London & Lancashire Indemnity Co. v. Cosgriff

⁶⁶² Boyd, C. J., delivered the opinion of the Court. This is an appeal by the London and Lancashire Indemnity Company of America, of New York, garnishee of An.gelia R. Carman, from a judgment of condemnation rendered against that company in favor of David W. Oosgriff. Mrs. Carman, who was the owner of an automobile, had an accident on the second day of September, 1919, by which the appellee ufas injured. He sued her and recovered judgment in the Circuit Court for Montgomery County of $7,500, with interest from the 3rd day of January, 1922, and costs.

Mrs. Carman had an automobile policy which was issued by the appellant, and an attachment was issued on the judgment, and, as shown by the return, it was laid in the hands of the appellant on the 4th day of February, 1922. The1 company, by its attorneys, James J. Carmody and John A. Garrett, appeared and filed a plea of nulla bona on the 13th of March, 1922, and the same day the plaintiff filed interrogatories to be answered by the gmmishee. It answered the interrogatories, denying any liability to the defendant, Mrs. Carman, or that it had paid her any money, or that it had delivered to her any goods or property, or to any other person for her, hut stated that it had issued “a policy of indemnity” to her, a copy of which was filed. On the 16th day of November, 1922, the garnishee filed a motion to quash the attachment on the grounds: First, because there was not a sufficient affidavit filed; second, because the voucher attached to the affidavit was not a sufficient cause of action; third, because the warrant on which the attachment was issued was fatally defective on its face, inasmuch as it does not appear to have been properly issued; fourth, because the copy of the indemnity bond filed in this case by the garnishee clearly and fully sets out the undertaking of the garnishee to the defendant, which is to indemnify the said defendant upon contingency, which contingency has not occurred, and there is, therefore, no liability to the defendant and no money or credits to which the defendant is entitled from the g’amishee. ⁶⁶³ The court overruled the motion to quash the attachment, the garnishee excepted, and the court’s action is presented by the first bill of exceptions.

As this was an attachment on a judgment, there w!as no affidavit, voucher or warrant necessary, and therefore the reasons for filing the first, second and third grounds for the motion to quash are not apparent. Fox would the fourth be good cause for quashing the attachment. The writ of attachment is: not in the record, and although a garnishee under our practice can make a motion to quash such a writ, if there is any ground for it, there is nothing before ns to show any irregularity in this writ. The fourth reason assigned would not he cause for quashing the attachment., hut the question intended to he presented hy it can he considered under the plea of nulla bona, as apparently was done.

A petition to quash and set aside the attachment was filed on the 17th day of Fovember, 1922, and was., according to the appellant’s brief, on the theory that section 20 of article 9 of the Code was applicable, hut without deeming it necessary to discuss that, it is clear, from what we said with reference to the fourth reason assigned for the motion to quash referred to above, that, in our opinion is not raised hy such a petition, although the construction of the policy was before the court under the issues made hy the plea of nulla bona filed hy thei gamisheei, and subsequent pleadings. That petition was., therefore, properly refused. That disposes of the questions, presented hy the first and second hills of exceptions, and as the important questions involved in the case are presented hy the rulings on the prayers., we need not make further reference to the motion of the plaintiff for a judgment of condemnation, which does, not appear to have been specifically acted on hy the court. Inasmuch as there¡ was no evidence included in the: bills, of exceptions in reference to- tire policy, we do not see the necessity of hills of exceptions, as. for aught that appears in them the assured may have paid the judgment against her, or some part of it, and the mere fact that this policy wasi issued would not be ground for a motion to quash, hut it would not he necessary ⁶⁶⁴ to refer further to the subject, -without pointing out when bills of exception are necessary.

It appears from the docket entries that on March 25th, 1923, the case was submitted to a full bench. Testimony was. taken and two prayers, numbered 1 and 2, were offered by the plaintiff and were granted by the court. The ruling on them constitutes the third bill of exceptions. Special exceptions to those prayers were filed, but were overruled, and the action of the court presented by the fourth and fifth bills of exceptions.

A judgment of condemnation in favor of the plaintiff for $5,393.32, with interest from the 10th of May, 1923, and costs., was entered. From that judgment this appeal was taken. The proper construction of the policy of indemnity is the important question before us. The garnishee claims that it is not liable because the insured has. not paid the judgment against her or any part of it.

Before discussing that question it will be convenient to refer to Hodge and McLane on Attachments, sec. 148, and cases cited in the notes, to show that “the general rule is that the right of the attaching creditor to recover against the garnishee depends upon the subsisting rights between the garnishee and the debtor in the attachment, and the. test of the garnishee’s liability is that he has funds, property or credits in his. hands, belonging to the debtor, for which the latter would have the right to sue. The plaintiff is subrogated, as against the garnishee, to the rights of the debtor, and can recover only by the same right, and to the same extent, as the debtor might recover, if he were suing the garnishee. But the above general rule is subject, of course, to some exceptions.” A number1 of exceptions, are mentioned by the authors in that section, amongst others, that in some cases an attachment may be laid in the hands of a garnishee before the debt owing by the latter to the debtor in the attachment has matured; that equitable interests, which can ordinarily be enforced only in a court of equity, may be attached, and that the plaintiff’s right to a judgment of condemnation does ⁶⁶⁵ not depend upon there being funds or credits in the hands of the¡ garnishee at the time of the service of the writ, hut upon whether funds have since come into his hands, or are in his hands at the time of trial. Although it is- contended in the brief of the company that notice was not given to it a.s required by the policy, there does not seem to- be any substantial foundation for that.

The provisions relied on are: “Upon the occurrence of an accident, or notice of any claim, the assured shall give immediate written notice thereof to the company or its duly authorized agent. If suit is brought the summons or other process shall tie immediately forwarded to the company.” ZXo- special reliance was placed on an a-lleg;ed failure to give notice in any of the papers filed by tbe appellant, and it is shown that the company took charge of the trial of the suit between the injured party and the assured, and the company’s regular attorney and another attorney employed by it to- defend, and, as far as appears from the record, no objection whatever was made by it to any omission on the part of the assured to notify it of the accident. There is no provision in our statute, or requirement under onr practice, to leave the summons or other process with the defendant when a suit at law is brought against an individual. But the evidence shows that the- accident which formed the basis of the suit against Mrs. Carman was in the State of Connecticut; that she did not know that anyone was injured, although she admits that Mr. Oosgriff was the one that figured in the accident; “that she notified the company of the accident through Mr. Malcolm McOonihe about two- or three days after the accident, and after the accident she got a communication to appear in court.

After that, Mr. Carmody called; that she had not known Mr. Carmody prior to that; that she told him the particulars of the case, but did not know whether they were reduced to writing.” ⁶⁶⁶ Mr. MoConihe testified as follows: “That he resided in Washington and that he knew Mrs. Carman, and he received a notice from the defendant about an accident. He testified that Mrs. Oarman came down to the bank in a day or two after the accident and that she and he notified M. M. Parker and Company, agents of the company, of the accident, but did not recall whether the notice was in writing or not; that this policy was issued by M. M. Darker & Company through his instructions, and that he and Mrs. Carman notified them of the accident. He testified further that Mrs. Carman bought a machine under a chattel mortgage, and the Merchants’ Bank loaned the money and that whenever the bank loans money on machines they have them insured for their own protection; that Mrs. Carman had paid for the machine long ago.” The record does not very clearly show what Mr. Mc-Conihe’s connection with the matter was, but apparently he either represented the bank which loaned Mrs. Carman the money with which to buy the automobile, or was either an agent himself of the indemnity company, or made some arrangement with the company’s agent about policies to be furnished persons borrowing money from the bank. There can he no doubt, however, that the company waived any question about the notice in writing, as it took charge of and tried the case on the part of the defendant through its own attorneys.

It denied in this case any liability and did not rely on the question whether there had been such notice to' it as the policy provided for. We will now consider what we regard as the real question In the case. The policy begins with this statement: “In consideration of the premium and the warranties of the assured, hereinafter set forth and made a part of this contract, hereby agrees to indemnify the person, firm or corporation named in the schedule, hereinafter called the assured, against loss from the liability imposed by law upon the assured for damages ⁶⁶⁷ on account of bodily injuries, including death accidentally suffered by any person or persons by reason of the ownership or maintenance of any automobile enumerated in the schedule during the period hereinafter stated and for the purposes hereinafter described.” There have been a great many decisions rendered by the courts with reference to the proper construction of indemnity contracts, although there are comparatively few involving damages done by automobiles), when the great number of them now using our public highways are remembered. It may be a surprise to many owners of automobiles to find that policies such as we now have before us do not afford them the protection that they supposed they had, but however that may be, we cannot change the contract between the parties to meet special circumstances, if the contracting parties have not protected themselves.

In 31 C. J. 419, it is said: “Generally speaking, the word (indemnity) carries with it two meanings: (1) In the sense of giving security; and (2), in the sense of relieving a party from liability for damage already accrued; and in a broad and general sense, indemnity is¡ that which is given to a person to prevent his suffering damage.” In section 3 on that page, it is said: “In respect to their subject matter, indemnity contracts are of great variety; but as regards the nature of the responsibility assumed by the indemnitor, a contract of indemnity is generally either one against liability, or one against mere loss or damage; and in respect to the accrual of liability thereon, the law makes a clear distinction 'between these two forms of indemnity contracts. Whether a contract of indemnity is one of indemnity against liability, or one against mere loss or damage, depends upon the true intent and meaning of its covenant; if the contract simply indemnifies and nothing more, it is against loss or damage only; but if it binds the indemnitor to do a certain act or pay sums and the performance of the act or payment of such sums will prevent harm or injury to the indem ⁶⁶⁸ nitee, it is a contract of indemnity against liability.” It is said in section 32, page 437, of 31 C. J., that “an indemnitor’s liability to the indemnitee accrues when^ under the terms and conditions of the particular contract, the covenant of indemnity is broken, and it may be stated generally that there is a breach of the covenant and the indemnitee’s right of recovery accrues as soon as he has recovered the loss or damage against which he was to be saved harmless, or the liability against which -he was. to be protected has become fixed and absolute, and until such time there can be no recovery against the indemnitor.” In section 33, page 438, it is stated: “Where -the indemnity is against liability, the cause of action is complete and the indemnitee may recover upon the contract as soon as his liability has become fixed and established, even though he has sustained no actual loss or damage at the time he seeks to recover. Thus, under such a contract, a cause of action accrues to the indemnitee upon the recovery of a judgment against