Court Opinion

ID: 3537873
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:50:34.055331+00
Date Added: 2024-06-11T14:06:06.105482
License: Public Domain

ON MOTION FOR REHEARING.
Respondent contends that we have overlooked the fact that the present action was "brought exclusively under and by *Page 668 
virtue of Sections 5898 and 5899, Revised Statutes Mo. 1929, and such statutes must be held to apply to reinsurance contracts to permit the present action," particularly since plaintiff in the prayer of his petition requests "the court to cause to be issued and equitable garnishment directed to defendant in accordance with" the above sections of the statute.
In the opinion we have outlined the facts pleaded in the petition and stated the particular theory upon which relief was sought. In addition to the prayer for special relief the petition closed with a prayer for general relief as follows: "And for such other and further orders as to the court may seem mete and just, the premises considered."
Plaintiff was only required to make "a plain and concise statement of the facts constituting a cause of action," and to make "a demand of the relief to which the plaintiff may suppose himself entitled." [Sec. 764, R.S. 1929 (Mo. Stat. Ann., 764, p. 983); Liese v. Meyer, 143 Mo. 547, 555, 45 S.W. 282.] The prayer was no part of the petition and could be disregarded in determining what relief, if any, is authorized by the petition [Caldwell v. Eubanks, 326 Mo. 185, 30 S.W.2d 976, 980.] Under a prayer for general relief the court may grant any relief consistent with the pleadings and evidence. [Muenks v. Bunch,90 Mo. 500, 507, 3 S.W. 63.] We are here dealing with a demurrer to the petition, and "whether plaintiff was entitled to all or any of the relief prayed does not matter, provided he was entitled to some relief on the facts stated." [Barnett v. Ground,304 Mo. 593, 263 S.W. 836, 840.] Since, as we have seen, the petition stated facts sufficient to constitute a cause of action requiring relief in equity, the demurrer should be overruled.
Respondent contends that we have twisted the contract away from its normal and ordinary meaning and have given it a strained and unnatural construction. It contends that we have in fact transposed various portions of the contract and confused "the insuring clause" with other terms of the contract which are said to be "conditions." Respondent says that it was unnecessary to define the word "loss" in every instance in which it was used, and insists that we have placed "undue emphasis" upon certain portions of the contract. We do not think the opinion is properly subject to this criticism.
In the opinion we held that the contract was not strictly a reinsurance contract. It was made before the contract of primary insurance was made. It is not a contract for indemnity against loss. It provided for the filing of all policies of primary insurance and agreed that thereupon each reinsurance should be subject to the general and special terms of such policies. It contains many additional provisions not appearing in the usual reinsurance contract referred to in reported cases, as for example, where it provides; "This reinsurance is excess . . . and applies only to the liability of *Page 669 the reinsured in excess of the amounts first herein stated, which amounts are retained at the risk of the reinsured as a first liability, before loss shall accrue to the corporation
hereunder." No case dealing with a reinsurance contract having such a provision in that portion of the contract, which precedes the "conditions," has been called to our attention. The clause in question precedes the statement in the contract that this reinsurance is subject to the following "conditions."
Under "conditions" the contract provides for the filing of each policy form and endorsements and provides that "each reinsurance hereunder shall be subject to all general and special terms and conditions of such policies or endorsements." It was agreed that "the corporation will make prompt settlement of its losses hereunder as soon as the same are definitely and finally determined." Respondent concedes that there is no standard form of excess reinsurance agreements. In the case of Bruckner-Mitchell, Inc., v. Sun Indemnity Co. et al.,82 F.2d 434, 444, the court said: "It is true that typical reinsurance agreements do not operate in favor of the original insured. They are merely contracts of indemnity of the insurer and there is no privity between the original insured and the reinsurer. But nothing in the law forbids drafting reinsurance agreements in special terms so that they will operate in favor of the original insured." In that case the reinsurers of a contractor's bond given for the benefit of the District of Columbia and certain materialmen were held liable in a suit in equity by materialmen, although the reinsurance agreement did not mention the materialmen, but only the District of Columbia. The court said: "We think the first reinsurance agreements in the instant case were not typical agreements but were special, and we conclude that according to the terms thereof the reinsurers are liable to materialmen." As to who may enforce the liability of a reinsurer see extensive notes 35 A.L.R. 1348, and 103 A.L.R. 1485.
Respondent insists "the court places undue emphasis on that part of the contract stating that `liability of the corporation upon each risk' shall `continue simultaneously with that of the reinsured' and should `continue concurrently with the liability of the reinsured.'" We believe that we have construed the contract as a whole and have arrived at its true intent and purpose from the terms used in the contract.
Respondent insists that the "subject to" clause merely fixes the liability of the reinsurer to the reinsured and gives no rights to third parties. The authorities cited by respondents, however, deal only with reinsurance contracts which are pure contracts of indemnity and which clearly do not undertake to make any provisions for the benefit of third parties. We have held in effect the provisions and conditions in the primary insurance policy which could have no *Page 670 
application as between the reinsured and the reinsurer and which were not intended to have any force or application as between the reinsured and the reinsurer would not apply to the reinsurance contract. The opinion does not hold that the "subject to" clause adopts into the reinsurance agreement all of the terms and conditions of the original policy, but only those provisions particularly applicable to the relationship between the parties to the reinsurance contract and which, under the terms of that contract, were intended to be a part thereof.
Respondent contends that "the opinion subjects the defendant to double liability since Continental's assigns and plaintiff both have a cause of action under it." The reinsurance agreement, in so far as it provides for the payment of any judgment against Stage Lines, is, of course, an agreement for the benefit, not only of plaintiff, but also of Stage Lines and Continental, although primarily for the benefit of plaintiff, the ultimate and primary beneficiary. But defendant's liability under the reinsurance agreement will be discharged, so far as it relates to the facts set forth in the petition, upon the application of said funds, representing the liability of defendant under the terms of said agreement, to the payment of plaintiff's judgments. If Continental collected under its cause of action for the failure of defendant to pay said judgments and discharge its liability thereon the recovery would have been for the benefit of plaintiff (in this connection see Equitable Surety Co. v. United States,234 U.S. 448, 456, 34 Sup. Ct. 803, 805, 58 L. Ed. 1394).
Respondent contends that the reasoning of the opinion breaks down when we consider that Continental was put in liquidation under an order of court and that a receiver was appointed and thereafter discharged. We think not, particularly in view of the fact that plaintiff was the ultimate beneficiary under the agreement for the payment of judgments rendered against Stage Lines and for which judgments both Continental and defendant are liable. This court may in this proceeding determine the liability as between plaintiff and defendant under the terms of the reinsurance agreement which was executed by the defendant and Continental, even though Continental be in receivership.
A brief has been filed on behalf of amicus curiae. It is contended that the contract under consideration is a typical reinsurance contract providing only for indemnity against loss; that "not a line within the four corners of the agreement either expresses or implies any other intent;" that the various words and phrases of the contract do not "support the conclusion of an intent to insure against liability;" and that the reinsurance agreement is exactly parallel to the terms of the reinsurance agreement under consideration in the case of Stickel v. Excess Insurance Co., 136 Ohio St. 49, decided November 22, 1939, by a divided court. We think the contract *Page 671 
under consideration there is easily distinguishable from the one here. The court followed the case of Fidelity and Deposit Co. v. Pink, as the most applicable case and thereafter said "it would seem superfluous to cite additional authorities for, after all, the decisions turn largely upon the language of the particular contract under examination in the particular case."
It is further insisted that the words, "subject to" as used in the reinsurance agreement imply no assumption of obligation or liability. Cases are cited to the effect that when a grantee takes title to land by deed reciting that the conveyance is "subject to" certain incumbrances, that the deed imposes no personal obligation or liability. [McFarland v. Melson,323 Mo. 977, 984, 20 S.W.2d 63; 66; State Insurance Co. v. Irwin,67 Mo. App. 90, 94; Walker v. Goodsill, 54 Mo. App. 631, 634.] It is said: "The words `subject to,' used in their ordinary sense, mean, `subordinate to,' `subservient to,' or `limited by.' There is nothing in the use of the words `subject to,' in their ordinary use, which would even hint at the creation of affirmative rights." [Englestein v. Mintz, 345 Ill. 48,177 N.E. 746, 752.] However, this contention overlooks the fact that we are construing a contract of reinsurance which "applies to the liability of the reinsured" and that such a contract necessarily implies the assumption of personal obligation and liability by the reinsurer, the extent of which is to be determined in the usual and ordinary manner by the consideration of the instrument itself and the words used therein and the references made. The reinsurance contract creates the obligation and not the words "subject to." Other contentions made in the brief are sufficiently covered in the original opinion or above.
The motion for rehearing is overruled. Hyde and Bradley,CC., concur.