Stephens v. Pennsylvania Casualty Co.

• Decision Date: 22 December 1903
• Citation: 135 Mich. 189,97 N.W. 686
• Court: Michigan Supreme Court
• Parties: STEPHENS v. PENNSYLVANIA CASUALTY CO.

97 N.W. 686

135 Mich. 189

STEPHENS v. PENNSYLVANIA CASUALTY CO.

Supreme Court of Michigan

December 22, 1903

Appeal from Circuit Court, Wayne County; Morse Rohnert, Judge.

Action by Henry Stephens against the Pennsylvania Casualty Company. From a judgment for plaintiff, defendant appeals. Modified.

This is a case-made after judgment. On April 14, 1900, the defendant and the Detroit, Rochester, Romeo & Lake Orion Railway Company entered into a contract of indemnity; the only parts which bear upon this controversy being as follows:

'In consideration of the Agreements hereinafter and the Warranties in the application for this Policy contained which application is made a part of this Contract of Insurance, and of fourteen hundred dollars premium, The Pennsylvania Casualty Company of Scranton, Pennsylvania (hereinafter called 'the Company') does hereby agree to indemnify Detroit, Rochester, Romeo & Lake Orion Railway Company of Detroit, County of Wayne and State of Michigan (hereinafter called 'the Assured') for the term of one year, beginning on the fourteenth day of day of April, 1901, at noon, standard time, against Legal Liability of the Assured for injury to or death of persons and all legal liability arising or accruing therefrom for loss of service, funeral expenses, and medical attendance being the result of casualties occurring by reason of the operation of the Street Railway named in the said application to an amount not to exceed twenty-five hundred dollars for injury to or death to any person, and subject to the same limit for each person not to exceed ten thousand dollars for the total liability in any one casualty, whereby several may be killed or injured; and not to exceed thirty thousand dollars for total liability during the term of this contract.

'Special Agreements.

'(7) The indemnity hereby provided for shall not be payable until the loss or damage has been adjusted and settled by the Company nor until thirty days after satisfactory particulars of the loss or damage shall have been furnished the Company.

'(10) The Company shall have control of the defense of any legal proceedings against the Assured in the name and on behalf of the Assured for accidents covered by the provisions of this contract, and in case legal proceedings shall be instituted against the Assured for such accidents, the Assured shall within five days of the service of any writ upon the Assured, deliver to the Company, at its home office, any writ, and all papers or copies of the same, pertaining to said suit or action, and all other papers received, possessed or controlled by the Assured, relating to such suit or action, immediately upon receipt of same, and keep the Company at all times informed of each successive step, and of all steps taken in said suit or action, immediately upon the occurrence of the same, and render to the Company all necessary information and assistance to properly conduct a defense, or prosecute an appeal, or effect a settlement, and a failure of the Assured to fully comply with the provisions of this section shall release the Company from all liability by reason of such accident, suit or action.'

On September 21, 1900, a passenger upon the railroad was injured, brought suit, and recovered on May 2, 1901, a judgment of $2,592 and costs of suit, taxed at $88.71. The defendant assumed the direct control of the defense in that suit. The railroad company was satisfied with the adjustment, and did not desire to appeal, but the casualty company insisted upon appealing to the Supreme Court. It was finally agreed to assign only such errors as would, if sustained by the Supreme Court, result in a reversal of the judgment without ordering a new trial. Upon an appeal to this court, taken at the instigation of the defendant, which paid all the expense of the appeal, the judgment was affirmed February 11, 1902 (89 N.W. 52), and costs taxed on February 20th at $73.51. On March 17, 1902, the judgment and the costs of both courts, and the accrued interest upon the judgment and costs, totaling $2,892, were paid by the railway company; plaintiff furnishing the money, and taking an assignment of the claim against the defendant. The defendant was soon thereafter notified of such payment, but asked for a certificate of the clerk of the court that the judgment had been paid, and by whom, and also asked for a certified copy of the assignment to Mr. Stephens. These certificates were furnished April 4, 1902. On March 19, 1902, the defendant was served with a writ of garnishment. Another writ was subsequently issued. Under these garnishee proceedings the defendant disclosed its liability to the amount of $2,500, and on April 7, 1902, an order was made, upon the motion of defendant, permitting it to pay $2,500 into court, under the provisions of the statute. This order was complied with July 7th, and a proper receipt taken from the clerk. These the fund remained until February 9, 1903, when the plaintiff gave a bond and received from the clerk of the court the $2,500, and the garnishment proceedings were discontinued. This suit was brought to recover the costs taxed in the Supreme Court, and interest thereon, and interest on the judgment from the date of its rendition. Under the direction of the court, the jury rendered a verdict from the amount claimed.

An indemnitor in a contract of indemnity authorizing the indemnitor to control the defense of any legal proceedings against the indemnitee, who appeals from a judgment against the indemnitee, is chargeable with the costs of the appeal on the affirmance of the judgment.

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Graves, Hatch & Mills, for appellant.

Graves, Hatch & Millis, for appellant

GRANT, J. (after stating the facts).

1. The main question arises upon the construction of the contract of indemnity. Plaintiff contends that the legal liability became adjusted and settled upon the rendition of the judgment in the circuit court. Defendant insists that the liability was not adjusted and settled until the judgment was paid, or, if that be not so, until the final determination in the Supreme Court. The contention of the defendant upon the trial was that its liability was limited to $2,500, and that, having paid that amount into court, its liability ended. This result would follow if its construction of the contract be sound. We think that, under the terms of this contract, when a final judgment was rendered against the railroad company the liability under defendant's contract became fixed, and it was obligated to pay the amount of the indemnity, although the judgment had not been paid. Under defendant's claim if the indemnitee were insolvent and never paid the judgment, the indemnitor would never be compelled to pay. This result would, of course, follow if the contract of indemnity required the indemnitee to be first damnified by payment, as was held in the case of Weller v. Eames, 15 Minn. 461 (Gil. 376), 2 Am. Rep. 150, upon which the defendant...