Schueler v. Phoenix Assurance Company of New York

• Decision Date: 18 November 1963
• Docket Number: Civ. A. No. 23047.
• Citation: 223 F. Supp. 643
• Parties: Arthur M. SCHUELER, Trustee in Bankruptcy of James Burton Williams, also known as Burton Williams, Plaintiff, v. PHOENIX ASSURANCE COMPANY OF NEW YORK, a New York Corporation, Defendant.
• Court: U.S. District Court — Western District of Michigan

223 F. Supp. 643

Arthur M. SCHUELER, Trustee in Bankruptcy of James Burton Williams, also known as Burton Williams, Plaintiff, v. PHOENIX ASSURANCE COMPANY OF NEW YORK, a New York Corporation, Defendant.

Civ. A. No. 23047.

United States District Court E. D. Michigan, S. D.

November 18, 1963.

I. Goodman Cohen, Detroit, Mich., for plaintiff.

John Feikens, Altero J. Alteri, Detroit, Mich. (Feikens, Dice, Sweeney & Sullivan, Detroit, Mich.) for defendant.

THORNTON, District Judge.

Plaintiff herein is the Trustee in Bankruptcy of one James Burton Williams against whom a judgment in the amount of $37,000.00 was entered upon a jury verdict in the Circuit Court for the County of Wayne, State of Michigan. In the State court action Williams was sued by one Richard Clyde Young for injuries resulting from an automobile accident in which Young and Williams were involved. Defendant here was the insurance carrier of Williams by virtue of an automobile insurance policy which limited the liability of said insurer to $10,000.00. This action is brought to recover the amount of the judgment obtained against Williams in excess of the policy limit. The parties here are in agreement

that the State court action could have been settled for the policy limit, that defendant Phoenix was in charge of and responsible for the representation of Williams in that suit,

that defendant Phoenix determined not to agree to the settlement which Young was willing to accept but to proceed to litigate the issues of liability and damages,

that Williams was advised by Phoenix he might obtain counsel of his own choosing and at his own expense to defend him,

that Williams agreed to and was satisfied with the legal representation supplied by Phoenix,

that judgment in the amount of $37,000.00 was entered against Williams,

that Phoenix has paid to Young the $10,000.00 for which it was liable under the terms of the contract of insurance with Williams.

Plaintiff's cause of action is based on 11 U.S.C.A. § 110, sub. a (5) and (6) which provides as follows:

"The trustee of the estate of a bankrupt and his successor or successors, if any, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this title, except insofar as it is to property which is held to be exempt, to all of the following kinds of property wherever located * * *; (5) property, including rights of action, which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered: * * *; (6) rights of action arising upon contracts, or usury, or the unlawful taking or detention of or injury to his property; * * *."

Defendant moves for summary judgment in its favor contending that plaintiff is legally barred from prosecuting this action under either subsection (5) or subsection (6) of 11 U.S.C.A. § 110, sub. a. As to subsection (6) defendant contends that plaintiff's cause of action, if any, is not one arising upon contract since defendant has fully performed its obligations under the contract of insurance between it and Williams * * * it has defended the State court suit against Williams and has paid the judgment up to the policy limit and there is no requirement in the policy that the insurance company must settle a case brought against...