Martin v. Zurich General Accident & Liability Ins. Co., 2763

• Court: U.S. District Court — District of Rhode Island
• Writing for the Court: MAHONEY
• Citation: Martin v. Zurich General Accident & Liability Ins. Co., 16 F. Supp. 897 (D. R.I. 1936)
• Decision Date: 17 November 1936
• Docket Number: 2830,2831.,No. 2763,2832,2763
• Parties: MARTIN v. ZURICH GENERAL ACCIDENT & LIABILITY INS. CO., Limited. AGUIAR v. SAME (two cases). DUARTE v. SAME.

16 F. Supp. 897

MARTIN v. ZURICH GENERAL ACCIDENT & LIABILITY INS. CO., Limited.

AGUIAR v. SAME (two cases).

DUARTE v. SAME.

Nos. 2763, 2830, 2832, 2831.

District Court, D. Rhode Island.

November 17, 1936.

William A. Gunning, of Providence, R. I., for plaintiffs.

Hoyt W. Lark, of Providence, R. I., for defendant.

MAHONEY, District Judge.

In each of the above-entitled cases, the plaintiff has begun his action in the Superior Court in and for the County of Providence in the State of Rhode Island, upon the issuance of a writ of summons "in an action of trespass on the case as by declaration to be filed in Court will be fully set forth." Each case has been removed to the District Court of the United States in and for the District of Rhode Island.

The declaration in each case alleges that the plaintiff was injured on the 1st day of November, 1933, through the negligence of the Graver Tank & Manufacturing Company; that on the date of said injury the defendant insurance company, with the usual place of business in Providence, R. I., had issued a policy of insurance insuring the Graver Tank & Manufacturing Company "against liability imposed by law for bodily injury caused by or through the work or operation of constructing, erecting, building or welding said storage tanks in the State of Rhode Island"; that the plaintiff did cause a writ to be issued against the Graver Tank & Manufacturing Company, returnable to said Superior Court, on which a return of non est inventus had been made; and that by virtue of the provisions of section 7, chapter 258, of the General Laws of Rhode Island for the year 1923, the plaintiff has brought his action against said Zurich General Accident & Liability Insurance Company, Ltd.

Thereafter "the defendant filed two pleas in bar alleging that the statute did not apply because the contract was not a Rhode Island contract, and it was an indemnity contract."

In the above-entitled case of Manuel Luiz Martin v. Zurich General Accident & Liability Insurance Company, Ltd., 13 F. Supp. 162, the United States District Court in and for the District of Rhode Island overruled the demurrer, sustained the pleas, and entered judgment for defendant. The plaintiff thereupon appealed to the United States Circuit Court of Appeals for the First Circuit. Subsequently the Circuit Court of Appeals in the case entitled Martin v. Zurich General Accident & Liability Ins. Co., 84 F.(2d) 6, 8, determined that the said policy of insurance was an Illinois contract. However, the Circuit Court said:

"But section 7 bears upon the remedy rather than performance, and as a remedy the Rhode Island courts have held that the section of its own force did not apply to contracts entered into outside of that state. Riding v. Travelers' Ins. Co., supra 48 R. I. 433, 138 A. 186; Coderre v. Travelers' Ins. Co., supra 48 R.I. 152, 136 A. 305, 54 A.L.R. 512.

"In no view of the case can plaintiff derive any benefit from section 7 ex proprio vigore. In the policy, however, it is provided:

"`I. If any condition in this policy conflicts with any specific statutory provision in the State in which it is claimed the Employer is liable for any such injuries or loss as are covered by this policy, such specific statutory provision shall be substituted for such condition.'

"Condition G provides that: `No action for the insurance against loss provided for in Agreement I of this policy shall lie against the Company until the loss is made certain either by judgment against the Employer after final termination of the litigation or by agreement between the parties with the written consent of the Company,' etc. If this policy covers insurance against liability, the above condition is inconsistent with section 7 of chapter 258 of the General Laws of Rhode Island 1923, which provides for the bringing of actions by the injured person against the insurer before judgment is entered against the insured, and section 7, by the express stipulation in the policy, should be substituted for condition G, or at least be incorporated in it."

The Circuit Court then held that the policy involved was one insuring against liability rather than a policy indemnifying for loss, vacated the judgment of the District Court, and remanded the case to that court for further proceedings not inconsistent with the opinion.

Thereafter, upon motion of the plaintiff, the demurrer in each case was sustained and pleas were overruled. The plea of general issue had already been filed in each case.

Subsequently, the defendant filed in each case a motion to dismiss. The motion is as follows: "Now comes the defendant in the above entitled cause and moves that the plaintiff's cause of action be dismissed because it says that the plaintiff is not entitled to recover from the defendant in a tort action. The plaintiff's declaration alleges that the defendant is liable to it in tort in an action of trespass on the case by virtue of the provisions of section 7 of chapter 258 of the General Laws of Rhode Island 1923 while it appears from the record that any rights which the plaintiff may have in said cause against the defendant are contractual and accrued to the plaintiff by reason of that certain Policy of Insurance set forth in the defendant's first and second pleas herein as Exhibit A and not by virtue of the provisions of section 7 of chapter 258 of the General Laws of Rhode Island 1923 as in the plaintiff's declaration is alleged."

The defendant urges that the motion should be sustained on the ground that the action is one of trespass on the case.

To this the plaintiff has moved that the defendant's motion to dismiss be stricken from the record in each case. If the position taken by the defendant is correct, the motion to dismiss is proper.

Advantage may be taken of the error by the plaintiff in mistaking his action at any stage of the trial. Rathbun v. New York, N. H. & H. R. R. Co., 19 R. I. 463, 36 A. 1134; Conroy v. Equitable Accident Company, 27 R.I. 467, 63 A. 356.

The procedure here is governed by the terms of the Conformity Act, 28 U.S. C.A. § 724.

The defendant urges that the action in each of the above entitled cases should be an action ex contractu rather than an action ex delicto. It argues that this construction is correct for the reason that the Circuit Court in its opinion in Manuel Luiz Martin v. Zurich General Accident & Liability Insurance Co., Ltd., supra, says: "In no view of the case can plaintiff derive any benefit from section 7 ex proprio vigore," and that it is only by virtue of the Provision I of the policy that said "section 7, by the express stipulation in the policy, should be substituted for condition G, or at least be incorporated in it."

The defendant states that it is only by this ruling of the Circuit Court that the plaintiff can take advantage of said section 7, and the query is that because of that should his action be one based on the policy itself or one in tort. It is true that said section 7 is now for the purposes of each of these cases a part of the terms of the policy covering insurance against liability, and that the plaintiff is seeking recovery under the provisions of said section 7.

Section 7 of chapter 258 of the General Laws of Rhode Island 1923 reads as follows:

"Sec. 7. Every policy hereafter written insuring against liability for property damage or personal injuries or both, other than payment of compensation under chapter ninety-two of the general laws, shall contain provisions to the effect that the insurer shall be directly liable to the injured party and, in the event of his death, to the party entitled to sue therefor, to pay him the amount of damages for which such insured is liable. Such injured party, or, in the event of his death, the party entitled to sue therefor, in his suit against the insured, shall not join the insurer as a defendant. If, however, the officer serving any process against the insured shall return said process `non est inventus,' the said injured party, and in the event of his death, the party entitled to sue therefor, may proceed directly against the insurer. Said injured party, or, in the event of his death, the party entitled to sue therefor, after having obtained judgment against the insured alone, may proceed on said judgment in a separate action against said insurer: Provided, however, that payment in whole or in part of such liability by either the insured or the insurer shall, to the extent thereof, be a bar to recovery against the other of the amount so paid; and provided, further, that in no case shall the insurer be liable for damages beyond the amount of the face of the policy.

"All policies made for the insurance against liability described in this section shall be deemed to be made subject to the provisions hereof, and all provisions of such policies inconsistent herewith shall be void."

Civil cases have been brought in the State of Rhode Island by virtue of the provisions of this section and the actions have been trespass on the case for negligence in assumpsit and debt on judgment.

In the case entitled Miller v. Metropolitan Casualty Insurance Company of New York, 50 R.I. 166, 146 A. 412, 413, which was an action for debt on judgment, the Supreme Court of that State in discussing said section 7 said:

"Similar statutes have been enacted in other states, but their language is not identical. In the Massachusetts statute the injured person's procedure is by bill in equity after a judgment against the insured. Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, 1 A.L.R. 1374. In New York it is by action at law against the insurance company `under the terms of the policy.' Coleman v. New Amsterdam Cas. Co., 247 N. Y. 271, 160 N.E. 367, 72 A.L.R. 1443. Our statute, so far as now material, reads: `Every policy hereafter written insuring against liability for property damage * * * shall contain provisions to the effect that the insurer shall be directly liable to the injured party...