Court Opinion

ID: 9849804
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:46:37.891385+00
Date Added: 2024-06-11T09:20:26.303154
License: Public Domain

Hill, Justice,
dissenting.
The majority relies upon Board of Lights &c. v. Dobbs, 151 Ga. 53, 56 (105 SE 611) (1920). There an Act of the General Assembly authorized the Board of Lights and Waterworks to appoint a treasurer and pay him a salary. The court held that it could not be against public policy to *318compensate the treasurer because the General Assembly had authorized such compensation.
The majority relies on Code Ann. § 56-408. Those are definitions of various types of casualty insurance. In my view a definition is not invariably an authorization. For example, see Code Ann. § 26-1801 defining elements of the various crimes of theft.
In my view the majority errs in applying the express statutory authorization in the Dobbs case, supra, to the general statutory definition of casualty insurance and concluding that the General Assembly has determined that it is not against the public policy of this state for insurance companies to pay punitive damages awarded to deter wilful and wanton misconduct.
In my view the General Assembly has not considered this question and has not decided this case. It therefore is up to the courts to determine the public policy question here in issue.
The insurance company urges that punitive damages should not be covered by insurance as a matter of public policy because the deterrent effect of punitive damages would be sacrificed if such damages were payable not by the insured but by the insurer. The insurance company urges us to adopt the McNulty rule, Northwestern Nat. Casualty Co. v. McNulty, 307 F2d 432 (5th Cir. 1962), where the named insured, a speeding drunken driver, rear-ended McNulty’s car and fled without stopping to render aid. There a divided court held that public policy prohibits insurance against liability for punitive damages, reasoning that (307 F2d at 440): "The policy considerations in a state where, as in Florida and Virginia, punitive damages are awarded for punishment and deterrence, would seem to require that the damages rest ultimately as well as nominally on the party actually responsible for the wrong. If that person were permitted to shift the burden to an insurance company, punitive damages would serve no useful purpose. Such damages do not compensate the plaintiff for his injury, since compensatory damages already have made the plaintiff whole. And there is no point in punishing the insurance company; it has done no wrong. In actual fact, of course, and considering the extent to which the public is insured, *319the burden would ultimately come to rest not on the insurance companies but on the public, since the added liability to the insurance companies would be passed along to the premium payers. Society would then be punishing itself for the wrong committed by the insured.” See also Crull v. Gleb, 382 SW2d 17 (Mo. App. 1964); Nicholson v. American Fire &c. Ins. Co., 177 S2d 52 (Fla. App. 1965).
The insured urges us to adopt the Lazenby rule (Lazenby v. Universal Underwriters Ins. Co., 214 Tenn. 639 (383 SW2d 1) (1964)), where the named insured, driving while intoxicated, caused personal injuries to another and the court held that the punitive damage award was covered by insurance. See also Carroway v. Johnson, 245 S. C. 200 (139 SE2d 908) (1965).
In American Surety Co. of N. Y. v. Gold, 375 F2d 523 (10th Cir. 1967), the court noted that the case law is almost equally divided numerically and followed McNulty. But see Southern Farm Bureau Cas. Ins. Co. v. Daniel, 246 Ark. 849 (440 SW2d 582) (1969), and Abbie Uriguen Olds, Buick, Inc. v. U. S. Fire Ins. Co., 95 Idaho 501 (511 P2d 783) (1973), following Lazenby.
I would decline to adopt either rule absolutely and would find instead that, in view of the division among the authorities, the better rule is a case by case determination. Even the McNulty court recognized that in states where an employer can be liable for punitive damages for injuries caused by an employee (see Gasway v. Atlanta & W. P. R. Co., 58 Ga. 216 (1877)), it is not against public policy for an employer to protect himself by obtaining insurance covering a punitive damage award. See cases cited in 307 F2d at 439. See also Ga. Cas. Co. v. Alden Mills, 156 Miss. 853 (127 S. 555) (1930); Ohio Casualty Ins. Co. v. Welfare Finance Co., 75 F2d 58 (8th Cir. 1934). Hence, it should not be said that public policy forbids all insurance coverage of punitive damages.
I could readily agree that the drunken hit and run driver in McNulty and the demolition derby driver in Crull v. Gleb, supra, should not have insurance protection for the punitive damages awarded against them personally. However, we should not hold that all punitive *320damages are uninsurable as a matter of public policy. For example, under the facts set out in Harris, Inc. v. Black, 130 Ga. App. 867 (204 SE2d 779) (1974), it would appear that a punitive damage award might be insurable.
Thus, we have at least two distinct situations, as follows: (1) Where the insured himself acts wilfully, intentionally, maliciously or fraudulently, it should be against public policy to allow him to pass responsibility for punitive damages on to his insurer. See Judge Gewin’s specially concurring opinion in McNulty, supra, 307 F2d at 443, 445. (2) On the other hand, where an insured employer is found to be liable for punitive damages by reason of vicarious liability and where the employer was otherwise free from fault, public policy should not prohibit coverage of punitive damages by insurance protecting the employer. The same would be true of family purpose car cases and certain suits against auto leasing companies if punitive damages are recoverable in such cases. See, for example, Concord General Mut. Ins. Co. v. Hills, 345 FSupp. 1090 (1972); Universal Ind. Ins. Co. v. Tenery, 96 Colo. 10 (39 P2d 776) (1934).
In the case before us the insured is a corporation which can act only through employees and agents. In this respect, the insured here is analogous to the employer in situation numbered two above in that it was not the personal action of this insured which caused the damage. On the other hand, it is not entirely clear that the corporation was free from fault or that it should be entitled to pass punitive damages on to its insurance carrier. For example, the record shows that the corporation was put on notice of the Bozemans’ contentions and that the corporation removed the marker after being notified not to remove it.
There being issues of fact (e.g., the fault, if any, of the corporation) and law (e.g., the insurer’s duty, if any, to defend a suit for punitive damages) which are unresolved, in my view this case should be remanded for further proceedings.
I am authorized to state that Justice Jordan joins in this dissent.