Thе decision in review is this: that in Maryland the administratrix of an insured, who died in an accident within the coverage of his automobile liability policy, cannot recover for the insurer’s negligent or bad faith refusal to settle, at a figure below the insurance limits, the claims of other persons in the accident based upon the insured’s carelessness, if the assets of his estate are not sufficient to satisfy the amount by which the subsequent judgments on the claims exceeds the insurance.
Until the estate is out-of-pоcket as a result of the insurer’s refusal, reasoned the District Judge, the estate has suffered no pecuniary damage and, hence, has no cause of action. Both principle and precedent, his searching discussion reveals, can be advanced for this view. We disagree only because, in the absence of a ruling by the Maryland Court of Appeals, we believe the opposing position offers a sounder resolution of the issue in law and is demanded under the Maryland statutes on the administration of decedent estates. Indeed, the candid appraisal of the trial judge is that the current of today’s authorities generally is to give a cause of action in the circumstances.
Had the insured survived, even insolvent, the outstanding judgments, as constant and life-long threats to his financial security and rating, would have caused him almost immeasurable damage. Certainly it would have rounded out his cause of action against the insurer for tort. Logically, his death ought
The damage done to the estate is the creation of its liability for the judgments. Their holders are creditors equally with other persons with whom debts may have been incurred though not paid, such as medical and hospital expenses. The tort origin of the judgments does not change their character as estatе debts. They are nonetheless damages though they represent no contribution to the insured or his estate. The rule of damages, nearly universal, that incurrence is equivalent to outlay, is not restricted to any particular category of obligation. Plank v. Summers, 1954,
Again, the plaintiff-administratrix has been peculiarly damaged in Maryland by the insurer’s tort. Her fiduciary duty, in which she is beholden as much to the creditors as to the next of kin, is to collect all that is owing the estate. 1 Sykes, Maryland Probate Law and Practice, sec. 591. For omission to prosеcute the collection of any sum due the estate, in tort as well as contract, the administratrix would be personally liable. This is a personal liability and, against her alone, obviously it is not limited to the penalty of her official bond. Failure to sue on the insurer’s tort could thus make her personally answerable in damages — the element found wanting in the present case. Her responsibility in this respect would seem to dispel any concern lest under the view now advocated by the Court she, аs judgment debtor, should become the arbiter of whether or not suit should be brought at all for the insurer’s tort. -q
As the judgment now on appeal was rendered on motion to dismiss, the underlying events of the claim are admitted. Nationwide Mutual Insurance Company, the аppellee, issued to Ernest Walter Lee, the plaintiff's husband, and to Gilbert C. Mabe motor vehicle liability policies upon their respective automobiles. The insurer obligated itself to defend the insured or his estate against all claims within the risk of the insurance, and to pay any judgment up to the face of the policy. But the insurer reserved the exclusive right and option to negotiate a settlement of any such claim.
While these policies were in effect, on January 5, 1956, the automobiles of the two insured were in collision on a Maryland highway. Lee and Mabe were killed, the latter’s wife seriously injured. An action was begun against the Mabe estate by the appellant, administratrix of the Lee estate, for the death of her husband. Similаrly, actions were instituted against the appellant, on behalf of the widow and surviving children of Gilbert Mabe, for her injuries and for his suffering and death.
Before as well as during the consolidated trial of these cases in the Maryland State court, the insurer reрeatedly declined opportunities to settle the Mabe claims against the appellant-administratrix for $16,000, her husband’s policy
Meanwhile, the appellant had filed her final accounting as administratrix. It showed total assets of $4,117.11 and, after expenses and other priority disbursements, a net estate of $1,441.48. This sum she distributed among herself and her thrеe infant children, as the sole beneficiaries of the estate. The Mabe judgments were not entered until after this division. Formal demand was made by the judgment holders upon the appellant, both as administratrix and in her own right, for the unpaid balance оf the judgments. Upon their consent to withhold further insistence until she could prosecute her claim against Nationwide for damages, for its failure to settle the Mabe claims to the exoneration of her husband’s estate, the appellant filed this action against Nationwide.
In the first count the administratrix charged Nationwide with negligence and bad faith in neglecting to effect a composition of the Mabe claims. In another count she asked for a judgment declaring: that the insurer had breaсhed its duty to the Lee estate in respect to the settlement, that the overplus of the judgments was the direct consequence of the insurer’s “tortious conduct”, and that Nationwide is bound to reimburse the Lee administratrix if in some way she can arrangе to pay the judgments.
The District Court held that the complaint adequately states a case of negligence or bad faith. Besides finding that the tort is not actionable for want of damage to the plaintiff, it also held that the controversy was not оne for a declaratory judgment. A declaration would be improper, the Court felt, as extending that procedure to “completed torts”. It doubted, as well, the presence of the necessary jurisdictional amount, pointing out that the only moneys shown to be possibly available to the administratrix for payment on the judgments — and thus damage to the estate — were in the amount of $1,441.48, if and when that sum were restored by the distributees to the estate. As our rulings on the first count in effect make the desired declaration, we do not further consider the second count.
For his opinion that the liability alleged by the administratrix against the insurer was not actionable, the District Judge relied, primarily, upon the altogether acceptable thesis that an injury gives no cause of action without a showing of consequent loss. On this principle, he thought, actions for damages premised as here had been disallowed in the Maryland courts and by the Court of Appeals of this Circuit. But, in our opinion, these deсisions do not go so far.
The first of them is United States Fidelity & Guaranty Co. v. Williams, 1925,
This is the setting in which the Court stated that the insurer could not be held by the creditor “for the reason that the appellant [insurer] is not indebted toj Price [the insured] in the amount of thе judgment unless and until Price has suffered loss by payment of the judgment.”' Fundamentally, then, the decision went off on the form of remedy for enforcement of the insurer’s contract liability..
Nor does Richardson v. Boato, 1955,
Last cited, in support of the judgment now before us, is State Automobile Mut. Ins. Co. of Columbus, Ohio v. York, 4 Cir., 1939,
While these three cases do not in our mind dictate dismissal of the administratrix’s claim, it must be acknowledged, as previously observed, that reputable precedent elsewhere does sustain the District Judge. Almost all the noteworthy decisions upon the point are included in his painstaking summation of the litigation in this field. For example: American Mutual Liability Ins. Co. of Boston, Mass. v. Cooper, 5 Cir., 1932,
In some of these, undoubtedly, the absence of the satisfaction of the residue of the judgment was determinative— “The mere existence of an outstanding judgment, which may never be paid, is not legal injury”. In others the ruling came about in other ways, such as on the statute of limitations, the action being said not to accrue until the judgment is pаid. However persuasive, we do not accept as governing here, the precept they teach.
More acceptable, as we noted at the outset, is the view treating the extant, unpaid judgments as injuries in themselves, their overburdеn measuring the pecuniary damages. For our conclusions we have borrowed somewhat freely from the impartial recount of the authorities made by the District Judge. We adopt for this case the summary of the law on this point as made by Justicе Whit-taker, then District Judge, in Wessing v. American Indemnity Co., D.C.,
The judgment will be reversed and the case returned to the District Court for trial on the first count of the complaint, the other count remaining dismissed as unneeded.
Reversed and remanded.