Case Name: ALLSTATE INSURANCE COMPANY v. HARRIS
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1974-12-04
Citations: 133 Ga. App. 567
Docket Number: 49535
Parties: ALLSTATE INSURANCE COMPANY v. HARRIS.
Judges: Pannell, P. J., and Webb., J., concur specially.
Reporter: Georgia Appeals Reports
Volume: 133
Pages: 567–575

Head Matter:
49535.
ALLSTATE INSURANCE COMPANY v. HARRIS.

Opinion:
Evans, Judge.
On January 1, 1970, Allstate Insurance Company issued a policy of insurance containing various liability coverages to certain dealer corporations of the Chrysler Corporation and Chrysler Motor Corporation Marketing Investment Program, which included Bill Jones Dodge City, Inc., Augusta, Georgia.
On Saturday, January 17, 1970, this policy was in full force and effect, on which date James Bryan Gray, a resident of South Carolina, and a young soldier friend, Chuck Palmer, while on a three-day drinking spree, visited Bill Jones Dodge City, Inc. to look at automobiles. Gray negotiated a purchase of an automobile and obtained possession of a 1970 Dodge from Jones. He contended he had no intention of buying it, but gave two checks, one for $25 and one for $3,800, on a non-existent bank account in payment of the automobile. The $3,800 check was for $3,800 as to the figures, but for only $38 as to the written portion. During negotiations, and before delivery of the automobile, Gray left Palmer at Dodge City, so he might go to a liquor store, as he contends, although Jones contends he left to arrange insurance coverage for the automobile. Gray admits that he did call the dealership and fictitiously represent himself to be an insurance agent in Bath, South Carolina. Jones then turned the proposed automobile over to Palmer to deliver to Gray. Gray was to return the following Monday. No papers of any kind were given to him or to Palmer.
Gray, on the same date, with several passengers in the automobile, while driving under the influence of intoxicants, at an excessive rate of speed, on the wrong side of the Gordon Highway in Richmond County, Georgia, collided with an automobile driven by Alvin Harris, Jr. Mrs. Connie Mobley Harris, wife of Alvin Harris, was a passenger in the Harris car. Both husband and wife suffered personal injuries.
A bill of sale and the transfer of the manufacturer's statement of origin of the automobile from Jones to Gray were thereafter prepared by Jones and completed on the following Tuesday (dated "1-20-70"). This was four days after the collision.
Connie Mobley Harris sued James Bryan Gray, alleging defendant to be a nonresident of Georgia, contending he was driving the car by permission of the alleged insured, Jones. She sought damages for her own personal injuries and loss of consortium by reason of her husband's injuries. By amendment, Bill Jones Dodge City, Inc. was added to the original complaint as a second defendant, because of Jones' negligent entrustment of the vehicle to an incompetent driver, unfit to drive by reason of his intoxication. She also alleged falsifications by Jones of certain records to show an actual sale of the vehicle by Jones to Gray.
Defendant Gray did not answer, and the case became in default as to him. Defendant Jones answered, and admitted jurisdiction but denied the remainder of the complaint, and alleged a completed sale to Gray and that Gray was thus not driving the car with "permission" of Jones.
After a trial, judgment was returned against defendant Gray only, for $24,000 ($16,000 as actual damages and $8,000 as punitive damages). Plaintiff then made a demand upon the insurance company (Allstate) which refused to pay the judgment.
Plaintiff filed suit against the Allstate Insurance Company as the insurer under the policy, and alleged the policy was in full force and effect at the time of the injuries. Plaintiff also sought to recover punitive damages of 25% of the judgment ($6,900) and $10,000 as attorney fees, under Code Ann. § 56-1206 (Ga. L. 1960, pp. 289,502; 1962, p. 712).
Allstate answered this suit, admitted jurisdiction, and that judgment had been recovered against Gray and that plaintiff had demanded payment of Allstate. Defendant denied liability and contended the sale to Gray resulted in no coverage under its policy. It also pleaded estoppel by judgment in that no judgment had been returned against its insured, Jones; and since plaintiff was not the holder of the policy of insurance it was not entitled to 25% penalty or attorney fees for bad faith.
After discovery and stipulation of certain evidence, motions for summary judgment were filed by both parties. Both plaintiff and defendant amended their pleadings before the final hearing of the motions for summary judgment. In this action plaintiff sought expenses of litigation and attorney fees by reason of bad faith of the insurer to evade its liability under the policy under Code § 20-1404. Defendant, by its amendment, defended on the ground that it was in privity with Jones; and that no question litigated with Jones could be relitigated with it; and that the question of possession of the automobile had been determined to be in Gray and not in Jones as a result of the first suit.
After a hearing, the court granted a partial summary judgment in favor of the plaintiff as the amount of the judgment in the former case ($24,000), leaving for jury determination the question of punitive damages. The court overruled defendant's motion for summary judgment. Defendant appeals. Held:
1. In the tort action, judgment was returned against defendant Gray, but not against defendant Jones. But for the negligence of these defendants to have been imputed to another (defendant Allstate), then Allstate must have been in privity with one of them so as to create the relation of principal and agent. Code § 105-205. No such relationship existed between any of these parties in tort, and there is no privity as between the defendant Allstate and Gray or Jones, but only as to possible coverage under the liability policy of insurance then in effect. Whether or not there is coverage under the policy remains for consideration by a jury from the facts since more than one inference may be drawn from the evidence. Holland v. Sanfax Corp., 106 Ga. App. 1, 4, 6 (126 SE2d 442); McCarty v. National Life &c. Ins. Co., 107 Ga. App. 178 (1) (129 SE2d 408).
Each party seeks to assert that a judgment of a court of competent jurisdiction shall be conclusive between the same parties and their privies as to all matters put in issue or which might have been put in issue. Code § 110-501. But same is not absolutely shown beyond peradventure by the evidence submitted at the first trial of the tort action. For only if there be no coverage as to Gray can there be a finding of no privity. The automobile, if owned by Jones with Gray as permissive user, would show coverage and privity between the parties under the policy of insurance. While Gray is not a "named insured" within the meaning of the policy, or the holder of the policy, he could be an insured person for the policy insures those driving the car with permission of the named insured. Since plaintiff may be a beneficiary under the policy by reason of defendant Gray's coverage, as a permissive user, questions of fact remain as to whether or not there is coverage under the policy. The provisions of a policy must be construed most favorably toward coverage and against the insurer if it is in anywise ambiguous. Code Ann. § 56-2419 (Ga. L. 1960, pp. 289, 667); Code § 20-701; Johnson v. Mutual Life Ins. Co., 154 Ga. 653 (2) (115 SE 14); Penn Mutual Life Ins. Co. v. Milton, 160 Ga. 168, 171 (127 SE 140).
Argued July 9, 1974
Decided December 4, 1974
Rehearing denied December 18, 1974
Allgood & Childs, T. Allen Childs, Jr., for appellant.
George B. Rushing, for appellee.
2. Many questions of fact remain for jury determination in this case, for if there was a sale, as the jury might infer from the evidence, then Gray would not be a permissive user. If there was no sale, then, of course, Gray was allowed to have the automobile within his possession as a permissive user. Therefore, the court properly denied defendant's motion for summary judgment, but erred in granting a partial summary judgment in favor of plaintiff. See Holland v. Sanfax Corp., 106 Ga. App. 1, 4, supra; McCarty v. National Life &c. Ins. Co., 107 Ga. App. 178 (1), supra.
3. A liability insurance company may not be held liable to a possible beneficiary under the policy who has obtained a judgment against the insured for alleged bad faith, fraud or negligence on the part of the insured in failing to settle the judgment with this beneficiary who is not the holder of the policy under the contract with the insured. The proposed beneficiary in this case is not a party to the insurance contract, and may not complain of the negligence, fraud or bad faith of the insurer in refusing to pay the claim. Francis v. Newton, 75 Ga. App. 341 (1) (43 SE2d 282). See also Leonard v. Fireman's Ins. Co., 100 Ga. App. 434, 437 (111 SE2d 773). Therefore, partial summary judgment as to this issue should have been granted in favor of the defendant.
Judgment affirmed in part and reversed in part.
Pannell, P. J., and Webb., J., concur specially.