Samford v. Allstate Ins. Co.
| Citation | 529 S.W.2d 84 |
| Decision Date | 30 September 1975 |
| Docket Number | No. 994,994 |
| Parties | Ralph W. SAMFORD et al., Appellants, v. ALLSTATE INSURANCE COMPANY, Appellee. |
| Court | Texas Court of Appeals |
William H. Berry, Jr., Corpus Christi, for appellants.
James W. Wray, Jr., Dyer, Redford, Burnett, Wray & Woolsey, Corpus Christi, for appellee.
This summary judgment action arose from a suit brought by Ralph W. Samford and Danny L. Samford against Allstate Insurance Company. There the plaintiffs sought to recover from Allstate, as liability insurer of R. R. Duff, based on plaintiffs' prior judgment against Duff. The amount sought was the excess of Duff's policy limits. Because the Samfords failed to allege an actionable cause of action in their original petition, the trial court granted Allstate's motion for summary judgment. The Samfords appeal.
Appellants' cause of action now on appeal here was based on the alleged negligence of the appellee in failing to settle a claim of the appellants against Duff arising out of an automobile collision. Appellee was the insurer of Duff. In the prior cause of action involved in an appeal (Samford v. Duff, 483 S.W.2d 517 (Tex.Civ.App.--Corpus Christi 1972, writ ref'd n.r.e.)), this Court reversed the judgment of the trial court and rendered judgment for the appellants in the amount of $26,683.75. Appellee has since paid appellants to the limits of Duff's insurance policy. This left the appellants with an excess judgment above the policy limits of $15,521.35. Appellants had a writ of execution issued on this excess which was returned unsatisfied.
Then appellants brought the cause of action now on appeal to us as an attempt to proceed directly against the appellee insurance carrier based on the 'Stowers' 1 doctrine. In that regard, appellants claim they are entitled to bring a direct cause of action against the appellee because: (1) as judgment creditors of Duff they are third party beneficiaries of the insurance contract between appellee and Duff; (2) the appellee was negligent in failing to settle the original action within Duff's policy limits; (3) there was a conspiracy between the appellee and Duff whereby Duff himself would not bring a direct 'Stowers' action against the appellee nor would he assign such a cause of action to the appellants; and (4) the appellee is strictly liable because of its intentional bad faith in failing to settle the case within Duff's policy limits.
Our analysis of appellants' five points of error indicates one question of law central to all points. That question is whether a judgment creditor of an insured may bring a direct cause of action against an insurer to recover the excess judgment he was granted as a result of the insurer's negligence in failing to exercise ordinary care in the settlement of a suit between the insured and the judgment creditor.
The case of Cook v. Superior Insurance Company, 476 S.W.2d 363 (Tex.Civ.App.--Beaumont 1972, writ ref'd n.r.e.) seems to be directly in point. In Cook the appellant obtained a judgment against the insured for some $15,456.46. The judgment was then affirmed on appeal. The appellee insurance company paid the appellant to the policy limits ($5,744.93). The appellant then obtained a writ of execution against the insured for the unpaid balance of the judgment ($10,456.46) which was returned unsatisfied. Whereupon the appellant filed a writ of garnishment alleging that he had made a firm offer of settlement prior to trial to the attorneys employed by Superior Insurance Co. in the amount of $5,000.00 which was within the limits of the liability policy issued to the insured. The trial court granted summary judgment for the insurer. In affirming the summary judgment the appellate court there said that a 'Stowers' action is in tort, grounded on negligence, and lies to repair harm to the insured, not the third party. The court's holding was that a judgment creditor was not entitled to proceed directly against a liability insurer of judgment debtor for an amount, based on prior judgment, in excess of policy limits, notwithstanding a claim that the judgment creditor made firm an offer of settlement prior to the trial involving the judgment debtor and the judgment creditor.
The case of Dillingham v. Tri-State Insurance Co., Inc., 214 Tenn. 592, 381 S.W.2d 914 (1964) is also almost directly in point. In Dillingham the appellant was a judgment creditor of the insured who brought a direct claim against the insurer for the excess of his judgment based on the alleged bad faith and negligence of the insurer in refusing to settle within policy limits. The trial court dismissed the case and the Tennessee Supreme Court affirmed the trial court. The court held that a judgment creditor of an insured alleging bad faith and negligence on part of insurer in refusing to settle within policy limits could not maintain an action against the insurer for the excess of judgment over and above policy limits where had the judgment creditor's offer of settlement been accepted, he would have recovered a smaller amount than he actually collected. The court pointed out that the appellant's settlement offer was for $3,000.00 and under the policy the appellant collected $5,200.00.
The significance of the Dillingham decision to the case at bar is that the original settlement offer of the appellants, the Samfords, was for $9,500.00 and that they have already recovered $11,162.00 from the appellee. Clearly under the Tennessee law they would have no right to recover any further. Although there are no Texas cases concerning the question of injury where recovery was in excess of the settlement offer, this is a logical result. If the Samfords felt that they had been injured only in the amount of $9,500.00 and that they would have dropped all claims for that amount, it is difficult to understand how they can show any damages where they hve already received some $11,162.00 for their injuries. Obviously under the 'Stowers' doctrine it was the insured who was injured by the excess jury verdict...
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