Neat v. Miller, 24224.

• Decision Date: 22 December 1932
• Docket Number: 24224.
• Citation: 170 Wash. 625,17 P.2d 32
• Court: Washington Supreme Court
• Parties: NEAT v. MILLER et ux. (UNITED STATES FIDELITY & GUARANTY CO., Garnishee.

17 P.2d 32

170 Wash. 625

NEAT v. MILLER et ux. (UNITED STATES FIDELITY & GUARANTY CO., Garnishee.

No. 24224.

Supreme Court of Washington

December 22, 1932

Department 1.

Appeal from Superior Court, Kitsap County; H. G. Sutton, Judge.

Action by Ingry A. Neat, administratrix of the estate of Robert H Neat, deceased, against A. C. Miller and wife, in which the United States Fidelity & Guaranty Company was made garnishee. From the judgment against garnishee, it appeals.

Affirmed.

Eggerman & Rosling, of Seattle, for appellant.

H. E Gorman, of Bremerton, for respondent.

MILLARD J.

Annually for four years, the United States Fidelity & Guaranty Company issued a policy of automobile accident liability insurance to A. C. Miller. The fourth consecutive policy was issued March 4, 1931. On June 11, 1931. the insured automobile, while negligently operated by its owner (Miller), collided with an automobile of which Robert H. Neat was the driver. As a result of that collision the latter sustained personal injuries which caused his death. To recover therefor the administratrix of the estate of the deceased instituted an action against A. C. Miller and wife.

On June 18, 1931, one week after the accident, an investigation by an agent of the guaranty company disclosed that Miller was convicted October 22, 1929, and on April 16, 1931, of operating an automobile upon the public highway while under the influence of intoxicating liquor; that for the first offense Miller's license as an operator was suspended ninety days, and for the second offense his operator's license was suspended three years; that on November 3, 1930 Miller was convicted of the crime of unlawful possession of one gallon of moonshine whisky; and that on March 31, 1931, he was convicted of 'conduct tending to debauch public morals.'

Defense of the action was tendered the surety on August 8, 1931. Denying liability on the policy, the surety notified Mr. Miller's counsel on August 20, 1931, that it refused to defend the action. On September 18, 1931, three months subsequent to the accident and when it had all of the facts upon which it based its defense in the garnishment action, the guaranty company notified Miller of the cancellation of the policy. Accompanying the notice was the company's check (which Miller rejected) for $16.20 as the amount of the unearned premium for the period September 23, 1931, to March 4, 1932. The company retained the remainder of the premium to pay for risk covered by the policy from March 4, 1931, to September 23, 1931, the period in which the accident causing the death of Robert H. Neat occurred. The notice of cancellation reads as follows: 'You are hereby notified that this company has elected to cancel its policy No. A 392686 issued to yourself, loss, if any, payable to yourself written to cover (describing automobile) from March 4, 1931, and that 5 days from the date of the service of this notice said policy, and the whole thereof, including Mortgage Agreement, if any, will stand cancelled without further notice, and thereafter be null and void, and no liability will exist thereunder. You are further notified that in the event premium having been paid, the unearned portion thereof will be returned on surrender or relinquishment of this policy. We are enclosing our check for $16.20 representing the unearned premium.'

The trial of the action resulted in judgment on November 19, 1931, in favor of the plaintiff and against Miller and his wife. The writ of execution was returned unsatisfied. The return recites that the sheriff, after diligent search and inquiry, was unable to find any property, belonging to the defendants, 'subject to execution by reason of insolvency sufficient to satisfy the within named judgment or any part thereof.' Thereafter, at the instance of the plaintiff, a writ of garnishment issued out of the superior court of Kitsap county against the surety, as garnishee defendant. The garnishee defendant's answer of 'no funds' was controverted by the plaintiff's affidavit setting up the liability insurance policy of which plaintiff claimed the estate of R. H. Neat, deceased, was a beneficiary by virtue of the terms of that insurance contract. The garnishee defendant's reply to plaintiff's controverting answer was not filed until the day after the conclusion of the trial of the garnishment action. The court found that the plaintiff had established a right of action upon the policy and that the guaranty company was indebted to the insured in the full amount of the policy. From the judgment entered against it in favor of the plaintiff, the garnishee defendant has appealed.

Counsel for appellant first contend that respondent failed to establish the insolvency or bankruptcy of the insured which, under the terms of the insurance contract, is a condition precedent to recovery by a third party upon the policy.

The pertinent provision reads as follows: 'Section II. (2). Bankruptcy or insolvency of the Assured shall not relieve the Company of any of its obligations hereunder. Any person or his legal representatives who shall obtain final judgment against the Assured because of any such bodily injury or injury to or destruction of property and whose execution against the Assured is returned unsatisfied because of such insolvency or bankruptcy, may proceed against the Company under the terms of this Policy to recover the amount of such judgment, either at law or in equity, but not exceeding the limit of this Policy applicable thereto. Nothing in this Policy shall give to any person or persons claiming damages against the Assured any right of action against the Company except as in this Paragraph (2) provided.'

The trial court found as a fact that the Millers were insolvent 'and have no money or property on which execution or other process can be levied for the collection of such judgment.' There is no evidence contrary to that finding. Without objection respondent introduced in evidence the return to the writ of execution issued on the judgment in the main action. That return recited that 'by reason of insolvency' of A. C. Miller and wife the sheriff was unable to find any property belonging to the Millers sufficient to satisfy the judgment against the Millers. That return was some evidence of insolvency of the judgment debtors. There was no contention--not a suggestion--in the trial court that the Millers were solvent. Not having challenged the sheriff's return when it was offered in evidence, the appellant is in no position to now question it. The policy provision clearly does not require as a condition prerequisite to the maintenance of an action against the insurer by one 'who shall obtain final judgment against the Assured' more than the sheriff's return to the writ of execution 'unsatisfied because of such insolvency or bankruptcy' of the assured. Unless that return is controverted it is sufficient evidence of the insolvency or bankruptcy of the assured to satisfy the policy provision above quoted.

It is next insisted that, as his driver's license had been suspended, Miller...