Patterson v. Adan

• Decision Date: 08 November 1912
• Docket Number: 17,866 - (58)
• Citation: 138 N.W. 281,119 Minn. 308
• Parties: ARTHUR H. PATTERSON v. EDMON ADAN
• Court: Minnesota Supreme Court

138 N.W. 281

119 Minn. 308

ARTHUR H. PATTERSON v. EDMON ADAN

Nos. 17,866 - (58)

Supreme Court of Minnesota

November 8, 1912

After the order in the district court for Ramsey county denying a new trial of the action, defendant appealed from that order to this court but gave no supersedeas bond. Thereafter judgment was entered in the district court, and an execution was issued against him and returned unsatisfied, he having departed from the state. The Philadelphia Casualty Company, a corporation which had issued to defendant an automobile policy of indemnity against loss as defined in the policy had defended the action but refused to pay the judgment. Garnishee process was then issued against it and its disclosure taken and returned to the court. Plaintiff moved for judgment, the motion was denied and the garnishee discharged, Kelly, J. From that order, plaintiff appealed to this court. Reversed and cause remanded for further proceedings.

SYLLABUS

Garnishment -- liability of insurer after judgment.

Where under a policy insuring against loss by reason of the operation of the assured's automobile, an action is brought by a person injured by such automobile against the assured, and the insurance company thereupon takes sole charge of the defense, to the exclusion of the assured, as it had the right to do under the policy, a judgment in the action against the assured becomes, as between plaintiff, defendant, and the company, a liability or debt owing unconditionally by the company to the assured, which such plaintiff may reach by garnishment.

Garnishment -- policy construed.

A provision in the policy that no action shall lie against the company, "unless it shall be brought by the assured for loss or expense actually sustained and paid in money by him after trial of the issue," applies only in case the company denies liability and refuses to defend.

C. D. & R. D. O'Brien, for appellant.

Harris Richardson and Walter Richardson, for respondent.

OPINION

HOLT, J.

Plaintiff recovered a verdict against the defendant in the sum of $4,500 for an injury received through the negligence of defendant, causing his automobile, in which plaintiff was riding, to overturn. Judgment was entered on the verdict, and defendant appealed to this court, but gave no supersedeas bond. Pending the appeal, the respondent was duly garnisheed and, upon the disclosure had, plaintiff moved for judgment. The motion was denied, and the garnishee discharged.

From the disclosure it also appears that, when the accident occurred which caused the injury for which plaintiff recovered the judgment, the defendant held a so-called insurance policy issued by the garnishee, hereinafter and in the policy called the company, covering risks resulting from accidents in the use of the automobile in question. In consideration of the premium the company "agrees to indemnify the assured against loss," as therein defined, subject to the special and general agreements therein contained, which are to be construed as co-ordinate conditions. The other terms of the policy deemed material to the question now presented for decision are these:

"The company agrees to indemnify the assured:

"I. Against loss by reason of the liability imposed by law upon the assured for damages on account of bodily injuries, or death accidentally suffered by any person or persons, by reason of the maintenance, or use, within the limits of the United States of America or Canada," of the assured's automobile.

"II. Agrees to serve the assured, upon notice of such injuries or death, by such investigation thereof, or by such negotiations or settlement of any resulting claims as may be deemed expedient by the company."

"III. Agrees to defend, in the name and on behalf of the assured, any suits which may at any time be brought against him on account of such injuries or death, including suits alleging such injuries and demanding damages therefor, although such suits, allegations, or demands, are wholly groundless, false, or fraudulent, and covered by this policy."

"IV. Agrees to provide" the necessary appeal bonds.

"V. Agrees to pay all costs taxed against the assured in any legal proceeding defended by the company, all interest accruing after entry of judgment upon such part thereof as shall not be in excess of the limits of the company's liability as hereinafter expressed, and all expenses incurred by the company for investigation, negotiation or defense."

This insurance is subject to the following

SPECIAL AGREEMENTS:

"1. The company's liability for loss on account of an accident resulting in injuries to or in the death of one person is limited to five thousand ($5,000) dollars, and subject to the same limit for each person."

Then follow general and special provisions covering loss from destruction of the property of others through the use of the automobile, substantially of the tenor above quoted, and also general and special provisions covering loss or damage to the automobile. Then follow these general agreements relating to all the risks:

GENERAL AGREEMENTS:

"1. The assured, upon the occurrence of an accident, shall give immediate written notice thereof. * * * The assured shall, at all times, render to the company all co-operation and assistance in his power.

"2. If thereafter any suit is brought against the assured to enforce a claim for damages on account of an accident covered by this policy, the assured shall immediately forward to the company every summons or other process served on him, and the company will at its own cost defend against such suit, even if groundless, in the name and on behalf of the assured.

"3. The assured shall not voluntarily assume any liability or settle any claim, except at his own cost, nor incur any expense, nor interfere in any negotiations for settlement or in any legal proceedings without the consent of the company previously given in writing. * * *

"4. No action shall lie against the company to recover for any loss or expense under this policy, unless it shall be brought by the assured for loss or expense actually sustained and paid in money by him after trial of the issue."

The disclosure shows that as soon as the action was begun the company took sole charge of the defense. At the trial plaintiff recovered a verdict of $5,000, the company in behalf of defendant duly appealed to this court from an order denying a new trial, the order was reversed, and upon a new trial the verdict first above mentioned was obtained. The company carried on all the steps in the litigation, including the present appeal in the main action; but upon advice of counsel no supersedeas bond was given, because the assured defendant was then thought to be insolvent, although the company since learned that he thereafter left the state with several thousand dollars in his possession. It was also disclosed that the practice of the company, when it undertook to defend in behalf of the assured, was to pay the final judgment without waiting for the assured to pay it, first, however, ascertaining that the assured was absolutely able to respond to the full amount thereof.

Upon the record did it appear that the company, the garnishee, was indebted to the defendant when the disclosure was had? It may be conceded that the company intended so to frame the policy that not every avenue of escape from payment in case of a loss should be closed. The main purpose of its business is to obtain and retain the premiums. The object of the assured is to get protection. The object and purpose of the contracting parties is not to be lost sight of in construing a contract, nor is the rule that in...