Shingleton v. Bussey, 37636

• Decision Date: 28 May 1969
• Docket Number: No. 37636,37636
• Citation: 223 So.2d 713
• Parties: Frances Ruth Bennett SHINGLETON and Nationwide Mutual Insurance Company, an Ohio corporation, Petitioners, v. Elizabeth Reiff BUSSEY, Respondent.
• Court: Florida Supreme Court

Page 713

223 So.2d 713

Frances Ruth Bennett SHINGLETON and Nationwide Mutual Insurance Company, an Ohio corporation, Petitioners, v. Elizabeth Reiff BUSSEY, Respondent.

No. 37636.

Supreme Court of Florida.

May 28, 1969.

Rehearing Denied July 8, 1969.

Keen, O'Kelley & Spitz, A. Frank O'Kelley, Chas. H. Spitz and Helen C. Ellis, Tallahassee, for petitioners.

Parker, Foster & Madigan, Leo L. Foster and Gayle Smith Swedmark, Tallahassee, for respondent.

Raymond Ehrlich, Jacksonville, for American Insurance Assn., American Mutual Insurance Alliance and National Assn. of Independent Insurers, amicus curiae.

Charles S. Ausley, Tallahassee, and John S. Cox, Jacksonville, for Federation of Insurance Counsel and Florida Defense Lawyers Assn., amicus curiae.

ERVIN, Chief Justice.

The District Court of Appeal, 1st District, held in this case, 211 So.2d 593, that the trial court erred in dismissing the appellant Nationwide Mutual Insurance Company as a party defendant in an action against its insured, appellant Shingleton, arising out of an automobile collision.

We find conflict of decisions between the District Court's holding in this case and Artille v. Davidson (1936), 126 Fla. 219, 170 So. 707, and Thompson v. Safeco Insurance Co. of America (Fla.App.1967), 199 So.2d 113, and accept jurisdiction to review on certiorari.

However, on the merits, we find, as did the District Court of Appeal in the instant case, that since our decision in Artille in 1936, which was followed by the District Court of Appeal, 4th District, in Thompson, the applicable law governing this controversy has undergone material alteration sufficient to convince us we should affirm the District Court. Our reasons therefor are outlined hereinafter.

We conclude a direct cause of action now inures to a third party beneficiary against an insurer in motor vehicle liability insurance coverage cases as a product of the prevailing public policy of Florida.

Public policy is a molding device available to the judicial process by which changing realities and the attending manifested rules of fair play may be incorporated into our corpus juris. The classic opinion by Mr. Justice Cardoza in MacPherson v. Buick Motor Co. (1916), 217 N.Y. 382, 111 N.E. 1050, L.R.A.1916F, 696, is illustrative of the role of public policy as a catalyst toward the advancement of jurisprudence.

The District Court concluded that liability policies as the one here involved should be construed as 'quasi-third party beneficiary contract,' thereby giving the injured third party an unquestionable right to bring a direct action against the insurance company as a party defendant.

Although the District Court did not undertake to expound on the rationale of this theory, we believe the reasoning advanced by the Illinois District Court of Appeals in Gothberg v. Nemerovski (1965), 58 Ill.App.2d 372, 375, 208 N.E.2d 12, is particularly responsive to this problem. In addressing itself to the theory underlying the maintenance of a suit against an insurance broker who virtually occupied the position of insurer, the Illinois Appellate Court stated in part (at 19-20):

'(11, 12) In substance, defendant contends that the plaintiffs cannot recover under the third party beneficiary doctrine because the contract was not made for their direct benefit, and, if anything, they are only incidental beneficiaries. Defendant argues for the application of the rule stated in Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 257-258, 178 N.E. 498, 501, 81 A.L.R. 1262 (1931):

"The test is whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. If direct he may sue on the contract; if incidental he has no right of recovery thereon. * * *

"* * * The rule is, that the right of a third party benefited by a contract to sue thereon rests upon the liability of the promisor, and this liability must affirmatively appear from the language of the instrument when properly interpreted and construed. The liability so appearing cannot be extended or enlarged on the ground alone that the situation and circumstances of the parties justify or demand further or other liability.'

'(13) Because of the peculiar significance of automobile liability insurance as well as the provisions of the policy contemplated by the parties and eventually issued, we do not agree with defendant's theory. We believe that these plaintiffs can sue defendant directly. The plaintiffs can be considered third party beneficiaries of the contract to procure insurance entered into between Jackson and defendant, that is, they had a sufficient interest in such a contract to bring suit directly for its breach. In entering into this contract to procure insurance, it is a fair and reasonable inference that Jackson and his mother were contemplating possible injury to unidentified third parties, and the insurance coverage was for the direct benefit of third parties who might be injured through Jackson's negligence. Because Jackson, as the insured, was to be directly benefited by the insurance coverage, does not preclude the fact that others were also intended to be directly benefited.

'(14) The general public, subjected to possible injury through Jackson's negligent operation of a motor vehicle, possessed more than a mere 'incidental' benefit from the contract to procure public liability insurance. It was, in effect a real party in interest to this contract. The procuring of automobile public liability insurance of the type contemplated has connotations extending to the general public above and beyond the private interests of the two contracting parties. As was said by our Supreme Court in Simmon v. Iowa Mutual Casualty Co., 3 Ill.2d 318, 322, 121 N.E.2d 509, 511 (1954):

"Automobile insurance has taken an important position in the modern world. It is no longer a private contract merely between two parties. The greater part of litigation in our trial courts is concerned with claims arising out of property damage, personal injury or death caused by operation of motor vehicles. The legislatures of all our States have recognized the hazards and perils daily encountered and as a result have enacted various pieces of legislation aimed at the protection of the injured party. Financial Responsibility acts, Unsatisfied Judgment Fund acts, and other similar laws are direct results of this concern. That the general welfare is promoted by such laws can be little doubted. Government and the general public have an understandable interest in the problem. Many persons injured and disabled from automobile accidents would become public charges were it not for financial assistance received from the insurance companies.

'(15) The fact that plaintiffs' identity may not have been known at the time the contract to procure insurance was made does not prevent them from assuming the status of third party beneficiaries. * * *' (Emphasis in text.)

We have quoted extensively from the Illinois Appellate Court opinion because its reasoning is enlightening in demonstrating that the third party beneficiary doctrine encompasses, substantively speaking, a cause of action against an insurer in favor of members of the public injured through the acts of an insured. Support for this view is buttressed by the State's Financial Responsibility Law, Ch. 324, Florida Statutes, F.S.A.

It cannot be disputed that securance of liability insurance coverage protection for the operation of a motor vehicle, regardless of whether the policy is secured to meet the requirements of Ch. 324, F.S., is an act undertaken by the insured with the intent of providing a ready means of discharging his obligations that may accrue to a member or members of the public as a result of his negligent operation of a motor vehicle on the public streets and highways of this state.

Viewed in this light, we think there exists sufficient reason to raise by operation of law the intent to benefit injured third parties and thus to render motor vehicle liability insurance amenable to the third party beneficiary doctrine.

Once it is established that a person injured by the act of an insured while operating a motor vehicle is a party entitled to maintain a cause of action directly against the liability insurer of the tort-feasor, the question then presented is when may the injured third party exercise his right to bring suit on the cause of action vested in him. Resolution of this question entails the effect to be attributed to rules of civil procedure and provisions of the policy as well as the process of weighing and measuring certain countervailing public policies.

It seems reasonable to view the cause of action against an insurer in favor of an injured third party as vesting in or accruing to the injured party at the same time he becomes entitled to sue the insured, assuming, of course, due notice of the injured party's claim has been given insurer and it has had opportunity to duly investigate the same.

Of course, by the very nature of liability insurance it is axiomatic that liability of the insured is a condition precedent to liability of the insurer on the cause of action against it by the injured third party. Such condition, however, does not effect a postponement in liability to be sued but only makes the liability of the insurer to judgment contingent on the establishment of liability to judgment of the insured; therefore, there is nothing inherent in the general nature of liability insurance which would operate to preclude an injured third party beneficiary from directly suing and joining the insurer as a codefendant in the action to determine the insured's liability.

In the present case, the policy of insurance contains provisions to the effect that no action shall lie against the insurer until the amount of the obligation of the insured shall have been finally determined by judgment and that the policy shall not give any right to join the insurer in...