Tichota's Estate, In re

• Citation: 191 Neb. 484,215 N.W.2d 885
• Decision Date: 14 March 1974
• Docket Number: No. 39216,39216
• Parties: In the Matter of the ESTATE of LeRoy TICHOTA, Deceased. Henry NIEMEYER, Appellant, v. The ESTATE of LeRoy TICHOTA, Deceased, and William Tichota, Administrator of the Estate of LeRoy Tichota, Deceased, Appellees.
• Court: Supreme Court of Nebraska

Page 885

215 N.W.2d 885

191 Neb. 484

In the Matter of the ESTATE of LeRoy TICHOTA, Deceased.

Henry NIEMEYER, Appellant, v. The ESTATE of LeRoy TICHOTA, Deceased, and William Tichota, Administrator of the Estate of LeRoy Tichota, Deceased, Appellees.

No. 39216.

Supreme Court of Nebraska.

March 14, 1974.

Syllabus by the Court

Where an insurer agrees to pay all costs taxed against the insured in any suit and all interest accruing after the entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon, the insurer is liable for interest on the total amount of the judgment until it complies with this provision.

Erickson, Sederstorm & Johnson, Omaha, for appellant.

Jewell, Otte, Gatz, Magnuson & Collins, Norfolk, for appellees.

Heard before WHITE, C.J., SPENCER, BOSLAUGH, McCOWN, NEWTON, and CLINTON, JJ., and CHADDERDON, District Judge.

SPENCER, Justice.

This case involves the question of whether a liability insurer is liable for interest on that portion of a judgment recovered against its insured by a third party which is in excess of the principal amount limited by the policy where the policy requires the insurer to pay 'all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon.' The trial court held there was no liability for interest on the excess judgment. Plaintiff appeals. We reverse.

Plaintiff, who was seriously injured in an automobile accident on February 1, 1970, recovered a judgment against appellants on March 28, 1972, in the amount of $170,000. Dairyland Insurance Company had issued a $20,000 maximum liability policy to decedent and had previously paid out $12,450 for other claims arising out of the same accident. It was obligated to pay the balance of $7,550 towards plaintiff's judgment, but chose instead to appeal the award without posting a supersedeas bond. Plaintiff sought by garnishment to recover the amount due and owing under the terms of the policy and also interest on the entire amount of the judgment from the date of its entry until the balance of the policy limit was tendered or paid.

Plaintiff's claim for interest on the entire amount of the judgment against the garnishee's insured was based upon the following contractual provision appearing in the Dairyland policy in force on the day of the accident.

'2 Defense Settlement Supplementary Payment

'With respect to such insurance as is afforded by this policy for bodily injury liability and property damage liability, the company shall:

'(b)(2) pay all expenses incurred by the company, All costs taxed against the insured in any suit and all interest accruing after the entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limits of the company's liability thereon. * * * and the amounts so incurred, except settlement of claims and suits, are payable by the Company in addition to the applicable limit of liability of this policy.' (Emphasis supplied.)

Dairyland admitted liability for $7,550, plus interest at 8 percent from the day of judgment. The trial court entered judgment for this amount but denied plaintiff's claim for interest at 8 percent on the remaining $162,450.

For several years this legal issue has engendered a considerable amount of litigation, resulting in a split of authority. As of 1961, the positions adopted by the courts on either side are summarized in 76 A.L.R.2d at pages 984 to 987. After suggesting that the jurisdictions were fairly evenly divided, the annotator at page 987 states: 'However, there seems to be a trend in favor of holding the insurer liable for interest on the entire amount of the judgment, as illustrated by the two most recent cases in which prior opposite holdings were disapproved. (Illinois and Texas) Thus, if a prognostication may be made as to which view uncommitted jurisdictions are more likely to adopt, the choice would be in favor of extending the liability of the insurer to the entire amount of the judgment because of the seemingly greater appeal of the arguments advanced in support of this theory, as best exemplified in River Valley Cartage Co. v. Hawkeye-Security Ins. Co. (1959), 17 Ill.2d 242, 161 N.E.2d 101, 76 A.L.R.2d 978.'

Since that annotation, the Later Case Service to 76 A.L.R.2d, pp. 983 to 996, indicates that 10 states have followed those permitting...