Metropolitan Casualty Ins. Co. of New York v. Colthurst

• Decision Date: 13 January 1930
• Docket Number: No. 5823.,5823.
• Citation: 36 F.2d 559
• Parties: METROPOLITAN CASUALTY INS. CO. OF NEW YORK v. COLTHURST.
• Court: U.S. Court of Appeals — Ninth Circuit

36 F.2d 559 (1929)

METROPOLITAN CASUALTY INS. CO. OF NEW YORK v. COLTHURST.

No. 5823.

Circuit Court of Appeals, Ninth Circuit.

December 9, 1929.

Rehearing Denied January 13, 1930.

Bronson, Bronson & Slaven, of San Francisco, Cal. (H. R. McKinnon, of San Francisco, Cal., of counsel), for appellant.

Harry I. Stafford and Daniel R. Shoemaker, both of San Francisco, Cal., for appellee.

Before RUDKIN, DIETRICH, and WILBUR, Circuit Judges.

DIETRICH, Circuit Judge.

Upon the facts, which are stipulated, the general question for consideration is whether the appellee, who was injured in an automobile accident in California resulting from the negligence of the owner of the automobile, is entitled to recover damages on account of the injury from the carrier of a policy of insurance. One Harris was the owner of the automobile, and to him, on May 1, 1926, the appellant issued the policy in question, which was written in California and was in force on June 15, 1926, when the accident occurred. Among other things, it provides that "the insolvency or bankruptcy of the Assured hereunder shall not release the Company from the payment of damages for injuries sustained or loss occasioned during the life of this policy, and in case execution against the Assured is returned unsatisfied because of such insolvency or bankruptcy in an action brought by the injured person or his or her personal representative in case death results from the accident, then an action may be maintained by the injured person or his or her personal representative against the Company under the terms of the policy for the amount of the judgment in the said action, not exceeding the amount of the policy."

At the time of its issuance, there was in force a California statute (St. 1919, p. 776) declaring that no policy should be issued "unless there shall be contained within such policy a provision that the insolvency or bankruptcy of the person insured shall not release the insurance carrier from the payment of damages for injury sustained or loss occasioned during the life of such policy and stating that in case judgment shall be secured against the insured in an action brought by the injured person * * * then an action may be brought against the company, on the policy and subject to its terms and limitations, by such injured person, * * * to recover on said judgment." Whether the provisions quoted from the policy and this statute are identical in meaning and effect we need not stop to consider. If any distinction can be drawn, it must be held that the policy is more favorable to the injured party, and for the purposes of decision we shall therefore assume that it is controlling.

It obligates the appellant "to defend in the name and on behalf of the assured (Harris) any suit brought against the assured to enforce a claim, whether groundless or not, on account of damages suffered or alleged to be suffered under the circumstances hereinbefore described." It also provides that it is subject to certain conditions, one of which is that written notice of any accident must be given to the company as soon as is reasonably possible, "and if suits are brought to enforce such a claim, the assured shall immediately forward to the company every summons, or other process, as soon as same shall have been served on him." On December 3, 1926, appellee herein brought an action against Harris in the superior court of California in the county of Solano, for damages resulting to her from the accident, and about the middle of that month caused summons to be served upon Harris, which summons he promptly forwarded to appellant. In due time an attorney who was employed by appellant to defend the action in the name of Harris filed a demurrer, sending a copy thereof to counsel for the plaintiff. Whereupon, on January 10, 1927, counsel for the plaintiff wrote to him acknowledging receipt of the copy and advising him that he had dismissed the Solano county suit and had commenced another action in Napa county. With the letter was inclosed a copy of the dismissal of the Solano county suit. It turns out that the suit in Napa county had been commenced on December 21, 1926, and that it was for the same cause of action covered by the Solano county suit. On December 30, 1926, Harris was personally served in San Diego county, Cal., with complaint and summons in the Napa county action, but he failed to appear as required by law, and accordingly, on February 3, 1927, his default was entered; and on May 9, 1927, judgment was rendered against him in favor of the plaintiff, the appellee herein, in the sum of $10,000. The judgment became final, and no part of it has been paid. Execution was issued and returned nulla bona, and it is conceded that at all times Harris was and is insolvent.

Harris not only failed to appear in the action, but also neglected, until May 12, 1927, three days after the judgment was entered, to forward or turn over to appellant herein the complaint or summons which had been served upon him on December 30, 1926, and until May 12th neither appellant nor its attorney ever received any copy of the complaint or summons or any notice of the service thereof upon Harris. Upon receiving the summons and complaint, appellant at once notified Harris that he had broken one of the material conditions of the policy in not promptly forwarding the papers, and advised him that, by reason of such breach, he had forfeited his rights under the policy. Thereafter Harris, at his own expense, took steps to have the judgment vacated, but his motion was resisted by the appellee herein and ultimately denied.

Appellee, having been unable to collect her...