. 333, 13 So. 385.

Had the county board the implied authority to insure its bus transportation for the benefit of the occupants thus transported by contract? There are many sections of the school law that impose upon and imply varied duties and powers of the county board (School Code...