429 Pa. 289 | Pa. | 1968
Lead Opinion
Opinion by
This is an appeal by Erie Insurance Exchange as garnishee from an adverse judgment on the pleadings in proceedings instituted by appellee for execution with attachment. This litigation has its genesis in Wrongful Death and Survival actions brought by appellee against three defendants, none of whom are parties to the present action. On March 26, 1964, the jury returned verdicts of |100,000 in the survival action and $1,418.50 in the wrongful death action against two defendants, one of whom was insured by Erie against liability.
Following the rendition of the verdicts, Erie, in the name of its insured defendant, filed motions for severance and for new trials. The transcript of testimony and charge of the court were filed July 8, 1964 and on August 3, 1964, additional reasons in support of the motions were filed. Thereafter, the motions were withdrawn or abandoned, and on September 10, 1964, Erie forwarded plaintiff a check in the sum of $20,000, which represented the limit of policy coverage. On September 16, 1964, plaintiff returned the check with a demand for interest on the entire amount of the verdicts and a tender of costs. On October 7, 1964, Erie tendered checks in the amounts of $21,591.91 and $72.25. On October 12, 1964, these checks were returned. Finally, on November 12, 1964 Erie deposited with the prothonotary of the lower court checks in the sums of $21,591.91 and $72.25. Appellee did not enter judgments on the verdicts until April 13, 1965, on which date she also filed a praecipe for writ of execution with attachment and served a copy upon Erie as garnishee.
On May 20, 1965, plaintiff filed a motion for judgment on the pleadings in the attachment proceedings, which motion was granted by the court below. A judg
At the outset it must be noted that absent- a situation wherein interest due plus the principal amount of a verdict exceed applicable policy limits of liability, the insurer is liable for any and all interest accruing from the date of the rendition of an adverse verdict to the entry of judgment thereon. In this respect, insurance carriers are subject to the identical liability for interest as any other party defendant who has received an adverse verdict. Act of April 6, 1859, P. L. 381, §1, 12 P.S. §781.
However, in the instant case, we are confronted with the issue of determining an insurer’s liability for interest when the interest allegedly due and owing plus the principal amount of the verdict exceed the face amount of the liability coverage under the policy. In these instances only, it is sufficient to say that an insurer is not liable for any interest in excess of the policy Umits of liability unless and to the extent it has contracted with its insured to do otherwise.
Erie’s liability insurance contract with its insured provides that Erie shall pay in addition to the applicable limits of liability: “All expenses incurred by the Erie, all costs taxed against the Insured in any such suit and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the Erie has paid or tendered or deposited in Court that part of the judgment which does not exceed the limit of the Erie’s liability thereon. . . .” Plaintiff contends that neither (1) Erie’s tender of the principal amount due nor (2) its tender of the principal amount plus fifty percent of interest on the entire amount of the verdicts plus fifty percent of the
The policy provides that Erie’s liability for bodily injury caused to one person by the insured shall be limited to $20,000. It further provides that Erie shall pay “all interest on the entire amount of any judgment therein which accrues after entry of the judgment. . . .” The instant record discloses that judgment was not entered on the verdicts until April 13, 1965, on which date plaintiff commenced execution proceedings. However, long before entry of judgment, Erie had (1) tendered the policy limit, (2) tendered the policy limit plus interest on one-half of the entire amount of the verdicts plus one-half of the costs, and (3) paid into court the latter sums. Since Erie has complied with the terms of the policy and before the entry of judgment “paid or tendered or deposited in court that part of the judgment which [did] not exceed the limit of the Erie’s liability,” the court below erred in including in its judgment a requirement that Erie pay interest on the entire amount of the verdicts.
In holding that Erie has no liability for interest in excess of its policy limits, we are not unmindful of the legal principle requiring terms of an insurance policy susceptible of different interpretations to be construed in a manner most favorable to the insured. This principle is founded upon the doctrine that when an ambiguity exists in a written contract, the ambiguity must be resolved against the party drafting the contract. However, as regards the instant language, there can be no reasonable basis for differing interpretations. The policy in question makes Erie liable for interest on the entire amount of any judgment which accrues after entry thereof. It does not make Erie liable for interest on the entire amount of the verdict which accrues prior to the entry of judgment.
Another matter also warrants comment. At reargument on this appeal, appellee strenuously urged that the distinction between verdict and judgment, adopted by our Court in its initial opinion, was never raised by Erie at any time during the course of this litigation and hence the issue was not properly before us. In answering appellee’s contention that we are indulging in a form of super-advocacy, it is only necessary to note that we .are charged here with the responsibility of interpreting a written contract. The mere fact that the interpretation which we deem proper and just had never been raised before should not and does not preclude our Court from arriving at a result consonant with recognized principles of law. We have held on many occasions that litigants may not confer subject matter jurisdiction on a court by consent or failure to object. By the same token litigants may not prevent a court from applying relevant principles of law when such principles are germane to a proper resolution of the case at hand. Our conclusion that judg
There remains only the matter of costs. Erie contends that since there are two responsible defendants, only one of whom it insured, it need pay only fifty percent of the compensable costs. That view, of course, is wrong. Pursuant to the Uniform Contribution Among Tortfeasors Act, Act of July 19, 1951, P. L. 1130, §§1-8, 12 P.S. §§2080-2089 (Supp. 1965), a party defendant who pays a verdict has a right of contribution from his joint tortfeasors. That act, however, in no way affects the right of a plaintiff to recover the entire amount of the verdict, interest and costs from any one of the joint tortfeasors. Accordingly, Erie must pay the costs in full, which amount may be deducted from the excessive sum already deposited in court.
The judgment of the court below is vacated, and judgment is entered in favor of plaintiff and against garnishee, Erie Insurance Exchange, in the amount of $20,000 without interest, together with all compensable costs.
We recognize that a conflict of interest might arise in cases where a verdict equals or exceeds policy limits. Admittedly, an insurance carrier by engaging in dilatory tactics after the rendition of an adverse verdict can cause the insured’s obligation to pay interest to increase substantially while its own obligation remains constant. Therefore, whenever an insurance carrier has in bad faith precluded the entry of judgment on a verdict, it will be held accountable for any interest accruing on the verdict notwithstanding such amount far exceeds the liability limits of its insurance policy.
Dissenting Opinion
Dissenting Opinion by
Not only is the majority opinion devoid of any authority to support its conclusion that Erie Insurance Exchange is not liable for any interest accruing between the date of verdict and the time of formal entry of judgment, but it also ignores the weight of authority from other jurisdictions. Even more inexplicable is the fact that the majority holds that Erie is liable for less than Erie admits it owes. Certainly, given the well established rule that a contract of insurance is
While older cases have concluded that the insurer’s liability for interest is limited to that part of the judgment for which the insurer is responsible, most recent decisions have viewed the liability for interest as extending to the entire amount of the verdict. See Southern Farm Bureau Cas. Ins. Co. v. Robinson, 236 Ark. 268, 365 S.W. 2d 454 (1963); River Valley Cartage Co. v. Hawkeye-Security Ins. Co., 17 Ill. 2d 242, 244-45, 161 N.E. 2d 101, 103, 76 A.L.R. 2d 978, 981 (1959); Doty v. Central Mutual Ins. Co., 186 So. 2d 328 (La. Ct. App. 1966); Powell v. T. A. & C. Taxi, Inc., 104 N.H. 428, 188 A. 2d 654 (1963); Kraynick v. Nationwide Ins. Co., 80 N.J. Super. 296, 193 A. 2d 419 (1963); Mayberry v. Home Ins. Co., 264 N.C. 658, 142 S.E. 2d 626 (1965); Coventry v. Steve Koren, Inc., 1 Ohio App. 2d 385, 205 N.E. 2d 18, aff’d on opinion of court below, 4 Ohio St. 2d 24, 211 N.E. 2d 833 (1965); Plasky v. Gulf Ins. Co., 160 Tex. 612, 335 S.W. 2d 581 (1960); contra, Crook v. State Farm Mutual Auto Ins. Co., 235 S.C. 452, 112 S.E. 2d 241 (1960); Nichols v. United States Fidelity & Guaranty Co., 13 Wisc. 2d 491, 109 N.W. 2d 131 (1961); see generally, Annot., 76 A.L.R. 2d 983 (1959). Certainly this is the first case where any court has held that under these facts the insurer is not liable for any interest.
The majority’s holding in this case actually awards the appellee less than the appellant admits it owes: “It is the contention of the Garnishee [appellant] that under the clear unambiguous specific terms of its insurance policy, it is liable only for $20,000, together1 with interest at 6% to be computed from March 26, 1964, upon the entire amount of the verdict, to wit, $101,418.15 to September 10, 1964, the date on which
Furthermore, appellant insurance company frankly conceded: “Erie is only liable to the Plaintiff for all costs and for all interest on the entire amount of any judgment before Erie has paid or tendered or deposited in Court that part of the judgment which does not exceed the limit of Erie’s liability thereon. In this instance, judgment is synonymous with verdict, the amount being $101,418.50, since a mere praecype com verts a verdict into a judgment.” Appellant’s Brief, page 12. (Emphasis supplied.)
The majority insists that because the insurance company did not act in bad faith, there is no obligation upon it to pay any interest. Once again, the brief of the party victorious on this appeal refutes its reasoning : “The provision in the policy [quoted in the majority opinion] is manifestly for the protection of the Deféndant. Since the liability carrier controls the litigation it would be most prejudicial to the Defendant assured if he were responsible for interest which is accruing on the entire amount of the verdict while post-trial motions and appeals are pending.”
Moreover, the majority places insurance companies in a preferred position in relation to other judgment debtors and this is in direct conflict with the Act of April 6, 1859, P. L. 381, §1, 12 P.S. §781: “From and after the passage of this act it shall be lawful for any party or parties, in whose favor any verdict may be rendered for a specific sum of money, to collect and
Interestingly, a case authored by the writer of the majority opinion, Kelly v. Allegheny County Redevelopment Auth., 411 Pa. 210, 191 A. 2d 393 (1963), re-enforces my view of the proper interpretation of the Act of 1859. On April 7, 1961, a jury returned a verdict of $130,000 in favor of the Kellys as compensation for land condemned by the authority. Believing this award to be inadequate, the Kellys moved for a new trial. When their motion was denied, judgment was entered on the verdict of January 8, 1962 and an appeal taken to this Court. On April 17,1962, this Court affirmed the award; the authority tendered payment of $130,000 on May 8, 1962. On appeal the Kellys contended that they were entitled to interest from April 7, 1961, even though it was their action which caused the
Judge Claky of the United States District Court for the Eastern District of Pennsylvania, interpreting Pennsylvania law, concluded that policy language which is in all material particulars identical to that presently in dispute requires that the insurer pay interest on the full amount of the verdict. See Underwood v. Buzby, 136 F. Supp. 957 (E.D. Pa. 1955), aff’d 236 F. 2d 937 (3d Cir. 1956). Plaintiff in Underwood obtained a verdict of $60,000 in an automobile negligence case. Defendant was insured only to the extent of $25,000. After the dismissal of defendant’s post-trial motions, defendant’s insurance carrier paid into court $25,000 plus interest on that amount only from the date of verdict to the date of payment. Plaintiff contended that the carrier was bound to pay into court $25,000 plus interest upon the entire verdict, $35,000 of which was not insured. The district court held that the carrier was required to pay interest on the uninsured portion of the verdict from the date of entry of the verdict to the date of payment into court of the proceeds of the policy plus interest. The policy therein involved provided that the company pay “all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the company’s liability thereon. . . .” (Emphasis supplied. )
The majority’s statements in footnote 1 indicate that it believes that adequate protection is given the insured if the insurer'is held for interest liability where it acts in “bad faith.” This protection is wholly illusory. No standards are provided, to enable the trial court to determine what constitutes “bad faith.” Furthermore, the insured can enforce the “bad faith” standard only through additional litigation the expenses of which may well equal any interest recovered. What the majority has done is absolve the insurance carrier for interest liability where the carrier unilaterally and
Perhaps the most incredible aspect of the majority’s holding is that it conflicts with the interpretation advocated by the insurance industry itself. The clause presently under review was inserted into policies for the express reason of assuring the policyholder that the insurance carrier would assume liability for interest on the entire amount of the verdict. See Ramsey, Interest on Judgments Under Liability Insurance Policies, Insurance L.J., No. 414, at pp. 407, 411 (July, 1957) : “The new family combination automobile policy, issued by The National Bureau of Casualty Underwriters, now provides with reference to this question that the insurance company is required to pay: ‘. . . all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the company’s liability thereon.’
“The National Bureau of Casualty Underwriters has also issued a directory to its member companies reading: ‘Several court cases have held that an insurer’s obligation to pay interest extends only to that part of the judgment for which the insurer is liable. The respective rating committees have agreed that this is contrary to the intent. As a result, the wording with respect to payment of interest in the new Family Automobile Policy has been restated, in order that it be entirely clear that all interest on the entire amount of any judgment, which accrues after entry of the judgment, is payable by the insurer until the insurer has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the insurer’s liability thereon. All Automobile and General Liability policies will be changed accordingly upon re
The Act of 1859 makes it clear beyond question that when one speaks of entry of judgment in Pennsylvania the judgment entered is computed by adding to the verdict the amount of interest owing. Simply, just as “2 plus 2” and “4” are identical, “verdict plus interest” and “judgment” are in Pennsylvania identical.
The unnatural result achieved by the majority’s reasoning is best illustrated by the following hypothetical example. Defendant’s policy has a maximum, coverage provision of $20,000 and plaintiff recovers a verdict for precisely that amount. The insurance company, in good faith, files a timely new trial motion which is not resolved until one year later when that motion is denied. Under Moore v. Quigley, 402 Pa. 638, 168 A. 2d 334 (1981) plaintiff cannot enter judgment on his verdict until the new trial motions have been adjudicated. The defendant, unless he pays to plaintiff an amount of money sufficient to satisfy the verdict, cannot prevent the running of interest and will be liable for interest of $1,200. Yet the plaintiff recovered an amount covered by defendant’s policy. To avoid this result (one mandated by the majority’s opinion), it is obvious that verdict and judgment mean the same thing for purposes of this policy.
The sole issue on this appeal, which has been totally obfuscated by the majority’s opinion, is whether, when the appellant offered to pay the appellee $20,000 on September 10, 1964, the full amount of its liability under its policy, it tolled the running of the interest on the entire amount of the verdict. It is now conceded by the appellant that their offer of 50% of the interest and 50% of the cost on October 7, 1964 did not equal their full obligation.
“Since the insurer conceded that it was liable for some interest and costs at the time of the alleged tender, although it disputed the exact amount, it should have been clear to the insurer that it did not make a legally valid tender. While it is true that interest is a separate and distinct obligation from the judgment,
In the instant case the insurer admits that it is liable for interest on the entire verdict at least until September 10, 1964. This is not the first time in recent months where, over my dissent, this Court, acting as a super-advocate, has ruled in favor of a litigant on a point of law which said litigant not only failed to complain about but also conceded was not an issue in the case. See Heck v. Beryllium Corp., 424 Pa. 140, 226 A. 2d 87 (1966). I know of no justification for this power in either law or logic.
I dissent.
Compare Gray v. Nationwide Mut. Ins. Co., 422 Pa. 500, 223 A. 2d 8 (1966); Gedeon v. State Farm Mut. Automobile Ins. Co., 410 Pa. 55, 188 A. 2d 320 (1963); Cowden v. Aetna Casualty & Surety Co., 389 Pa. 459, 134 A. 2d 223 (1957),
Accord, West Republic Mining Co. v. Jones & Laughlins, 108 Pa. 55 (1885); J. P. Cope Hotels Co. v. Fidelity-Phenix Fire Ins. Co., 126 Pa. Superior Ct. 260, 191 Atl. 636 (1937); see Palmgreen v. Palmer's Garage, Inc., 383 Pa. 105, 117 A. 2d 721 (1955).
Compare cases cited note 1, supra.