State ex rel. Indemnity Co. of America v. Daues

• Decision Date: 11 February 1929
• Docket Number: 29037
• Citation: 13 S.W.2d 1059,321 Mo. 1035
• Parties: The State ex rel. Indemnity Company of America v. Charles H. Daues et al., Judges of St. Louis Court of Appeals
• Court: Missouri Supreme Court

13 S.W.2d 1059

321 Mo. 1035

The State ex rel. Indemnity Company of America v. Charles H. Daues et al., Judges of St. Louis Court of Appeals

No. 29037

Supreme Court of Missouri

February 11, 1929

Motion for Rehearing Overruled February 11, 1929.

Writ quashed.

W E. Moser and Hensley, Allen & Marsalek for relator.

(1) The opinion of respondents' clashes eith the rule heretofore adopted by this court, in the construction of insurance policies and other contracts. The respondents hold, in effect, that they are privileged to evade the plain terms of the policy in question, by "one process of reasoning or another," because, forsooth, as appears from the opinion, they do not approve of the particular form of policy in suit. The opinion in this matter reverses the law frequently declared by this court, that "unequivocal language is to be given its plain meaning, though found in an insurance contract." State ex rel. v. Trimble, 306 Mo. 309; State ex rel. v. Ellison, 269 Mo. 420; State ex rel. v. Trimble, 297 Mo. 659. (2) The contract between relator and Zausch plainly provides that the relator agreed to indemnify the assured against loss resulting from claims upon the assured, etc. The policy also contained the "no-action" clause above noted. This court decided in a case in which the facts are practically identical with those of the present case, that under such form of policy no liability on the part of the insurer accrues until the assured suffers a loss and pays the same in money, as required by the policy. State ex rel Automobile Ins. Co. v. Trimble, 297 Mo. 659. (3) The opinion of respondents conflicts with the well-settled rule frequently declared by this court, that "in order that an indebtedness may be liable to garnishment, it must be shown to be absolutely due as a money demand, unaffected by liens or prior incumbrances or conditions of contract," and that except in cases of fraud, "the creditor can claim no higher rights against the garnishee than the debtor could claim against him." Weil v. Tyler, 38 Mo 545; Johnson v. Pub, Co., 122 Mo. 104; Holker v Hennessey, 143 Mo. 87; Marz v. Glass Co., 269 S.W. 700; Scales v. Southern Hotel Co., 37 Mo. 520; McPherson v. Railroad, 66 Mo. 103. (4) In establishing the conflict of opinions it is not necessary that relator produce a "Grey-mule" case, but it is sufficient if it appears (a) that the opinion of the Court of Appeals runs counter to the decisions of the Supreme Court on the general principle of law announced, or (b) that such opinion announces a ruling contrary to that of the Supreme Court under a like or similar state of facts, or where the facts are analogous. State ex rel. v. Ellison, 271 Mo. 474; State ex rel. v. Reynolds, 287 Mo. 169, 289 Mo. 506; State ex rel. v. Allen, 294 Mo. 214; State ex rel. v. Trimble, 250 S.W. 384. It being the purpose of certiorari to secure harmony of opinions, if the opinion of respondents is not harmonious with the decisions of the Supreme Court, it should be quashed. State ex rel. Vulgamott v. Trimble, 300 Mo. 92; State ex rel. Boeving v. Cox, 310 Mo. 367.

Frederick A. Wendt, Roy H. Bergmann and James J. O'Donohoe for respondents.

(1) The opinion of respondents in Goerss v. Indemnity Co., 3 S.W.2d 272, does not conflict with State ex rel. v. Trimble, 297 Mo. 659, for the following, among other, reasons: (a) The insuring and no-action clauses in the policies considered in said cases are different, but the policy considered in Swanson v. Georgia Casualty Co., 315 Mo. 1007, and in the instant case, are substantially the same; and respondents followed said decision by referring approvingly to Wehrhahn v. Casualty Underwriters (Mo. App.), 1 S.W.2d 242, where the Swanson case is relied on as a binding authority. (b) In the Trimble case the relator there did not agree to defend and did not promise to embark in the practice of law, while in the instant case relator agreed "to defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim covered by said parts 4 and 5, whether groundless or not." (c) The relator in the Trimble case did not promise, as here, "to pay all expenses incurred by the company in defending any suit, including any costs taxed against the assured, and interest accruing on verdict or judgment." (d) The question of breach of contract was neither presented to nor decided by the court in the Trimble case. (e) In the policy considered in the Trimble case assured was a freeman, while Zausch, the assured in the instant case, was excluded from voluntarily assuming any liability, interfering in any negotiations for settlement, interfering in any legal proceedings, incurring any expense, and settling any claim except at his own cost without the written consent of relator previously given. (f) In the Trimble case relator there did not stipulate for dominion over either claims or suits, while relator here gave itself exclusive control of all investigations, adjustments, settlements and defense of suits. (g) In the Trimble case the insuring clause is a dependent one, while in the instant case it is an independent clause complete in itself. (h) It was not presented or decided in the Trimble case that the insuring and no-action clauses conflicted and that the former controlled. (i) It was not presented or decided in the Trimble case that where two clauses in a contract conflict, the first governs, rather than the last. (j) Whether the no-action clause applied to garnishment proceeding was not presented or passed upon in the Trimble case. (2) Answering point 3 of relator's points and authorities, the respondents, in their opinion, contravened no decision of this court. Respondents did not hold that the creditor can claim higher rights against the garnishee than the debtor could claim against him. (3) The policy under the title, "Part V. Liability," indemnifies against loss resulting from claims upon the assured for damages on account of bodily injuries accidentally suffered or alleged to have been suffered by any person or persons by reason of the ownership, maintenance and use of such automobile, as distinguished from reimbursement for loss by reason of payment of judgment. Swanson v. Georgia Cas. Co., 315 Mo. 1007; Wehrhahn v. Casualty Underwriters (Mo. App.), 1 S.W.2d 242; Goerss v. Indemnity Co. (Mo. App.), 3 S.W.2d 272. (4) Judgments are direct losses, for they work loss of credit, occupation, mental loss and cause dissolutions of copartnerships, corporations and drive assureds into bankruptcy; while, "Handing money to a judgment plaintiff with one hand and receiving the same amount of money from the insurance company in the other is certainly not a loss." Cases supra, and Elliott v. Belt Automobile Assn., 87 Fla, 545; American Indemnity Co., 114 Tex. 127. (5) Regardless of the no-action clause, where an action is brought by a third party against the assured under an indemnity policy, a judgment in the action becomes, as between plaintiff, defendant and the insurance company, a debt owing unconditionally by the company to the defendant (assured), which may be reached by garnishment, and this is true whether insurer does or does not defend the action. Cases supra, and, Mahr v. Maryland Cas. Co., 132 Minn. 336; Standard Printing Co. v. Deposit Co., 138 Minn. 304; Powers v. Cas. Co., 139 Minn. 309; Capelle v. U.S. Fidelity & G. Co., 80 N.H. 481; Illinois Surety Co. v. Maguire, 150 Wis. 544; Ross v. Am. Emp. Ins. Co., 56 N.J.Eq. 41; Pickett v. Cas. Co., 60 S.C. 477; Meyers v. Continental Cas. Co., 12 F.2d 53; Farmers H. W. Co. v. Cas. Co., 184 Iowa 773; Fritchie v. Extract Co., 197 Pa. St. 401; Fentress v. Royal Indemnity Co., 140 Va.App. 685; Fenton v. Fidelity & Cas. Co., 36 Ore. 283; 14 R. C. L. 1322; 15 Cyc. 1036. (6) Relator promised, in consideration of the premiums, "to defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim covered by said parts four and five, whether groundless or not." Hence, failure to defend the damage suit brought against assured and disclaiming all liability constitutes a breach of contract upon relator's part and puts an end to the no-action clause. Goerss v. Indemnity Co. (Mo. App.), 3 S.W.2d 272. The courts have gone further than respondents and have held that where the stipulation to defend is in the policy and insurer fails to defend or negligently defends, or where insurer fraudulently or oppressively or in bad faith fails to settle, insurer is liable not only for the limit in the policy, but for the face of the judgment, regardless of amount. Carthage Stone Co. v. Trav. Ins. Co., 274 Mo. 537; Attlebon Mfg. Co. v. Ins. Co., 240 F. 573, 171 F. 495; Brunswick Realty Co. v. Ins. Co., 166 N.Y.S. 36; Anderson v. Surety Co., 107 Kan. 375. A ruling different to that made by respondents in the instant case would conflict with the following cases: Strong v. Phoenix Ins. Co., 62 Mo. 289; Gantt v. Ins Co., 68 Mo. 503; Garrison v. Baggage Trans. Co., 94 Mo. 130; Railroad v. News Co., 151 Mo. 373.

Gantt, J. All concur, except Blair, J., who dissents.

OPINION

GANTT

Certiorari to quash the opinion, judgment and record thereof of the St. Louis Court of Appeals in Goerss v Indemnity Company of America, a corporation, Garnishee of Ralph T. Zausch. The opinion is reported in 3 S.W.2d 272, and the facts are stated in said opinion, as follows:

"This is a garnishment proceeding. On March 23, 1925, plaintiff obtained a judgment against defendant Ralph T. Zausch, for $ 3000 in the Circuit Court of the City of St. Louis, in an action brought to recover damages for personal injuries accidentally suffered by plaintiff as a result of being struck by an automobile operated and driven by defendant on a public street in said city....