Sheehan v. Liberty Mut. Fire Ins. Co.

• Decision Date: 27 January 1972
• Docket Number: 6 Div. 888
• Citation: Sheehan v. Liberty Mut. Fire Ins. Co., 258 So.2d 719, 288 Ala. 137 (Ala. 1972)
• Parties: Ellen Patricia SHEEHAN v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, a Corporation, et al.
• Court: Alabama Supreme Court

Page 719

258 So.2d 719

288 Ala. 137

Ellen Patricia SHEEHAN v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, a Corporation, et al.

6 Div. 888.

Supreme Court of Alabama.

Jan. 27, 1972.

Rehearings Denied Feb. 24, 1972.

Dunn, Porterfield, McDowell & Scholl, Birmingham, for appellant.

Sadler, Sadler, Sullivan & Sharp and Eugene P. Stutts, Birmingham, for appelleees Buford L. Chesser and Helen Chesser.

Lange, Simpson, Robinson & Somerville and Lyman H. Harris, Birmingham, for appellee Liberty Mutual Fire Ins. Co.

BLOODWORTH, Justice.

This is an appeal by one of several claimants to the proceeds of the uninsured motorists coverage under an automobile liability insurance policy after a decree was rendered awarding the proceeds to the several claimants on a pro rata basis.

The insurance company paid $17,000 into court by Bill of Interpleader, alleging there were three claimants to the fund and that their claims exceeded the policy limits of $20,000. The insurer claimed a reduction of $3,000 from the policy limits for the amounts it had paid the three claimants under the 'Medical Expense Coverage' of the policy.

The trial judge, sitting in equity, ordered the insurance company to pay the $3,000 into court, awarded a $250 attorney's fee to the insurer's attorney, taxed the court costs against the 'fund,' and divided the remainder between the claimants, one-third each.

From this award of an attorney's fee and the division of the proceeds, the appellant, one of the claimants, prosecutes this appeal. Appellant's position is that she is entitled to priority against the 'fund,' and since it is inadequate to safisfy her claim, she is entitled to all of it. She contends the trial judge's decree is erroneous in ordering a proration between the claimants, and in allowing an attorney's fee.

We concede that the appellant's position is well taken, in part, and that the trial court's decree is erroneous in several aspects, as will hereinafter appear.

The facts, out of which this litigation arose, were stipulated. The pertinent details are as follows.

On April 19, 1969, appellee Buford, L. Chesser was operating his 1968 Chevrolet automobile on U.S. Highway 280 in Tallapoosa County, Alabama, when his car was struck by an automobile being operated by an uninsured motorist, Troy Lee Pitts. Appellee Buford L. Chesser, his wife, appellee Helen Chesser, and appellant Ellen Patricia Sheehan (the latter two being passengers in the Chesser vehicle) were all severely injured as a result of the negligence of Pitts.

At the time of the accident, appellee Liberty Mutual Fire Insurance Company had in full force and effect a policy of automobile liability insurance on the Chesser vehicle. This policy contained these relevant 'UNINSURED MOTORISTS COVERAGE' provisions, viz:

'Protection Against Uninsured Motorist Coverage

'The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.

'No judgment against any person or organization alleged to be legally responsible for the bodily injury shall be conclusive, as between the insured and the company, of the issues of liability of such person or organization or of the amount of damages to which the insured is legally entitled unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company.

'Uninsured Motorists Coverage

'(C) the limit for Uninsured Motorists Coverage is $20,000 applicable to each accident and such limit is the total limit of the company's liability for all damages because of bodily injury sustained by one or more persons as the result of any one accident.

'The company shall not be obligated to pay under the Uninsured Motorists Coverage that part of the damages which the insured may be entitled to recover from the owner or operator of an uninsured highway vehicle which represents expenses for medical services paid or payable under the Medical Expense Coverage.'

The policy also contained a 'Medical Expense Coverage' provision which was limited to $1,000 for each person. Under this provision, each claimant received $1,000.

On May 28, 1969, the insurer was informed that the appellant Sheehan and appellees Chesser would make claims under the uninsured motorist provisions of the policy, the Pitts vehicle having been found to be uninsured.

On October 23, 1969, appellant Sheehan made formal claim against the insurer under the uninsured motorist provisions of the policy. On March 11, 1970, she made formal demand for arbitration under the policy.

On March 3, 1970, appellant Sheehan 'with the full knowledge * * * (of the insurer) of her intention to so do, file suit' against the uninsured motorist Pitts. On May 21, 1970, default judgment for $50,000 was rendered against the uninsured motorist in her favor.

On July 2, 1970, the insurer notified appellant's attorney of its refusal to arbitrate. The insurer's Bill of Interpleader was filed on August 10, 1970. On February 12, 1971, the insurer was notified by the attorney for the appellees Chesser 'of their intention to file a law suit for damages against the uninsured motorist, Troy Lee Pitts.'

On March 5, 1971, appellees Chesser filed suit 'with the full knowledge of' the insurer. On April 19, 1971, default judgments for $100,000, in each case, were recovered against Pitts by appellees Chesser.

Three questions, 'to be decided' by the trial court, were stipulated by the parties, viz:

'1. Is the complainant entitled to deduct from the proceeds of the uninsured motorist fund of Twenty Thousand Dollars ($20,000.00) the sum of Three Thousand Dollars ($3,000.00) previously paid to the respondents under the medical expense provision of said policy of insurance by virtue of the provisions of said policy as set out in this stipulation of facts, or is the complainant obliged to interplead the remaining $3,000.00?

'2. What pro-ration of the uninsured motorist fund should be made between the respondents, Buford L. Chesser, Helen Chesser and Ellen Patricia Sheehan?

'3. What attorney's fee, if any, is due the attorney representing the complainant-insurer Liberty Mutual Insurance Company, as attorney's fee in this matter?'

As we have already indicated, the trial judge, sitting in equity, answered these three questions by: Ordering the $3,000 interpleaded into court; ordering a proration of the fund between the claimants, one-third each; and ordering an attorney's fee of $250 to be paid the insurer's attorney of record.

Apparently, the trial court rendered its decree, ordering the insurance company to pay the $3,000 into court, in reliance on our recent decision in Employers National Insurance Company v. Parker, 286 Ala. 42, 236 So.2d 699 (1970). There, we held, under the facts of that case, that the insurer was not entitled to credit medical payments against its uninsured motorist liability. There is no contention made on this appeal as to the correctness of that part of the decree.

The injuries suffered by these parties were extensive, severe and permanent. According to the 'Stipulation of Facts,' the special damages of each are as follows: Appellant Sheehan--$15,065.34; appellee Buford L. Chesser--$14,981.53; appellee Helen Chesser--$3,186.25.

It must have been obvious to the insurer, as well as to the claimants, at an early stage in these proceedings, that the policy proceeds would be wholly insufficient to satisfy the claims. Undoubtedly, this conclusion led to the filing of the Bill of Interpleader.

And, now we pass to a consideration of the contentions of the parties on this appeal.

Each of the appellant's argued assignments of error (1, 2, 3, 4, 5, 10, 11 and 12), is directed to one or the other of these two contentions: that the trial court erred in awarding an attorney's fee of $250; or, that the trial court erred in ordering a proration of the 'fund,' one-third to each claimant.

We first address ourselves to the question as to whether the trial court erred in awarding the insurer an attorney's fee.

Counsel for appellant contends that failure of the insurer to pay the $3,000 into court (until ordered to do so) demonstrated a lack of good faith on its part, which should be considered in determining whether it is entitled to an attorney's fee.

Appellee Liberty Mutual's position is that allowance of an attorney's fee is discretionary with the trial court and unless there is an abuse of that discretion, the court cannot be put in error. (As to the distribution of the fund, it is content to allow that matter to be argued by the respective claimants.)

Equity Rule 36 authorizes allowance of attorneys' fees in interpleader suits. This court has said that the trial judge is invested with discretion in this regard and is only to be reversed for abuse of discretion. Chapman v. Rivers Construction Company, 284 Ala. 633, 227 So.2d 403 (1969); Jennings v. Jennings, 250 Ala. 130, 33 So.2d 251 (1948); Loop National Bank of Mobile v. Cox, 261 Ala. 148, 73 So.2d 364 (1954).

We are usually reluctant to hold that the trial judge abused his discretion in allowance of attorney's fees. In this instance, we are not impressed with appellant's argument that failure to pay the $3,000 medical payments into court should preclude an award of attorney's fee.

On June 11, 1970, we released our opinion holding that medical payments were not to be credited against the uninsured motorist liability in an automobile liability...