Seguros Tepeyac, SA, Compania Mexicana v. Jernigan
Decision Date | 07 May 1969 |
Docket Number | No. 25651.,25651. |
Citation | 410 F.2d 718 |
Parties | SEGUROS TEPEYAC, S. A., COMPANIA MEXICANA de SEGUROS GENERALES, Appellant, v. James L. JERNIGAN, Appellee. |
Court | U.S. Court of Appeals — Fifth Circuit |
Chilton Bryan, Bryan & Patton, James H. Westmoreland, Houston, Tex., for appellant.
Stanley S. Crooks, Dallas, Tex., for appellee.
Before GEWIN, PHILLIPS* and GOLDBERG, Circuit Judges.
We take the Erie1 route once again to visit our old friends in Texas Jurisprudence, Culberson2 and Linkenhoger.3 Our visit pertains to yet another twist in what is known in Texas as the Stowers doctrine, a principle established in the case of Stowers Furniture Co. v. American Indemnity Co., Tex.Com.App. 1929, 15 S.W.2d 544. According to Stowers, an insurer has a duty to exercise ordinary care to protect the interest of the insured, and failure to do so renders the insurer liable for any judgment rendered against the insured, including amounts in excess of the policy limit. However, the insured is not permitted to bring suit against his insurance company for negligence until he has made some payment in satisfaction of the judgment against him, and then only as to amounts in excess of the policy limit. See Universal Automobile Insurance Company v. Culberson, Tex.Com.App.1935, 126 Tex. 282, 86 S.W.2d 727, 87 S.W.2d 475. On this appeal we are asked to determine whether the statute of limitations in a Stowers type suit begins to run: 1) on the date the claim against the insured is reduced to judgment, or 2) on the date or dates when the insured makes payment on the judgment to the injured claimant. The district court was of the view that the statute of limitations did not begin to run until the date or dates of payment, and for reasons hereinafter discussed, we agree.
The tragedy impelling this litigation occurred in Mexico on January 28, 1958, and involved a serious collision between an automobile and a bus.4 The automobile contained three occupants who were on a pleasure trip through Mexico: James L. Jernigan, Allen J. Sullivan and Maynard Bostrom. Jernigan was the owner of the car; Sullivan was driving with Jernigan's permission at the time of the accident; and Bostrom was asleep in the back seat of the car. Bostrom appears to have "sustained about as serious injuries as a person could endure and live." 225 F.Supp. at 227. He is today a permanent quadriplegic.
On July 12, 1960, Bostrom brought suit in the United States District Court for the Northern District of Texas against the owner, Jernigan, and against Sullivan, the driver. In a trial without a jury, judgment was rendered in favor of Bostrom in the sum of $270,000. A writ of execution against Jernigan was then issued, but was returned nulla bona on April 2, 1962.
In pursuit of a solvent target, Bostrom next initiated an action against Seguros Tepeyac S.A., Compania Mexicana, the Mexican insurance company that had issued Jernigan a three-day "Special Automobile Policy for Tourists." The jury in this second Bostrom suit found that Seguros was negligent "in not initiating or attempting to bring about a settlement" of Bostrom's claim within the limits of Jernigan's $5,000 policy. 225 F. Supp. at 227. The district court entered judgment for $270,000 against Seguros and overruled the Company's motion for judgment and for judgment n. o. v. On appeal our Court held that the policy was a liability rather than an indemnity policy and "that under Texas law as well as Mexican law the plaintiff had standing, as a third party beneficiary to the contract, to sue for the amount of the policy." Seguros v. Bostrom, 347 F.2d at 173. The judgment of the district court was affirmed insofar as it awarded $5,000 to Bostrom.
On the remaining $265,000 this Court reversed the judgment of the district court and held that Bostrom, the injured claimant, had no standing to sue the insurer for the excess over the policy limit. In summarizing our decision, Judge Wisdom concluded:
Subsequent to this ruling, Jernigan's attorney negotiated a loan for Jernigan in the sum of $10,100 and transmitted this sum to Bostrom. Bostrom's attorney then sent a partial satisfaction of judgment to Jernigan's attorney, and Jernigan initiated the present suit in the United States District Court. Jernigan asserted his damages in the amount of $10,100 paid on the judgment to Bostrom and also requested a declaration that the insurance company reimburse him for any further sums which Jernigan might pay to Bostrom in satisfaction of the $270,000 judgment.
At trial Jernigan's claims were submitted to the jury on special interrogatories as to negligence, contributory negligence, and proximate cause. The jury found that Seguros was negligent in not initiating and attempting to bring about a settlement of Bostrom's claim against Jernigan within the limits of the $5,000 policy, that such failure was the proximate cause of the $270,000 judgment, and that Jernigan was not guilty of any contributory negligence in failing to communicate to Seguros the $5,000 offer that Bostrom's attorney had made to Jernigan in June of 1960. The jury also found that Jernigan had made a bona fide payment to Bostrom in partial satisfaction of the $270,000 judgment. The trial court thereupon rendered judgment for $10,100 in favor of Jernigan and against Seguros, including in its decree an order that Seguros pay Jernigan "such sums as and when he may hereafter pay on the judgment recovered against him by Maynard Bostrom until such judgment is fully satisfied." Seguros then filed this appeal.
Petty pother aside,5 Seguros urges error in the district court's disposition of its case in three particulars. First, it argues that Jernigan's recovery in the instant case is barred by limitations because this suit was filed more than two years after judgment was rendered in the earlier suit against Jernigan. Secondly, Seguros submits that the judgment below must be reversed because of an erroneous application of the doctrine of collateral estoppel. Finally, it argues that the district court's judgment must be modified to exclude that portion of the decree which encompasses future payments to Jernigan.
We direct our attention first to the limitations problem. Both parties agree that the present suit was filed more than two years after judgment was rendered against Jernigan,6 and less than two years after the $10,100 payment was made by Jernigan to Bostrom.7 Since the two year limitations period is here applicable,8 this action is barred if the statute of limitations runs from the date of judgment. On the other hand, the suit is still viable if the countdown commences from the date of payment.
Direction is given to our consideration of this problem by Seguros v. Bostrom, supra. In that opinion we considered the rationale for and against a judgment-day cause of action and a payment-day cause of action. We concluded that Texas law required the plaintiff to make payment on the judgment before a Stowers type suit could be maintained:
Appellant does not challenge this reading of Culberson. It simply maintains that Linkenhoger v. American Fidelity & Casualty Co., 1953, 152 Tex. 534, 260 S.W.2d 884, whether or not consistent with Culberson, still stands for the proposition that the statute of...
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