Summary
In Farm Bureau, both insurance companies admitted their coverage and the liability of their insured for some amount of damages and both insurers engaged in extensive settlement negotiations.
Summary of this case from Westfield Ins. v. Wausau Business Ins.Opinion
No. 30555
Decided July 24, 1946.
Court of Appeals — Record to be certified to Supreme Court in conflict case, when — Section 6, Article IV, Constitution — Judges of Court of Appeals to determine existence of conflict — Certification of conflict vests Supreme Court with jurisdiction to review judgment — Finding that conflict exists, not reviewed by Supreme Court — Contribution rests upon principles of equity — One making payment, without legal liability, a volunteer — Equity will not aid volunteer — Insurer paying more than its share of loss — Not entitled to contribution from another insurer, when.
1. Section 6 of Article IV of the Constitution of Ohio provides that whenever the judges of a Court of Appeals find that a judgment upon which they have agreed is in conflict with a judgment pronounced upon the same question by any other Court of Appeals of the state, the judges shall certify the record of the case to the Supreme Court for review and final determination.
2. This provision confers exclusive plenary authority on the judges of a Court of Appeals to determine the existence of such a conflict.
3. An affirmative finding and certification by the judges of a Court of Appeals as to the existence of such a conflict vests the Supreme Court with jurisdiction to review the judgment in the case.
4. Such an affirmative finding and codification by the judges of a Court of Appeals is not subject to a review by the Supreme Court as to the existence of such a conflict. (Paragraph one of the syllabus in the case of State, ex rel. Sylvania Home Telephone Co., v. Richards et al., Judges, 94 Ohio St. 287, and paragraph one of the syllabus in the case of Flury v. Central Publishing House of Reformed Church, 118 Ohio St. 154, approved and followed.)
5. The doctrine of contribution rests upon principles of equity.
6. One who, with knowledge of the facts and without legal liability, makes a payment of money, thereby becomes a volunteer.
7. Equity will not aid a volunteer.
8. If the policy of each of several insurers limits its liability to such proportion of a loss as the amount insured by such insurer bears to the total applicable limit of liability of all valid and collectible insurance against such loss, the payment by one insurer of more than its proportion of a loss creates no right to contribution from the other insurers.
CERTIFIED by the Court of Appeals for Geauga county.
In the Court of Common Pleas the plaintiff, the Farm Bureau Mutual Automobile Insurance Company, instituted an action against the defendant, the Buckeye Union Casualty Company, to obtain a decree for contribution by reason of a loss sustained under two liability insurance policies issued by the respective companies on an automobile owned by one Harry Linden.
Findings of fact and conclusions of law were found by the trial court as follows:
"(1). On April 25, 1941, Harry Linden requested Paul Alvord, Chardon, Ohio, the agent of The Buckeye Union Casualty Company, a corporation, to place liability insurance with limits of $5,000 and $10,000 on his Plymouth coupe. Prior to this day he had advised Alvord that he had a policy that was expiring, with the Farm Bureau Mutual Automobile Insurance Company, a corporation. Also, on this day Linden paid the premium thereon.
"On April 25, 1941, Alvord wrote policy No. 504260 for Linden as requested, dated April 26, 1941, and mailed the same to Linden by letter dated April 26, 1941, inclosing therewith receipt for premium. No investigation was made by either Linden or Alvord to determine if the Farm Bureau policy had expired.
"The Farm Bureau has policy No. R-239-726A on the same automobile for Linden with limits of $10,000 to $20,000, which expired April 28, 1941.
"(2). On the night of April 26, 1941, at about 12.20 a. m., David H. Mead was driving easterly on U.S. route 322 when he discovered that he had a flat tire. He drove off the right, or south side of the pavement, clear of the paved portion of the roadway and came to a stop about half a mile west of the intersection of the state route 44 and U.S. route 322.
"He left all lights burning on his car and had a flashlight which he waved in the direction of any approaching traffic as he attempted to change his left rear tire.
"At about said time and place Harry J. Linden, approached from the west driving said Plymouth car on which said parties hereto each had outstanding policies of liability insurance, traveling at such a high rate of speed that after he saw Mead, he was unable to bring his car to a stop within the assured clear distance ahead in violation of Section 12603, General Code, and struck Mead, throwing him onto the pavement, fracturing his skull, breaking several ribs, breaking his left knee and right ankle, and tearing a hole in his side, so that he was unable to get up, and was rendered partially unconscious; his nervous system suffered shock, and he was removed in an ambulance and taken to Corey Hospital, and then to Lake County Memorial Hospital, where he suffered pain, and required three special nurses daily for nine weeks.
"He paid about $3,000 for professional services, nursing, oxygen, X-rays, hospital bills and medicines, and is still required to have further medical treatment.
"(3). During his confinement in the hospital Mead, by written instrument, made Dr. W.C. Corey, Chardon, Ohio, his attending physician, his attorney in fact to negotiate a settlement of his claim against Linden, with the two insurance companies.
"The night of the accident Linden told Dr. Corey that he was insured with the Buckeye Union, and Alvord was the agent. Dr. Corey contacted Paul Alvord, the agent of the Buckeye, who advised him that they had a $5,000 to $10,000 liability policy covering Linden's car.
"Thereafter, Paul Alvord took an accident report from Mr. Linden for the Buckeye Union, and sent the original to the home office at Columbus. Afterwards, Joe Haverich, a claim adjuster for the Buckeye Union took a statement on the accident from Mr. Linden, and then contacted Dr. Corey, who advised him of his authority to settle for Mead, and showed his power of attorney to Haverich.
"Later Haverich stated to Dr. Corey that Farm Bureau also had a policy covering the same car, and that his company by reason of the variation in coverage amounts would pay 50 cents for every $1 paid by Farm Bureau. He had several conferences with Dr. Corey advising always that he would pay, but to work out a settlement with Farm Bureau first if he could.
"Dr. Corey negotiated a settlement of the liability of Farm Bureau, with Ward Lawrence their adjuster, finally for $4,500, and about the fore part of July obtained releases in that amount for execution by Mead for $4,400 and $100 by Mrs. Mead for loss of services, to fully protect the company.
"When Dr. Corey advised Mr. Haverich of Buckeye Union of the settlement, Haverich asked him to get re-releases for him also, similar to those of Farm Bureau, but said he would have to notify his company first, before he made payment.
"Thereafter, on July 12, 1941, Dr. Corey had the Farm Bureau releases executed by Mead and his wife, and placed them in his safety deposit box until he got the others from Haverich executed. Shortly thereafter Haverich told Dr. Corey that his company now refused to pay anything.
"Discussions over the co-insurance were had between the two companies and finally Farm Bureau advised Buckeye they were going to settle the whole liability for $4,500 and hold Buckeye for their proportion by way of contribution toward the settlement made.
"Finally on August 6, 1941, with consent of Mr. Mead, Dr. Corey made a complete settlement with Farm Bureau of the Linden liability, for the sum of $4,500, and paid $4,400 to Mr. Mead, and $100 to Mrs. Mead taking the releases above referred to therefor.
"Farm Bureau then demanded that Buckeye Union contribute their portion of the co-insured loss in the amount of $1,500 and when they refused started this suit in equity for contribution.
"About October 31, 1941, Buckeye Union and Harry Linden, executed an agreement attempting to postpone the date of their policy until after the date of the accident, and attached an endorsement to the Linden policy extending the expiration date to April 28, 1942.
"Conclusions of Law."The court, after careful review of all of the cases cited by counsel for plaintiff and defendant, and numerous other cases he has been able to find upon the subject, comes to the following conclusions of law.
"(1). The plaintiff and defendant were on the 26th day of April 1941, co-insurers on separate contracts of insurance for liability and property damage, on the Plymouth coupe owned and operated by Harry Linden, in the respective amounts as follows, to wit: The Farm Bureau Mutual Automobile Insurance Company, in the amount of $10,000 and The Buckeye Union Casualty Company, in the amount of $5,000. * * *
"(2). The court further finds that David H. Mead parked his car legally on said highway, and that he was in the exercise of ordinary care in the changing of said tire, in that he left all of his car lights burning and waved a lighted flashlight at approaching traffic and particularly at Harry Linden.
"The court further finds that Harry Linden was driving at such a speed that he was unable to bring his car to a stop within the assured clear distance ahead, and struck Mead, and that therefore he was negligent as a matter of law, and his said negligence was the proximate cause of the injuries to Mead at said time and place, and therefore liable for damages as a result thereof. * * *
"(3). The court further finds that plaintiff settled and paid in full all damages as a result thereof in the sum of $4,500, after timely notice to defendant, and obtained absolute and complete releases therefor, which payment the court finds to be fair and reasonable.
"The court therefore finds that plaintiff is entitled to contribution from defendant, and plaintiff should recover of said defendant, as its contributing share, its proportion thereof in the sum of $1,500 and costs. * * *
"Journal entry may be prepared in conformity with these findings, to which defendant may reserve exceptions."
The following decree was rendered in favor of the plaintiff:
"This cause came on to be heard on the pleadings and evidence, and on consideration whereof the court finds that the plaintiff and defendant were on the 26th day of April, 1941, co-insurers on separate policies of insurance for liability for personal injury and property damage, on the Plymouth coupe of Harry Linden in the respective amounts as follows to wit: The Farm Bureau Automobile Insurance Company, in the amount of $10,000 and The Buckeye Union Casualty Company, in the amount of $5,000.
"The court further finds that by the negligence of Harry Linden, in the operation of said automobile at said time aforesaid, that he became legally liable for damages to D.H. Mead.
"The court further finds that plaintiff settled and paid in full all damages as a result thereof in the sum of $4,500, after timely notice to defendant, and obtained absolute and complete releases therefor, which payment the court finds to be fair and reasonable.
"The court further finds that plaintiff is entitled to contribution from defendant.
"It is therefore ordered, adjudged and decreed that plaintiff recover of the defendant, as its contributive share, its proportion thereof to wit, the sum of $1,500 for which judgment is rendered against it. * * *"
On an appeal on questions of law and fact the Court of Appeals rendered a decree for the defendant. The judges of that court also certified the case to this court for review and final determination on the ground that this decree is in conflict with that pronounced by the Court of Appeals of Cuyahoga county upon the same question in the case of the Commercial Casualty Ins. Co. v Knutsen Motor Trucking Co., 36 Ohio App. 241, 173 N.E. 241.
Messrs. Bostwick Bostwick, for appellant.
Messrs. Herbert Dombey, for appellee.
A preliminary procedural question is interposed by the defendant in the form of a motion to dismiss the plaintiff's appeal on the ground that the decree of the Court of Appeals in the instant case is in fact not in conflict with the judgment of the Court of Appeals of Cuyahoga county in the Knutsen case, supra.
Section 6 of Article IV of the Constitution of Ohio provides that "whenever the judges of a Court of Appeals find that a judgment upon which they have agreed is in conflict with a judgment pronounced upon the same question by any other Court of Appeals of the state, the judges shall certify the record of the case to the Supreme Court for review and final determination." This provision confers plenary authority on the judges of a Court of Appeals to determine the existence of such a conflict, and an affirmative finding and certification with reference thereto vests this court with jurisdiction to review the judgment in the case. Furthermore, this court is without authority to review that court's affirmative finding of the existence of a conflict. However, if the finding of the judges of a Court of Appeals is in the negative, this court nevertheless may give incidental consideration to the question of a conflict in subsequently exercising its constitutional authority to determine whether the case is of public or great general interest. State, ex rel. Sylvaina Home Telephone Co., v. Richards et al., Judges, 94 Ohio St. 287, 114 N.E. 263; Flury v. Central Publishing House of Reformed Church, 118 Ohio St. 154, 160 N.E. 679; Whipp v. Industrial Commission, 136 Ohio St. 531, 27 N.E.2d 141.
In the instant case the judges of the Court of Appeals of Geauga county found that their decree is in conflict with the judgment of the Court of Appeals of Cuyahoga county upon the same question. That affirmative finding is final and will not be questioned by this court. Hence, the defendant's motion to dismiss the plaintiff's appeal must be overruled and the court must accept jurisdiction of the case.
In the lower courts the defendant contended that the effective date of its policy was April 28, 1941, instead of April 25, 1941. The collision occurred about midnight on April 26, 1941. Thereafter the defendant and its insured entered into an agreement whereby it attempted to evade liability by changing the date of its policy to April 28, 1941 — the second day after the collision. The defendant insisted that its policy was executed and delivered under the mistaken belief on the part of both the insured and itself that the plaintiff company's policy expired April 25, 1941, instead of April 28, 1941. The defendant offered no parol evidence and but two exhibits consisting of letters written respectively by its agent and by a member of its underwriting department. Each of the lower courts very properly held that the defendant's policy was not executed or delivered by mistake. Said the Court of Appeals: "This is clearly shown by the fact that such policy was delivered after full knowledge by defendant's representative that the Farm Bureau policy did not expire until April 28, 1941." Hence, on the date of the collision the two companies manifestly were co-insurers.
With reference to the contention of the plaintiff that in equity and good conscience the defendant should be compelled to pay its proportionate share of the money paid by the plaintiff in full settlement of the claims arising out of the collision, the Court of Appeals stated that it could "readily understand the reasons for such insistence and would be moved to concur in the judgment and decree of the Common Pleas Court were it not for certain well established principles governing the right to contribution between insurers." The court then observed that these principles are stated as follows in 29 American Jurisprudence, 998, Section 1333:
"If several insurers bind themselves to pay the entire loss in case of the destruction of the subject of the insurance, and one insurer pays the whole loss, the one so paying has a right of action against his co-insurers for a ratable proportion of the amount paid by him, because he has paid a debt which is equally and concurrently due by the other insurers. But if each of several insurers contracts to pay such proportion of the loss to result from the destruction of the insured premises as the amount insured by such insurer bears to the whole insurance effected on the property, none of them has any right to contribution from the other, nor will the payment of the whole loss by any of them discharge the liability of the others, for in such a case the contracts are independent of each other; nor will the payment by one insurer of more than his share of a loss, and his assignment of his right to contribution, create any cause of action in favor of his assignee."
Similar statements appear in 6 Ruling Case Law, 1048, Section 10; 46 Corpus Juris Secundum, 150, Section 1207; 9 Ohio Jurisprudence, 669, Section 4 et seq. And in the first paragraph of the syllabus in the case of Assets Realization Co. v. American Bonding Co., 88 Ohio St. 216, 102 N.E. 719, Ann. Cas. 1915A, 1194, this court restated and approved these principles as follows:
"Where several surety companies are bound by separate instruments on account of the same principal, and each company, by its bond, limits its liability, in the event of default on the part of the principal, to such proportion of the total loss sustained by the obligee as the penalty named in its bond bears to the total amount of the bonds furnished by the principal to the obligee, the suretyship of each company is a separate and distinct transaction and the relation of co-suretyship among them does not arise, nor does the right of contribution exist."
These pronouncements are based upon the fundamental doctrine that contribution rests upon principles of equity and natural justice; that one who, with knowledge of the facts and without legal liability, makes a payment of money, thereby becomes a volunteer; and that equity will not aid a volunteer. Russell v. Failor, 1 Ohio St. 327, 59 Am. Dec., 631; Davis v. Bauer, 41 Ohio St. 257; Baltimore Ohio Rd. Co. v. Walker, 45 Ohio St. 577, 16 N.E. 475; 9 Ohio Jurisprudence, 689, Section 17; 16 Ohio Jurisprudence, 142, Section 56; 6 Ruling Case Law, 1037, 1039; 21 Ruling Case Law, 141, Section 165; 18 Corpus Juris Secundum, 8, Section 4; 46 Corpus Juris Secundum, 152.
Was the plaintiff a volunteer?
Admittedly each of the two policies here involved contains the following unambiguous provision:
"Other Insurance. If the insured has other insurance against a loss covered by this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss."
Under these provisions neither the plaintiff nor the defendant was liable for the entire amount of the loss. Each was liable for its proportion but no more. In his opinion in the case of the Assets Realization Co. v. American Bonding Co., supra, Judge Newman used the following pertinent and decisive language:
"The several bonding companies were not obligated to pay the same debt — they each agreed to pay an aliquot part — a fractional part of the total loss due to the default of the depositary. If one of these companies failed to pay its portion, such failure, in no way, affected the liability of the other companies. No duty, legal or equitable, was owing by one company to the other."
In the instant case the plaintiff contends that the settlement was negotiated with the knowledge of the defendant's representatives who promised that the defendant would pay its proportion of the loss, as it was required to do under the terms of its policy. However, it is admitted that subsequently the plaintiff was notified that the defendant refused to pay its proportion of the loss. It is admitted, too, that in spite of this notice the plaintiff thereafter proceeded to pay the entire loss — a thing which by the terms of its own policy it was not obligated to do. Thus, with knowledge of the facts and without legal liability therefor the plaintiff included in its payment the proportion for which the defendant alone was liable. Under these circumstances the plaintiff manifestly became a volunteer and hence is not entitled to contribution. The plaintiff stresses the fact of the defendant's liability for the latter's proportion of the loss. This, of course, is important. But of controlling importance, so far as the two insurance companies alone are concerned, is the fact that the plaintiff was not liable for the defendant's proportion of the loss. It must be remembered that this is not a case in which each insurer is liable for the entire loss; rather it is one in which the liability of each insurer is expressly limited to its proportion of the loss.
Under the undisputed facts the decree of the Court of Appeals was not erroneous and must be Affirmed.
Decree affirmed.
BELL, MATTHIAS and HART, JJ., concur.