Pringle v. Robertson

• Decision Date: 11 February 1970
• Citation: 60 A.L.R.3d 1186,465 P.2d 223,258 Or. 389
• Parties: William Calvin PRINGLE, a minor, by Robert L. Frederickson, Guardian of the Estate of William Calvin Pringle, Appellant, v. Charles ROBERTSON, Defendant, and Hartford Accident and Indemnity Company, a corporation, Respondent.
• Court: Oregon Supreme Court

Page 223

465 P.2d 223

258 Or. 389

William Calvin PRINGLE, a minor, by Robert L. Frederickson, Guardian of the Estate of William Calvin Pringle, Appellant, v. Charles ROBERTSON, Defendant, and Hartford Accident and Indemnity Company, a corporation, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 10, 1969.

Decided Feb. 11, 1970.

George G. Van Natta, St. Helens, argued the cause for appellant. With him on the briefs were Van Natta & Petersen, St. Helens, and William F. Schulte, Portland.

Edwin J. Peterson, Portland, argued the cause for respondent. With him on the brief were Charles R. Holloway, III, and Tooze, Powers, Kerr, Tooze & Peterson, Portland.

Before PERRY, C.J., and McALLISTER, SLOAN, O'CONNELL, GOODWIN, ^* DENECKE and HOLMAN, JJ.

HOLMAN, Justice.

Plaintiff recovered a personal injury judgment against defendant Robertson in the amount of $170,000 after defendant's insurance company refused an offer to settle for $5,000, which was the policy limits of defendant's liability insurance policy. Defendant being insolvent, plaintiff now attempts to collect his judgment by bringing a garnishment proceeding against defendant's insurance company. He seeks to garnish 'property' in the hands of the insurance company which belongs to insured, namely, the claim which defendant allegedly has against his insurance company for negligence and bad faith in failing to settle within the policy limits. The trial court ruled that the claim was not subject to garnishment, sustained the garnishee-insurance company's demurrer to plaintiff's allegations, and dismissed the proceedings. Plaintiff appealed.

The sole question to be decided in this case is whether such a cause of action against an insurance company is subject to a garnishment levied upon the company. Garnishment is a purely statutory proceeding. Therefore, strictly speaking, the present question is one of statutory interpretation. However, Oregon's statutes do not shed much light on the problem, as they refer only to 'all other property' and 'other personal property.' ORS 29.140 and 29.170(3).

All judicial authority in the United States is to the effect that such a claim is not subject to garnishment. Steen v. Aetna Casualty, 157 Colo. 99, 401 P.2d 254 (1965); Stilwell v. Parsons, 51 Del. (1 Storey) 342, 145 A.2d 397 (1958); Jordon v. Shelby Mutual Insurance Company, 175 So.2d 233 (Fla.App.1965); Powell v. Prudence Mut. Cas. Co., 88 Ill.App.2d 343, 232 N.E. 155 (1967); Paul v. Kirkendall, 6 Utah 2d 256, 311 P.2d 376 (1957); Murray v. Mossman, 56 Wash.2d 909, 355 P.2d 985 (1960); Seguros Tepeyac, S.A., Compania Mexicana de Seguros Generales v. Bostrom, 347 F.2d 168 (5th Cir. 1965). Plaintiff admits he can cite no case as direct authority for his position.

The following cases hold that the plaintiff has no independent cause of action of his own against defendant's insurance company: Fidelity & Casualty Co. of New York v. Southall, 435 P.2d 119 (Okl.1967); Ammerman v. Farmers Insurance Exchange, 19 Utah 2d 261, 430 P.2d 576 (1967); Seguros Tepeyac, S.A., Compania Mexicana de Seguros Generales v. Bostrom, Supra; Chittick v. State Farm Mutual Automobile Ins. Co., 170 F.Supp. 276 (D.Del.1958); Tabben v. Ohio Casualty Insurance Co., 250 F.Supp. 853 (E.D.Ky.1966); Wessing v. American Indemnity Co. of Galveston, Tex., 127 F.Supp. 775 (W.D.Mo.1955). Also see R. Keeton, Liability Insurance and Responsibility for Settlement, 67 Harv.L.Rev. 1136, 1176 (1954).

The rationale for not allowing the injured party the benefit of the alleged cause of action for the insurer's misconduct is not always the same. Most of the cases hold that an insured's cause of action against his insurance company for negligence and/or bad faith in failing to settle plaintiff's claims sounds in tort. The garnishment cases which so hold say that an unliquidated tort claim is not subject to garnishment. The balance of the garnishment cases say that it does not make any difference whether the alleged claim is in tort or in contract because, even if it is a contract claim, it is not subject to garnishment since fraud or bad faith has not yet been established. Some of the garnishment cases also hold that the cause of action is in the hands of defendant and, therefore, even if it can be subject to garnishment, it cannot be reached by garnishing the insurance company. They hold that all the company has is an exposure.

The cases which hold that the plaintiff has no independent cause of action against the insurance company say that the plaintiff is a stranger to the relationship between the insured and the insurer. Most of these cases say also that the plaintiff could not have been injured by the conduct of the insurance company, in any event, because plaintiff received everything he would have received had there been a settlement, plus a judgment for a greater sum.

Plaintiff contends that defendant's alleged cause of action against the insurance company is 'property' within the meaning of the garnishment statutes because 'property' is an all-encompassing term and because we held that such a cause of action is capable of assignment in Groce v. Fidelity General Insurance Company, 252 Or. 296, 448 P.2d 554 (1968). In Groce the insured defendant assigned his claim for the insurer's failure to settle within the policy limits to the injured plaintiff. We upheld the assignment and allowed plaintiff to bring an action against...