Terrell v. Western Cas. & Sur. Co.
| Decision Date | 02 February 1968 |
| Citation | 427 S.W.2d 825 |
| Court | United States State Supreme Court — District of Kentucky |
| Parties | Nettie TERRELL, Individually and as the Assignee of Horace Cole, Appellant, v. The WESTERN CASUALTY & SURETY COMPANY, Fort Scott, Kansas, Appellee. |
P. Joseph Clarke, Jr., Danville, for appellant.
James G. Sheehan, Jr., Danville, for appellee.
JAMES B. STEPHENSON, Special Commissioner.
The trial court sustained defendant's motion for summary judgment and plaintiff appeals from this judgment.
Appellant Nettie Terrell's complaint is summarized as follows: The appellee, Western Casualty & Surety Company, had issued to one Horace Cole a liability policy on an automobile; Cole was involved in a collision with a vehicle owned and driven by appellant, Nettie Terrell, causing severe personal injury to her; she instituted suit against Cole; certain negotiations regarding settlement of the case were entered into; Cole made demand on appellee insurance company to settle the suit within the policy limits; an offer was made by appellee insurance company to settle the cases of Nettie Terrell v. Horace Cole and Elizabeth Terrell v. Horace Cole, Elizabeth being Nettie's daughter who was a passenger in the Terrell car. The offer of settlement was rejected on the ground it was made in bad faith; the case went to trial and at the instance of appellee's counsel Cole admitted liability and the case was presented to the jury on the question of damages only; the jury returned a verdict for Nettie Terrell against Cole in the amount of $16,848.05; the policy held by Cole was limited to $10,000 for each person, $20,000 for each accident. Appellee insurance company paid to the Clerk of the Court $10,113.50 and Cole was confronted with an unsatisfied judgment against him in the sum of $6,734.55, being the amount of the judgment in excess of the policy limits. An execution was issued against Cole. In order to obtain withdrawal of the execution, Cole executed an assignment of his claim against appellee's insurance company to the appellant, Nettie Terrell; that appellee insurance company was guilty of fraud and bad faith in refusing to negotiate a fair settlement of the suit and claiming judgment against appellee for the sum of $6,734.55.
After answer was filed denying the allegations of the complaint, certain interrogatories were propounded to the appellee. Most of the allegations of the complaint were admitted, others denied. The pertinent allegations denied were that Cole had made a demand upon the insurance company to settle and that the appellee insurance company was guilty of fraud or bad faith in declining to settle the case within the policy limits. Appellee interposed the defenses of invalidity of the assignment and no consideration for the assignment since the judgment was unsatisfied. There was also a controversy with regard to additional interrogatories filed by appellant demanding production of letters and documents pertaining to settlement negotiations entered into in the damage suits. This will be discussed further after disposing of the principal question of law involved in this appeal.
In the former lawsuits Cole was represented by counsel for the amount in litigation exceeding the policy limits.
As to the validity of the assignment from Cole to the appellant, Nettie Terrell, it is in effect the assignment of a chose in action for failure to fulfill a contractual obligation. This action is based on a breach of the insurance contract and the damages resulting therefrom. It is not in tort, and while the specific language will not be found in the contract it is there by operation of law. American Sur. Co. of N.Y. v. J. F. Schneider & Son, Inc., Ky., 307 S.W.2d 192, and State Farm Mut. Auto. Ins. Co. v. Marcum, Ky., 420 S.W.2d 113. All defenses on behalf of appellee insurance company that were available had Cole prosecuted this action are available to it in defending against appellant. Appellee argued no consideration for the assignment since the judgment was not satisfied. This contention is answered in the State Farm Mutual case, supra. 'However, we find the great weight of authority is that the entry of a final judgment, rather than satisfaction of it, gives rise to the cause of action.' The damages are liquidated and are the difference between the...
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