Noe v. U.S. Fidelity & Guaranty Co.

• Decision Date: 12 September 1966
• Docket Number: No. 2,No. 51731,51731,2
• Citation: 406 S.W.2d 666
• Parties: Jerry L. NOE and Shirley Ann Noe, Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Respondent
• Court: Missouri Supreme Court

Page 666

406 S.W.2d 666

Jerry L. NOE and Shirley Ann Noe, Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Respondent.

No. 51731.

Supreme Court of Missouri, Division No. 2.

Sept. 12, 1966.

Motion to Transfer to Court En Banc or for Rehearing Denied

Oct. 10, 1966.

Daniel, Clampett, Ellis, Rittershouse & Dalton, Donald W. Jones, Springfield, for appellants.

Glenn A. Burkart, Mann, Walter, Burkart, Weathers & Schroff, Springfield for respondent.

STOCKARD, Commissioner.

The issue here presented is whether an action may be maintained in the courts of this State under a Louisiana statute which gives a right of direct action by an injured person against a liability insurer for the damages he has sustained, irrespective of whether or not a judgment has been first obtained against the insured.

The Louisiana statute (La.Rev.Stat. 22:655), in its parts here material, provides that an 'injured person * * * shall have a right of direct action against the insurer within the terms and limits of the policy; and such action may be brought against the insurer alone, or against both the insured and insurer jointly and in solido, in the parish in which the accident or injury occurred or in the parish in which an action could be brought against either the insured or the insurer under the general rules of venue prescribed by Art. 42, Code of Civil Procedure. This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana.'

Plaintiffs' petition is in two counts. The first is on behalf of Jerry L. Noe who alleged that he was injured in the State of Louisiana as the result of the negligence of Dr. Hugh Lamensdorf who was insured by a policy of liability insurance issued by defendant. The second count is on behalf of Shirley Ann Noe, wife of Jerry, for loss of consortium. Defendant contends that no action by a wife for loss of consortium exists under the Law of Louisiana, but we need not rule that question. The trial court dismissed the petition for failure to state a cause of action against defendant, and plaintiffs have appealed. We have jurisdiction by reason of the amount of the prayer.

There is no statute in Missouri comparable to the direct action statute of Louisiana, and there is no contention that plaintiffs are entitled to maintain this suit in this State except on the basis of the Louisiana statute. Plaintiffs contend that the statute is substantive, and that pursuant to the full faith and credit provision of the federal Constitution they are entitled to maintain in this State this direct action against the alleged tort-feasor's liability insurer. Defendant, on the other hand, contends that the statute is procedural only and has no extra-territorial effect. ¹

It is the general rule that the court at the forum determines, according to its own rules as to conflict of laws, whether a given foreign law is substantive or procedural, but in making this determination it will give consideration to the interpretation of the foreign law by the courts of that state. Hopkins v. Kurn, 351 Mo. 41, 171 S.W.2d 625, 149 A.L.R. 762; Restatement, Conflict of Laws, § 584. In our examination of the Louisiana direct action statute, we are immediately impressed with the fact that it does not in express terms impose liability on or create a new cause of action against the insurer. Instead, it purports to create a method or procedure for enforcing in the courts of that State the cause of action which came into being by the tortious act of the insured. Following the provisions of the statute quoted above, it is further provided that it is the 'intent' of the statute that 'all liability policies within their terms and limits are executed for the benefit of all injured persons, his or her survivors or heirs, to whom the insured is liable'. Thus it recognizes that the cause of action is based on the liability of the insured, and that the statute is designed to afford a procedural remedy to enforce that liability. In addition, the language of the statute creating the right of action directly against the insurer to enforce the liability of the insured to the injured person expressly provides where the remedy there authorized may be exercised, and it limits that right to the courts of Louisiana in certain designated parishes. Although the direct action statute, by amendment, now provides that the action may be brought in additional parishes in Louisiana than previously authorized, the effect of such a limitation contained in the statute creating the right of action was expressly recognized in Morton v. Maryland Casualty Company, 1 A.D.2d 116, 148 N.Y.S.2d 524, affirmed 4 N.Y.2d 488, 176 N.Y.S.2d 329, 151 N.E.2d 881; Pearson v. Globe Indemnity Company, 5 Cir., 311 F.2d 517; and Oltarsh v. Aetna Insurance Company, 15 N.Y.2d 111, 256 N.Y.S.2d 577, 204 N.E.2d 622. In the Morton case it was held that 'the right and the remedy are so united that the right cannot be enforced except in the manner and before the tribunal designated by the act.' ²

We shall consider now what the courts of Louisiana have had to say concerning the rights created by this direct action statute. In Finn v. Employers' Liability Assurance Corporation, La.App., 141 So.2d 852, the court said this: 'Nor do we find any merit in the contention that the direct-action statute created separate and distinct causes of action, one against the insurer alone and another against the insurer and the insured. The statute is remedial in character, rather than substantive, and does not create causes of action.' Other similar rulings of the Louisiana Court of Appeal may be found in Rossville Commercial Alcohol Corporation v. Dennis Sheen Transfer Co., Inc., 18 La.App. 725, 138 So. 183; Lowery v. Zorn, La.App., 157 So. 826; Robbins v. Short, La.App., 165 So. 512, Mock v. Maryland Casualty Company, La.App., 6 So.2d 199; Churchman v. Ingram, La.App., 56 So.2d 297. We have found no court of appeal decision to the contrary. In Burke v. Massachusetts Bonding & Insurance Co., 209 La. 495, 24 So.2d 875, the Supreme Court of Louisiana had the issue squarely before it. There the plaintiff was injured in Mississippi as the result of the negligence of her husband, and under the law of Mississippi one spouse had no cause of action against the other for tort, and Mississippi had no direct action statute. The Louisiana Supreme Court said this: 'It is conceded that Act 55 of 1930 (the direct action statute) is procedural and not substantive, and it is only by virtue of the statute that plaintiff brought her suit in Louisiana. Plaintiff insists that since the statute creates no substantive right, the case must be governed by the law of the place where the remedy is sought. But the statute merely gives a claimant a direct right of action against the liability insurer when he has a cause of action against the insured, or where the insured would be liable but for immunity personal to him. The statute does not give plaintiff any more rights than she has under the law of Mississippi. It only furnishes her with a method to enforce in Louisiana whatever rights she has in Mississippi. Since she has no cause of action under the law of Mississippi, necessarily Act 55 of 1930 confers upon her no cause of action in Louisiana. The mere fact that under the statute plaintiff was able to obtain jurisdiction against her husband's liability insurer in a direct action in this State does not create, as against her husband, or as against his insurer, a substantive cause of action that does not exist under the law of the State where the wrongful act occurred.' In Vowell v. Manufacturers Casualty Insurance Company, 229 La. 798, 86 So.2d 909, 914, the court stated that the direct action statute 'is purely remedial and does not affect substantial rights under the insurance contract nor impair its obligations.' In the Home Insurance Co. v. Highway Insurance Underwriters, 222 La. 540, 62 So.2d 828, the court held the direct action to be remedial because it avoids the necessity for recovery from an insured and then subsequently from an insurer, and it spoke of the act as being 'remedial enlargements and remedies of procedure to better insure recovery for an injured person'.

Courts of other jurisdictions have held the Louisiana direct action statute to be procedural. See McArthur v. Maryland Casualty Co., 184 Miss. 663, 186 So. 305, 120 A.L.R. 846; Cook v. State Farm Mutual Insurance Company, 241 Miss. 371, 128 So.2d 363; Goodin v. Gulf Coast Oil Company, 241 Miss. 862, 133 So.2d 623; Penny v. Powell, 162 Tex. 497, 347 S.W.2d 601; and Pearson v. Globe Indemnity Company, 5 Cir., 311 F.2d 517.

The only basis for any different view concerning the Louisiana statute is West v. Monroe Bakery, 217 La. 189, 46 So.2d 122. In that case the insurer was sued in Louisiana for an injury occurring in Louisiana, and the insurer claimed it was released from its liability under the terms of its policy of insurance because the insured had failed to comply with the cooperation clause. The court said this: 'An analysis of our jurisprudence considered by the Appellate Court (which had sustained the contention of the insurer) in reaching its conclusion discloses that with two exceptions Act 55 of 1930 has been treated consistently as conferring substantive rights on third parties to contracts of public liability insurance, which become vested at the moment of the accident in which they are injured,' subject only to such defenses as the tort-feasor himself may legally interpose. The two cases referred to, Howard v. Rowan, La.App., 154 So. 382, and State Farm Mut. Automobile Ins. Co. v. Grimmer, D.C., 47 F.Supp. 458, held that under the facts of each case...