Case Name: SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY v. O. M. GOODING
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1978-05-15
Citations: 263 Ark. 435
Docket Number: 77-326
Parties: SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY v. O. M. GOODING
Judges: Byrd, J., not participating.
Reporter: Arkansas Reports
Volume: 263
Pages: 435–441

Head Matter:
SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY v. O. M. GOODING
77-326
565 S.W. 2d 421
Opinion delivered May 15, 1978
(In Banc)
Laser, Sharp, Haley, Young & Huckabay, P.A., for appellant.
Friday, Eldredge & Clark, by: Overton S. Anderson; and Kincaid, Horne & Trumbo, by: Hugh R. Kincaid, for appellees.

Opinion:
George Rose Smith, Justice.
The principal question in this case is one of insurance coverage. In 1975 the appellant, Southern Farm Bureau, issued a $10,000/$20,000 policy of automobile liability insurance to the principal appellee, O. M. Gooding, a farmer. The policy specifically covered nine described automobiles and trucks, but it made no reference to a lowboy trailer owned by Gooding.
In November, 1975, Ivan Gooding, also an insured, was driving one of the described trucks on a highway. The truck, by means of its fifth wheel, was pulling the lowboy, upon which a bulldozer tractor was being transported. As Ivan allegedly drove too fast around a curve the chains holding the bulldozer gave way, so that the bulldozer was thrown into the path of an oncoming vehicle being driven by Donald B. Hawksley. Hawksley was injured.
Hawksley brought a $75,000 personal injury suit against the Goodings. Upon Southern Farm Bureau's denial of coverage, the Goodings filed a third-party complaint against Southern Farm Bureau and also against the insurance agent, Joe Rodman, who wrote the policy. It was alleged that Rod-man had represented to the Goodings that trailers and lowboys would be covered when being pulled by an insured vehicle. Eventually Southern Farm Bureau and Rodman filed counterclaims against each other, each insisting that the other was liable for any possible recovery by Hawksley.
The two branches of the case were tried separately. At the first hearing, submitted largely on stipulations, the court determined that Southern Farm Bureau's policy protected the Goodings, up to $10,000, against liability for Hawksley's injuries. At the second trial, two weeks later, a jury returned a $10,000 verdict for Hawksley. The court's final judgment included the $10,000 award in favor of Hawksley against the Goodings, a similar award in favor of the Goodings against Southern Farm Bureau, plus penalty and attorney's fee, and a S3,538.97 award in favor of Rodman against Southern Farm. Bureau, representing Rodman's expense and attorney's fee in defending the Goodings' claim against him.
The principal question is whether the policy's failure to describe the lowboy as an insured vehicle exempts the insurance company from liability. Several provisions of the policy are pertinent. First, by the basic insuring clause the insurer agreed to pay on behalf of the insureds, under coverages A and B, claims for personal injuries and property damage "caused by accident and arising out of ownership, maintenance or use of any automobile." Next, there was this exclusion: "This policy does not apply: (a) Under any of the coverages for automobiles owned by the insured . . unless properly described on the declaration and used for the purposes stated." Third, there was this definition of an automobile:
"Automobile" means a land motor vehicle, trailer or semi-trailer designed for travel on public roads (including any machinery or apparatus attached thereto) but for the purpose of Division 1 coverage C only [not involved in this case], an automobile also means a farm tractor or other farm equipment while being operated on public highways.
The trial court was right in construing the contradictory and therefore ambiguous language of the policy in favor of the insured. On the one hand, an automobile is defined to mean a trailer, which would be a basis for excluding coverage of the lowboy, because it was not described in the declaration. On the other hand, an automobile includes "any machinery or apparatus attached thereto." A dictionary definition of apparatus is: "Any complex instrument or appliance, mechanical or chemical, for a specific action or operation; machinery; mechanism." Synonyms are listed as: "Equipment; instrument; machine." Webster's New International Dictionary (2d ed., 1939). Hence the insureds' truck, which was described in the declaration, included the lowboy that it was pulling, as being machinery or apparatus attached to the insured truck. This interpretation of the policy is confirmed by still another paragraph, which provides that when two or more automobiles are insured under the policy, the terms of the policy apply separately to each, "but a motor vehicle and a trailer attached thereto shall be held to be one automobile as respects limits of liability under Coverages A and B," which are involved here. That is to say, if O. M. Gooding had listed the lowboy and paid an additional premium for its inclusion in the policy, he would have obtained no additional protection with respect to Hawksley's claim, because the limit for both vehicles would still have been only $10,000. Such a result can hardly have been contemplated by the parties to the contract.
Two other points for reversal are argued by Southern Farm Bureau. First, it is contended that the trial court should not have awarded the statutory 12% penalty to the Goodings, because (it is argued) theirthird-partycomplaint against their insurance company was merely a suit for a declaratory judgment, as to which no penalty is provided. Ark. Stat. Ann. § 66-3239 (Repl. 1966). The cited statute applies to suits to cancel or lapse a policy, to change its terms, to obtain a declaratory judgment, or to require the insurer to reinstate a policy. The plain intent of the statute was to amend the prior law by providing an attorney's fee when the insured prevails in a controversy with his insurance company, but does not actually obtain a money judgment against it. Here, from the outset, the Goodings have sought to obtain protection and reimbursement with respect to any monetary judgment that Hawksley might be awarded in the lawsuit. In the final judgment, now before us, the Goodings did obtain a $10,000 recovery against their insurer. Consequently they were entitled to both penalty and attorney's fee under Ark. Stat. Ann. § 66-3238. An additional $1,500 attorney's fee is allowed for counsel's services in this court.
Second, it is argued that Southern Farm Bureau's agent, Rodman, should not have been allowed to recover the expenses and attorney's fee he incurred in defending the third-party complain filed against him by the Goodings. We think the recovery was proper. A principal has a duty to indemnify his agent when the agent suffers a loss which, because of their relation, it is fair that the principal should bear. Restatement, 2d, Agency, § 438 (1958). In particular, the agent can recover the expenses of defending an action brought by a third person because of the agent's authorized conduct. Id., § 439. If Rod- man represented to the Goodings that the lowboy would be covered while being pulled by an insured vehicle, that representation was correct. Rodman, the agent, was subjected to the expense of litigation because his principal, Southern Farm Bureau, erroneously denied that the coverage existed. In the circumstances it is fair that the principal be required to indemnify the agent for his expenses, including his attorney's fee.
Rodman asks that a fee be allowed for the services of his attorneys on this appeal, but we can find no basis for such an allowance. In the trial court Rodman did not recover an attorney's fee for this litigation with his principal. He merely recovered the expenses to which he had been put by his principal, which happened to include an attorney's fee. The Goodings have not appealed from the judgment in favor of Rodman upon their complaint against him. Consequently, upon this appeal there has been no issue between Rodman and the Goodings, nor any possibility that a reversal would entail any liability on his part to them. As to Rodman, the only question on appeal has been whether he can recover his prior expenses from his principal. The situation presents no reason for a departure from the general rule that a successful litigant is not ordinarily entitled to attorneys' fees. Romer v. Leyner, 224 Ark. 884, 277 S.W. 2d 66 (1955).
Affirmed.
Byrd, J., not participating.
Fogleman, J., dissents.