Plasky v. Gulf Ins. Co.
| Decision Date | 18 May 1960 |
| Docket Number | No. A-7518,A-7518 |
| Citation | 160 Tex. 612,335 S.W.2d 581 |
| Parties | John PLASKY, Petitioner, v. GULF INSURANCE COMPANY, Respondent. |
| Court | Texas Supreme Court |
Powell, Rauhut, McGinnis, Reavley & Lochridge, Eugene W. Nelson, Austin, for petitioner.
Strasburger, Price, Kelton, Miller & Martin, Dallas Royal H. Brin, Jr., Dallas, with firm, for respondent.
The principal question in this case is whether an automobile liability insurer is obligated to pay interest on the entire judgment obtained against its insured or only on that portion of the judgment which is within the basic policy limits. Its answer turns upon the intention of the parties as disclosed by the italicized portion of the following policy provisions:
'As respects the insurance afforded by the other terms of this policy under coverages A and B the company shall:
'(c) pay all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon;'
John Plasky, petitioner, was injured when his automobile collided with a vehicle owned by B. A. Hodges and driven by the latter's wife, Gladys Hodges. He instituted suit against Mr. and Mrs. Hodges, and the jury awarded him $86,496.84 for personal injuries and $572.50 for property damage. On May 28, 1956, judgment was entered on the verdict in petitioner's favor for $87,069.34 with interest thereon from date at the rate of six per cent per annum and costs of suit. This judgment was affirmed on appeal. Hodges v. Plasky, Tex.Civ.App., 300 S.W.2d 955 ().
Gulf Insurance Company, respondent, was the liability insurance carrier for Hodges and defended the former suit in the trial court and on appeal. The stated limits of its policy are $5,000 for bodily injury liability to each person and $5,000 for property damage. After the judgment against Mr. and Mrs. Hodges was affirmed, petitioner instituted the present suit against respondent to recover the amount which the latter is obligated to pay on such judgment. At the conclusion of a trial to the court without a jury, petitioner was awarded $5,572.50 plus interest on $87,069.34 from May 28, 1956, to the date of the judgment in this case. The judgment against respondent then bears interest from its date until paid at the rate of six per cent per annum. A divided Court of Civil Appeals reversed and reformed the trial court's judgment so as to allow petitioner to recover only the $5,572.50 with six per cent interest on that amount from May 28, 1956, until paid. 326 S.W.2d 216.
The meaning of the policy provision in question has not been determined in Texas, and the courts of other jurisdictions are not in agreement. A majority of the cases hold that it obligates the insurer to pay interest only on that part of the judgment for which the company is liable. The courts which have adopted this view reason that one person should not be required to pay interest on an obligation owing by another unless the contract clearly expresses that intention. They say that only by an unnatural and strained construction could the language of the policy be interpreted to mean that the company agrees to pay interest on the part of the judgment for which it is not legally liable. See Sampson v. Century Indemnity Co., 8 Cal.2d 476, 66 P.2d 434, 109 A.L.R. 1169; Home Indemnity Co. v. Corie, 206 Misc. 720, 134 N.Y.S.2d 443 (affirmed 286 App.Div. 996, 144 N.Y.S.2d 712); United States Fidelity & Guaranty Co. v. Hotkins, 8 Misc.2d 296, 170 N.Y.S.2d 441; Standard Accident Ins. Co. v. Winget, 9 Cir., 197 F.2d 97, 34 A.L.R.2d 250; Morgan v. Graham, 10 Cir., 228 F.2d 625; Herzog v. Fidelity & Casualty Co., 10 Cir., 257 F.2d 840.
The contrary and in our opinion the sounder view is represented by River Valley Cartage Co. v. Hawkeye-Security Ins. Co., 17 Ill.2d 242, 161 N.E.2d 101; United Services Automobile Ass'n v. Russom, 5 Cir., 241 F.2d 296; Underwood v. Buzby, 3 Cir., 236 F.2d 937; and Wilkerson v. Maryland Casualty Co., D.C., 119 F.Supp. 383. By the terms of the policy the insurer undertakes to pay all interest accruing after entry of judgment until it has paid, tendered or deposited in court that part of the judgment which does not exceed the limit of its liability thereon. The contract thus recognizes that a judgment in excess of the policy limits may be taken against the insured and shows that those who drafted the...
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