Source: https://casetext.com/case/american-indemnity-v-fellbaum
Timestamp: 2019-04-25 16:34:39+00:00

Document:
November 17, 1920. Rehearing Denied. December 22, 1920.
Appeal from District Court, Bexar County; J. T. Sluder, Judge.
Suit by Ernest Fellbaum against the American Indemnity Company. From a judgment for plaintiff, defendant appeals. Affirmed.
Arnold Cozby, of San Antonio, for appellant.
McAskill Mauermann, Perry J. Lewis, H. C. Carter, Champe G. Carter, and Randolph L. Carter, all of San Antonio, for appellee.
This is a suit by appellee, as administrator of the estate of M. D. Carr, deceased, against appellant, in which it is alleged that a judgment was obtained against appellee on March 3, 1917, by Douglas Stough for $4,000; that the judgment was based upon bodily injuries inflicted by M. D. Carr on the said Stough on or about September 27, 1915; that previously said M. D. Carr had obtained from the appellant a policy of insurance which indemnified him against such claims; and that such policy was in full force and effect when the injuries were inflicted. It was further alleged that the suit against him was pending when M. D. Carr died, and appellee was appointed administrator of his estate; that appellant took charge of the defense in said suit, as provided in the policy of insurance, both for Carr and the appellee, and had exclusive control of said suit. It was alleged that the judgment had been obtained and duly allowed and approved as a claim against the estate of M. D. Carr, and was paid in full by the administrator in the sum of $4,480. The defenses were that the cause of action died with M. D. Carr, and that the administrator borrowed money, without power or authority to do so, to pay off the judgment, and his action was not binding on the estate, and the note given for the borrowed money was not enforceable, and therefore the estate had sustained no loss. The cause was tried by the court and judgment rendered in favor of appellee for $4,760.
"The said Ernest Fellbaum, as administrator of said estate, borrowed from D. A. McAskill and H. C. Carter the sum of $4,480, said McAskill and Carter each giving Fellbaum, as administrator, their checks in the sum of $2,240 each; and to evidence said indebtedness, the said Ernest Fellbaum, as administrator, thereupon at the same time executed and delivered to the said D. A. McAskill and II. C. Carter his promissory note for said sum of $4,480, signed by Ernest Fellbaum as administrator of said estate and payable to the order of the said D. A. McAskill and H. C. Carter, a copy of which said note is hereto attached, marked `Exhibit C' and made a part hereof. The said note has never been paid. Upon receiving and cashing said checks at the bank and upon receipt of said $4,480 in cash from the bank, the said Ernest Fellbaum, administrator, took said money and paid it to Douglas Stough in full payment of her said judgment, and said Douglas Stough thereupon duly executed and delivered to said Fellbaum, administrator, a release of said judgment, a copy of which is hereto attached and marked `Exhibit D.' Said money was so handed by the administrator to the said Douglas Stough on said March 14, 1919, in the office of H. C. Carter, and at that time there was present the said Ernest Fellbaum, administrator, and H. C. Carter and Douglas Stough; and said administrator thereupon left, having received the release of the judgment, and thereupon the said Douglas Stough immediately delivered the said $4,480 in cash to the said H. C. Carter upon an agreement between the said Douglas Stough and the said McAskill and Carter that said sum of money was to be held by the said McAskill and Carter to protect them against loss upon the note so executed to them by the said administrator, reference being here made to the copy of said agreement hereto attached, marked `Exhibit E' and made a part hereof, for the full terms and conditions of said agreement. Said note has not been paid, and said money has never been returned to the said Douglas Stough."
The original suit of Stough v. Carr was filed by D. A. McAskill, Simmang Mauermann, Perry J. Lewis, H. C. Carter, Champe G. Carter, and Randolph L. Carter, as attorneys for the plaintiff, and they obtained the administration on the estate of Carr.
"The company at its own expense, will settle or defend said suit whether groundless or not; the moneys expended in said defense shall not be included in the limits of liability fixed under this policy. The assured shall not assume any liability, nor interfere with any negotiation for settlement or any legal proceeding, nor incur any expenses nor settle any claim except at his own cost, without the written consent of the company."
Under the terms of the contract, appellant took absolute control of the defense when the suit for damages was brought against M. D. Carr. Its defense resulted in a judgment against the appellant in the sum of $4,000, payment of which appellant seeks to evade.
"By undertaking the defense the company elected to treat plaintiff's cause of action, if he had any, as covered by its contract; and when it substituted itself and its judgment for that of the defendant, both plaintiff and defendant have a right to insist that the final judgment establishes the liability and debt of the company to the assured. The undertaking to defend is of no value, and may be of great danger, to the assured, where he thus abandons all control of the suit to the company, if it does not mean that whatever liability is established shall be discharged."
No reservations were made as to its liability by appellant when it assumed control of the case. The judgment is in effect one against appellant as well as against Carr, and it must pay off and discharge the judgment. There are other authorities that sustain this ruling. Brassil v. Casualty Co., 210 N.Y. 235, 104 N.E. 622, L.R.A. 1915A, 629; Coast Lumber Co. v. Ætna Life Ins. Co., 22 Idaho, 264, 125 P. 185; Ins. Co. v. Gas Light Co., 150 Ky. 732, 150 S.W. 994, 43 L.R.A. (N.S.) 1128; Royle Mining Co. v. Casualty Co., 161 Mo. App. 185, 142 S.W. 438; Sanders v. Ins. Co., 72 N. H. 485, 57 A. 655, 101 Am.St.Rep. 688; Davies v. Casualty Co., 89 Wn. 571, 154 P. 1116; Casualty v. Peppard, 53 Okla. 515, 157 P. 106, L.R.A. 1916E, 597; Realty Co. v. Ins. Co., 179 Mo. App. 123, 161 S.W. 624. None of the cases cited as being opposed to the doctrine stated are similar in facts to the case now before us, being cases either where the insurers had not assumed the control of the suits, or where the injured employé sought to recover on judgments against the employer and the insurer. The better considered authorities all concur in holding that the insurer is absolutely liable to the insured on judgments in cases in which the defense has been controlled by the insurer. The Texas cases cited are not in point. We have seen no Texas case that passes on the question.
All of the assignments of error are overruled, and the judgment is affirmed.

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