Midwest Mut. Ins. Co. v. Aetna Cas. & Sur. Co.

• Decision Date: 23 April 1976
• Docket Number: No. 750401,750401
• Parties: MIDWEST MUTUAL INSURANCE COMPANY v. The AETNA CASUALTY AND SURETY COMPANY. Record
• Court: Virginia Supreme Court

Page 901

223 S.E.2d 901

216 Va. 926

MIDWEST MUTUAL INSURANCE COMPANY v. The AETNA CASUALTY AND SURETY COMPANY.

Record No. 750401.

Supreme Court of Virginia.

April 23, 1976.

H. Merrill Pasco, Douglas W. Davis, Richmond (E. Milton Farley, III, T. S. Ellis, III, Hunton, Williams, Gay & Gibson, Richmond, on briefs), for plaintiff in error.

Henry H. McVey, III, Richmond (McGuire, Woods & Battle, Richmond, on brief), for defendant in error.

Before I'ANSON, C.J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.

COMPTON, Justice.

This controversy involves the right of contribution between two carriers providing uninsured motorist protection to the same insured.

Midwest Mutual Insurance Company, the plaintiff below, brought this action at law for $6,000 against The Aetna Casualty & Surety Company seeking to recover one-half the amount Midwest paid to settle the uninsured motorist claim of Stanley S. Winston, Sr. Aetna's demurrer was sustained by the trial court and we awarded Midwest a writ of error to the December 10, 1974, order dismissing the action.

Midwest's motion for judgment states the following case, the effect of the demurrer being to admit as true all material facts which are well pleaded. On April 26, 1970, Winston was injured in an accident in the City of Richmond, while operating his motorcycle, as the result of the alleged negligence of an unknown motorist, hereinafter referred to as John Doe. At the time, Winston was an insured under certain policies of insurance issued by Midwest and Aetna which contained statutory ¹ uninsured motorist coverage.

Following the accident, when Winston made his claim for damages, a dispute developed between Widwest and Aetna concerning the nature of the uninsured motorist protection afforded by their respective policies. Those policies are not before us and we are not confronted here with that coverage question. In this action, we must assume the policies extend identical coverage to the common insured.

Aetna rejected Midwest's demand to contribute to payment of a settlement of Winston's claim. Thereafter, on January 20, 1971, Midwest settled by paying Winston $12,000, a reasonable amount considering all the facts and circumstances, taking a release and assignment from him. No tort action had been filed against John Doe ² prior to settlement and, of course, no service of process had been made upon either insurer nor had any claim against John Doe been reduced to judgment.

On January 12, 1973, Midwest filed this suit. In sustaining Aetna's demurrer, the trial judge decided that 'until judgment is obtained against the uninsured motorist, there is no Common obligation of the respective insurers created by the accident' and that Midwest had no right of contribution against Aetna.

The sole issue is whether, under the foregoing facts, a right of contribution exists in favor of Midwest against Aetna in the absence of a judgment against the uninsured motorist which has been paid by Midwest.

Midwest argues that 'a judgment against the uninsured motorist is not a prerequisite to contribution between uninsured motorist coinsurers' because 'a common obligation between insurers can arise even though no judgment has been rendered against or in favor of their common insured'. It contends that the Virginia uninsured motorist statute does not require that such a judgment be obtained before the right of contribution arises, pointing out that Code § 38.1--381(e), note 2 Supra, provides that if the uninsured motorist is unknown, 'an action May be instituted against the unknown defendant as 'John Doe" and that Code § 38.1--381(el) ³ provides 'if any action is instituted against the owner or operator of an uninsured motor vehicle,' the insured shall serve a copy of the process upon the insurer issing the policy. These requirements obtain, according to Midwest's theory, Only when the insured elects to enforce his uninsured motorist coverage by means of a suit against the uninsured motorist, and not when, as here, the insured decides to settle with one of two coinsurers without suit. It also contends that when the foregoing 'permissive' provisions of the uninsured motorist statute are construed together, one must conclude that the General Assembly 'did not intend to preclude settlement as a means of providing benefits to insured persons under the uninsured motorist statute.' It argues that a 'contrary view of the legislative intent would run counter to the strong public interest favoring the expeditious settlement of claims.' We reject these contentions.

This problem must be solved within the strict confines or our uninsured motorist act applying the principles of equitable contribution, enforced in courts of law. As the trial judge emphasized, and as the parties recognize, the case turns on the time when a common obligation comes into existence between the insurers. 'The right to contribution as such does not arise out of any express contract or agreement between the parties to indemnify each other, but is based on the broad principles of equity that where two or more persons are subject to a Common burden it shall be borne equally, since the law implies a contract between them to contribute ratably towards the discharge of the Obligation. But in order to enforce contribution the payment must have been made by one Obligated to pay the whole, as between himself and the payee, but only Bound to pay a proportionate part as between himself and his co-obligors. Thus where two or more persons Are liable to pay a claim and one or more of them pays the whole of it, or more than his or her share, the one so paying may generally recover from the others the ratable proportion of the claim that each Ought to pay.' Wiley N. Jackson Co. v. City of Norfolk, 197 Va. 62, 66, 87 S.E.2d 781, 784 (1955) (emphasis added).

In this case, at the time Midwest paid the insured it was not legally obligated to him under the uninsured motorist statute, nor was Aetna; there was no common obligation. Under the statute, the obligation of the uninsured motorist insurer arises Only if it is determined that the insured is 'legally entitled to recover' damages from the owner or operator of an uninsured motor vehicle. Code § 38.1--381(b), note 1 Supra. Judgment is the event which determines legal entitlement to recovery. But in an uninsured motorist case judgment alone against the tortfeasor will not suffice to fix the obligation of the uninsured motorist carrier.

If an insured intends to rely on the coverage required by our uninsured motorist statute, he Must serve a copy of the process in any action instituted against the owner or operator of the uninsured motor vehicle upon the insurer issuing the policy. Code § 38.1--381(el), note 3 Supra. 'It is evidence that a copy of the process must be served on the insurance company before it may be held liable under the uninsured motorist act. The language employed is mandatory and establishes a condition precedent to the benefits of the statute unless waived by the insurance company.' Creteau v. Phoenix Assurance...