Seguros Tepeyac, S.A., Compania Mexicana De Seguros Generales v. Maynard Bostrom and James L. Jernigan

WISDOM, Before BROWN and Cir- Judges, ESTES, Judge. cuit District

WISDOM, Judge: Circuit presents

This case new twist in the Texas Stowers doctrine. When an injured damages person against claims an injury insured for an tort-feasor covered liability policy, under a Stow requires ers doctrine the insurer to ex ordinary protect ercise care to in sured to the amount of limi duty, ts.1 If the insurer breaches that 1. G. A. Stowers Furniture Co. v. American Cir. E. 267 F.2d 473. See Robert Indemnity Co., Tex.Comm.App.1929, Keeton, Liability Responsi- Insurance 544; Chancey Settlement, bility S.W.2d v. New Amster for 67 Harv.L.Rev. Casualty Co., Tex.Civ.App.1960, (1954); Kronzer, dam Status of The Present e.; Texas, S.W.2d error ref. n. r. Tex. 1 So. Stowers Doctrine Fidelity (1954); Dye, & Jur.2d § § Tex.L.J. 167 Lia- Insurer’s Casualty Robb, Co. New York v. insurer of the notified the The insured action insured cause has a day in- it occurred. The amount of accident the total for investigation and, him, judgment against within includ- made surer claimant’s company eight days, settled with the bus in excess the amount Jernigan damages $5,000; and with Here, bus policy was limit. might At automobile. allegedly, have been set- the claim knowledge company amount; instead, had no in- time tled for that judgment Bostrom to assert a claim jured intended recovered claimant nego- against Jernigan, and no reason $270,000. The the insured company nothing if, insolvent, as the tiate with Bostrom insured has contends, policy does not judgment, cover and did not sue on the Seguros guest-passenger. presents claim question this case insurer. Tepeyac that no one was ever claimant states is whether a claim standing Bostrom had asserted for aware that to sue the nineteen months after judgment until in excess of June the amount of the accident, attorney in- when Bostrom's policy court al- limit. The district Jernigan Bostrom was about formed insurer for to sue the lowed the claimant against Jernigan. August 26, jury and, file suit $270,000 find- to after a the full grant- negligent, wrote Com- ing father Bostrom’s that the insurer was photo-copy pany a “insurance judgment plaintiff for of the for in ed favor Jernigan. relating to He wrote F.Supp. file” $270,000. reverse 225 222. We again September 1 20 December and over to as pol- asking copy a the insurance for policy limit. icy. Company replied let- to these The ters, wanting in his interest to know I. matter, copies and of documents sent young men, 1958 three November copy of a from its file but did send - Sullivan, appellee), (plaintiff Bostrom attorney policy wrote until Bostrom’s Jernigan (intervenor) on a and went asking 30, 1960, copy. for a June Jernigan’s pleasure trip in to Mexico policy Mexico, copy forwarded to they The car. After Jernigan crossed into attorney one-page policy liability public is the insur- Bostrom’s took out court Seguros Tepeyac, S.A., in case. The district sued on Com- ance with no to sub- Seguros was evidence pañía found there de Generales Mexicana contention (defendant-appellant), corpo- the insurer’s a stantiate policy Mexican Jernigan an addi- had delivered in ration licensed to do business Texas. liability page excluding in- for three-day tional policy “Special Au- was a riding guest juries persons as to third covering Policy for tomobile Tourists” passengers. only. Republic of Mexico risks within the July 12, filing Shortly coverage suit before five thousand The maximum was oral offer Sulli- injured, made an person Bostrom with ten dollars for each Jernigan claim coverage settle his for van and thousand dollars the total They rejected $5,000. day for them of their one accident. second insured Jernigan’s Both the holiday, of funds. it for lack car collided Mexican men- driving refrained the claimant Sullivan was with a bus. tioning in- Jernigan’s offer of settlement permission, and Bostrom was Company surer, that it asserts asleep and the “sus- Bostrom back seat. knowledge injuries per- existence a had tained about as serious live”; Bostrom until after recovered offer now a son could endure and of- F.Supp. 54 the amount permanent ment for times quadriplegic. 225 fered settlement. Note, (1963); Policy Exceeding Judgments bility Tex.L.Kev. (1964). (1960); Note, Limits, S.W.L.Jour. 38 Tex.L.Kev. 233 Jernigan August Highway advised Se- above sums.” those guros Tepeyac of Bostrom’s suit and Ins. Underwriters Lufkin-Beaumont upon Coaches, Inc., Tex.Civ.App.1948, A called it to defend the action. Motor passed Here, example, number of Jerni- letters between S.W.2d gan Seguros Tepeyac sounding suit, $5,000 the suit before Bostrom a deny- tried, consistently party beneficiary, the insurer a was third contract guest liability passenger $265,000 sounding suit, tort, to a re- a based fusing February negligence. to defend the case. on the defendant’s We shall plaintiff discuss, first, plaintiff’s standing a recovered against Jernigan $270,000 and Sulli- sue contract. trial, jury, after van a without a before Casualty This Court held in Ohio Hughes Judge Sarah T. in the Dallas Beckwith, Ins. Co. Cir. 74 F.2d Division of the Northern District insurance Texas. benefit of third contract (cid:127) Execution re entitling person, claimant brought turned nulla bona. Bostrom then the insurer enforce sue against Seguros Tepeyac. action judgment. Similarly, Seaton v. issues, special jury On submission Pickens, 1935, 126 Tex. 87 S.W.2d negligent found that the “in insurer was 709, 711, 512, the A.L.R. Texas Su initiating attempting bring preme Court declared that “[t]he about a settlement” of Bostrom’s claim * * * inures to the of such benefit $5,000 public the “within limit of the injured persons, as well as the benefit liability policy February question”2 in assured”; accordingly, in- of “the the 12, 1962, granted judg the district court jured obtaining person, final after $270,000, ment and overruled de the against insured, in- the sue the judgment fendant’s motions for surer to enforce the judgment n. o. v. causing without to be issued execution June while this case on against strong dictum insured.” This Jernigan appeal, assigned to Bostrom his by supported v. is other Seaton Pickens against Seguros Tepeyac. claim He then Texas cases. Womack v. Allstate See petition filed with asking this Court a Co., 1956, Ins. 156 Tex. S.W.2d permitted he be We intervene. 233; Commercial Standard Ins. Co. v. petition preliminarily. allowed the The Ebner, 1950, 149 Tex. 228 S.W.2d intervention asks that dis- insurer 507. charge judgment against Bostrom’s Jer- nigan. Bostrom, however, rely does not Here contract was executed assignment. Mexico; In the district court insurer was a Mexican right party company; anticipated public sued his own parties aas third beneficiary taking coverage insurance On contract. for accidents appeal, attorney circumstances, place his now contends that in Mexico. In these Bostrom, judgment creditor, aas judge properly en- is the trial found that Mexi meaning titled reach funds to the con can law of the controls judgment. amount of his law tract. Article 147 of the Mexican governing be therefore must insurance

II. policy. article, read into consis This In a “petition generally, specifi Stowers situation the law tent with the civil asserts, effect, action, cally recognizes two party causes is one for paid beneficiary the sums party contracted to be of the insurance a third (in tort) and one for the excess of the contract. negligence 2. duty implies duty In Stowers the consisted settle rejecting negotiate.” Chancey an offer to settle within the New Amster- v. policy case, Co., Tex.Civ.App.1960, limits. the instant dam Cas. 336 S.W. district court relied the “view that 2d error ref. n. r. e. against Company Liability lie until the shall insurance “Art. indemnity grants right for which the amount by damaged person, reason loss directly assured is liable third determined covered considered as benefici- who shall be against ary a final mo- either insurance n Assured, by agreement between the loss. ment of the plaintiff writ- Assured and the latter, “In case of death Company.” These ten consent the insurance amount shall permit a direct action do not clauses by way succession, transmitted against party the in- a third claimant law or the contract which unless the recovered surer before obliga- establish for the assured the they against insured, establish indemnity, specifies tion liability policies policies are family of the deceased to members indemnity per- policies, and than rather indemnity whom must be insurer, mit an action directly need without of estate less, policy or as soon the amount proceedings.” (Emphasis supplied.) the insured. there is paragraph In the second Article Tex.Civ.App.1933, Jordan, Lander v. the reference to “the insurance amount” Indemnity 959; Co. American S.W.2d indicate, should, seems to well as it Martin, Tex.Com.App.1935, 126 Tex. quasi-contract that the with the claimant Moore, 697; Cuellar v. 84 S.W.2d is limited to the limit. 244; Tex.Civ.App.1932, cf. 55 S.W.2d only significant clause Tex.Civ.App.1962, Vala, Ins. Gulf Co. v. one-page policy provides: “The Com Langdeau v. Pitt- 361 S.W.2d pany agrees terms, excep that within the man, Tex.Civ.App.1960, 337 S.W.2d hereof, tions and General Conditions held that states have Courts other payable to indemnities the insured shall liability policies policies rath- are similar damage once the effected suffered Rogers indemnity policies. er than by proved caused the vehicle has been 213, Youngs, 1931, Mich. N.W. adjusted.” Although and this de clause Fidelity 511; Capelle & United States v. “indemnities”, scribes the as the 481, 1922, Guaranty Co., 120 A. 80 N.H. clause pay states that the insurer must Trandum, 1932, 556; Trandum v. “damage as soon caused as the ve the Minn. 245 N.W. hicle" proved adjusted. has been and damage persons amount of poli to third between the The difference very is established at the a pol latest when and cases the cies involved in those is rendered in the icy emphasizes the Se that in this case sured. of liability pol Satisfaction the guros Tepeyac policy ais necessary damages liability provides to establish policy the icy. The usual persons. “by judg caused the vehicle damage third fixed must be that the policy provided If says merely had policy that the dam Tepeyac ment”. The age “to insured” “proved must be fixed damage before or ad must that payment by insurer, policy justed”. “Adjustment” implies would an ex indemnity policy. establishing have been an Com trajudicial of dam means pare judicially Universal Automobile damage may “proved” Ins. Co. v. age; Culberson, 1935, proof extrajudicially by Tex. 86 S.W.2d of informal 727; Instead, Seaton v. Pickens. loss. “damage provides that policy was person” third must be fixed We hold therefore before liability under Texas pol is liable. The clause in plaintiff icy typical law in well Mexican this similar to law as case is party policies standing, benefi- “No as the third of had Action” clauses construed contract, for ciary to sue policies the Texas courts. policy. usually Such of state: action amount clauses “No proof III. law. Since there was credible of standing Mexican law claimant’s discussing plaintiff’s Before stand- to sue action the in- $265,000 for to sue in tort above judge excess, surer the district necessary pause policy limit, it is “presumed that such law [of Mexico] applies. and decide law what that of are the same”. judge The district started with assumption intriguing, troublesome, of Mexico the law con- An trolled, question in the accident occurred because is created when a conflicts rule accepted foreign application Mexican Mexico. He stat- calls law which are as to utes insurance silent but the content of the law not been rejected situation, proved as un- a Stowers to the satisfaction of the trial testimony “expert” relegate of an reliable court. We discussion of the paralleling question footnote,3 however, the insurer that no doctrine because prefer approach the Stowers doctrine exists Mexican we a different take authority judge authority hand, 3. The able district found there is On the other holding Tortuguero Logging contrary for his in Texas Houston, Operation, Limited v. Tex.Civ. in all cases for circuit. “Heretofore App.1961, ref., injuries personal wrongful 349 S.W.2d err. oc- death or e., (applying relating curing Mexico, republic n. r. Texas law in which in the pre-judgment republic interest the absence al- have been the laws of that proof law). leged proven, Oosta Rica As he state the courts pointed out, however, consistently there is an ex to entertain a have refused ception general recovery rule when the for such suit for the system jurisprudence foreign injury, because the laws death country giving different from that of the Mexico the cause action forum. providing Article Revised Civil Stat are so the enforcement provides: materially utes of the State of Texas laws of our different from the England, relating “The common law of far as so the courts state to torts adjudicate it is not inconsistent with the Constitu of Texas cannot undertake to State, together rights parties.” tion and laws of this shall El Paso & laws, Carruth, with such Constitution and be the Tex. Juarez Traction Co. decision, rule of Comm.App.1923, and shall continue in force See Car- 255 S.W. 159. repealed by Legisla Tex.Civ.App.1953, until Tillery, altered or ter v. spite strong legisla ref., ture”. of this n. r. also err. e. See S.W.2d Railway tive declaration that Texas is a common v. Jack- Mexican National Co. jurisdiction, law son, the district court con Tex. 33 S.W. originally cluded that since “the civil law Mexican Na- 31 L.R.A. Slater prevailed Mexico”, Railway Co., both Texas and tional 194 U.S. presump in this 581, case there should be a In Panama 24 L.Ed. 900. S.Ct. 48 Moyers, 1918, tion that the laws of Mexico and Texas Electric Co. v. 5 Cir. 249 F.Supp. argu- rejected are 19, the same. 225 at 228. See F. the this Court Marshall, Railway Mexican Cent. Co. v. that because of a common civil 1899, 933, 938; background 5 Cir. 91 F. Mexican the laws of Panama law Railway Glover, presumed Central Co. v. 5 Cir. to be the same as should be F. 107 361. Some courts Zone. This case the laws of the Canal apply by resorting rely their own law Rail- and similar cases road on the Cuba presumption similarity though Company Crosby, of the v. 222 U.S. foreign legal state a different back has in which 32 S.Ct. 56 L.Ed. ground. Louknitsky Louknitsky, action, stating See the Court dismissed Cal.App.2d 406, foreign 123 266 P.2d 910 under recover (applying community prop plaintiff’s case, part California law and “is of the erty proof doubt, in law absence of of Chinese if there is reason for he must law); Waller, allege prove Tidewater 10 Oil Co. and it.” (applying Cir. “funda 302 F.2d 638 The older authorities tend toward a principles” jaundiced mental applying of tort Oklahoma law of view of the law Beale, but not the Com Oklahoma Workmen’s of the forum. See 3 Conflicts pensation proof 6211, 622A.2; Restatement, Act in absence of of Laws Con- § law); Foreign (1934). Turkish Stern Law in the flict of Laws 621 Modern § Proof, general Courts: Judicial Notice and 45 in commentators are more less (1957). agreement Cal.L.Rev. 23 forum of the law foreign apply should when law is not

175 qualified judge. in The insurer to do business For the trial from that taken pro- determining has interest Texas. Texas an purposes the insured’s of tecting per is a breach liability its citizens when there to the claimant tort duty injuries, place of an insured Tex- where the insurer’s law of the sonal governs. injury usually an. occurred pur Mexico. But Here that was usually look Texas courts determining poses the insurer’s lia of wrongful place of act law where negligence bility in a to the insured for neglect place. took Mexican National situation, place acci of the Stowers certainly Jackson, is not R. Tex. S.W. dent is irrelevant R. v. 89 33 foreign law 857; Laws, determinative as to whether Tex.Jur.2d, Conflict of forum law of control. or the should original Con 13 and cases cited. The § liability On the issue of the insurer’s law of flicts Restatement looked assured, duty of to a Texas breach its wrong”, “place described significant Texas a more relation^ “the where last neces state event ship to determination of sary liable for an al to make action offer to than Mexico.4 Bostrom’s settle 377). leged place” (§ Re But tort took Jernigan was made in Texas. Suit statement, Second, Laws, Ten Conflict was filed in the federal court “local tative Draft No. looks to the against a The insur Texas defendant. sig law of the state which has the most to initiate and er’s misconduct —failure relationship occurrence nificant with the bring about settlement failure 379).4a parties” (§ place in Texas. defend the with the suit —took Nussbaum, injury proved. Proving personal property Problem of per- Foreign Law, Yale L.J. 1018 inflicted the course of suffered or Displacement (1941); Currie, On of the in another state. formance If contract injury Forum, Cal.L.Rev. of the Law action account (1958); Ehrenzweig, sounding in Conflict of tort rath- characterized as Nussbaum, Proving governing (1962); contract, law Laws 366 er than Foreign Countries, injury, place Law 3 Am.J. will be that Foreign Comp.L. (1954); Stern, place Law the contract where * * * Proof, Actually, in the Judicial Notice and the trend Courts: made. rule, (1957). clearly away evi- Calif.L.Rev. 23 form the orthodox just arriving cases, In the at a ad- not toward interest dent recent judication, judge equally trial have Tort Claims should automatic rule of the determining Act, something discretion in far less ex- whether law but toward forum, may act. as a sort with or dis- It be described without guise prevail. presumption, of a rather than should luxuriance rules especially single permits This discretion should be broad to make rule. It a court background. among variety in a a civil considerable state with law its choice places To the the content iden- extent therefore that of tifying at ‘property’ contracts different ap- controlling law. Mexican law be considered * * * plicable proved, judge reasonably trial con- A substantial correctly applied responsibility the forum. law nection with Currie, Displace- required.” Leflar, especially activity On is what is local Forum, (1959). ment of the Law of § Cal. Conflict of Laws Goodrich, (1958); L.Rev. Con- Principle. 4a. The General “§ 379. (Scoles flict of Ed. § Laws (1) local the state which law of 1964); Ehrenzweiz, of Laws Conflict significant relationship with the most Note, § 127 at Cal.L.Rev. parties de- the occurrence and with (1963). rights liabilities termines their and rule, 4. Cf. “The orthodox with torts as tort. crimes, operates (2) Important the forum is that when an act that contacts determining legal across a the state of line its character is will state consider place significant relationship law include: determined where most injury produces (a) place it first oc- takes harmful where the effect * * * complained curred, A con- result of. place (b) oc- conduct tract have been in one where the made state curred, light liability consistently

In of the Texas cases and cannot be ex- generally, protection law evi the state tended to include to one Second, Restatement, seeking we who denced is hold insured applies to hold that the law of Texas liable. lia of the insurer’s determination short, legally “In conduct to be bility situation. We in this Stowers wrongful duty must contravene some reach the therefore same result which the law attaches the rela- * * court, passing on the district without parties *, tion between the ruling defendant’s effect of his relationship and is clear pertinent expert prove Mex failed to injured here exists between [the having to our make ican law and without party] third and the [insurer] assumption in a Stowers the violent permit would maintenance of is of Mexico same the law situation present Lum- action.” Duncan v. law of as the Texas. Casualty Co., 1941, bermen’s Mutual 91 N.H. 23 A.2d IV. Keeton, im- Professor Robert F. in an A. issue of the We turn now to the portant subject, points article on out injured standing to claimant’s sue the only stranger that not is the claimant a insurer over the relationship between limits. We the same con- have reached insured, profits and the but the claimant in a recent clusion reached note from the insurer’s failure to settle: directly supports “No case: case liability company “The excess holding point, i. al- the court’s on this e. relationship arises out of the be lowing proceed party to di- company. tween insured Claim rectly against the insurer on stranger relationship. ant is a to that held insured for an amount only company Not is without * * * It is excess of limits. duty accept to claimant claimant’s courts would submitted the Texas offer, also, reasonable settlement not allow such a suit under the Stowers disparity there be if is sizable Note, doctrine.” 18 Sw.L.Jour. tween the offer and the settlement (1964). judgment obtained in amount of the duty to settle runs The insurer’s the trial which follows refusal only Hamp insured. The New offer, rather claimant benefited is Supreme Court, on which shire Stowers by company’s refusal to than harmed relied, controlling principle: states Keeton, Liability Insurance settle.” Settlement, Responsibility duty of an insurance com- “[T]he (1954).5 67 Harv.L.Rev. pany protect insured its permit place (c) domicil, nationality, insured? A doctrine or statute ting excess from incorporation place claimant to recover the of business right company, or as parties, either in his own insured, only slightly assignee bene (d) place relationship, where the any, parties who is between the is centered. ficial to insured —the one (3) wrong. determining company’s relative im- Insured victim of portance contacts, protected by the forum will re for remedy of action cause issues, consider the character of the imbursement. additional This tort, purposes only by making pos and the relevant of the tort would benefit insured option rules of the interested states.” sible at claimant’s a transfer enforc insured to claimant of the cost of ing 5. Keeton continues: “It would therefore the claim of excess —such permit be anomalous to claimant to re expenses attorney’s fees as are directly against company in cover own recovery. included the measure of (in policy provi absence person by doctrine benefited such sion, phrase above, such as the italicized by person com claimant —a not harmed clearly having meaning). Should he pany’s judicial accomplish be allowed refusal to settle. A ex to the same result indirectly by taking assignment (either by by implied an tension con tort or

177 Farm Mut. thinking, State Chittick v. Court of See also In line with this D.C.Del.1941, Co., 170 F. Ins. Un Automobile Appeals, Southern in Graves v. Civil Liability 276; Dye, Supp. Insurer’s derwriters, Tex.Civ.App.1939,130 S.W.2d Limits, Judgments Exceeding Policy 38 holding, 362, 360, held: in an alternative 233, (1959). 245 Tex.L.Rev. company’s “In no event could suit to Graves’ failure defend In to avoid the order B. any grounds against of Teel create cases, Bos Texas in the reached result Graves, complaint part on the of distinguished attorney, author a trom’s by enabled, probably since he was ap law, on ity now contends on.insurance failure, $35,000 a such to obtain by judgment cred peal suit that this against judgment on a claim Teel bill of a creditor’s in nature itor is he of- which he himself testified that garnishment funds in the to reach or $5,000.” to than fered settle less belonging to the hands of 360, 130 at 362. S.W.2d money insurer is judgment debtor Indemnity Wessing American v. obligated pay debtor. D.C.Mo.1955, Galveston, Company 127 of argument is that in defect fatal 775, Judge, F.Supp. Justice, then District against the insurer claim the insured’s Whittaker, a him for had before decision unliquidated contingent chose ais brought by declaratory suit for excess action injured party insurance law will limit. Texas over company of a declaration to secure garnishment un of an permit liability company pay in action. liquidated chose claim of unpaid party amount of the Waples-Platter Co. v. Grocer by portion a her secured R., 1902, 68 S.W. 95 Tex. P. R. & the insured excess of 265; of Dallas Co. Auto Ins. Universal Judge limits. held that Whittaker 25 Christensen, 119 Tex. v. declaratory judgment complaint for did Gillean, 601; Taylor 23 S.W.2d “justiciable controversy”: a not state Attachment, Tex.Jur.2d, § Tex. 6 liability “Here, asserted ff; Garnishment, 2 ff; Tex.Jur.2d, § 26 relationship arises between out Executions, Tex.Jur.2d, § defendant, insurer, and its found Douglas court The district Mrs. was a C. insureds. standing be to sue stranger relationship. had to that Bostrom being the in privity with duty at no all. of his defendant owed Hence, cause her bring entitling "to claimant I fail how to see it could sured growing the relation her, tort, out breach a tort liable to suit ship F.Supp. by duty, a contract.” for it owed none. More- her created House v. over, complaint relied had court her shows that 233. The Tex. Co., accepted her offer been Waterworks to settle Houston she. 532, approved but, gotten $15,000, 28 L.R.A. would have be- S.W. T. L. rejected, by in McClendon her went cause it was cause Court $47,500 Co., to trial she obtained & Cir. James lending sup judgment, $15,000 which has been House read We Supreme lose, paid. Thus, The Texas port she did the claimant. benefi benefit, “recognized for such failure de- stands to relationships tort, ciary accept of settle- fendant to her sue offer such must be parties contract ment.” legislation liability company agreement theory) provided by tract claimants, benefiting agreement beyond purpose of that undertaken justified by purpose arguable cost increased of bene cannot be high applied fiting party toward harmed a third is not should be who insurance limits, company toward anything rather than or failed has done er contract of disregarding Furthermore, a settlement if extensions limits when to do. coverage at 1176. Harv.L.Rev. fer insurance are is declined.” duty beneficiary”.6 that a owed to is than (Em- those the insured." of phasis supplied.) that case a resident Houston of sued Appleman, In- Practice, the Houston Co. Waterworks for dam surance Law and 1962 Re- ages alleg by fire, vision, to (citing many cases). his house caused a § city a of breach contract between the If the insured no of has cause action company company; and the failed to against insurer, the claimant has no extinguish furnish to water fire. standing to sue for the ex- plaintiff right The asserted a sue as cess. party beneficiary third contract. doctrine, part As of the Stowers recovery. The court denied The court imposed have courts serious limi said, by dictum, if. a defendant “has right recovery tation on the insured’s duty, breach of he committed a is not by treating it as a to reimburse protected setting by up a contract in re policy ment. Whether the is one of in spect to the same matter with another”. demnity liability, Texas courts limit cry Indeed, That is a far case. from this recovery has amount the insured Supreme in House Court of Texas injured party. for basis parties described the relations principle in clear in the case of language: the suit in “We think it insurance; demnity the insurer is obli is clear there were no contract re gated only indemnify the insured plaintiff and lations between the fendants, de Although his loss. less obvious consequently duty no liability insurance, principle case of legal can be claim.” the basis recovery essentially the same: in tort 5.W. at 184. We have the same situation depends showing injury; aon excess; tort claim here as injured pays insured is until duty injured no insurer owed judgment against or all of the him.7 On claimant. principle, recognize we a basic weakness rationale, in this V. is a mortgage on the future.8 Nev insured’s The claimant’s reach exceeds ertheless, per all of the Texas eases grasp. Appleman, his As in his treatise mitting the insured or claimant to re very insurance, soundly observes: insurer, directly cover from the the claim statutory provi- “In expressly policy absence maxi limited to the required policies, ; many sions form it is mum in these cases generally injured per- person held that the had recovered a above deliberately son stands in- shoes maximum but rights sured, the in- limited his the insurer to claim greater coverage policy.9 surer no are and no less maximum under the Note, judgment. (1964). 6. the excess More the courts S.W.L.J. ‘ rejected It has have this view. been “[T]here can no action tort un- payment stated that there must be either payment til has been loss suf- made or proof insured or else that his financial except fered where the enforcement of status is such that excess payment by person third is reason- opin- is certain to be Other collected. ably certain and its amount can be as- dealing question ions with this have stated approximate certained with definiteness.” simply action cause of does Restatement, j. § Torts Comment payment not arise until some is made (1939). limits, insured in saying applied rule what should be 8. Keeton comments: “Some courts have proof there is the excess though taken the view that even insured is certain collected in the future.” has made no on the excess Liability Responsibility Insurance and subject legal ment and assets Settlement, 67 Harv.L.Rev. 1173- process judgment, for collection of the (1954). he has suffered a loss in that he is ad- judged pay. liable to is in Underwriters, loss Ferris Southern Tex. increase in his debts Civ.App.1937, (judgment the amount of 109 S.W.2d 233

179 against up to a Texas court the insurer for an amount In no Stowers situation maximum; policy permitted from the the insured to recover could the insured only first if insured has sue the insurer the suit were insurer unless the the brought injured par- judgment.10 the for the benefit of the If Stowers satisfied ty. said, extended, provisions”, Texas courts “These the court doctrine is to right give any not “do the assured must do it.11 prosecute the suit in his be- own behalf Insur In Universal Automobile paying fore costs.” 282, Culberson, 1935, Tex. 126 ance Co. v. 289, 126 Tex. at 86 S.W.2d at 730. The 727; den’d, 87 86 reh. S.W.2d S.W.2d court then the claim above the dealt with opinion adopted (Tex.Com.App. 475 policy limits under the Stowers doctrine. injured party 1935), an had recovered policy provisions The court held that the against excess uncollectible give injured party did not or the in- jointly parties sued Both insured. any against insurer, sured claim be- judgment. amount insurer for the judgment against in- cause excess Supreme that nei The Texas Court held paid; they had “Nor sured not been do The court to recover. ther was entitled give him to sue for pol under the first dealt with the claim company because failure of the coverage pol icy of the for the maximum make a settlement of Miss Witt’s claim. pol peculiar icy. terms of the Under the alleged icy, party As of action in that direct action to his cause had a against 884; 534, $4,300, against v. claim Tex. Highway 260 S.W.2d Jones insured for maximum); Tex.Civ.App. Underwriters, policy $2,500, for Ins. insurer Chancey 1018; 1952, v. v. Co. 253 S.W.2d Underwriters Ins. Automobile Long, Tex.Comm.App.1933, Tex.Civ.App. Co., S.W.2d Amsterdam Cas. New 63 763; Highway $10,- 1960, (judgment against Ins. for insured 336 S.W.2d 356 $5,000, against 000, Mo v. Lufkin-Beaumont for Underwriters claim insurer Tex.Civ.App.1948, Inc., maximum); Coaches, policy 215 South tor Graves v. 904; Fidelity Tex.Civ.App.1939, Underwriters, & Cas. Co. see 130 S.W.2d ern 1959, Robb, (judgment 267 of N. Y. v. 5 Cir. insured S.W.2d 360 $35,000, Kronzer, $5,000, of the also Status insurer 473. See claim Texas, maximum). 1 policy Sou.Tex.L. Stowers Doctrine also Com See Dye 171, 1950, 167, (1954) Ebner, In 172 Jour. Ins. v. mercial Standard Judgments Liability (claim 28, Exceed surer’s 149 Tex. 228 S.W.2d 507 233, Policy Limits, maximum); policy Tex.L.Rev. 38 less than (1959). Davis, 246 v. Tex. Traders & Ins. General Co. 826; Employ Civ.App.1940, 142 S.W.2d Automo Farm Mutual 11. v. Smoot State Casualty Co., ers Co. v. Hicks Rubber Co., 525 299 F.2d Ins. 5 Cir. bile Many Tex.Civ.App.1942, 96. 160 S.W.2d Georgia applied is also fac Smoot law. parties cases discussed distinguishable. tually in Smoot long before commentators were decided judgment, paid not the excess sured had question lia of the Stowers raised the property, in substantial but he had bility beyond the maximum insurer automobile, cluding a house and an g., coverage policy. e. Ameri See judg part excess at least Indemnity Fellbaum, can Co. v. satisfied; here been could have A.L.R. 114 Tex. S.W. 37 263 satisfy part of the insured cannot express 633. One or two cases do judgment. do not de We the excess ly they brought within state that were in would Texas courts cide whether policy limits, but the claims were so insured sist a formal they very probably below low that were part satisfy least could who All maximum. See Womack v. judgment. insured here has Since Co., 1956, 156 Tex. Ins. state question assets, reach we do reversing S.W.2d 296 S.W.2d 308; only Cul We hold decided Smoot. Pickens, v. 126 Tex. Seaton recovery prevents berson A.L.R. S.W.2d from the over the complete and is no assets Amer insured has ly A. Indemnity Furniture Co. G. Stowers judgment. satisfy Erie Oo., Tex.Comm.App.1929, unable ican apply in a Texas Linkenhoger Culberson us to Ameri directs S.W.2d Note, Co., 1953, Tex.L.Rev. Fidelity Casualty case. can & (1963). regard, Culberson, cannot same assert un- tionale for Culberson as noted in Linken- hoger, purpose on the til he has some sum is that the “fundamental $5,000 policy; underlying damages, in the in excess limit all rules other pay- only punitive damages, indemnify and then the extent than is to injured (Emphasis supplied.) party pecuniary 126 Tex. ment." the for loss the * * 289, Reaugh at at In order 86 S.W.2d 730-731. suffered him v. doubly point plain Exploration Co., 485, to make the and to McCollum 139 Tex. any question (1942). eliminate once and all 163 S.W.2d 620 holding respect right as to its with to the stated, In “We court Culberson the injured party of the third to recover the obligation, indemnity construe as an excess, Court, rehearing, the said: liability The rather than contract.” opinion, our “In made clear we it policy, however, a contractual contained contract, that under the terms of the giving injured clause,” “direct the action par- Miss Witt third [the person di- the the insurer sue rights any ty] no has thereunder for judg- rectly to recover the amount of his ‘exceeding amount the amount against up insured, to the ment the policy,’ wit, $5,000, with interest policy policy the maximum. The reached entry thereon from the date liability policy, same result the since judgment. It there- follows though judg- pay the insurer had to fore that Culberson can- [insured] against ment not the insured had been not sue for her benefit sum Culberson, the As satisfied. we read excess this amount.” 87 S.W. only court introduced this distinction 2d 475. an with reference to the claim exceeding policy requires Culberson amount not maxi- therefore this Court to find that nor mum. In had to dis- neither the Culberson the court insured tinguish standing claimant Amer- sue until earlier lines of cases. Indemnity Fellbaum, paid 1924, insured has on the ican Co. v. some amount judgment; pre-Stow- excess the insurer then li- 114 Tex. S.W. only policy able to the extent of the suit for amount within the insured’s ers an payments. Kronzer, limits, The was Present had held that the insurer Texas, up policy Status of the Stowers Doctrine in liable maximum even against (1954). though 1 Sou.Tex.L.Jour. the insured had been satisfied. The court in Cul- have courts never overruled or distinguished berson Fellbaum because Linkenhoger limited Culberson. liability policy Fellbaum with a dealt Fidelity Co., Casualty American & policy in- was an while Culberson 152 Tex. 260 S.W.2d the Texas demnity policy, and because there Supreme held the statute of charge de- had full insurer taken limitation on a cause of action Stowers fense of insured. The court distin- begins to run from the date of the guished “it was shown Stowers because against insured, date of charge company full had wrongful the insurer’s failure to settle. brought by in- defense of the suit expressly approved The court Culberson: jured party, and it further shown was opinion “The in the case of Universal Au- Company Furniture the Stowers Culberson, tomobile Insurance Co. against paid had full 727, clearly supports Tex. 86 S.W.2d (Emphasis supplied.) at it.” Tex. petitioner’s contention. Culberson had 86 S.W.2d brought against suit his insurer for the judgment against him, including distinguish entire Stowers Culberson did not portion policy ground over and above the that one involved case limit. indemnity policy The court held that as such and the other a liabil- excess ity policy; Culberson could maintain no ac- Culberson stands against liability tion proposition in- insurer until he had that neither the portion indemnity thereof.” is liable 152 Tex at 536- nor surer policy 260 S.W.2d at in- 886. The ra- maximum until above allowed court The Stowers doctrine. pays excess sured only policy up maximum. claim gist cause of the Stowers him. Since majority opinion on a statute relied negligence, of action against an dealing judgments taken whether difference should make receivership. during in- insolvent liability insurance contract concurring points opinion out that demnity distin- Culberson insurance. stat- without the result follows even guishes and below above same claims between liability in- since the limits, ute: and between paid, doc- had the Stowers indemnity sured not been policies; the distinc- but opinion goes only apply. dis- Neither trine did not types policies tion between liability and policies, not cusses the difference between Stow- on the based to claims indemnity policies, apparently sounding in tort. ers claims was a in Ratner v. Wheeler is interpretation of Culberson This policy, the claim for the court allowed See, Texas cases. with later consistent against policy up maxi- the insurer Pickens, 1935, example, v. for Seaton though had not mum insured even the As Sea- 709.12 126 Tex. 87 S.W.2d judgment against paid the him. per out, points Culberson Pickens ton v. against insurer the mitted an action apparently sur Culberson has though limits) (within policy the leg responsibility” vived Texas “financial judg the not satisfied insured had the provides islation. Texas that the law now against distin This is the him. ment revoked owner’s driver’s must be license liability policy as guishing of a feature after a serious the owner accident unless indemnity policy. Linken opposed to an responsibil proof furnishes of financial Casualty Fidelity hoger & American v. ity proof mo that covered he was as that “held Culberson Co. tells us that liability policy tor vehicle meets the above amount to such excess [the statutory requirements. the One the main policy could Culberson maximum] statutory requirements the is that insurer against until insurer no action the tain judg must be soon is a liable as as there portion paid thereof.” had against indemnity ment the insured. An 536-537, at 885-886. Tex. at 260 S.W.2d policy express would not meet re the Linkenhoger to Culberson does not limit quirement Safety Re of the statute. See indemnity policies. sponsibility amended, Act of as §§ Wheeler, Tex.Civ.App.1947, 5, 21, 6701h; Ratner v. Tex.Civ.Stat.Ann. art. Gil Safety, opinion) laspie Department (concurring also of Public 301 S.W.2d 268 support to our that 152 Tex. cert. lends conclusion. S.W.2d den’d, 1954, had not U.S. insured the 74 S.Ct. case the against injured party suggested L.Ed. 1084. No Texas has him. The case any way the of the insurer under that Culberson is in sued the receiver weakened Pickens, 1935, may 126 Tex. Seaton v. the against assured maintain an action express- payment “It not S.W.2d the insurer to enforce 709: opinion ly judgment, paying stated in the Universal the without first the Company same, provided brought Cul- Automobile Insurance the suit for the injured berson, supra, person. obtained that one who had use and benefit of the given judgment against policy, the assured a final injury Under the construction the operation injured person, obtaining of the from the the judgment against after final suffered may, insured, may fails insurer when the automobile the sue judgment, pay payment maintain to or refuses to insurer enforce against judgment causing insurer to enforce action without execution to be judgment against assured, may payment first without issued or he against causing to be issued cause execution to execution be issued assured, maintain that he so assured and sue the insurer enforce judgment the construction in the event the action follows such obligating directly policy execution is returned unsatisfied.” as judgment 273-274, company pay final Tex. at 87 S.W.2d 710-711. ruling injured person from the legislation case, legislation. insured has stand- as in Similar having paid York all to sue of not because does not affect New York New excess, judgment part for the is not liable rule the insurer standing injured has judgment insured claimant has no until Thus, sue insurer the excess over in Harris v. Standard satisfied it. unnecessary Co., find it 2 Cir. limits. and Ins. We Accident argument other “The reach issues the case. said: court injured protect should insurance Accordingly, affirms only person applies well as insured as to the face amount below insured taken to the extent that and reverses the argument out insurance. policy limit to the excess amount over the having premiums the insurance received prejudice rights, $5,000, without company should relieved of liabili- not be any, of the insured and the ty bankruptcy because of the insured’s either, claimant, proceed apply does the excess showing claims on a premiums since the insurer has received opinion. inconsistent with this only policy, for the face amount $10,000.” here li- Judge 297 F.2d at 631. The BROWN, (concurring) : Circuit ability escapes insurer who affirmance, concur in I the reversal an excess insured because the part, and also in remand the case is insolvent has not received a windfall: Moreover, I concur District Court. only premiums “The insurer has received my fully opinion in exhaustive upon policy, the face amount except Brother Wisdom as to mat regardless pay it much must obliquely re ters discussed in Part Y and * ** insured’s financial condition. argue To portions. ferred to in I think or other gets unjustified that the insurer derly it administration also makes wise13 merely ques- windfall avoids the crucial emphasize affirmatively wide lati actually tion whether the insured has especially tude exists on remand in the been harmed.” 297 F.2d 633. possibility entertaining, perhaps granting, framing declaratory and then holding. We summarize our necessarily relief. The remand is not encompasses The Texas Stowers doctrine inquiry amount, confined to an into the principle injured that an claimant has any, paid the Assured on the excess standing to sue the insurer third as a possibility judgment awith of a his party beneficiary of the con insurance Bostrom’s favor like amount. tract, only up sue to the amount doing so, I follow the Court’s format and limits. The Culberson limi discuss this in terms of the Assured’s tation on deprives doctrine in rights, not the nonexistent ones of the damage claimant. standing sured of to sue the insurer excess, except any paid as to amounts Accepting Holding The Court’s on the in favor of the Prepayment On rights claimant. The claimant’s in an ac tion purposes accept can rise no For these I this Court’s higher rights. than When, reading Supreme insured’s literal of the Texas Weingarten, Inc., ton, Cir., 1964, FTC v. 153; J. 5 5 F.2d Bur 335 Cir., 1964, 687; FPC, Co., 336 F.2d Hill v. ton State Farm Mut. Ins. Auto. Cir., 1964, 355, Cir., 5 27; 1964, 317; 335 F.2d 365 and n. 5 335 F.2d Benson Valley Broadcasting, States, Cir., 1964, 288; Shenandoah Inc. v. United 5 332 F.2d ASCAP, y. 1963, 39, Whitney Waimvright, Cir., 1964, 375 U.S. 84 S.Ct. 5 8, opinion 11 787; States, L.Ed.2d modified re F.2d 332 Anderson v. United hearing granted part, 1964, Cir., 1963, 815; 375 U.S. 5 F.2d Juelich v. 318 Cir., States, 726; 84 S.Ct. 11 L.Ed.2d 468 United (dissenting opinion); Younger Bros., States, Bartone v. United Inc. v. United States, 1963, (3-Judge), F.Supp. 375 U.S. 84 S.Ct. S.D.Texas May- L.Ed.2d United States v. 861-862. approve acknowledge, expressly Culber Linken statements literal Court’s question in terms son, answered this prior hold hoger approving literal could have though suit on which earliest date so, I do in Culberson.15 day on as the fixed That was filed. discuss, been con I am for reasons I later damage judgment final. became Supreme of Texas Court fident that the Indeed, made today mention was even no holding make no such literal would judgment was which the date on response problem face. we obviously The Court paid, date. a later for the excess As to Assured’s claim say: could “The [assured] had to policy limit, that the stated Culberson present until suit maintained have “give policy provisions him [the did not the extent as his such time any right sue for assured] final determined had been thereof company [in- because of failure of the [damage claimant’s] in the to make dam- a settlement surer] [the rights had not been case. Until then age claim.” The Court then claimant’s] ac failure to insurer’s] invaded [the alleged went on: “As to assured’s] [the cept offered terms of settlement regard, of action in that Culberson cause complete.” tort was not until [the cannot assert same assured] reiterated, the [assured’s] “We sustain he has some sum on the point did not be hold that limitation $5,000 policy; excess of the in the limit judg gin any run in until event only pay- and then to the extent of his [damage be case claimant’s] in the ment 727, 730, ment.” In a S.W.2d ** final16 S.W.2d came straight out Culberson situation if—and big sought only the if is a one-—the relief holding cry a far But this is in a Texas Court is a for dam- be available kind would ages money payable is a sum of relief —-that unless the excess Texas law under paid prove pay- now-—the assured must part. The Court’s in language or in whole of some of the excess in which event not it was reflects that own judgment may be rendered to extent viewing of a demonstrable terms payment made. 899, damage. quoting After first § dollar Linkenhoger Supreme Restatement, (C. 1939), “tort that a Torts “clearly supports stated Culberson ordinarily complete has until there is [assured’s] contention.” But in Linken- legally protected in- of a been an invasion hoger Culberson, as in assured’s suit was plaintiff,” trans- the Court terest of the money judgment. The a issue was tangible in a Sto- lated this into terms problem two-year of the Texas of statute Recasting affirmative- it wers situation. limitations. The insurer contended excerpts quoted ly, declare: above a Stowers of cause action arose at the by rights invaded An assured’s have been negligent rejection pru- time of a accept terms an insurer’s failure dent settlement offer. The assured con- complete is settlement and the tort rights tended that his had not been in- extent and the time assured’s damage vaded until the claimant’s final has determined thereof judgment been ment for an excess amount had become damage suit case. in the final. problem The statute of limitations concepts, the put in classic tort To turned on when the assured could have duty in the of due care Insurer owed the commenced a suit to recover of the case. It breached settlement Although Linkenhoger such. did, as we appeal, it became Absent an Linkenhoger 1962. 14. v. American Fid. & Cas. damage days. thirty The Tex, final within Co., 1953, 260 S.W.2d 884. vicarious Bostrom filed this claimant 15. Universal Automobile Ins. Co. v. Cul- 26, 1962 December “Stowers” suit on berson, 1935, 126 Tex. 86 S.W. complaint). (second as- amended rehearing, 2d 87 S.W.2d 475. signment to Bostrom the Assured from apparently case, on June 16. made was long As instant see Part I appealed judgment opinion, damage after the Court’s claim- rendered, judgment February 1963. October ant’s was rendered resulting judgment Fed duty Both Texas and in a eral arsenal.19 encourage judgment system use of declara become eral limits. reasonably tory relief it is neces The existence where final and is irretrievable. resolving sary helpful in judgment is final constitutes and will be of a which existing controversy.20 pressing, injury would not have occurred which due care. It had the Insurer exercised brings play impor This into another legal its the final awesome procedure. principle As tant of Federal in train the dollar dam- effect which sets 54(c) clear, except in F.R.Civ.P. makes “ ages ensue, final will and it is decree, the event a default elief [r] invaded the assured's which has granted prayer, depends on the be rights. situations, As it matters in other but on what the facts —either found may years months or not that it be before law— trier or established as a matter of ” * * * injuries or nature of the full extent reasonably require. Burton may demonstrated or translated into Co., 5 Farm State Mutual Auto. Ins. dollars. Cir., 1964, Conse 324. Assuming proceedings, require quently, on the remand Texas would without formal amendment at least one dollar the ex prayer, cess District Court will have commence a Stowers obligation 54(c) determining money damages, suit to whether recover there declaratory ought granted indeed, everything no indication relief at all— though points opposite because of Culberson a direction —that money judgment deny declaratory perhaps ren Texas would cannot be relief to a hapless quarter assured faced of dered. I with a would not whether de intimate ought claratory granted a million dollar described relief to be mortgage might this Court as “a on the what its form or in character remedy sured’s future.”17 The should There is its is avail be. wide latitude given able and is full in Texas.18 voice Burton, supra, form and content for as in important And it is an in the Fed- device and a host of other cases we have rec- accompanying 17. See text note Delaney, (en banc), Life Ins. Co. v. 5 Cir. opinion. Court’s (concurring). 328 F.2d 18. The Uniform be Guilliams v. liberally ton, declaratory judgment further and to afford relief from insecurity and other strued either before or after been a breach thereof. granted and other Act was enacted in 1943. Tex.Civ.Stat. Ann. art. shall have 172 A.L.K.. x ^{[*] [*]} It is “Section 12. “Section 8. Further “Section “Section 1. Courts of record SjS ^[*] remedial; 279 S.W.2d given whenever relief construed and administered.” with 144 Tex. power legal legal relations; A3. ^[*] $ wide and liberal Koonsman, 1955, its is or could be claimed. respect §§ relations whether or not This to declare Declaratory 579; contract 1-16. purpose necessary -$ ^[*] see United Services Act or decree Cobb v. relief 190 S.W.2d uncertainty is declared to rights, status, rights, status, may and is to he ^[*] $ is application. based or Judgments there has 154 Tex. Harring- be * * * may proper. settle ^[*] $ con- be 20. Of course all must 21. Smoot v. State Farm Mut. Auto. Ins. F.2d Eccles v. 426, 431, v. National Mut. Ins. Mut. Cas. of 106; Byers legal Seniors v. Co., Cir., 1962, Pennsylvania Threshermen & Farmers granting is or could be the. factors ers Ins. Co. v. 1961, * * * tual * * * * * 28 U.S.C.A. Cir., 1961, judicial public 205; controversy relations of 294 F.2d * including of any court of the United States Co., Cir., 1960, Peoples Bank, 1948, whether or not further Arnold, Cir., 1960, 68 S.Ct. interest American Fid. & Cas. discretion to be declaratory 294 F.2d declare the sought. § Busy Byers, 139, 145; matters 299 F.2d within its 5 carefully weighing any Electric recognize Co., * * 5 “In relief is a matter interested rights Cir., 1958, of 92 L.Ed. 139; Dotschay 280 F.2d 453. 525; Sax v. state exercised Co., jurisdiction case Cir., and other 333 284 Travel policy. Co. party relief F.2d Cir., 784; U.S. Sax, ac- all in Linkenhoger Culberson formula the may, often ognized indeed that the Court produces this payment, requirement of must, form of a conditional it in cast startling result. very and senseless or decree.22 order un- may not, not, filed need indeed suit Holding Disagreement With Courts by payment payment. is no If til there Required Payment thing can excess, the on the the assured many discussing far, ave- Thus in fifteen, ten, along say, five, for, rock possible of open for some character nues years twenty-five suit without twenty, or remand, accepted the I have on the relief any of if, one being permitted. But at requires ruling that Culberson Court’s or obtain- times, a is these dollar payment condi- the excess as a some execution, Sto- assured on ed from the damages by Assured. suit for tion to commenced can be suit wers-CuIberson re- Obviously, is no such course, time, By of at that late date. pros- quired, about the then all I’ve said gone, or may be dead witnesses declaratory pect an assured relief law- their unknown. whereabouts assignee (or as an one his shoes such insurer, yers case for the handled the who assignment), doubly true. is under valid investigative agents ad- and claims Linkenhoger, this, approving I On think judg- contemporary justers, all whose theory support as- for the Culberson in establish- under review ments will be assured, effectively re- serted there defending or care breach due straight jacket to leases Texas from this permit charge, scattered Erie-seeking to conclude may be dead, Files or senile. retired align that Texas would now itself destroyed misplaced, if lo- either permitting the rule of reason suit sufficiency in cated be of doubtful will prior payment. without resurrecting han- a recollection light any Linkenhoger, conclu- other dling particular out of one case absurd, sion commits unrealistic busy profes- of a hundreds thousands same results which are one be hard sional The truth will lifetime. wholly keeping time with its out nonpartisan find, and the hurt will be repose limita- reflected statutes of suffering one effect, its the assured tions and constitutes rank discrimination case, another. wrong. these victims of another’s prospect aside Nor be brushed can this Moreover, simply does not serve rule visionary hypothetical. The instant aas purpose. real A proof of likelihood. best its is the case young pointed Linkenhoger out, he is As debtor because involved affirmatively question es- proof does when the statute of limita- the record property de- tions on tablish commenced run. The insurer hypothesis admitting that he has standing wrong, sue since clared its have urged yet paid. The reflex the assured’s claim into has not came being wrong startling. Assured, done, e., when For i. pretty prudent rejected negligently. debtor, fate settlement Insurer’s has the all whis- The assured it commenced much in his hands. With contended that damage suggestions pered when the sometimes suit became agreed emerge arguments Supreme the or of final. The in the briefs Court with possibility the assured. of collusion be- for that in connivance and We know certain damages may damage plaintiff and the Texas the tween suit for be a suit not brought prior judg- judgment-debtor-assured, damage this conse- suit Culberson-Linkenhoger becoming giving quence cer- ment of final. If ef- literal gate tainly Linkenhoger’s open. approval Time here fect to of lets the wide literal may said, literally for the what work much favor Culberson add to we assignment. par- ported not, course, intimates Assured is of a timeliness, opinion validity, ty. Declaratory on or to the relief available to legal significance any granted damage Bostrom, other as- of this be to the claim- signment. establishing ant, depends on his a status through pur- of a vicarious assured 186 high ly interest runs at a creditor since conflict economic fact— with sheer 23 By friendly cooperation rate. with that the existence of final a adversary, judg assured, damage large judg his former a sum does not judg only keep paro Perhaps

ment creditor has to a I reflect ment debtor. statutes, tendency, alive under and then ment local chial I am confident time either his self- Supreme execution on it or Texas would not Court of help day collection for a moment when efforts of its this forecast one era disadvantages proof young of and rebuttal econom citizens a life so bleak and greatest theory ically unrewarding legal will the Insurer. be as this necessarily implies.25 Moreover, accepts I cannot— one —as conclusion that this Assured Court’s Jernigan made The record shows that things poverty, is destined for life of a young trip friends to Mexico with get worse, better, this rule. under Sullivan, all of whom were Bostrom and Someday, many years later, perhaps this age of around at time this of 20 young by savings man out of the modest working They at 1958 occurrence. were probably average any income of other Tempeo Company at Grand Aircraft good citizen, acquire American will a few Prairie, Texas, industrial suburb exemption assets not under the um complex. Jerni- Dallas-Fort Worth pay brella with which to of ex gan, Assured, tooler worked as a judgment. day arrives, cess When that former, suppose class of a labor I would may Insurer, he then sue the either alone skilled, semiskilled, to be in the if not assignee. applying with his And great Assuming, level. is true of a reading Linkenhoger-Culber Court’s majority young people, of Texas son, timely though the suit will be even high figures graduate, was a school impossible time has made it to defend in figures telling talk, are Courts when fact.24 listen. United State of Alabama v. Linkenhoger From States, we know Cir., 1962, 5 304 F.2d rights assured’s have been a affirmed, invaded as S.Ct. U.S. consequence pru- Although of the insurer’s failure 9 L.Ed. 112. at the time dently to settle years when the assured’s liabili- he was about ty and age years extent thereof has been deter- expectancy with a life of 46.6 damage mined final in the purposes facilitates our to round this light suit. this, high years we can no out for of 21 school with one longer assume that Texas Assuming would under- education. retirement at thing take to declare as law so prospect years, absolute- and work good duty The assured altogether owe does dence detri- will lost cooperation. faith assured, But insurer, once the insurer or both. obligations point right breaches its damages, With no sue where, hypothesis, negli- only way preserve it has other evidence gently prudently failed to settle with a would de- awkward and unsure resulting judgment discovery far in perpetuate excess bill vice of a limits, why, there testimony. 27(a) (c) ; seems be no reason (1), F.R.Civ.P. stage, an assured take Tex.R.Civ.P. 737. appears honest action which to hold concept 25. This is absorbed the Court. prospect relieving out himself of the distinguishing See note Smoot v. State specter part of all or a substantial Co., Cir., 1962, Farm Mut. Auto. Ins. large growing judgment a though even ground that Smoot incidentally the for- benefits * * * property “had substantial adversary mer as well. part which at least inescapable consequent 24. This furnishes ment could have while been satisfied” powerful supporting satisfy reasons for the ex- “here the insured cannot istence of a part judgment”; to obtain suitable de- “since of the excess * claratory * prior relief here insured has no assets excess, damage prevents recovery but after suit in- Culberson “if the ment has completely become final. Unless this re- no sured has and is assets open, lief is satisfy judgment.” it be that vital evi- unable to

187 apparatus carriages, and or tools recognized vehicles population-income officially belonging profession, to a trade or $250,000 is a books that demonstrate statistics homestead, wages, there and a this current expectancy for income conservative things Unprotected many peril. are lifetime.26 economic normally represent assets which those are least, these at this Assured As to savings against of edu cost a lifetime understate- figures prove mild it to be a or cation, illness the hazard of uninsured to declare for the enjoy to age, to old accumulated mortgage on a $272,000 is a savings day’s include leisure time. These $250,000. income of future stocks, corporate accounts, deposits, bank sporting estate, real non-homestead longevity so, these and More with this goods, boats, And even and the like. economically averages, is it attainable homestead, family property as safe as a morally to improbable indefensible and exempt, proceeds 25 of a are not sale will productive Texan this assume Exemptions 21. Tex.Jur.2d (b) §§ worse, savings or, (a) have no either enough keep huge judgment, to Moreover, clever ubi be somehow will through invest judgment proof perpetual, quitous an almost and with them statutorily exempt from scriptural28 tenacity ments are from the break night and hu day Broad creditors. is him al reach of to the dark of with geared ex expect ways. society one would mane as an economic plen be, still emption personal is statutes to there of credit for both use ty es creditor and acquisition, relentless left business way. prop pecially one armed with lien on all stands in the It is a property kept erty opportunity forever.27 No can alive meet and his by very unless, exempt expressly family lib is encum needs of himself designated by the implication, prospective is so eral bered or vendor- frustrated statute, Exemptions already 13. com § Tex.Jur.2d creditors learn that he liberally Although beyond exemptions prospective extend lifetime mitted wearing ap furniture, pictures, average books, earning capacity of Ameri mules, animals, horses, Sergeant parel, Smoot,29 farm can. who de- Like high high income 26. In median edu- had had more than a school no aged over, Abstract, graduates, Source, 25 and school cation. Statistical figures $5,552. 1964, pp. 1963, p. show the median 340-43. employed distinguished male civilians to eco- income of the nation’s One manufacturing, Sylvia $5,240, analysts, in “Your and if works Porter nomic family $5,793, Post, Money’s Worth,” income Decem- median Houston 1963, evaluating $6,237. benefit ber breakdown, figures, gross average on 1961 incomes But a based education stated high gradu- years through fol- school 64 was as reveals for the 50.9% $5,000. over ates earned lows: 3,000 $3,999 Average Total $ 11.9% 4,999 4,000 12.6 Income Lifetime Completed Years 3,000 Over 24.5% $184,000 Grade School 8 5,000 ¡>5,999 $ to Í 15.5% 212,000 High 1 to 3 School 6,999 6,000 12.5 247,000 grad. 4— 7,000 9,999 16.2 293,000 College 1 to 3 10,000 and over 6.7 417,000 grad. 4— 5,000 Over 50.9 5447-5449; art. 27. Tex.Civ.Stat.Ann. $3,000 Total Judgments over 75.4% 595. §§ 35 Tex.Jur.2d angle, per- Viewed another Oil Co. v. see Continental Psalm haps meaningfully, figures more Cir., 1959, FPC, F.2d that of families in this coun- show (dissenting). try $10,000 with income between fully $15,000, Ins. Farm Auto. than Smoot v. State Mut. had more 61% high education, Cir., Co., 1962, 299 school and of $15,000 income, families with 337 F.2d 223. over 41% pended pay his Air Force cred and the the harm has become irretrievable —when generate, damage judgment modest income would it that suit the becomes development plans for the this Assured’s final.33 life, welfare, health, of his education Finally, requirement of the Culberson oppor of himself and his children payment no serves excess through savings tunity diligence and to litiga- purpose. Nevertheless, up cuts it things acquire make more that life a ending pieces into tion so that never experience things pleasant all which are parties long enough enough live judgment are in the hands of credi Judges are around and are courthouses enlightened tor. Unless —even in this open, big, judgment, no how matter day leg still demand irons —we someday paid. will be chains, peonage this is in fact. It is Assured, damage interests not the recognize, must, We as we that Culber- claimant-judgment creditor, are at that payment require son does not of all of the agree, stake here. One can as this judgment. only It that declares echoing Circuit, does in that Second the assured “cannot Stowers assert” the no there is basis for the an notion that claim “until some sum on the gets unjustified insurer an be windfall judgment ; [policy in excess of the limits] damage reap cause the claimant does not only pay- and then extent judgment the excess over ment.” 86 S.W.2d 731. limits. Harris v. Ins. Standard Acc. & analysis requirement An of this reveals Co., Cir., 1961, 297 F.2d 631-633.30 that a nominal sum plight But the assured be cannot so thing motion, sets the whole the effect easily away. brushed It is ironic that judicial of which is to obtain a determina- insurer, peculiar because of the nature binding judicata tion which is as res damage inflicted, the tort wreacks such liability, victory and that is first such impossible that it for the claim assures a source out of which the single assured ever to recover a cent. finally paid. whole claim will A dollar Linkenhoger here, Now that will good hundred, keep is as as a out but to Georgia,31 many Florida,32 follow petty courts, figure use I of 100 affording right others in to when sue dollars. Although point involved Harris Any succeeded. other result would be to yet reached, was not this Court in Palmer default, allow an insurer to drive its as- Co., Cir., 1963, v. Travelers Ins. bankruptcy, sured to the wall and then held that the Referee’s refusal blithely estate, trustee, advise the permit bankruptcy sue Trustee all assured and creditors bankrupt’s insurer a Stowers duty breached, its while was there claim was erroneous. There the statute nothing to be done about 296, 300. it.” 319 F.2d again according key of limitations was viewpoint. argued to the insurer’s It recently The 7th Circuit allowed recov- damage judgment that since the suit ery of excess the trustee with- long not final until after the date of bank- prior payment damage out ruptcy, (bankrupt) assured had which drove him the wall right against date insurer bankruptcy. St. Paul Anderson bankruptcy and the trustee therefore Mercury Co., Cir., Indem. rejected succeeded to none. We F.2d 406. powers. artificial restraint on a trustee’s 31. Smoot v. State Farm Mut. Auto. Ins. Concurring generally, I added a further Co., supra, note 29. theory concurrence insurer’s money confused to recover dam- 32. Burton v. Farm State Mut. Auto. Ins. ages legal aon Stowers claim with other Co., Cir., 1964, 335 F.2d open assured, long remedies to an before final, compel peril contrary became 33. Another rule is comply go possibility insurer its contractual will duty. insolvent, business, Of these I val- said: “These were out of become etc. existing rights during belong long uable wait between finality payment. the Assured and to which the Trustee first recognize judgment debtor, pays confident, assured, I am of an judgment. judicial then files assured thus on the He victimized to have a $100 grievance suit to obtain a Culberson re determination of his at a time Stowers covery reasonably nec when facts are of that amount. That draws available to negli essarily parties. grant appropriate all question of the It re in issue the will gence condemning failing lief without the insurer to settle. the assured to stealthy hypothesis prevails. ignominy bankruptcy, the acquisition On our the assured judgment He which of non obtains concealment $100 judg exempt savings that becomes final. On execution of and assets or the certain knowledge gets age ment, progresses the assured that as he This $100. income, property subject exemption. By at and judgment to no his fortune is dedicated to execution, garnishment or holder all tachment an insurer because damage duty prudentl breached a claimant creditor to defend him y.35 gets give way way In this full assured Texas will $100. nig voice to'the another institutes his Stowers doctrine.36 He A $100. gardliness second Culberson-Stowers suit to recover this area be would out of step simple. policies with its Now his task is He liberal on tort liabil $100. including ordinary prove only prior generally, need ities judicata by negligent case establishes on res caused through payment breach the fact of execution contract. 40 Tex.Jur.2d Negligence damages momentarily the Stowers re 9. Some criticize the due § by good ceived him care faith, from the standard insurer. Another contrast to that of recognize but all is rendered. It be States seem to $100 now that an comes final. There is assured execution on it. does some re have per And so on ad course for infinitum.34 failure of the insurer to engagement. form his Like the steve I do not minimize dore, what Culberson said perform the insurer must its en Linkenhoger gagement it held. I do assert in a workmanlike manner or it added so much to the Texas Stowers law consequences, suffers the sometimes awe may literally longer that Culberson applied. Having gone be Vickery, indeed. See Stevedore- they as far as have Shipowner Indemnity: Ryan Doc Linkenhoger, Supreme trine, Tul.U. 7th Tidelands Inst. 167-76 recognize Texas will that the dis- factors (1963); Shipping Strachan Mel Co. v. by produce artificial, cussed me vin, absurd Cir., 1964, (dis 327 F.2d very damaging consequences. will, senting). It may really The ad infinitum so. For practical submitted and decided for all Culberson, under the suit purposes though filed were had been “only to the extent of party. [the assured’s] course, opin- Of I intimate no payment.” Necessarily the statute ion as to whether the Insurer bound only limitations runs this. recognizes, therefore, made. This 36. I am at a loss to understand where the divisible, the claim is is not encumbered feelings Court finds basis for its against splitting doctrines of a cause doctrine, Texas is afraid of the Stowers action, and some cause of action re- started, ways wishes it had never been mains until discharged final must be found to constrict it. And since payment. final Stowers, this is not an extension of I dis- Negligence agree the Insurer is assumed with such comments as “If hypothesis in the opinion of the Court’s extended, Stowers doctrine is to be Although and this concurrence. it”, As- Texas courts must do 347 F.2d 179. party, sured is tried, not a the case was

Case Details

Case Name: Seguros Tepeyac, S.A., Compania Mexicana De Seguros Generales v. Maynard Bostrom and James L. Jernigan

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Jun 16, 1965

Citation: 347 F.2d 168

Docket Number: 21167_1

Court Abbreviation: 5th Cir.