National Grange Mut. Ins. Co. v. Smith, 89-212

• Decision Date: 24 May 1990
• Docket Number: No. 89-212,89-212
• Citation: 133 N.H. 279,574 A.2d 1386
• Parties: NATIONAL GRANGE MUTUAL INSURANCE COMPANY v. Lynda Noeding SMITH, Administratrix of the Estate of Lisa Noeding.
• Court: New Hampshire Supreme Court

Page 1386

574 A.2d 1386

133 N.H. 279

NATIONAL GRANGE MUTUAL INSURANCE COMPANY v. Lynda Noeding SMITH, Administratrix of the Estate of Lisa Noeding.

No. 89-212.

Supreme Court of New Hampshire.

May 24, 1990.

Wiggin & Nourie, Manchester (Gary M. Burt on the brief and orally), for plaintiff.

Leahy, Denault & Moody, Claremont (Thomas P. Connair on the brief and orally), for defendant.

SOUTER, Justice.

In these cross appeals from an order of the Superior Court (Hollman, J.) on cross petitions for declaratory judgment, an uninsured motorist carrier excepts to an award of interest from the date of the writ in an underlying tort action that had resulted in a verdict held to bind both insurer and insured, and the insured excepts to the ruling that it was so bound. We reverse as to interest but affirm that the underlying verdict bound the insured.

Following the death of Lisa Noeding by asphyxiation in an auto, her administratrix brought action against the car's operator and the owner of a garage that had serviced it. The decedent's uninsured motorist carrier, National Grange Mutual Insurance Company, refused written permission to proceed with the tort action, although it was aware of the litigation and raised no objection to it. The administratrix and National Grange also discussed the possible effect of the litigation on their contractual relationship as insured and insurer, but they reached no agreement on that, either. When the underlying tort action ended in a verdict against the operator exceeding his liability coverage, the administratrix and National Grange each filed a petition for declaratory judgment to determine their respective rights. The trial court ruled that each party was bound by the amount of the verdict in the underlying action, and held National Grange liable, inter alia, for interest on its obligation from the date of the underlying writ.

For the source of the tort judgment's preclusion of further litigation between the present parties over the extent of the car operator's liability to the decedent, we need look no further than the terms of National Grange's policy. The statement of its Coverage J provides, insofar as relevant, that "[n]o judgment against [an underlying tort defendant] ... shall be conclusive, as between the insured and the company ... unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company." This language reflects an underlying contractual assumption that as a general rule such a judgment will bind the parties upon satisfaction of the written consent condition, the clear object of which parallels the privity requirement of collateral estoppel, see Daigle v. City of Portsmouth, 129 N.H. 561, 571, 534 A.2d 689, 694 (1987), in shielding the insurer against the effect of any proceeding in which its interest was not protected. In the instant case, the trial court found that National Grange's behavior had waived the written consent requirement, a conclusion that National Grange does not appeal and the administratrix does not contest. Given the trial court's further finding that the administratrix had a full and fair opportunity to litigate the amount of the damages for which the tortfeasor was responsible, there is no apparent reason to refuse to give effect to the underlying assumption of the parties' insurance contract, that the judgment on the verdict setting the damages against the tortfeasor would bind them both as to the amount of those damages.

In turning now to National Grange's appeal from the award of prejudgment interest, we begin again with the policy terms, which provide that when a prior judgment is binding, its function is to determine what the Coverage J provisions describe as the amount that "the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury ... including death...." While the term "damages" is nowhere formally defined in the policy, a reading of Part I, providing liability coverage, discloses an express distinction between "damages" and "interest" on any judgment. Since a policy is to be read as a whole, see Trombly v. Blue Cross/Blue Shield, 120 N.H. 764, 768-69, 423 A.2d 980, 983 (1980), and since there is no indication that "damages" might have a different meaning under Coverage J, it follows that the company's contractual obligation is limited by the amount necessary to compensate the insured for the uninsured motorist's infliction of bodily injury, to the exclusion of...