Venz v. State Auto. Ins. Ass'n of Des Moines

• Decision Date: 14 November 1933
• Docket Number: No. 42046.,42046.
• Citation: 251 N.W. 27,217 Iowa 662
• Parties: VENZ v. STATE AUTOMOBILE INS. ASS'N OF DES MOINES et al.
• Court: Iowa Supreme Court

217 Iowa 662

251 N.W. 27

VENZ

v.STATE AUTOMOBILE INS. ASS'N OF DES MOINES et al.

No. 42046.

Supreme Court of Iowa.

Nov. 14, 1933.

Appeal from District Court, Black Hawk County; R. W. Hasner, Judge.

This is an action at law on behalf of an assured against the Insurance Company. The opinion states the facts.

Affirmed.

Clark & Clark, of Waterloo, for appellants.

Mears, Jensen & Gwynne, of Waterloo, for appellee.

MITCHELL, Justice.

On the 1st day of September, 1929, the appellee, a resident of Waterloo, Iowa, was injured in an automobile collision between the car in which she was riding and an automobile owned by T. W. Wren, who was doing business under the name of “Rent-a-Car and Drive-Ur-Self” Garage. At the time of the accident resulting in the injuries to the appellee, the automobile owned by T. W. Wren was driven and operated by one Donald Powers, a boy under fifteen years of age, who had rented the automobile from the said Wren and paid him the consideration for it. The business operated by Mr. Wren was one in which he rented cars to the public, and it was pursuant to such calling that he rented the car to Donald Powers, whose negligence in driving the car resulted in the appellee's injuries. Mr. Wren carried a policy of insurance in the appellant company, insuring him against loss from liability imposed by law on account of bodily injuries suffered by any person as the result of an accident occurring while such contract was in force, due to the ownership or use of any automobile described in the contract. The car rented by Donald Powers and which he was driving at the time of the accident was one of the cars included in the policy contract. The policy of insurance was one unusual in its terms. It was not one where the premiums were paid for a specified period of time. Instead of the premiums being paid in advance on a time basis, premiums on this policy were to be paid on the first day of each month for the risks actually incurred during the preceding month. For each trip that incurred a risk, a charge of 20 cents was to be made. There were certain trips on which the company was to take no risk. One provision was that the policy should cover only such accidents occurring while any of the described automobiles were being driven for compensation paid or agreed to be paid by the party renting the car. Another exception was when the automobile was being driven or operated by a person under sixteen years of age. Whenever a car was rented, a rental agreement was made, setting out the name and address of the renter, the make and license number of the car rented, the date thereof, and indorsements were made thereon showing the exact time and date that the renter took the car, the mileage driven by him, the hour and minute he returned the car, and the rental charges therefor. Such a rental contract was signed by Donald Powers in the regular manner.

On the day following the accident, Wren notified a Mr. Aldrich, who was then and had been for ten years the branch manager of the appellant company and was located at Waterloo, Iowa. Mr. Aldrich had Mr. Wren make out a written report, and in about a week after the accident an adjuster of the appellant company came to Waterloo, investigated the accident, and learned that Donald Powers was under fifteen years of age. The information that Donald Powers was under fifteen years of age was also given Mr. Aldrich, the branch manager.

Early in the month of October and not later than the 3d, the branch manager, Mr. Aldrich, called at Wren's place of business for the purpose of collecting the premiums for the month of September. Mr. Aldrich and Mr. Wren checked the rental agreements, and Mr. Wren paid to Mr. Aldrich 20 cents for each of the trips made during the month of September, including the trip made by Donald Powers, although at the time that Mr. Aldrich collected said money he and the appellant company knew that Donald Powers was not sixteen years of age. On October 27, 1929, demand was made of the appellant company for the damages caused by Mr. Wren's automobile, driven by Donald Powers, and on February 21, 1930, suit was brought by appellee against T. W. Wren on account of damages sustained by her. The appellant company refused to defend or to have anything to do with the case, but thereafter at the solicitation of Wren and Wren's attorneys, the appellant company agreed to assist in the defense of the action upon the condition that they were waiving no rights. Thereafter judgment was rendered in favor of the appellee, and against Wren, in the amount of $9,000 and costs. The premium collected by the insurance company for the trip made by Donald Powers was never returned or tendered back but has at all times been retained by the insurance company. After execution had been issued against the property of T. W. Wren and returned wholly unsatisfied, suit was brought by the appellee against the appellant company, a jury was waived, and the case was tried to the court as a law case. The court rendered a judgment in favor of the appellee in the sum of $5,000, that being the amount of the policy coverage, and it was from this judgment that the appellant company has appealed to this court.

[1][2][3] I. The first error relied on by the appellant is that the court erred in not holding that the appellee's action was improperly brought and that section 8940 of the Code of Iowa gives the appellee no right or authority against the appellant. It is the claim of the appellant that it is the attorney in fact for the subscribers at a reciprocal or interinsurance exchange, known as the State Automobile Insurance Association. That this exchange is organized, is created, has its being, is operating and existing under and by virtue of chapter 408 of the Code of Iowa. Section 8940 of chapter 404 of the Code of Iowa simply makes it mandatory that liability insurance companies organized under chapter 404 of the Code provide such right to the injured party. It does not forbid the inclusion of a provision giving such right in policies of insurance in companies or associations organized under other chapters of the Code. The policy which the appellant company issued in the case at bar contained a specific provision permitting such action to be brought by the injured party. This provision is as follows: “Should an execution on a final judgment against the assured in an action covered by this policy be returned unsatisfied, the judgment creditor shall have a right of action against the association to the same extent that the assured would have, had such assured paid such final judgment.”

This court has held that a third party, for whose benefit a contract is made, has a right to bring an action on the contract. In Runkle v. Kettering, 127 Iowa, 6, 7, 102 N. W. 142, it is said: “The right of a party for whose benefit a contract of this kind has been made to maintain an action thereon is settled beyond controversy in this state.”

In the case of In re Estate of Youngerman, 136 Iowa, 488, at page 496, 114 N. W. 7, 10, 15 Ann. Cas. 245, the court said: “This court has uniformly held that one for whose benefit a contract is made is the real party in interest as to an action for a breach thereof, regardless of whether the consideration proceeds from him or another.”

So in the case at bar the appellant itself wrote into the contract the provision under which the injured party could bring an action against the insurer. Appellant now seeks to nullify this provision which it itself made a part of the policy. This it cannot do. The appellee had a right under the terms of the policy to commence her action, as she did.

[4] II. The next proposition relied upon by the appellant for reversal is that the court erred in not holding that the policy contract sued on was one for indemnity for loss and not indemnity against liability.

In the case at bar the condition set out in the policy under which the insurer could be sued was as follows: “Should an execution on a final judgment against the assured in an action covered by this policy be returned unsatisfied, the judgment creditor shall have a right of action against the association to the same extent that the assured would have, had such assured paid such final judgment.”

The case of Schmid v. Automobile Underwriters et al. (Iowa) 244 N. W. 729, 734, 85 A. L. R. 4, was one in which the policy provided that “no suit or action shall be sustainablein any court of law or equity for the recovery of any claim for loss under this contract unless brought by the assured himself or his legal representatives.” In its analysis of the facts and the law of that case the court discussed what the effect would have been had the policy contained a provision, as in the instant case, permitting action to be brought by the injured person after execution against the property of the assured had been returned unsatisfied and held that in...