Court Opinion

ID: 6887827
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:33:30.985075+00
Date Added: 2024-06-11T16:05:45.914383
License: Public Domain

WALLER, Circuit Judge
(dissenting).
Upchurch agreed to take out a motor vehicle casualty insurance policy with the Casualty Company, in consideration of which a binder was issued putting the policy into immediate effect pending the issuance and delivery of the policy which would indemnify and protect Upchurch from any liability for injuries caused by third parties. Upchurch’s agreement was to accept and pay the premiums on the policy; the company’s agreement was to issue the policy and to protect Upchurch against liability to third parties and not to protect third parties against Upchurch.
The majority opinion rightfully concedes that the Herrins, who are third parties and strangers to the contract, can have no higher or greater rights than Upchurch. Upchurch breached his contract with the insurance company, refused to take out the policy and pay for it, but took a policy in another insurance company. Having first breached his contract with the insurance company, Upchurch, could not then require the insurance company to carry out its part of the contract to indemnify him. Since Upchurch had no right, after having breached his contract, to demand its enforcement, neither could third parties demand its enforcement because they have no greater rights than Upchurch. This would not be true if the policy in question gave to third parties the right to sue on it as some casualty insurance policies do. Nor would the foregoing conclusion be true if the statutes of the State of Georgia gave third parties the right to enforce or sue on a contract but the statutes .of Georgia do not afford that right. The policy, therefore, was not a policy entered into for the benefit of third parties. In 36 C.J. 1056, liability insurance is defined as follows: “Liability insurance is that form of insurance by which insured is indemnified against loss or liability on account of bodily injuries sustained by others, or in a broader sense, against loss or liability on account of injuries to property.”
Liability insurance is sometimes confused with contracts of suretyship in which a bonding company issues a contract to protect third parties against the obligee, but a liability policy is not a contract of surety-ship. The distinction is clearly outlined and discussed in the case of State ex rel. Travelers’ Indemnity Co. v. Knott, 114 Fla. 820, 153 So. 304, 307, in which the Court, quoting from Royal Indemnity Co. v. Knott, 101 Fla. 1495, 136 So. 474, said:
“ ‘The essential distinction between an indemnity contract and a contract of guaranty or suretyship is that the promisor in an indemnity contract undertakes to protect the promisee against loss or damage through a liability on the part of latter to a third person, while the undertaking of a guarantor or surety is to protect the promisee against loss or damage through the failure of a third person to carry out his obligation to the promisee.’
“See, also, American Employers’ Liability Ins. Co. v. Fordyce, 62 Ark. 562, 36 S.W. 1051, 54 Am.St.Rep. 305; Fidelity & Casualty Co. v. Fordyce, 64 Ark. 174, 41 S.W. 420; Stephens v. Pennsylvania Casualty Co., 135 Mich. 189, 97 N.W. 686, 3 Ann. Cas. 478; Anoka Lbr. Co. v. Fidelity & Casualty Co., 63 Minn. 286, 65 N.W. 353, 30 L.R.A. 689; Fritchie v. Miller’s Pennsylvania Extract Co., 197 Pa. 401, 47 A. 351; Klotzbach v. Bull Dog Auto F. Ins. Ass’n, (Mo.App.), 267 S.W. 39; Ross v. American Employers’ Liability Ins. Co., 56 N.J.Eq. 41, 38 A. 22; Fenton v. Fidelity & Casualty Co., 36 Or. 283, 56 P. 1096, 48 L.R.A. 770; London & Lancashire Indemnity Co. v. Cosgriff, 144 Md. 660, 125 A. 529.”
Authorities in addition to those cited could be multiplied indefinitely to support the proposition that a casualty insurance policy is one merely to protect the person taking it out against liability to third parties, and in the absence of a provision in the policy permitting third parties to sue, or in the absence of a statute requiring motor vehicle owners to carry policies for the protection of third parties, no rights accrue to third parties until a judgment has *895been obtained against the insured, whereupon the insurance company becomes indebted to the insured, and the holder of the judgment could then run a garnishment against the insurance company to have applied to his judgment any indebtedness due by the company to the insured. See 29 Amer.Jur. §§ 1080 and 1081, pp. 810-812.
In the present case, if the Herrins had a judgment against Upchurch and a garnishment were issued against the insurance company, it could truthfully reply that it owed Upchurch nothing because Upchurch breached his contract with the company and failed to take out the insurance with the company or to pay the premiums or to perform any part of his contract with the company. Since the company, because of Upchurch’s first breach of his contract with it, would be relieved of liability to Up-church and would have no indebtedness to Upchurch, and since the Herrins have no greater right than Upchurch, it clearly follows that the insurance company in this case should be exonerated. I, therefore, dissent from the majority opinion.