196 S.E. 837 | N.C. | 1938
SEAWELL, J., took no part in the consideration or decision of this case. The action was instituted under C. S., 6445, by the Insurance Commissioner for the purpose of having a receiver appointed to administer the special fund deposited by the Central Mutual Insurance Company of Chicago (an Illinois corporation, now insolvent) with the State Treasurer for the payment of the obligations of said Insurance Company to citizens or residents of this State. Paul F. Smith was duly appointed and qualified receiver. Thereafter the Burlington Trucking Company, a North Carolina corporation, a policyholder, filed a claim with said receiver on account of a judgment rendered against said Trucking Company for liability covered by the liability insurance policy of defendant Insurance Company. This claim was disallowed by the receiver on the ground that the claimant had not paid the judgment upon which the claim was based. Upon appeal to the Superior Court, it was adjudged that claimant was entitled only to prove its claim for the actual amount paid upon said judgment, with provision permitting payment of the judgment by installments, the claim to be allowed for the amount of *472 payments actually made within the limits of the policy. Claimant appealed to the Supreme Court.
Thereafter, it appearing that the claimant, Burlington Trucking Company, had been placed in receivership, the receiver of the Trucking Company was, by order, empowered to prosecute the claim on its behalf. The question presented for decision by this appeal arose upon the following facts:
The Central Mutual Insurance Company of Chicago (hereinafter called the Insurance Company) issued its policy of insurance to the Burlington Trucking Company insuring it "against loss from liability imposed by law upon assured for damages on account of bodily injuries, including death resulting therefrom, . . . caused by or through the ownership, maintenance or operation of any automobile described in the schedule." The policy required the assured to give within five days written notice of any accident, claim or suit resulting, to forward process to the company, and, when requested, to aid in securing evidence and attendance of witnesses. The policy contained the further provision that "the (Insurance) Company will investigate all accidents and claims covered hereunder, and defend in the name and on behalf of the assured all suits thereon, and will pay . . . the expenses incurred by it in such investigation and defense, but the company reserves the right to settle any such claim or suit. The assured shall not voluntarily assume any liability nor interfere in any negotiations or legal proceedings conducted by the company on account of any claim, nor except at his own cost, settle any claim, nor incur any other expense without the written consent of the company previously given."
During the life of this policy the automobile of the Trucking Company was involved in an accident resulting in the death of Sarah Colston Barry in the State of Virginia. In a suit for damages therefor prosecuted by R. P. Barry, Jr., administrator, in the District Court of the United States for the Western District of Virginia, judgment was rendered 5 December, 1936, against the Trucking Company for $4,000. This suit was defended from the beginning and throughout by the Insurance Company. Following the appointment of the receiver for the Insurance Company, claim under the policy was filed by the Trucking Company for $4,000, with certified copy of the judgment attached. The Trucking Company had paid $700 on the judgment. The receiver rejected the claim for the remainder of the judgment for the reason that the insured *473 had not paid it. A similar ruling of the Superior Court, on appeal, was based upon the same ground.
Does the policy of insurance in suit constitute a contract of insurance against liability for damages, or only a contract of indemnity against actual loss in the sense of money paid? As a condition precedent to the right to recover on the policy must the assured have paid the judgment?
It has been well said that a policy of liability insurance is either a contract of insurance against liability for loss or damage and is properly called a liability contract, or it is a contract of insurance against loss or damage and is thus called an indemnity contract. Whether it is the one or the other depends upon the intention of the parties as evinced by the phraseology of the agreement in the policy. "Where the policy provides that insured shall immediately notify the company in case of accident or injury, that the company would defend actions growing out of injuries, in the name of insured, and that insured should not settle any claim or incur any expense without the consent of the company, it is generally held to be a policy of indemnity against liability for damages, and is not merely a contract of indemnity against damages." 36 C. J., 1057-8; 14 R. C. L., 1321.
In Slavens v. Ins. Co.,
In Malley v. American Indem. Corp.,
In the leading case of Clark v. Bonsal,
In the elaboration of his opinion, Justice Hoke cites Anoka Lumber Co.v. Casualty Co.,
Examining the opinion in Anoka Lumber Co. v. Casualty Co., supra, we find that Court, in holding the insurance contract one of indemnity against liability, reasoned as follows: "If the plaintiff is forbidden to settle a claim for an accident of this kind, we fail to see how it is imperative upon him (the assured) to pay a judgment rendered against him upon such a claim as a condition to his right of recovery. The Insurance Company by the terms of its own policy has taken into its own hand the whole machinery for settling such claim, and will not allow the employer (insured) to do it." And in Sanders v. Frankfort Ins. Co., supra, it was held that, since the Insurance Company agreed, in the performance of its contract, to defend the suit and to settle with or pay the assured, it plainly provided for the performance of the contract of indemnity before the assured has suffered loss in the sense of actual payment of damages, and that "after taking control of the proceedings in a suit against the assured, the insurer could not thereafter be discharged except by payment of the indemnity to the assured, or securing his discharge from the claim."
In Hoven v. Steel Co.,
In Brandon v. Indemnity Co.,
From Indemnity Co. v. Davis,
In Kurre v. Indemnity Co.,
In West v. McMillan,
To the same effect is the holding in Miholevich v. Ins. Co.,
In Oehme v. Johnson,
In Murgic v. Casualty Underwriters,
The reason for the rule, supported by these authorities, that the provision in the policy for the exclusive control of the defense is an important factor in determining whether the contract is one of insurance against liability or of indemnity only, is well stated by Bausman, J., inDavis v. Casualty Co.,
In Brucker v. Casualty Co.,
The following additional authorities, in support of the ruling in the cases above cited, may be noted. Fenton v. Ins. Co.,
In Goerss v. Indemnity Co.,
"`Loss from liability' literally means loss which arises immediately upon one becoming liable to another, not loss which arises immediately upon such liability being paid or extinguished. `Liability' is defined in Webster's New International Dictionary as `that which one is under obligation to pay, or for which one is liable.'" Maryland Casualty Co. v.Peppard,
"`Loss does not have an inflexible meaning, and may consist of many different situations of varying gradations. Voluntary or involuntary separation from one's money is not the only criterion of loss. Any shrinkage in value of estate or property may on proper occasions be rightfully so termed." Malley v. Am. Indemnity Corp.,
A contrary conclusion, in construing policies of liability insurance, seems to have been reached in Casualty Co. v. Williams,
The appellee relies upon Lowe v. Fidelity Casualty Co.,
In R. R. v. Accident Corp.,
The statement of the general principles governing the construction of liability insurance contracts set forth in Clark v. Bonsal, supra, was quoted in Hensley v. Furniture Co.,
Applying the principles of law, deducible from the authorities cited, to the facts in the case at bar, we reach the conclusion that when loss from a liability within the coverage of the policy, and against which the Insurance Company has contracted to insure and for which it has received compensation, has been judicially established, the Insurance Company can only be discharged by payment, the ultimate disposition of the fund by the receiver of the insured to be determined by the court. It follows, therefore, that when the claimant filed its claim, based upon the Insurance Company's admitted policy, together with proof of a valid judgment for a liability covered by the policy and within the limit contracted, it was error to disallow the claim.
The judgment of the Superior Court in this respect must be
Reversed.
SEAWELL, J., took no part in the consideration or decision of this case.