Court Opinion

ID: 4720312
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:35:56.366182+00
Date Added: 2024-06-11T08:07:36.883461
License: Public Domain

Fullerton, J.
(dissenting) — As stated in the majority opinion, the question for determination is whether the bond in controversy is one of indemnity or one of liability. The conclusiQn that it is one of liability is rested, if I have correctly gathered the purport of the opinion, on two separate grounds: first, that the bond was intended by the parties to be the statutory bond, prescribed by Laws of 1915, p. 227, ch. 57, and being so intended will be so held as between the insurer and the insured and between the insurer and a third person, notwithstanding it may be lacking *228in some or in all of the essentials prescribed by the statute for such a bond; and second, that the language of the bond itself, properly interpreted, denominates the bond as one of liability rather than one of indemnity. With neither of these contentions can I agree.
The facts are simple. On and prior to the time of the execution of the bond in controversy, the defendants, Poston and Lamken, were operating an automobile stage over a route extending from a place near the business center of the city of Tacoma to the army post known as Camp Lewis, carrying passengers for hire. A part of the route passed over the streets of the city of Tacoma. That city is a city of the first class, and by the statute cited, it is made unlawful for any person to carry passengers for hire upon the streets of any city of the first class in a motor propelled vehicle without first obtaining a permit from the secretary of state so to do. To obtain the permit, the carrier is required by the statute cited (Laws of 1915, p. 228, ch. 57, § 2) to
“deposit and keep on file with the secretary of state a bond running to the State of Washington in the penal sum of twenty-five hundred dollars, with good and sufficient surety company licensed to do business' in this state as surety to be approved by the secretary of state, conditioned for the faithful compliance by the principal of said bond with the provisions of this act and to pay all damages which may be sustained by any person injured by reason of any careless, negligent or unlawful act on the part of said principal, his agents or employes in the conduct of said business or in the operation of any motor propelled vehicle used in transporting passengers for hire over or along any public street, road or highway, and shall pay to the secretary of state a fee of five dollars . . . .”
■ Poston and Lamken were operating their automobile wdthout a permit from the secretary of state. They *229were unable to obtain a statutory bond. No licensed insurance company would then issue such a bond. This because, so it was stated in the argument at bar, of the decision of this.court in Salo v. Pacific Coast Casualty Co., 95 Wash. 109, 163 Pac. 384, L. R. A. 1917D 613. In this situation, they applied to the appellant company for a bond and that company issued to them the bond in suit. The appellant was not then a licensed company and could not issue the statutory bond had it so desired. It had theretofore applied for a license, it is true, but a license had been denied it by the state officer empowered to issue such licenses, and this court, in an opinion handed down less than two months prior to the issuance of this bond, had sustained the officer in his refusal. See State ex rel. Mutual Union Ins. Co. v. Fishback, 97 Wash. 565, 166 Pac. 799. Nor is there anything in the record that indicates that Poston and Lamken did not fully understand and appreciate the situation. There is no evidence that they applied to the secretary of state for a permit on the strength of the bond, and it is in evidence that they paid the deferred installments on the insurance premium as long as they continued to operate their stage. Nor is either Poston or Lamken here contending that the bond was the statutory bond. This contention is made on their behalf by the garnishee plaintiffs, who are neither parties nor privies to the contract, and whose sole interest in so doing is the hope that they may profit thereby.
But stress is laid on the language of the bond as tending to support the conclusion that the bond is a statutory bond. I cannot so read it. The bond (barring the italics, which are supplied by the majority) is correctly copied in the main opinion. It contains no reference to the statute. It does not run to the state of Washington. It contains no condition for the pay*230ment of damages to any person injured by the careless, negligent or unlawful act of the operators of the automobile. On the contrary, it purports on its face to be a contract between private persons, by which the one agrees to indemnify the other against loss from liability arising from certain defined causes.
Again, the opinion also contains statements from which it can be gathered that the majority conclude that it would operate as a fraud on the insured and on the injured person, if the bond is not construed as a statutory bond. In the opening paragraph of the opinion, it is pointed out that the plaintiffs alleged in their complaint that the defendants Poston and Lam-ken were operating the motor car under a permit issued by the secretary of state and had filed a bond with the secretary on which the appellant was surety, and later on it is said that “Policies such as this should not be so construed as to be a delusion either to those who bought them, or to those who in good faith rely upon them . . . . ” But the majority should remember that allegations in a complaint, denied and unproven, avail nothing. It is perhaps unnecessary, but I may add that the plaintiffs sued the insurance company jointly with Poston and Laraken, and that this allegation was thought necessary to charge the former. Doubtless they thought the allegation true when it was inserted in the complaint, but afterwards, discovering their mistake, they consented to a dismissal of the action as against the company. The intimation that to construe the bond as other than the statutory bond would render it a “delusion” to the insured and the injured plaintiff is likewise unfounded. The insured, as .1 have hereinbefore pointed out, fully understood the nature of the bond and accepted it, so understanding it. There could be no fraud or deceit in its issu*231anee as to them. The injured plaintiff could in no manner he deceived or affected thereby. No contractual relation existed between her and Poston and Lamken at the time of the injury. She was not a passenger on the automobile. On the contrary, she was injured at about midnight, while walking in the roadway of a paved street, directly in the path of oncoming vehicles, although unobstructed walks in good condition, prepared especially for pedestrians, existed on each side of the street.
I cannot think, therefore, that there is any justification in the record for the statement of the majority, that the bond “was such as was intended to win for the operator of the motor car a permit to carry passengers, for hire, on a specified route,” or the statement that “it also made an apparent attempt to so far comply with the provisions of chapter 57, Laws of 1915, as was intended to be approved by the secretary of state, . . . . ” It seems to me that the bond was nothing more than a contract between private individuals, in no way subserving a public function, as does the statutory bond.
The second question, in my opinion, presents the debatable issue in the case; and on this I think the majority clearly wrong if our prior decisions in kindred cases are to be followed. Turning to the bond, it will be observed that the insurer agrees to “indemnify” the insured “against loss .... from the liability imposed by law” on the insured, arising from certain stated causes. The indemnity, it will be noticed, is not against “liability” arising from the stated causes, but is an indemnity against “loss from liability” so arising. It is this distinction that the majority seem to overlook, and it is the distinction which, in my opinion, renders the bond one of in*232demnity rather than one of liability. To prove this point, it would seem enough merely to cite the majority opinion at the place where the distinction between an indemnity and a liability bond is pointed out. Clearly the agreement here “is only to indemnify the assured against actual loss by them, ’ ’ and this by the terms of the definition given is an indemnity and not a liability bond. The adjudicated cases which I think support the contention are Puget Sound Imp. Co. v. Frankfort etc. Ins. Co., 52 Wash. 124, 100 Pac. 190; Sheard v. United States Fid. & Guar. Co., 58 Wash. 29, 107 Pac. 1024, 109 Pac. 276; and Ford v. Aetna Life Ins. Co., 70 Wash. 29, 126 Pac. 69.
The last of these cases is cited by the majority and distinguished from the case in hand, because of the somewhat more definite language of the bond. While the distinction pointed out seems to me to be unfounded, I need not stop to discuss the reason for my conclusion. The second of the cited cases is equally emphatic in declaring the bond there in question to be an indemnity rather than a liability bond, and the bond contains none of the language thought to be distinguishing. The language of the obligatory clause of the bond was to “well and truly indemnify and save harmless the said obligee from any pecuniary loss, resulting from the breach of any of the terms, covenants, and conditions” of the contract for which the bond was given as a guaranty. We held this to be an indemnity and not a liability bond, using this language :
“The bond does not oblige the obligors to pay legal liabilities, but to indemnify the appellant (the obligee) for any pecuniary loss he may sustain from a breach of the contract; and in view of this provision, we agree with the appellant that it is an indemnity against liability for damages, and that the cause of action did *233not accrue until the damages were judicially determined and actually paid. ’ ’
Beference is made to the case of Davies v. Maryland Casualty Co., 89 Wash. 571, 154 Pac. 1116, 155 Pac. 1035, L. R. A. 1916D 395, with the remark that it “contains much reasoning apropos here.” For my purposes I need but say that the case does not overrule the cases I have cited.
The bond, therefore, being one of indemnity against loss rather than one of indemnity against liability, there should be no recovery on the part of the garnishee plaintiffs. These plaintiffs, since they are not in privity of contract with either of the parties to the bond, cannot be substituted for the obligees therein. They can recover only in the case of an actual indebtedness owing by the insurance company to the obligees. This we held in Bellingham Bay Boom Co. v. Brisbois, 14 Wash 173, 44 Pac. 153, 46 Pac. 238, where we said:
“The garnisher can get no better right to the debt garnished than his debtor has, and if the latter has no right in or to the debt, the former acquires none by his garnishment. ’ ’
See, also, to the same effect Ford v. Aetna Life Ins. Co., supra.
There was no such indebtedness here existing. The obligees suffered no loss within the condition of the bond. They have neither paid nor been forced to pay the judgment against them.
The judgment should be reversed.
Main, J., concurs with Fullerton, J.