Opinion
February 11, 1929.
1. INDEMNITY INSURANCE: Against Liability. A clause in the insurance policy providing for indemnity against loss resulting from claims upon the assured for damages, is an indemnity against liability, and not merely against loss from liability.
2. ____: ____: Breach: Refusal to Defend. Where the insurance company agreed to defend a suit brought against the assured for damages, and refused to do so, it thereby breached its contract, and is in no position to contend that its intricate and perhaps ambiguous contract does not require it to pay the judgment rendered against the assured.
Corpus Juris-Cyc. References: Courts, 15 C.J., Section 511, p. 1079, n. 42.
WRIT QUASHED.
W.E. Moser and Hensley, Allen Marsalek for relator.
(1) The opinion of respondents' clashes with the rule heretofore adopted by this court, in the construction of insurance policies and other contracts. The respondents hold, in effect, that they are privileged to evade the plain terms of the policy in question, by "one process of reasoning or another," because, forsooth, as appears from the opinion, they do not approve of the particular form of policy in suit. The opinion in this matter reverses the law frequently declared by this court, that "unequivocal language is to be given its plain meaning, though found in an insurance contract." State ex rel. v. Trimble. 306 Mo. 309; State ex rel. v. Ellison, 269 Mo. 420; State ex rel. v. Trimble, 297 Mo. 659. (2) The contract between relator and Zausch plainly provides that the relator agreed to indemnify the assured against loss resulting from claims upon the assured, etc. The policy also contained the "no-action" clause above noted. This court decided, in a case in which the facts are practically identical with those of the present case, that under such form of policy no liability on the part of the insurer accrues until the assured suffers a loss and pays the same in money, as required by the policy. State ex rel. Automobile Ins. Co. v. Trimble, 297 Mo. 659. (3) The opinion of respondents conflicts with the well-settled rule frequently declared by this court, that "in order that an indebtedness may be liable to garnishment, it must be shown to be absolutely due as a money demand, unaffected by liens or prior incumbrances or conditions of contract," and that except in cases of fraud, "the creditor can claim no higher rights against the garnishee than the debtor could claim against him." Weil v. Tyler, 38 Mo. 545; Johnson v. Pub. Co., 122 Mo. 104; Holker v. Hennessey, 143 Mo. 87; Marz v. Glass Co., 269 S.W. (Mo.) 700; Scales v. Southern Hotel Co., 37 Mo. 520; McPherson v. Railroad, 66 Mo. 103. (4) In establishing the conflict of opinions it is not necessary that relator produce a "Grey-mule" case, but it is sufficient if it appears (a) that the opinion of the Court of Appeals runs counter to the decisions of the Supreme Court on the general principle of law announced, or (b) that such opinion announces a ruling contrary to that of the Supreme Court under a like or similar state of facts, or where the facts are analogous. State ex rel. v. Ellison, 271 Mo. 474; State ex rel. v. Reynolds, 287 Mo. 169, 289 Mo. 506; State ex rel. v. Allen, 294 Mo. 214; State ex rel. v. Trimble, 250 S.W. (Mo.) 384. It being the purpose of certiorari to secure harmony of opinions, if the opinion of respondents is not harmonious with the decisions of the Supreme Court, it should be quashed. State ex rel. Vulgamott v. Trimble, 300 Mo. 92; State ex rel. Boeving v. Cox, 310 Mo. 367.
Frederick A. Wendt, Roy H. Bergmann and James J. O'Donohoe for respondents.
(1) The opinion of respondents in Goerss v. Indemnity Co., 3 S.W.2d 272, does not conflict with State ex rel. v. Trimble, 297 Mo. 659, for the following, among other, reasons: (a) The insuring and no-action clauses in the policies considered in said cases are different, but the policy considered in Swanson v. Georgia Casualty Co., 315 Mo. 1007, and in the instant case, are substantially the same; and respondents followed said decision by referring approvingly to Wehrhahn v. Casualty Underwriters (Mo. App.), 1 S.W.2d 242, where the Swanson case is relied on as a binding authority. (b) In the Trimble case the relator there did not agree to defend and did not promise to embark in the practice of law, while in the instant case relator agreed "to defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim covered by said parts 4 and 5, whether groundless or not." (c) The relator in the Trimble case did not promise, as here, "to pay all expenses incurred by the company in defending any suit, including any costs taxed against the assured, and interest accruing on verdict or judgment." (d) The question of breach of contract was neither presented to nor decided by the court in the Trimble case. (e) In the policy considered in the Trimble case assured was a freeman, while Zausch, the assured in the instant case, was excluded from voluntarily assuming any liability, interfering in any negotiations for settlement, interfering in any legal proceedings, incurring any expense, and settling any claim except at his own cost without the written consent of relator previously given. (f) In the Trimble case relator there did not stipulate for dominion over either claims or suits, while relator here gave itself exclusive control of all investigations, adjustments, settlements and defense of suits. (g) In the Trimble case the insuring clause is a dependent one, while in the instant case it is an independent clause complete in itself. (h) It was not presented or decided in the Trimble case that the insuring and no-action clauses conflicted and that the former controlled. (i) It was not presented or decided in the Trimble case that where two clauses in a contract conflict, the first governs, rather than the last. (j) Whether the no-action clause applied to garnishment proceeding was not presented or passed upon in the Trimble case. (2) Answering point 3 of relator's points and authorities, the respondents, in their opinion, contravened no decision of this court. Respondents did not hold that the creditor can claim higher rights against the garnishee than the debtor could claim against him. (3) The policy under the title, "PART V. LIABILITY," indemnifies against loss resulting from claims upon the assured for damages on account of bodily injuries accidentally suffered or alleged to have been suffered by any person or persons by reason of the ownership, maintenance and use of such automobile, as distinguished from reimbursement for loss by reason of payment of judgment. Swanson v. Georgia Cas. Co., 315 Mo. 1007; Wehrhahn v. Casualty Underwriters (Mo. App.), 1 S.W.2d 242; Goerss v. Indemnity Co. (Mo. App.), 3 S.W.2d 272. (4) Judgments are direct losses, for they work loss of credit, occupation, mental loss and cause dissolutions of copartnerships, corporations and drive assureds into bankruptcy; while, "Handing money to a judgment plaintiff with one hand and receiving the same amount of money from the insurance company in the other is certainly not a loss." Cases supra, and Elliott v. Belt Automobile Assn., 87 Fla. 545; American Indemnity Co., 114 Tex. 127. (5) Regardless of the no-action clause, where an action is brought by a third party against the assured under an indemnity policy, a judgment in the action becomes, as between plaintiff, defendant and the insurance company, a debt owing unconditionally by the company to the defendant (assured), which may be reached by garnishment, and this is true whether insurer does or does not defend the action. Cases supra, and, Mahr v. Maryland Cas. Co., 132 Minn. 336; Standard Printing Co. v. Deposit Co., 138 Minn. 304; Powers v. Cas. Co., 139 Minn. 309; Capelle v. U.S. Fidelity G. Co., 80 N.H. 481; Illinois Surety Co. v. Maguire, 150 Wis. 544; Ross v. Am. Emp. Ins. Co., 56 N.J. Eq. 41; Pickett v. Cas. Co., 60 S.C. 477; Meyers v. Continental Cas. Co., 12 F.2d 53; Farmers H.W. Co. v. Cas. Co., 184 Iowa 773; Fritchie v. Extract Co., 197 Pa. 401; Fentress v. Royal Indemnity Co., 140 Va. App. 685; Fenton v. Fidelity Cas. Co., 36 Or. 283; 14 R.C.L. 1322; 15 Cyc. 1036. (6) Relator promised, in consideration of the premiums, "to defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim covered by said parts four and five, whether groundless or not." Hence, failure to defend the damage suit brought against assured and disclaiming all liability constitutes a breach of contract upon relator's part and puts an end to the no-action clause. Goerss v. Indemnity Co. (Mo. App.), 3 S.W.2d 272. The courts have gone further than respondents and have held that where the stipulation to defend is in the policy and insurer fails to defend or negligently defends, or where insurer fraudulently or oppressively or in bad faith fails to settle, insurer is liable not only for the limit in the policy, but for the face of the judgment, regardless of amount. Carthage Stone Co. v. Trav. Ins. Co., 274 Mo. 537; Attlebon Mfg. Co. v. Ins. Co., 240 F. 573, 171 F. 495; Brunswick Realty Co. v. Ins. Co., 166 N.Y.S. 36; Anderson v. Surety Co., 107 Kan. 375. A ruling different to that made by respondents in the instant case would conflict with the following cases: Strong v. Phoenix Ins. Co., 62 Mo. 289; Gantt v. Ins. Co., 68 Mo. 503; Garrison v. Baggage Trans. Co., 94 Mo. 130; Railroad v. News Co., 151 Mo. 373.
Certiorari to quash the opinion, judgment and record thereof of the St. Louis Court of Appeals in Goerss v. Indemnity Company of America, a corporation, Garnishee of Ralph T. Zausch. The opinion is reported in 3 S.W.2d 272, and the facts are stated in said opinion, as follows:
"This is a garnishment proceeding. On March 23, 1925, plaintiff obtained a judgment against defendant Ralph T. Zausch, for $3000 in the Circuit Court of the City of St. Louis, in an action brought to recover damages for personal injuries accidentally suffered by plaintiff as a result of being struck by an automobile operated and driven by defendant on a public street in said city. Execution was issued upon said judgment, and the Indemnity Company of America was summoned as garnishee. The trial of the garnishment proceeding, which was had before the court without a jury, resulted in a judgment in favor of the plaintiff against the garnishee for the sum of $3421.15, being the amount of the judgment in said action for damages, with the interest accrued thereon, and the costs incurred in said action. The garnishee appeals.
"The plaintiff grounds his right of recovery against the garnishee upon a liability insurance policy issued by the garnishee to defendant prior to the accident for which plaintiff obtained judgment against defendant as aforesaid. The provisions of the policy, so far as material here, are as follows:
"`The Indemnity Company of America, hereinafter called the company, in consideration of the conditions, exclusions, limitations, premiums, warranties, and statements in the schedule, hereinafter mentioned, hereby agrees with the assured named and described herein, hereinafter called the assured, as follows:
"PART V. LIABILITY.
"`13. To indemnify the assured against loss resulting from claims upon the assured for damages on account of bodily injuries and/or death accidentally suffered or alleged to have been suffered by any person or persons not in the employ of the assured or otherwise herein excepted (see paragraph 22), by reason of the ownership, maintenance and/or use of the automobile described hereon. . . .
"`ADDITIONAL COVERAGE FOR LIABILITY AND PROPERTY DAMAGE.
"`17. As regards Part Four, Property Damage, and Part Five, Liability, the company further agrees: (a) To defend in the name and on behalf of the assured, any suit brought against the assured to enforce a claim covered by said Parts Four and Five, whether groundless or not; (b) Also to pay all expenses incurred by the company in defending any suit including any costs taxed against the assured, and the interest accruing on verdict or judgment; . . . (d) Also as regards Part Five, Liability, to reimburse the assured for the expense incurred in providing such immediate surgical relief as is imperative at the time of the accident. . . .
"`22. As regards PARTS FOUR AND FIVE, applying to Property Damage and Liability, and in addition to the exclusions mentioned in Paragraph 19, the policy does not cover and the company shall not be liable: [Here follow clauses a, b and c, not material to the decision of the issues involved on this appeal.]
"`SPECIAL PROVISIONS
"`24. THE FOLLOWING SPECIAL PROVISIONS APPLY TO PARTS FOUR AND FIVE PERTAINING TO PROPERTY DAMAGE AND LIABILITY, and shall be considered as an addition to the General Provisions stated in Paragraph 25, and are subject to all exclusions and limitations stated herein pertaining to these parts: [Here follow clauses a, b and c, requiring the assured to give the company immediate notice of any claim for damages or suit against him, excluding him from interfering in any negotiation for settlement, or in any legal proceedings, and from incurring any expense except for such immediate surgical relief as is provided in Paragraph 17-c, and giving the company exclusive control of all investigations, adjustments, settlements or defense of suits.]
"`(d) LIMITATION — No action to recover for any loss and/or expense covered by this policy, arising or resulting from claims upon the assured for damages, shall be sustainable unless brought by the assured for loss and/or expense actually sustained and paid in money by him after actual trial of the issue.'
"The policy is divided into five parts, twenty-five numbered paragraphs, and numerous lettered clauses, which point to each other, fore and aft, by an intricate system of cross-references, to explain, supplement, or limit their meaning. Part V is six times designated in the policy as relating to liability, and four times such designations are made in large capital letters. We call attention to these features as pertinent to the contention of appellant that the policy properly construed undertakes to indemnify the insured merely against loss sustained by him by the actual payment in money of a claim against him, and does not undertake to indemnify him against liability, and that its demurrer to the evidence ought to have been sustained on that ground."
The Court of Appeals affirmed the judgment on two grounds: First, that by its refusal and failure to defend the suit brought against the assured, relator waived the condition that the judgment must be paid by the assured in money; second, that the indemnity is against liability and not merely against loss from liability.
Relator does not challenge the rule first announced as being in conflict with a decision of this court, but challenges the rule second announced as being in conflict with the following decisions of this court: State ex rel. Western Automobile Insurance Co. v. Trimble, 297 Mo. 659, l.c. 670-2, 249 S.W. 902; State ex rel. American Fire Insurance Co. v. Ellison, 269 Mo. 410, l.c. 420, 190 S.W. 879; State ex rel. New York Life Insurance Co. v. Trimble, 306 Mo. 295, l.c. 309, 267 S.W. 876. These cases hold that unambiguous contracts of insurance are to be construed by the same law by which other contracts are construed.
The Western Automobile case was a suit on a contract of indemnity insurance. The company was a mutual association, and the certificate of membership directed the appellant to the by-laws of the association as containing the contract of insurance. The insuring clause of said contract is set forth in the by-laws, as follows:
"Each member of this Association will be indemnified for any sums paid by such member in satisfaction of any judgment imposed by law upon such member on account of bodily injuries or death, suffered or alleged to have been suffered, by any person or persons, through the ownership, maintenance or use of the automobile enumerated and described in such member's application for membership in this Association while such automobile is within the limits of the United States of America or Canada."
Several paragraphs following this clause and leading to the no-action clause contain provisions limiting the liability of the company to the amount of money paid by the member in satisfaction of a judgment.
There was no contention in said case in the Kansas City Court of Appeals or in this court that the contract was an insurance against liability. Both courts ruled it was a contract against loss from liability. The meaning of the word "money" in the no-action clause was the only question in that case. In the instant case the respondents held that the relator contracted against liability. Relator contends it contracted only against loss. In an effort to similize the insuring clause of the contracts, the relator claims to set out the relative provisions of said clauses of the policies, as follows:
"A. The insuring clause of the Pickel (Western Auto case) policy provided that its purpose was to `indemnify and protect' the member against claims for `loss and damage.'
"B. The insuring clause of Zausch's (instant case) present policy agreed `to indemnify the assured against loss resulting from claims.'"
The words quoted in Paragraph A are not found in the insuring clause of the Western Auto contract. They are quoted from section 3, article 1, of the by-laws. We considered said section in ruling the Western Auto case, and said:
"It merely stated the general object in view. It does not purport either to define the association's liability, or to state the condition thereof, or to `guarantee' to the member any payments whatever. It has nothing in it which has any tendency to exclude from the by-laws conditions and limitations which follow this merely and patently introductory paragraph. It cannot aid in the construction of the subsequently written provisions pertaining to liability and actions."
It will be noted that by the insuring clause in the Western Automobile case the company agrees to indemnify for any sums paid by the member in satisfaction of any judgment imposed by law upon such member; whereas, in the instant case the insuring clause provides for indemnity against loss resulting from claims upon the assured for damages. Relator argues that by these words it agreed "to indemnify the insured against claims for damages paid by him and not to indemnify him against liability." It must be held that if relator intended to contract only against loss, it could easily have done so by the use of plain and unambiguous words. That it did not do so is made apparent by relator's effect to explain the meaning of the words.
In addition, the files of this court in the Western Automobile case disclose that the company did not agree to defend suits, but it was agreed that it "may" do so. The Western Automobile Company refused to defend the suit, but did not thereby breach the contract of insurance; whereas the company in the instant case agreed to defend suits, and by its refusal to do so was guilty of a breach of contract.
For these reasons the opinion of the Court of Appeals is not in conflict with the decisions of this court in either the Western Automobile, American Fire Insurance Company, New York Life Insurance Company cases, or with the decisions of this court holding that in order "that an indebtedness may be liable to garnishment, it must be shown to be absolutely due as a money demand, unaffected by liens or prior encumbrances or conditions of contract."
It follows our writ should be quashed. It is so ordered. All concur, except Blair, J., who dissents.