#### Conold, Appellant, *v.*Stern et al., Appellees.

(No. 28436

Decided June 11, 1941.)

*356*Messrs. Burt, Carson £ SJiadrach,*for appellant.

*Messrs. Wise, Roetsel £ Maxon,*for appellee, The Ohio Casualty Insurance Company.

Hart, J.

This supplemental action was brought under Sections 9510-3 and 9510-4, General Code, to have the insurance money, provided for in a motor-vehicle-liability-insurance contract between the insurance company and the defendant, Karl Stern, applied in satisfaction of a judgment rendered in the Common Pleas Court of Summit county against defendant Stern, in an action by plaintiff for personal injuries.

In substance these sections provide (1) that in respect to every contract of insurance against third-party risks on account of bodily injury or death by accident, whenever a loss occurs on account of a casualty covered by such contract of insurance, “the liability of the insurance company shall become absolute,” and the *357payment of the loss shall not depend upon the satisfaction hy the assured of a final judgment against him for loss, or damage or death occasioned by such casualty, and that “no such contract of insurance shall be can-celled or annulled by any agreement between the insurance company and the assured, after the said insured has become responsible for such loss or damage or death, and any such cancellation or annulment shall be void”; and (2) that, upon the recovery of a final judgment against any person, firm or corporation, by any person, including administrators or executors, for loss or damage on account of bodily injury or death, if the defendant in such action was insured against such loss or damage at the time when the right of action arose, “the judgment creditor or his successor in interest shall be entitled to have the insurance money provided for in the contract of insurance between the insurance company and the defendant applied to the satisfaction of the judgment,” and, if the judgment is not satisfied within 30 days after the date when it was rendered, the judgment creditor “to reach and apply the insurance money to the satisfaction of the judgment, may file in the action in which said judgment was rendered, a, supplemental petition wherein the insurer is made new party defendant in said action,” and “thereafter the action shall proceed as to the insurer as in an original action at law.”

As was suggested by the opinion of this court in the case of *Stacey*v. *Fidelity & Casualty Co. of New York,*114 Ohio St., 633, 151 N. E., 718, “If the language of Section 9510-3 should be taken, in its literal sense, and the interpretation of the plaintiff be adopted, the insurance company would have no ground of defense, and immediately upon the occurrence of an accident, resulting in loss and damage, would be bound to pay, and all questions of contributory negligence, proximate cause, and other elements bearing upon the right to recover, would be eliminated.”

*358While the statutes in question declare that the liability of the insurance company shall become absolute, to be valid they must be interpreted to mean “ ‘that the payment of the loss shall not depend upon the satisfaction by the assured of a final judgment against him for a loss or damage or death occasioned by such casualty’ ” *(Stacey*v. *Fidelity & Casualty Co. of New York, supra),*and that the amount of loss shall not thereafter be open to dispute *(Lorando*v. *Gethro,*228 Mass., 181, 117 N. E., 185); and while Section 9510-4, General Code, provides that an injured person may, by supplemental petition, proceed against the insurance company after judgment is obtained against the insured who was responsible for the injury, this must be interpreted to mean that such right is subject to the limitations and conditions of the insurance contract entered into between the insurance company and the insured, including conditions subsequent to be performed by the insured after an injury covered by the policy occurs, which conditions become conditions precedent to a right of action on the policy. *Clements*v. *Preferred Accident Ins. Co. of New York*(C. C. A. 8), 41 F. (2d), 470; *Ocean Accident & Guarantee Corp., Ltd.,*v. *Lucas*(C. C. A. 6), 74 F. (2d), 115, 98 A. L. R., 1461; *Storer*v. *Ocean Accident & Guarantee Corp., Ltd.*(C. C. A. 6), 80 F. (2d), 470; *Western Casualty & Surety Co.*v. *Beverfordsen*(C. C. A. 8), 93 F. (2d), 166; *Myers*v. *Ocean Accident & Guarantee Corp., Ltd.*(C. C. A. 4), 99 F. (2d), 485; *Employers Liability Assurance Corp.*v. *Ryan*(C. C. A. 6), 109 F. (2d), 690. See also *Rothman*v. *Metropolitan Casualty Ins. Co.,*134 Ohio St., 241, 16 N. E. (2d), 417; *Stacey*v. *Fidelity & Casualty Co.,*21 Ohio App., 70, 152 N. E., 794, affirmed *Stacey*v. *Fidelity & Casualty Co., supra.*Otherwise, there would be no occasion for a supplemental action wherein the insurance company is made a defendant, and through service of summons upon it is *359subjected to an independent judgment, all as provided for by tbe statute. Garnishment would be sufficient.

Tbe conditions and limitations of tbe policy are en-forcible, not only against tbe insured but against all persons who seek relief under it. Otherwise, tbe statute would violate tbe due process clause of tbe Constitution. *Stacey*v. *Fidelity & Casualty Co. of New York, supra.*

Tbe authorities are in practical unanimity on this subject. A clause in an insurance policy requiring tbe insured’s cooperation, aid and assistance in a defense of an action against him is a material condition of tbe policy, tbe violation of which by tbe insured forfeits bis rights to claim indemnity under tbe policy. It is a condition precedent, failure to perform which, in tbe absence of waiver or estoppel, constitutes a defense to liability on tbe policy. *Stacey*v. *Fidelity & Casualty Co. of New York, supra; Royal Indemnity Co.*v. *Morris,*37 F. (2d), 90, *certiorari*denied, *Morris*v. *Royal Indemnity Co.,*281 U. S., 748, 74 L. Ed., 1160, 50 S. Ct., 353; *Bachhuber*v. *Boosalis,*200 Wis., 574, 229 N. W., 117; *Metropolitan Casualty Ins. Co.*v. *Blue,*219 Ala., 37, 121 So., 25; *Guerin*v. *Indemnity Ins. Co. of North America,*107 Conn., 649, 142 A., 268; *Coleman*v. *New Amsterdam Casualty Co.,*247 N. Y., 271, 160 N. E., 367, 72 A. L. R., 1443.

And tbe insured’s failure to comply with tbe cooperation clause in bis indemnity insurance policy constitutes a good defense to bis insurer as against a person injured by the fault of tbe insured, seeking, under and by virtue of tbe statutes in question, to recover against tbe insurer for bis injury. *Stacey*v. *Fidelity & Casualty Co. of New York, supra; Luntz et al., Exrs.,*v. *Stern,*135 Ohio St., 225, 20 N. E. (2d), 241; *Bachhuber*v. *Boosalic, supra; Metropolitan Casualty Ins. Co.*v. *Blue, supra; Coleman*v. *New Amsterdam Casualty Co., supra; Lorando*v. *Gethro,*228 Mass., 181, 117 N. E., 185, 1 A. L. R., 1374; *Seltzer*v. *Indem**360*nity Ins. Co. of North America,*252 N. Y., 330, 169 N. E., 403.

The plaintiff contends, however, that under the statute her rights in the policy were fixed at the time her cause of action arose against the defendant Stern, which is the date of her injury, or, at the latest, that her rights were fixed as of the date her original action was filed; that up to that time the alleged lack of cooperation on the part of Stern had not taken place; that the alleged lack of cooperation, which was the subject of litigation in the case of *Luntz et al, Exrs.,*v. *Stern, supra,*culminating in the judgment which is set up as a defense in the supplemental answer herein, did not occur with reference to or in connection with her claim against Stern; and that such lack of cooperation as to the Luntz claim cannot affect her right to recover on the policy issued by the insurer.

It is apparent that the rights of the plaintiff must be based upon the terms of the contract of insurance between the insurer and the insured, and that this contract must be valid and in force and effect at the time she seeks to enforce her claim under it. Cooperation of the insured with the insurer, in the defense of any claim asserted against it, is alleged to be one of the conditions of the policy. When, as alleged, that condition was broken, the policy came to an end, if the insurer so elected, and it did so elect. The date of the accident or date when the injured parties may acquire a potential interest in the proceeds of the policy has nothing to do with fixing the time when the policy may become inoperative or void by failure of the insured to perform conditions subsequent therein, except that under the statute the policy may not be cancelled or avoided by agreement of the parties to it.

It is conceivable that the policy might be valid and in force when one judgment creditor of the insured succeeds in asserting his rights against the insurer, and that by reason of a subsequent breach of the con*361tract through failure of the insured to perform a condition subsequent,, the policy might thereafter become void before another judgment creditor is able to enforce his claim against the insured and for that reason fail. In other words, the failure on the part of the insured in this case, without collusion or fraudulent conduct with the insurer, to perform conditions subsequent in relation to the claim of *any*judgment creditor of the insured arising under the policy of insurance must affect all such claims thereafter asserted, because if the policy, which, from the pleadings in this case, seems to have been an indivisible contract and to have been declared null and void as such, becomes void by nonperformance of the insured, it is void as to all parties who may thereafter claim under it.

The supplemental answer of the insurance company to the supplemental petition of the plaintiff in this case pleads as a bar the judgment in its favor in the case of *Luntz et al., Exrs.,*v. *Stern,*No. 27192 in this court, *supra,*in which the plaintiffs, executors of Luntz, were denied a recovery against the insurance company because Stern had failed to cooperate with the insurance company in defending the Luntz action against him. The insurance company here claims that the judgment in its favor in the supplemental action in the *Luntz case*is determinative of this action in its favor because Stern is bound by that judgment, and *a fortiori*the plaintiff is. likewise bound because her right is dependent upon the validity of the insurance contract as between the insurance company and Stern, an issue of fact which was determined in that action. On the other hand, the plaintiff claims that the judgment in the *Luntz case*is not *res judicata*against her because she was not a party to that action. Does the supplemental answer of the insurance company to the supplemental petition of the plaintiff herein set out a good defense? This, it is submitted, is the crucial issue in this case.

In the case of *Wright, Admr.,*v. *Schick,*134 Ohio St., *362193, 16 N. E. (2d), 321, 121 A. L. R., 882, this court held that:

> “If, in such an action, the defendant and the insurer were in reality adversaries on the controlling issue as to whether the insurance policy was in force at the time of the plaintiff’s injuries, and such issue is in fact litigated and finally determined, it is *res judicata*as between defendant and the insurer in any subsequent action wherein the defendant and the insurer are aligned as adverse parties on such issue.”

And. this court further held that:

> “When the plaintiff recovers a final judgment against the insurer upon the sole basis that the insurance policy was in force at the time of the injuries, such adjudication is determinative of the result in an action brought under Section 9510-4, General Code (108 Ohio Laws, pt. 1, 386), by another plaintiff who was personally injured by the defendant at the same time and in the same occurrence as the plaintiff first mentioned, and in which latter action the defendant and the insurer are again opposing parties on the controlling issue as to whether the insurance policy was operative at the time of the injuries.” See, also, *Ohio Casualty Ins. Co.*v. Gordon, 95 F. (2d), 605, 609.

These decisions are not on the ground that the judgment in favor of the plaintiff against the insurance company in the first action is *res judicata*directly in favor of the plaintiff in the second action, but on the ground that the judgment in the first action operates asa bar against the insurer in favor of the insured. It is true that in the *Schick case*above cited neither the causes of action nor the parties plaintiff were the same in the original actions; nevertheless, the judgment in the supplemental action in the first ease was held to estop the insurance company from again claiming the invalidity of the insurance contract in the second supplemental action. It is well recognized that a final judgment or decree of a court of competent jurisdic*363tion upon the merits of a case is a "bar to any future action between the same parties or their privies upon the same cause of action.; but it must also be recognized that a point or a fact which was actually and directly in issue in a former action and was there passed upon and determined by a court of competent jurisdiction cannot be drawn in question in any future action between the same parties or their privies, whether the cause of action in the two actions be identical or different. In the first instance, the *res*which is *judicata*is the cause of action, but in the second, the *res*which may be *judicata*is the particular issue or fact common to both actions. 2 Black on Judgments (2 Ed.), 764, Section 504; *Keith*v. *Wiliers Truck*Service, 64 S. D., 274, 266 N. W., 256, 104 A. L. R., 1471; see annotation 88 A. L. R., 574.

While the insured and insurer in the *Schick case*were joined as codefendants in the first supplemental action, they were, nevertheless, adversary parties because the question of the validity of the insurance contract and the question as to whether the insured was indemnified by such contract were involved and decided, and since the question as to whether the policy was in effect had been litigated between them as adversaries in the first supplemental action in favor of the insured, it could not be raised again in the second supplemental action in which they were likewise co-defendants. The plaintiff in the second action, Bertie Wright, who had also been injured by the insured, had the benefit of the application of the doctrine of estoppel by judgment, not in her own right, but as a result of the litigated fact in favor of the insured in the first action to whom the benefit of *res judicata*was accorded in the second action.

In the case at bar, for like reason, the finding against the insured in the *Luntz case*as to the validity of the insurance contract must operate conversely as *res judicata*against him and in favor of the insurance com*364pany in the present case. Restatement of Judgments (Tentative Draft No. 1), 130, Section 330. Does it operate as an estoppel as well against the plaintiff, Helen Conoid, who was not a party to the Luntz action? May she have the question of the validity of the insurance contract relitigated in this action, or do her rights in the contract fall with those of the insured?

The supplemental petition of the plaintiff in order to make out a cause of action against the insurance company pleads as an essential allegation not only that she had secured judgment against Stern but that at the date of her accident there was in full force and effect the insurance policy in question by the terms of which the insurance company was obligated to Karl Stern to indemnify him against liability resulting from injuries which she received at his hands. The contract of insurance between Stern and the insurance company, which is the basis of the claim of the plaintiff, was not one required by law to be given for the protection of persons injured through the operation of his automobile in which an absolute liability may be predicated against the insurer *(Kruger*v. *California Highway Indemnity Exchange,*201 Cal., 672, 258 P., 602), but a voluntary contract entered into by Stern with the insurance company primarily for his own benefit but also for the benefit of third parties who might be injured by the operation of his automobile. It is a contract between the insured and the insurer wherein the obligations of each party to the other are clearly defined, and wherein certain limitations and conditions are imposed upon the respective contracting parties affecting the validity of the contract and the rights of each under it. The statutes in question do not contravene or void any of these limitations or conditions, but provide only that if the contract is valid and in force as between the parties to it, a third party may, if a judgment against the insured for an injury covered by the policy is not satisfied within 30 days after it is rendered, proceed *365against the insurer, and further provide as a protection to such injured party or parties that no cancellation of the contract shall be made by an agreement of the parties after an injury occurs. Third parties may not alter its terms or make it more beneficial to them than it is to the insured for whose protection it was issued. The rights of injured persons under and by reason of any such policy are limited by and dependent upon the terms and conditions of the contract, and the right of the plaintiff in this case must be dependent upon the right of Stern to enforce his contract. The right of a judgment creditor of the insured against the insurer, if any, is a derivative right implied in law by way of subrogation to the rights of the insured against the insurer. Hence, the right of a judgment creditor against the insurer can rise no higher than the rights of the insured judgment debtor against such insurer.

This rule of law is well stated in 12 American Jurisprudence, 842, Section 289, as follows:

“Even in jurisdictions which recognize the right of a beneficiary to enforce the contract, the agreement between the promisor and promisee must possess the necessary elements to make it a binding obligation — in other words, it must be a valid agreement between the parties to enable a third person, for whose benefit the promise is made, to sue upon it. His rights depend upon, and are measured by, the terms of the contract. The right of a third person for whose benefit a promise is made is affected with all the infirmities of the contract as between the parties to the agreement. Unless the third person has been induced to alter his position by relying in good faith upon the contract made for his benefit or unless a novation has been effected, the promisor may set up any defense or equity against him which he could have set up as against the promisee.” See, also, *Electric Appliance Co.*v. *U. S. Fidelity & Guaranty Co.,*110 Wis., 434, 85 N. W., 648, 53 L. R. A., 609; *Malanaphy*v. *Fuller & J. Mfg. Co.,*125 Iowa, 719, *366101 N. W., 640; *Meyerson*v. *New Idea Hosiery Co.,*217 Ala., 153, 115 So., 94, 55 A. L. R., 1231.

In this instant supplemental action of another judgment creditor of Stern against the insurance company, the right of Stern against the insurer cannot be re-litigated. His right against the insurance company was fully litigated in the former supplemental action and the judgment against him in that case stands a bar for all time. Restatement of Judgments (Tentative Draft No. 1), 130, Section 330. Must it not also be a bar against any third party whose right, if any, against the insurance company is derived from and dependent upon a valid right of Stern against the insurance company? It is inconceivable that the insurance company should be held liable to the plaintiff and at the same time not be required to indemnify Stern in case he should be required to pay the Conoid judgment, he being the only party to whom it owed contractual obligations.

Res *judicata*or estoppel operates not only between parties to an action but between parties, and others not parties, as to the derivative rights of the latter which flow from those who were adversary parties in the action. Where a court of competent jurisdiction finds that a legatee under a will receives 'the legacy, not in her own right, but as a trust fund to be held for her by another, a judgment creditor of the legatee seeking to subject the fund to the. payment of its judgment, although not a party, is bound by the decree as to the character of the fund because it is in privity with the legatee. *First National Bank of Bolivar*v. *Burns*(Mo. App.), 199 S. W., 282. Unsecured creditors of a mortgagor, though not parties by name or service of process, are represented in a suit for foreclosure by their debtor, the mortgagor, and the decree and sale which bars the mortgagor, in the absence of fraud, bars them. *St. Louis-San Francisco Ry. Co.*v. *McElvain,**367253 F., 123, 130. See *Hopper*v. *Nicholas,*106 Ohio St., 292, 302, 140 N. E., 186.

In the *Schick case*where, in a former action, the insurance contract was held valid as between the insurer and insured, the injured plaintiff in the second action was subrogated to the adjudicated rights of the insured against the insurer. Conversely, but for like reason, since the insurance contract was held void as between the insurer and the insured in the Luntz action, the injured plaintiff in this case, limited to a derivative right from the insured, is barred as her insured is barred from recovery against the insurance company.

There is no claim under the pleadings in this case that any agreement was made between Stern and the insurance company to cancel the policy of insurance or that the former’s failure to cooperate was in collusion with the insurance company to defeat the claim of the defendant.

The judgment of the Court of Appeals is affirmed.

*Judgment affirmed.*

Williams, Zimmerman and Bettman, JJ., concur.

Weygandt, C. J., and Turner, J., dissent.

Matthias, J., not participating.

Zimmerman, J.,

concurring. The conclusions reached by Judge Hart in his opinion are in harmony with the cases of *Stacey*v. *Fidelity & Casualty Co. of New York,*114 Ohio St., 633, 151 N. E., 718; *Wright, Admr.,*v. *Schick,*134 Ohio St., 193, 16 N. E. (2d), 321, 121 A. L. R., 882; and *Luntz et al., Exrs.,*v. *Stern,*135 Ohio St., 225, 20 N. E. (2d), 241. In fact, a contrary holding would, in my judgment, require the overruling of those cases, which I am unwilling to do.

The expression, “whenever a loss or damage occurs on account of a casualty covered by such contract of insurance, the liability of the insurance company shall *368become absolute,” as used in Section 9510-3, General Code, was properly interpreted in the *Stacey case,*and such interpretation corresponds with the decisions of other courts in jurisdictions having the same or a similar statute. See, *George*v. *Employers’ Liability Assurance Corp.,*219 Ala., 307, 122 So., 175, 72 A. L. R., 1438; *Hynding*v. *Home Accident Ins. Co.,*214 Cal., 743, 7 P. (2d), 999, 85 A. L. R., 13, and cases cited therein; also 29 American Jurisprudence, 811, Section 1081; 5 *Id.,*810, Section 544 *et seq.*

Undoubtedly the purpose of the statute was to do away with clauses in contracts of insurance making the obligation of the insurer to pay loss or damage dependent upon the prior satisfaction by the insured of a judgment obtained against him by an injured person.

The meaning and effect of Sections 9510-3 and 9510-4, General Code, are accurately and succinctly stated in *Employers’ Liability Assurance Corp.*v. *Ryan*(C. C. A. 6), 109 F. (2d), 690, 691, as follows:

> “Sections 9510-3 and 9510-4 of the General Code of Ohio, permit an injured party a direct action against his judgment debtor’s insurers after he has obtained a judgment against the insured. In such action the insurer may defend for breach of conditions in the insured’s contract pertaining to notice of the accident, or to notice of a claim on account of it [or for failure to cooperate in the defense of an action], and on clauses which limit the casualties coming within the terms of the insured’s contract, such provisions binding the judgment creditor if they are binding upon the assured.” See, also, *Storer*v. *Ocean Accident & Guarantee Corp., Ltd.*(C. C. A. 6), 80 F. (2d), 470.

As pointed out in the *Stacey case,*if the quoted language from Section 9510-3, General Code, were to be taken in its literal sense to deprive an insurance company of any defense in proceedings against it by the judgment creditor of the insured, a denial of due process of law would result in contravention of both *369the state and federal Constitutions. It is to he remembered that the insurance ■ company does not become a party to the action, under Section 9510-4, General Code, until after the injured person has recovered a judgment against the insured. If it is desirable to have an action in which the injured person may originally sue the insured and his insurer together, trying out all questions in such action, the General Assembly must provide the appropriate legislation. See 85 A. L. R., 27, annotation.

Turner, J.,

dissenting. The foregoing opinion follows the recent decisions of this court, which are bottomed upon the case of *Stacey*v. *Fidelity & Casualty Co. of New York,*114 Ohio St., 633, 151 N. E., 718. Ordinarily, I would acquiesce under the rule of *stare decisis.*

However, it is the duty of this court to enforce all constitutional enactments of the Legislature and, being of the opinion that the majority decision does not give due effect to Sections 9510-3 and 9510-4, General Code, I am registering my dissent.

The transaction of the business of insurance in Ohio requires a license and may be exercised only in compliance with the laws of this state (22 Ohio Jurisprudence, 227, Section 41), which become a part of the insurance contract (22 Ohio Jurisprudence, 347, Section 189).

Regardless of any provision contained in the insurance policy, the laws of Ohio must prevail and any policy provision, condition, or agreement contrary to statute must fall. In the case of *Verducci*v. *Casualty Co. of America,*96 Ohio St., 260, 117 N. E., 235, this court held:

> “1. The business of insurance is one of public interest, affecting all classes of people and property, and is therefore properly the subject of legislative regulation and control.

> “2. Domestic and foreign corporations engaged in *370the insurance business in Ohio must conform their business and contracts to the provisions of the statutes of Ohio regulating and controlling the same.”

Sections 9510-3 and 9510-4, General Code, are supplementary to Section 9510, General Code, under which companies are organized or permitted to do insurance business in Ohio.

Section 9510-3, General Code, provides:

> “In respect to every contract of insurance made between an insurance company and any person, firm or corporation by which such person, firm or corporation is insured against loss or damage on account of the bodily injury or death by accident of any person for which loss or damage such person, firm or corporation is responsible, whenever a loss or damage occurs on account of a casualty covered by such contract of insurance, the liability of the insurance company shall become absolute, and the payment of said loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, or damage or death occasioned by such casualty. No such contract of insurance shall be cancelled or annulled by any agreement between the insurance company and the assured, after the said assured has become responsible for such loss or damage or death, and any such cancellation or annulment shall be void.”

Section 9510-4, General Code, provides:

> “Upon the recovery of a final judgment against any firm, person or corporation by any person, including administrators and executors, for loss or damage on account of bodily injury or death, for loss or damage to tangible or intangible property of any person, firm or corporation, for loss or damage to a person on account of bodily injury to his wife, minor child or children if the defendant in such action was insured against loss or damage at the time when the rights of action arose, the judgment creditor or his successor in interest shall be entitled to have the insurance money *371provided for in the contract of insurance between the insurance company and the defendant applied to the satisfaction of the judgment, and if the judgment is not satisfied within thirty days after the date when it is rendered, the judgment creditor or his successor in interest, to reach and apply the insurance money to the satisfaction of the judgment, may file in the action in which said judgment was rendered, a supplemental petition wherein the insurer is made new party defendant in said action, and whereon service of summons upon the insurer shall be made and returned as in the commencement of an action at law. Thereafter the action shall proceed as to the insurer as in an original action at law.”

While there is no legal obligation on the part of an insured to take out a policy indemnifying against loss on account of injuries to third persons, yet when it is taken out it becomes, by virtue of Sections 9510-3 and 9510-4, General Code, *a contract made for the benefit of a third party.*Such contract may be can-celled or annulled *prior*to any accident. But if the policy is in force *at the time of the accident*“the liability of the insurance company shall become absolute” and “no such contract of insurance shall be cancelled or annulled by any agreement between the insurance company and the assured, after the said assured has become responsible for such loss or damage or death, and any such cancellation or annulment shall be void.”

I thoroughly disagree with the holding in *Stacey*v. *Fidelity & Casualty Co. of New York, supra,*that such “contract of insurance becomes absolute only in the sense that the payment of loss by the insurance company shall not depend upon the satisfaction by the assured of a final judgment against him for loss or damage or death occasioned by such casualty.” There is no “only” or any other limitation in the statute. Instead, there is the positive provision that prevents *372the parties, even by mutual agreement, from cancelling or annulling the policy after the happening of the accident. Certainly, there is no right in one party to do without agreement what both may not do by agreement. Yet the majority in the instant case holds that the insurance company may of its own accord repudiate this contract and avoid the rights of an injured party whose rights had theretofore become fixed under the above-quoted statutes.

In the *Stacey case,*the court was worried about the possible unconstitutionality of Sections 9510-3 and 9510-4, General Code, and felt that it was required to give a constitutional interpretation to what was thought to be a doubtful statute. At page 639 of the opinion, it is said: “In construing this language it is again the duty of the court to give to the statute such an interpretation as will prevent a declaration of unconstitutionality.” At the close of the opinion, it is said: “Sections 9510-3 and 9510-4 are not unconstitutional when properly interpreted, and will doubtless serve a useful purpose, *but may not be permitted to eliminate essential terms and conditions of policies of insurance.”*(Italics mine.)

Had this been said in reference to a policy issued prior to the enactment of these sections, I could readily agree. But when it comes to contracts of insurance entered into subsequent to the enactment of these statutes, then there can be no question of unconstitutionality because insurance business in this state may be transacted only in accordance with the statutes of this state, which become a part of and modify or extend every contract of insurance written in this state so as to effect the purpose of the statute. In the *Stacey case,*no notice was taken of *Verducci*v. *Casualty Co. of America, supra.*Had the latter case been studied, it would be difficult to understand the concern of the court in the *Stacey case*about the constitutionality of the statute there being construed.

*373In the course of the *Stacey*opinion, the court also said at page 638: “If the language of Section 9510-3 should be taken in its literal sense, and the interpretation of the plaintiff be adopted, the insurance company would have no ground of defense, and immediately upon the occurrence of an accident, resulting in loss and damage, would be bound to pay, and all questions of contributory negligence, proximate cause, and other elements bearing upon the right to recover, would be eliminated. It must necessarily be assumed that the Legislature had no such intent. To give the section such meaning would necessarily render it invalid.” There is thus put up a straw man to destroy.

Sections 9510-3 and 9510-4, General Code, are parts of a single act (108 Ohio Laws, pt. 1, 385, and 115 Ohio Laws, 403). ' When these two sections are construed together, as they should be, it is at once apparent that the right of recovery by the injured person from the insurance company depends upon the prior recovery by the injured person of a judgment in an action for damages brought against the insured. In the action for damages, the insured (the insurance company under its policy defends the damage action for the insured) has the full right and opportunity to try out all questions of contributory negligence, proximate cause, and other elements bearing upon the right of the ■injured party to recover. *When the recovery is made in the action for damages,*then by virtue of Section 9510-3, General Code, the questions of contributory negligence, proximate cause and other elements bearing upon the right to recover are *res judicata*between the injured party, the insured and the insurance company.

If there were any doubt about the meaning of the words in Section 9510-3, General Code, that “the liability of the insurance company shall become absolute,” such doubt ought to be dispelled by the language of Section 9510-4 that “upon the recovery of a final *374judgment * * * for loss or damage * * ***if the defendant in such action was insured against loss or damage *at the time when the rights of action arose,*the judgment creditor * * * shall he entitled to have the insurance money * * * applied to the satisfaction of the judgment * * V’ (Italics mine.)

What the majority holds in the instant case is that notwithstanding the defendant was insured *at the time when the right of action arose,*notwithstanding that the policy of insurance *was in full force and effect at the time of the accident,*and notwithstanding the plain and unequivocal provision of Section 9510-3 that “no such contract of insurance shall he cancelled or annulled by any agreement between the insurance company and the insured, after the said *assured*has become responsible for such loss or damage or death, and *any*such cancellation or annulment shall be void,” the insurance company may declare the policy void because of the non-cooperation of the insured *after the liability became absolute and after the rights of the injured party to recover directly from the insurance company had become fixed.*(Italics mine.)

While the peculiar facts referred to in the brief in this case may raise a clear inference that the tendency of insured’s conduct was harmful or at least not helpful to the insurance company; yet it should not be overlooked that the question here is being raised upon demurrer to an answer by the insurance company to a supplemental petition of the injured party filed pursuant to Section 9510-4, General Code. The *facts*showing non-cooperation were not pleaded. Furthermore, it should not be overlooked that when the defendant secured a judgment against the insured in the action for damages, the liability of the insurance company as well as of the insured became *res judicata*as to the injured party.

Contrary to the argument in the majority opinion, the rights of Stern against the insurance company are *375not involved in the instant case, save only the question of whether *at the time of the accident*Stern held a *.valid*policy of insurance covering the accident, which policy had been issued by the appellee insurance company.

The majority opinion attempts to measure the rights of the injured person by the contract between Stern and the insurance company without giving any consideration to the fact that Stern and the insurance company had no right to make any contract which conflicted with, modified or eliminated any provision of any statute of this state.

In the absence of the statutes above-quoted, I could agree that the *Luntz case*formed the basis of *res judicata,*but giving effect to those statutes, I maintain that the liability of the insurance company to the plaintiff is now *res judicata*by virtue of the judgment in the damage case.

We must not decide this case upon the *facts*in the *Luntz case,*because in the instant case we have merely a supplemental answer, filed by the insurance company, to which a demurrer was filed and overruled with final judgment following appellant’s failure to plead further.

If Stern, the insured, breached his contract to cooperate in the defense of the case, then the insurance company has a right of action against Stern for any damages caused by such breach of contract.

Final judgment ought to be entered for appellant.