American Automobile Insurance v. Fidelity & Casualty Co.

Digges, J., delivered the opinion of the Court. The single question for determination on this appeal, as presented by the action of the lower court on the prayers, is: Did the action of the assured in assuming liability in the manner shown by the record render the policy void and release the insurer? The facts which give rise to this question may be briefly but substantially stated as follows: Dr. Chester Riland was the owner of a Flint sedan, which on the night of December 9th-10th, 1926, was parked on the north •side of Edmondson Avenue, Baltimore City, in front of the doctor’s residence, with the parking lights burning. Dr. Riland had a policy of insurance in the Fidelity & Casualty 'Company of Bew York, one of the appellees, by which that ■ company contracted to pay any loss, to the extent of the ⁶³³ policy, occasioned by damage through collision to his car..

Lloyd M. Joyner at the time was the owner of a Buick sedan, which was insured by the American Automobile Insurance Company, the appellant. That policy of insurance provided: “American Automobile Insurance Company, in consideration of the premium and of the statements set forth in the schedule of statements, which the assured makes and warrants to be true by the acceptance of this policy, does hereby insure the assured named and described in said schedule for the term therein specified, against direct loss or expense arising or resulting from claims upon the assured for damages by reason of the ownership or maintenance of any automobile1 described in Statement IY of the schedule and the use thereof for the purposes described in Statement Y of the schedule, *■ * * an airLOurLt not exceeding the limits hereinafter stated,, if such claims are made on account of * * * damage to or destruction of property of others, including the loss of use thereof, * * * arising from an accident occurring while this policy is in force.” The contract further provides: “This policy is issued by the company subject to the following conditions, limitations and agreements which are a part of the policy, and to' which assured, by the acceptance of this policy, agrees: * * * The assured shall not voluntarily assume any liability or interfere in any negotiations for settlement or in any legal proceeding or incur any expense or settle any claim, except at assured’s own cost, without the written consent of the company previously given; the company reserves the right to settle or defend, as the. company may elect, any such claim or suit brought against the assured.” And further, under the head, Insolvency Endorsement: “In consideration of the premium rate at which this policy is written, and subject to all its other terms, conditions, limitations and agreements not inconsistent herewith, it is understood and agreed that the insolvency or bankruptcy of tbe assured shall not release the company from the payment of damages for injuries or death sustained or loss occasioned within the provisions of this policy; and the prepayment of any judgment that may be recovered against the assured upon any claim ⁶³⁴ covered by this policy is not a condition precedent to any right of .action against the company nnder this policy, bnt the company is bonnd to the extent of its liability nnder this policy to pay and satisfy such judgment; and an action may be maintained upon such judgment by the injured person, or his or her heirs or personal representatives, as the case may be, to enforce the liability of the company as in this policy set forth and limited.” The amount of the insurance was $1,000, and the policy covered the period of one year, beginning at noon, March 6th, 1926. On the night above stated, the car of Dr. Eiland, being so parked, was run into and damaged by the automobile of Joyner while being driven by him, at about 12:15 a. m. The collision resulted in personal injuries to Joyner, as well as damage to Dr. Eiland’s car.

After the accident Joyner was taken to a hospital for treatment, where he remained three or four days. There is testimony in the record that Joyner was either drunk or had been drinking at the time of the accident. Dr. Eiland notified his insurer of the accident, and William Eink, its claim adjuster, was sent to the hospital to interview Joyner, between 8 and 9 o’clock a. m. on December 10th. Eink saw and talked to Joyner in the hospital, in the presence of a police officer and Dr. Murray, who was the father-in-law of Joyner.

At that interview Joyner signed the following statement: “I, Lloyd W. Joyner, 510 Saint George Eoad, Baltimore, Md., the undersigned, being of sound mind, agree to pay for the repairs to Dr. Chester Eiland’s Flint sedan that was damaged by being struck by my Buick sedan that was driven by me on December 10, 1926, at 12 :15 a. m., while his car was parked on the north side of Edmondson Avenue at the curb in front of Dr. Chester Eiland’s residence, 2532 Edmondson Avenue. I also agree to pay him for loss of use of his car. I agree to pay all expenses for repairs and loss of use. I was at fault in this accident.” This statement was signed by Joyner, witnessed by Eobert C. Shipley and Officer Brown, and acknowledged by Joyner as follows: “State of Maryland, City of Baltimore: On this ⁶³⁵ lOth day of December, 1926, personally appeared before me,.

Lloyd W. Joyner, who read the above statement, signed it in the presence of myself and witnesses. William Fink, Rotary Public. Seal.” It appears from the testimony of some of the witnesses that this statement was read by Joyner; but at least it is uncontradicted that it was 'read to him by Dr. Murray. The Fidelity & Casualty Company of Aew York had the damaged car of Dr. Riland removed from the street to the Autogenous Company, where it was repaired, the cost of such repairs being $947.15.

The appellant was notified of the accident by Joyner or his attorney j and on December 22nd, 1926, Leo A. Hughes, claims attorney for the appellant, wrote to Joyner, stating: “This is to advise you that the American Automobile Insurance Company disclaims liability to you on policy number 4191013 for any damages you may sustain by reason of an accident occurring on or about the 10th day of December, 1926, wherein the property of one Doctor Chester Riland was damaged.” Subsequently, on January 19th, 1927, the appellees sued Joyner in the Baltimore City Court (of which suit the appellant was notified), and it resulted in a judgment against Joyner for $1,196.90. A writ of fieri facias was issued on that judgment, and returned "nulla bona”; whereupon, on February 19th, 1929, the present suit was instituted by the appellees against the appellant, and resulted in a verdict and judgment for the plaintiffs. From that judgment the present appeal is prosecuted. The trial court refused the prayers of the defendant asking for an instructed verdict in its favor, and granted all of the prayers of the plaintiffs, among which was: “At the request of the plaintiffs, the court instructs the jury that the statement dated December 10th, 1926, signed by Lloyd A. Joyner, witnessed by Officer Brown and others, offered in evidence, is not a violation of the policy provision quoted in defendant’s third plea sufficient to constitute a breach of the said policy and discharge the insurer from liability thereunder.” The third plea referred to in that prayer alleged that the statement of Joyner breached the terms of the con ⁶³⁶ .tract, and relieved the appellant from any obligation under the policy on account of the alleged damage sustained.

It is apparent that, if there was error in granting the plaintiff’s third prayer above quoted, there was also error in refusing the prayers of the defendant directing a verdict in its favor. The question therefore resolves itself into this: Is the legal proposition contained in the plaintiffs’ third prayer, .as granted by the court, correct ? We do not think that it is. It cannot now be questioned that in this state policies of insurance are construed as other contracts, and that, when the language employed by the parties is clear and free from ■ambiguity, it is to be -given its usual and ordinary significance, thereby effectuating the intent of the parties as thus plainly expressed.

It is not for the court to conclude the matter by determining whether or not a clear and plain provision of the contract, which is not contrary to or forbidden by law, is a proper or necessary part of the contract. That is .a matter for the parties themselves. The law presumes the insurer and insured understood their contract as executed, ■and every intelligible condition embraced therein was inserted by design and intended to accomplish some material purpose; and it has been repeatedly held by this court that when the terms of a contract are clear and unambiguous, ■courts have no right to make new contracts for the parties, or ignore those already made by them, simply to avoid seeming hardships; and that insurance contracts are construed with the view of arriving at the intention of the parties as gathered from the whole instrument. Joffe v. Niagara Fire Ins.

Co., 116 Md. 155 ; Miller v. Home Ins. Co., 127 Md. 140 ; Frontier Mortgage Co. v. Heft, 146 Md. 1 . The provision in the contract agreed to by the parties, and ■expressed in unmistakable terms, was that the assured should not voluntarily assume any liability, or interfere in any negotiation for settlement, or in any legal proceeding, or incur ■any expense, or settle any claim, except at his (the assured’s) own cost, without, the written consent of the company previously given. That was one of the conditions of the contract to which the assured agreed, not only by the acceptance of the ⁶³⁷ policy but by the following provision in the policy: “This policy is issued by the company subject to the