Iowa Home Mut. Cas. Co. v. Farmers Mut. Hail Ins. Co.

• Decision Date: 15 November 1955
• Docket Number: No. 48805,48805
• Citation: 247 Iowa 183,73 N.W.2d 22
• Parties: IOWA HOME MUTUAL CASUALTY COMPANY, Appellant, v. FARMERS MUTUAL HAIL INSURANCE COMPANY, Loretta A. Bruch, Guardian for Mary A. and David Bruch, Loretta Bruch, Administratrix of the Estate of M. L. Bruch, Appellee.
• Court: Iowa Supreme Court

Page 22

73 N.W.2d 22

247 Iowa 183

IOWA HOME MUTUAL CASUALTY COMPANY, Appellant, v. FARMERS MUTUAL HAIL INSURANCE COMPANY, Loretta A. Bruch, Guardian for Mary A. and David Bruch, Loretta Bruch, Administratrix of the Estate of M. L. Bruch, Appellee.

No. 48805.

Supreme Court of Iowa.

Nov. 15, 1955.

Loth & Melton, Fort Dodge, for appellant.

Linnan & Lynch, Algona, for Farmers Mutual Hail Ins. Co., appellee.

Senneff & Buck, Britt, and John Senneff, Mason City, for other appellees.

SMITH, Justice.

This is a proceeding brought under our Declaratory Judgment Rule 261 R.C.P. The case was decided by the trial court upon the pleadings. It is our task to determine it upon the pleaded factual situation as it stood when judgment was rendered.

Prior to August 19, 1952, defendant Farmers Mutual Hail Insurance Company issued its standard automobile policy to one John Beiser, insuring him and any one driving his car with his consent against liability for damages for death or personal injury up to $50,000 for one person or $100,000 for one accident.

On or about the named date his car, driven with his knowledge and consent by his son, James J. Beiser, collided with a car driven by M. L. Bruch, killing both drivers and injuring other occupants of the Bruch car. As a result, damage suits by the administratrix of the M. L. Bruch estate and the guardian of the injured members of his family (all made defendants here) are now pending against the estate of James J. Beiser.

James J. Beiser was himself, at the time of the accident, carrying a 'non-owner' policy in plaintiff company, insuring him during his use of an automobile not owned by him, against liability for damages for death or personal injury up to $5,000 for any one person or $10,000 for any one accident.

Plaintiff, in this proceeding, contends James J. Beiser was within the definition of 'insured' under each policy and that both companies must contribute proportionately to the payment of any judgments rendered against his estate by reason of the August 19th collision with the Bruch car since each policy had a provision requiring such contribution, applicable 'if the insured has other insurance against a loss covered by this policy.'

Otherwise stated, plaintiff contends defendant's policy (issued to John Beiser) became 'other insurance,' available to James, and that plaintiff, under its subrogation clause, became subrogated to his right to enforce contribution between defendant company and his own insurer (plaintiff) as to any liability established against him or his personal representative for damages growing out of the Bruch collision.

Defendant company pleads that before the accident it had modified its policy by a rider (Exhibit 2, referred to as a 'Driver Exclusion Endorsement') excluding all coverage while the car was being operated by James J. Beiser. It pleads the rider was signed by and delivered to John Beiser, the insured, to be attached to the policy.

Said defendant also answers that since the liability, if any, to the Bruchs would be due to James' negligence, his estate would be primarily liable and his insurer primarily liable to its policy limits; also that the petition shows no suits by the Bruchs are pending against John Beiser, that defendant's policy issued to him was entirely a matter of contract between him and defendant company and that the petition fails to show any privity or interest such as to entitle plaintiff to the declaratory judgment prayed for.

Plaintiff replied, denying the 'Driver Exclusion Endorsement' rider (exhibit 2) ever became a part of defendant's said policy, alleging there was no consideration for its addition or creation; that neither James J. Beiser nor his administrator ever assented to it; that John Beiser signed it less than five days before the accident, through mistake and induced by fraud; that it was never delivered to him or attached to his policy; and that John Beiser, 'within a reasonable time after learning the truth' (about said rider) 'and defendant's claim under it, * * * notified defendant in writing that he rescinded, repudiated and cancelled' same.

Defendant company's answer is in four divisions as is the reply thereto. We have some difficulty in condensing the various contentions urged by able attorneys on each side but appreciate their efforts to simplify and shorten the Record for us, omitting unessential details. The complex situation created by policies issued to separate individuals but with interlocking provisions seems not to have been presented many times in court annals. Exact precedents are few and we must reason largely from principle and such analogies as may be pertinent. Furthermore the field of declaratory law is new and its bounds are not definitely marked.

The Bruch defendants filed motion to dismiss as to them, asserting their right to look to both John Beiser and his son's estate ('even if they were joint tortfeasors which they were not') and disclaiming interest in any controversy over the relative rights of the two insurance companies. The court sustained the motion and plaintiff has appealed from that decision.

After defendant company answered and plaintiff filed reply as above described, defendant company moved to strike the vital allegations of the reply. The court sustained the motion. Plaintiff stood on its exception to the ruling and when the case was reached for trial judgment was entered against plaintiff, the judgment entry reciting that no actual issue of fact remained to support this action.

Plaintiff appealed also from that ruling and both appeals are now before us.

I. We consider first the appeal as to defendant Farmers Mutual Hail Insurance Company. Plaintiff's claim that defendant Company must contribute, proportionately with plaintiff to the payment of any judgments that may be rendered against the James J. Beiser estate growing out of the accident, is based on this reasoning:

First, plaintiff is of course liable as James' insurer although he was not driving his own but his father's car. This is because of the so-called 'non-owner' rider attached to his own policy, making the insurer liable regardless of whether insured was driving his own or another's car;

Second, defendant Company, having insured any one driving the John Beiser car with John's consent, and James having been its driver when the accident occurred, it follows that defendant Company was also the insurer of James against the same liability as was plaintiff Company;

Third, the two Companies were therefore joint insurers of James J. Beiser against the same potential liability, and under the 'contribution' provision in each policy must make proportionate contribution to the payment of any liability that may ultimately be established against the James J. Beiser estate. The result of this reasoning, if accepted, would be that because of the difference in maximum coverage, and within their respective limits, plaintiff's share would be 1/11 and defendant company's 10/11 of any liability ultimately established against the James J. Beiser estate.

This is plaintiff's case as made by its petition.

We first assume, at least temporarily, that plaintiff here stands, in all respects and for all purposes, in the shoes of its insured, James J. Beiser, or his personal representative.

II. Under plaintiff's contention, its insured, while driving John's car, became a 'third party' for whose benefit defendant's policy was written. Iowa subscribes to the prevailing American rule that a contract between two parties may be enforced by a third person for whose benefit it was made. Young v. Bierschenk, 199 Iowa 309, 313, 201 N.W. 591; 17 C.J.S., Contracts, § 519c, p. 1121 et seq., also citing Meyer v. Stortenbecker, 184 Iowa 441, 450, 165 N.W. 456; 12 Am.Jur., Contracts, § 277, citing Iowa cases.

This is true even when the third party beneficiary is not expressly named or identified, or even known when the contract is made, or when his beneficial interest is dependent on a contingency, if he or the contingency is sufficiently described to make identification possible. 17 C.J.S., supra, § 519c(2)(d); 12 Am.Jur., supra, § 287.

But we also recognize that this right is always subject to the right of the original contractors to modify or terminate the contract before the third party has acquired rights under it. Coen & Conway v. Scott Co. Sav. Bank, 205 Iowa 483, 490, 218 N.W. 325, citing Peters v. Goodrich, 192 Iowa 790, 185 N.W. 903; Shult v. Doyle, 200 Iowa 1, 8, 9, 201 N.W. 787, 790. In the last ...