Court Opinion

ID: 6758371
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:19.290375+00
Date Added: 2024-06-11T16:02:31.225070
License: Public Domain

Holmes, J.,
dissenting. I dissent from the majority in that, in my view, an action in tort does not lie against the issuer of a financial responsibility bond for the alleged failure to act in good faith in response to the claims of injured third parties. A surety’s liability extends only to the contractual limits of the bond and, in the proper case, it may include interest from the date judgment is taken against the principal.
The majority strains to distinguish the case sub judice from Thornton v. Personal Service Ins. Co. (1976), 48 Ohio St. 2d 306 [2 O.O.3d 447], in which this court specifically addressed the extent of a bond carrier’s liability. In Thornton, we held that a surety’s liability extended only to the limits of the bond for the alleged failure to settle a claim presented by an injured third party. Therefore, when a surety tenders the face amount of a financial responsibility bond it discharges both its liability to the injured party, and its duty to the principal.
The crux of my dissent, however, centers on the lack of legal relationship between a bond carrier and an injured third party. In Republic-Franklin Ins. Co. v. Progressive Cas. Ins. Co. (1976), 45 Ohio St. 2d 93, 95 [74 O.O.2d 202], this court stated that a financial responsibility bond is written for the protection of those members of the public who may be injured by the principal, while an insurance policy is written for the protection of the insured. This distinction does not, however, provide a member of the public with standing to sue the bond carrier for damages beyond the face amount of the bond, as the majority here suggests.
In Hoskins v. Aetna Life Ins. Co. (1983), 6 Ohio St. 3d 272, this court recently held that based upon the relationship between an insurer and its insured, an insurer has the duty to act in good faith in payment of the claims of its insured. A breach of this duty will give rise to an action in tort against the insurer.
However, the imposition of the duty of good faith upon the insurer was justified because of the relationship between the insurer and the insured. There was obviously privity of contract and consideration flowing from both sides. In my view, the contractual relationship between the parties was vital in establishing the duty on the insurer to act in good faith. I fail to see any *10relationship between the parties herein which was so vital to the Hoskins decision.
Finally, upon motion by the appellant for summary judgment, the trial court ordered the appellee bonding company to pay appellant the face amount of the bond ($25,000), plus interest, from the date of the prior judgment against the principal. In this situation the payment of interest was proper, even though in excess of the face amount of the bond. As stated in 72 Corpus Juris Secundum (1951) 594, at Section 113:
“Ordinarily, sureties may be held liable for interest on the amount due from them as damages for its detention, even though by the addition of such interest the sum for which the sureties are held exceeds the sum named as penalty in their contract.”
Accordingly, I would affirm the judgment of the court of appeals.
Locher, J., concurs in the foregoing dissenting opinion.