Court Opinion

ID: 6881637
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:17:25.432761+00
Date Added: 2024-06-11T16:05:36.223778
License: Public Domain

WOODROUGH, Circuit Judge
(dissenting).
I think that the undertaking of the policy sued on in this case expressed in the words, “The reinsurer agrees to reinsure the Company as respects all third party automobile public liability policies * * * becoming effective while this contract is in force”, and in the words “The liability of the reinsurer shall commence simultaneously with that of the Company”, indelibly stamps the contract an insurance contract and differentiates it from a mere contract for recoupment of moneys that might be actually paid out by the ‘Company’. The other agreements in the policy as to notice and the ascertainment and limitation of amounts to be paid and as to the time and manner of making payment of such amounts, should all be deemed subordinate to, and should be reconciled with, the expressed intent and fully paid for legal obligation to insure' — or reinsure, which is basically the same thing.
The wording of the policy is not the same wording which turned the decision of the Supreme Court in the Pink case ' (302 U.S. 224, 58 S.Ct. 162, 82 L.Ed. 213). There the reinsuring company “reinsured against loss” instead of reinsuring, like in this case, “as respects — -all liability policies.” This policy is more like one insuring a man in respect to a fire occurring in his house. But whether there is analogy to the Pink case or not, the law of Iowa controls and the majority opinion seems to me to be contrary to Iowa law as declared in the decision by the Supreme Court of that state in Globe National Fire Insurance Co. v. American Bonding & Casualty Co., 198 Iowa 1072, 195 N.W. 728, 729, 200 N.W. 737, 35 A.L.R. 1341. In that suit upon a reinsurance contract by the receiver of an insolvent reinsured, the court said, “The right of the receiver to recover is challenged upon the ground that the insolvent surety has discharged no part of its liability upon the bond executed for the benefit of the appellee, and that, as it has suffered no loss, no recovery can be had in the name of the receiver. The contrary appears, to be the well-settled rule. * * * Gantt v. American Central Insurance Co., 68 Mo. 503; Allemannia Fire Ins. Co. v. Firemen’s Ins. Co., 209 U.S. 326, 28 S.Ct. 544, 52 L.Ed. 815, 14 Ann.Cas. 948; French Mut. General Soc. v. United States F. & G. Co. (D.C.) 203 F. 558; Joyce on Insurance, § 132 et seq., vol. 1 (2d Ed.) ; Mutual Safety Ins. Co. v.. Flone, 2 N.Y. 235; Philadelphia Trust, etc., Co. v. Fame Ins. Co., 9 Phila. [Pa.]: *759292; Blackstone v. Alemannia Fire Ins. Co., 56 N.Y. 104; Eagle Ins. Co. v. Lafayette Ins. Co., 9 Ind. 443.”2 The Iowa court applied the “well-settled rule” and sustained the judgment awarding recovery to the receiver of the insolvent reinsured against the reinsurer notwithstanding the fact that the insolvent had discharged no part of its liability on its bond.
The court recognized that policies might be so worded that a different result would follow and instanced contracts which indemnified “only against ‘a loss actually sustained and paid in satisfaction of a judgment after the trial of the issue’ But the plain intendment of the decision is that under a policy which reinsures, like the one here in suit, “as respects — all public liability policies — becoming effective while the contract is in force”, the receiver of the insolvent reinsured may recover whether insolvency has prevented it from paying its losses or not.
It is true the Iowa decision conflicts with decision in the Pink case. The identical wording passed on in both cases was “does hereby reinsure — against loss.” One decision denies recovery because the loss was never actually paid by the reinsured, and the other awards recovery notwithstanding that fact. Neither policy contained any express provision that the reinsurance should lapse upon the reinsured’s becoming insolvent. Wherever that result of in effect lapsing the policy has been arrived at it is through judicial interpretation and I think a different guide to interpretation has been followed in the respective cases. One course is to determine whether the contract is one of insurance, and if it is, then to apply insurance law to it. The fundamental of that law being to let paid for insurance live rather than perish. The other way is to deduce the true intention of the parties to the contract by a priori determination of the meaning of the words used. I feel that we are firmly bound to .follow and apply the Iowa law which ascribes certain consequences to contracting for reinsurance and sustains liability of the reinsurer, ’and that the judgment herein should be reversed. The question presented seems tó me one of general importance.

 Quotations as follows are taken from the cases cited and relied on by the Iowa court in addition to Allemannia Fire Ins. Co. v. Firemen’s Ins. Co., 209 U.S. 326, 28 S.Ct. 544, 52 L.Ed. 815, 14 Ann. Cas. 948; Gantt v. American Central Ins. Co., 68 Mo. 503. “An insurer whose risk is re-insured, is not obliged, in order to maintain his action against his re-insurer, to show that he has paid the loss.” French Mut. General Soc. v. United States F. & G. Co., D.C., 203 F. 558, loc. cit. 566, “The authorities, however, are clear that an insurer may recover from a reinsurer before the former has actually paid the insured.” Blackstone v. Alemannia Fire Ins. Co., 56 N.Y. 104, (2 syl.), “Under a contract of re-insurance the extent of the liability of the re-insurer is not affected by the insolvency of the re-assured.” Eagle Ins. Co. v. Lafayette Ins. Co., 9 Ind. 443, “ * * * it is not necessary for the reassured to pay the loss to the first assured before proceeding against the reinsurer”.