Southern Surety Co. v. Puryear-Meyer Grocer Co.

McCulloch, C. J. Appellee, a doméstic corporation, is engaged in the mercantile business in the city of Paragould, and operates one or more automobile trucks in connection with its business. One of these trucks collided with and damaged an automobile owned by G. W. Scott, and the latter made claim against appellee for reimbursement for the injury thus inflicted. Appellee carried with appellant a policy of indemnity insurance covering liability of the kind which includes Scott’s claim against appellee. Scott obtained a default judgment in the common pleas court of Greene Count}'- for the amount of his claim, and then demanded payment of the judgment, but appellee refused to pay the judgment on the ground that it had not been served with process in the action. The record in that case does not show that any process had been issued or served. Scott then abandoned the judgment and caused another summons to be issued and served on appellee, who notified appellant of the pendency of the suit and forwarded to appellant a copy of the summons. Appellant, through its attorneys, took charge of the litigation and appealed to the circuit court from the second judgment rendered against appellee, and after the cause reached the circuit court on appeal, those attorneys interposed a defense of res judicata, based on the former judgment rendered in the common pleas court. No other defense wast interposed. The court sustained his plea, and entered a judgment accordingly, but the next day, at the request of one of the managing officers of appellee company, set aside the order sustaining the plea and continued the case until the next term of the court. Subsequently appellee paid the judgment, and the appeal from the common pleas court was dismissed by consent. Appellee then instituted the present action against appellant to recover on the policy of indemnity insurance. According to the stipulations of the policy, appellee, as the assured thereunder, undertook to perform the condition upon which liability against appellant should be asserted as follows: “(a) Upon the occurrence of an accident covered by this policy, the assured shall give immediate written notice thereof with the fullest information obtainable at the time to the company, or its duly authorized agent. If a claim is made on account of such accident, the assured shall give like notice thereof, with full particulars. If suit is brought to enforce such claim, the assured shall immediately forward to the company every summons, or other process, as soon as same shall have been served upon him. The assured shall at all times render to the company all co-operation and assistance, except in a pecuniary way, within his power. “(b) The assured * * * shall not interfere in any negotiations for settlement, or in any legal proceeding conducted by the company on account of any claim * The defense relied on in the present action is that appellee failed to notify appellant of the first suit instituted by Scott gnd failed to forward a copy of the summons, and that appellee interfered with the efforts of appellant to defend against the Scott suit in the circuit court. The material facts in the case are undisputed, and it is unnecessary to consider the assignments of error with respect to the charge of the court to the jury. The failure of appellee to notify appellant prior to the first judgment entered in the common pleas court affords no defense to the present action, for that judgment was abandoned. The purpose of the stipulation in the policy was to afford the company an opportunity to control the litigation and interpose a defense against tlie claim on the merits of the case. The first judgment obtained by Scott against appellee was abandoned, and no payment was made thereunder, and no liability against appellant is sought by virtue of an enforced payment of that judgment, hence it is clear that there was no breach of the conditions of the policy by failure of appellee to give notice of the first suit. Nor do we think, under the undisputed evidence, that there was any interference with appellant in defending against the suit in the circuit court. It offered no defense on the merits, but merely interposed a plea of res judicata, which was obviously done for the purpose, not of defeating the claim of Scott, but to establish the liability under the first .judgment so as to afford appellant a defense against appellee’s claim for indemnity. Appellant was let in to defend against the original litigation, not,for the purpose of absolving itself from liability to appellee, but to defend against the claim of Scott, and appellee was not bound to sit by and permit appellant’s attorneys to conduct the litigation solely for the purpose of enabling appellant to escape liability, and at the same time to fasten upon appellee the liability for Scott’s claim. "VVe are of the opinion, therefore, that the judgment was correct upon the undisputed evidence, and no error in the instructions could have been prejudicial. . Affirmed.