The appeal in this case is from a judgment in favor of the defendants for costs, entered in the Court of Common Pleas of Baltimore City, after a demurrer to the declaration had been sustained, with leave to amend, upon a motion for a non pros,
the plaintiff having declined to amend.
Specifically, the basis of the demurrer is that the defendants are sued as joint obligors on a contract, a copy of which is filed with the declaration, which contract is in the form of an insurance policy, issued by the defendants, and severally insuring the plaintiff against loss by reason of (a) bodily injury, and (b) property damage, it being contended that there is a misjoinder of parties defendant.
The declaration alleges that the defendants issued a policy of automobile insurance to the plaintiff, and that, during the period in which said policy was in full force and effect, the latter, while driving his automobile, collided with the automobile of one John Fletcher Tatom, as a consequence of which collision Mr. Tatom sustained personal injuries, and damage to his automobile. He thereafter filed suit in the District Court of the United States for the District of Maryland, against the plaintiff below (appellant in this court), to recover for both personal injuries and property damage, which suit resulted in a judgment against the appellant, in favor of the said Tatom, in the sum of $3000, with interest and costs.
It is set forth in the declaration that under the terms of the insurance policy issued by the defendants, the latter agreed to pay on behalf of the plaintiff all sums which the plaintiff might become obligated to pay by reason of the liability imposed upon him by law for damages, because of bodily injuries and property damage, suffered by any person or persons and caused by accident arising out of the ownership, maintenance or use of the automobile mentioned in the policy and involved in the accident, subject to the limitation as to liability hereinafter noted. And further agreed to pay all costs taxed
against the insured in any suit against him, including interest accruing after entry of judgment, until such time as the defendants tender or deposit in court such part of said judgment as does not exceed the limit of the liability of the defendants under the terms of the policy.
Finally the declaration alleges that although the policy of automobile liability insurance, to which reference is above made, purports to have been issued by the American Automobile Insurance Company and the American Automobile Fire Insurance Company, the defendants, in capacities of separate corporate entities, the one insuring against liability for personal injuries only, and the other against liability for property damage only; nevertheless, the said defendants, in fact, constitute but one corporate entity, in that the latter company, above named, is a wholly owned subsidiary of the former. That the companies have identical officers, directors and managers, "who have so organized, controlled and conducted the business and affairs of the American Automobile Fire Insurance Company as to render it, in fact, a mere agent, adjunct and instrumentality of the American Automobile Insurance Company." And that apart from the latter company, the former has no separate existence in fact or in practical operation; wherefore the above judgment, representing, as it does, a liability against the plaintiff for both personal injury and property damage, is a liability which the American Automobile Insurance Company, directly and through its alterego, the American Automobile Fire Insurance Company, agreed to pay under the terms of the policy; the plaintiff having complied with all its provisions, and the defendants having failed to pay said judgment, although demand has been duly made upon them for the payment of the same.
The above declaration is filed under the Speedy Judgment Act (Acts 1886, ch. 184), and a part of the voucher or cause of action filed with the same is a copy of the policy, termed a combination automobile policy, by American Automobile Insurance Company and American Automobile Fire Insurance Company, each a stock company.
The insuring clause of the policy is as follows: "American Automobile Insurance Company and American Automobile Fire Insurance Company, St. Louis, Missouri (each a stock insurance company, herein called the Company), do hereby severally agree with the insured, named in the declaration made a part hereof, in consideration of the payment of the premium and of the statements contained in the declarations and subject to the limits of liability, exclusion, conditions, and other terms of this policy, provided (1) that the American Automobile Insurance Company shall be the insurer with respect to coverage A if a premium is specified and charged in Item 3 of the declarations, and no other, and (2) that the American Automobile Fire Insurance Company shall be the insurer with respect to any one or more of the coverages B, C, D, D-1, E, F, G, H, and I, for which a premium is specified and charged in Item 3 of the declarations, and no other."
Item 3 of the "declarations" states that as to coverage "A" the American Automobile Insurance Company insures against "bodily injury liability in the limits of $5000.00 each person and subject to that limit for each person" and "$10,000.00 each accident," for a premium of $32.30, and that the total "premium, American Automobile Insurance Company," is $32.30. Thereafter, in the "declarations in the same Item 3, it is shown that the American Fire Insurance Company insures against coverage "B" or "property damage liability" within the limits of $5000 each accident, for a premium of $13.60, and at the end of said Item 3, "total premium, American Automobile Fire Insurance Company," $13.60. This is followed by the line, "total premium both companies, $45.90."
The policy is separately signed by the president and secretary of each company, who are, respectively, the same persons; one of the executions being on behalf of the American Automobile Insurance Company with respect to coverage "A" and such other parts of the policy as are applicable thereto; and the other being on behalf
of the American Automobile Fire Insurance Company, with respect to coverage "B," in like manner.
A certified copy of the judgment rendered against the appellant in the federal court is found in the record, and a statement of the same is made, filed and sworn to, in connection with the aforegoing insurance policy, in support of the cause of action in this case.
As indicated, the sole question before us is whether the demurrer was properly sustained; and accordingly, that question will be now considered.
The situation in the instant case is an anomalous one, and a careful review of the authorities has resulted in our failure to find an instance in which two surety companies, at the same time, in what, in effect, is one and the same policy of insurance, purport to insure against liability for personal injury in one clause of the combination contract, and against liability for property damage in another clause, upon the theory that the contract is entered into with the insured by two corporate entities, in themselves separate and distinct.
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The appeal in this case is from a judgment in favor of the defendants for costs, entered in the Court of Common Pleas of Baltimore City, after a demurrer to the declaration had been sustained, with leave to amend, upon a motion for a non pros,
the plaintiff having declined to amend.
Specifically, the basis of the demurrer is that the defendants are sued as joint obligors on a contract, a copy of which is filed with the declaration, which contract is in the form of an insurance policy, issued by the defendants, and severally insuring the plaintiff against loss by reason of (a) bodily injury, and (b) property damage, it being contended that there is a misjoinder of parties defendant.
The declaration alleges that the defendants issued a policy of automobile insurance to the plaintiff, and that, during the period in which said policy was in full force and effect, the latter, while driving his automobile, collided with the automobile of one John Fletcher Tatom, as a consequence of which collision Mr. Tatom sustained personal injuries, and damage to his automobile. He thereafter filed suit in the District Court of the United States for the District of Maryland, against the plaintiff below (appellant in this court), to recover for both personal injuries and property damage, which suit resulted in a judgment against the appellant, in favor of the said Tatom, in the sum of $3000, with interest and costs.
It is set forth in the declaration that under the terms of the insurance policy issued by the defendants, the latter agreed to pay on behalf of the plaintiff all sums which the plaintiff might become obligated to pay by reason of the liability imposed upon him by law for damages, because of bodily injuries and property damage, suffered by any person or persons and caused by accident arising out of the ownership, maintenance or use of the automobile mentioned in the policy and involved in the accident, subject to the limitation as to liability hereinafter noted. And further agreed to pay all costs taxed
against the insured in any suit against him, including interest accruing after entry of judgment, until such time as the defendants tender or deposit in court such part of said judgment as does not exceed the limit of the liability of the defendants under the terms of the policy.
Finally the declaration alleges that although the policy of automobile liability insurance, to which reference is above made, purports to have been issued by the American Automobile Insurance Company and the American Automobile Fire Insurance Company, the defendants, in capacities of separate corporate entities, the one insuring against liability for personal injuries only, and the other against liability for property damage only; nevertheless, the said defendants, in fact, constitute but one corporate entity, in that the latter company, above named, is a wholly owned subsidiary of the former. That the companies have identical officers, directors and managers, "who have so organized, controlled and conducted the business and affairs of the American Automobile Fire Insurance Company as to render it, in fact, a mere agent, adjunct and instrumentality of the American Automobile Insurance Company." And that apart from the latter company, the former has no separate existence in fact or in practical operation; wherefore the above judgment, representing, as it does, a liability against the plaintiff for both personal injury and property damage, is a liability which the American Automobile Insurance Company, directly and through its alterego, the American Automobile Fire Insurance Company, agreed to pay under the terms of the policy; the plaintiff having complied with all its provisions, and the defendants having failed to pay said judgment, although demand has been duly made upon them for the payment of the same.
The above declaration is filed under the Speedy Judgment Act (Acts 1886, ch. 184), and a part of the voucher or cause of action filed with the same is a copy of the policy, termed a combination automobile policy, by American Automobile Insurance Company and American Automobile Fire Insurance Company, each a stock company.
The insuring clause of the policy is as follows: "American Automobile Insurance Company and American Automobile Fire Insurance Company, St. Louis, Missouri (each a stock insurance company, herein called the Company), do hereby severally agree with the insured, named in the declaration made a part hereof, in consideration of the payment of the premium and of the statements contained in the declarations and subject to the limits of liability, exclusion, conditions, and other terms of this policy, provided (1) that the American Automobile Insurance Company shall be the insurer with respect to coverage A if a premium is specified and charged in Item 3 of the declarations, and no other, and (2) that the American Automobile Fire Insurance Company shall be the insurer with respect to any one or more of the coverages B, C, D, D-1, E, F, G, H, and I, for which a premium is specified and charged in Item 3 of the declarations, and no other."
Item 3 of the "declarations" states that as to coverage "A" the American Automobile Insurance Company insures against "bodily injury liability in the limits of $5000.00 each person and subject to that limit for each person" and "$10,000.00 each accident," for a premium of $32.30, and that the total "premium, American Automobile Insurance Company," is $32.30. Thereafter, in the "declarations in the same Item 3, it is shown that the American Fire Insurance Company insures against coverage "B" or "property damage liability" within the limits of $5000 each accident, for a premium of $13.60, and at the end of said Item 3, "total premium, American Automobile Fire Insurance Company," $13.60. This is followed by the line, "total premium both companies, $45.90."
The policy is separately signed by the president and secretary of each company, who are, respectively, the same persons; one of the executions being on behalf of the American Automobile Insurance Company with respect to coverage "A" and such other parts of the policy as are applicable thereto; and the other being on behalf
of the American Automobile Fire Insurance Company, with respect to coverage "B," in like manner.
A certified copy of the judgment rendered against the appellant in the federal court is found in the record, and a statement of the same is made, filed and sworn to, in connection with the aforegoing insurance policy, in support of the cause of action in this case.
As indicated, the sole question before us is whether the demurrer was properly sustained; and accordingly, that question will be now considered.
The situation in the instant case is an anomalous one, and a careful review of the authorities has resulted in our failure to find an instance in which two surety companies, at the same time, in what, in effect, is one and the same policy of insurance, purport to insure against liability for personal injury in one clause of the combination contract, and against liability for property damage in another clause, upon the theory that the contract is entered into with the insured by two corporate entities, in themselves separate and distinct. It is undoubtedly true that upon the face of the policy now subject to our review, it is apparent that the contract entered into by and between the plaintiff and defendants was designed to create separate and distinct contractual relations with the plaintiff on the part of the defendants; that is to say, that one of the defendants, by its contract with the plaintiff, insured the latter against liability for bodily injury "and no other," and that the remaining defendant insured the plaintiff against liability for property damage "and no other."
If the contract must be construed as contended by the defendants, it is obvious that its inevitable effect, in all cases wherein the insured sustains both personal injury and property damage in one and the same accident, is to relieve the two defendants of a liability which, although purporting to be separately entered into, nevertheless was entered into on the part of the same officers of the contracting defendants will full knowledge on their part of a dilemma in which the insured would find himself in
event of the happening of such a contingency as set forth in the declaration filed in this case. It would hardly be contended, notwithstanding the plain and unambiguous language of the combination policy, that the purpose of the same, when the separate parties to the combination entered into it, was to protect the insured in those cases only in which his accident resulted in either the one or the other liability insured against, upon the contingency of their happening separately in an accident; and in freeing the combination of liability upon the contingency of their happening coincidentally.
In the last analysis, for the reason that the respective amounts awarded against the insured for personal injuries and for property damage are not segregated and separately shown by the judgment against him, for which he now seeks reimbursement from his insurer, it is the present contention of the defendants that the former is not entitled to recover against either of them. And that contention is urged, notwithstanding the circumstance that the defendants, in unison, contracted with the plaintiff, and in spite of the inherent probability that any accident covered by the policy, in which the insured might be required to answer in damages, would involve both personal and property injury.
When, through the combination policy involved in the instant case, the term "the company" is used in a singular sense, with reference to matters bearing upon the liability assumed; the purport of the agreements entered into; the refund of excessive premiums and the right of cancellation; connected as the above references are with the general statement that the "policy embodies all agreements between himself and the company or any of its agencies relating to this insurance"; it is apparent that the collective terms indicated are glaringly inconsistent with the contention that the undertaking with respect to personal damages and damages to property are severally distributed between separate and distinct insurers.
As a general proposition it is undoubtedly true that in actionsex contractu, only defendants who are jointly liable under the terms of the contract can be joined in the same suit. 1 Poe, Pl. Pr., sec. 379A. And unless the terms of the policy before us can be so construed as to warrant the joinder of the two defendants in one suit, upon the theory alleged by the insured that one of them is the mere alter ego of the other, the effect of the contract between the insured and his insurers, under the state of facts alleged in the declaration, is to release the latter from liability in the instant suit, and thereby deny indemnity to the former.
The language of a policy, being that of the company, should, where involved and conflicting, receive that construction which will give effect to all parts of the instrument and bring results as nearly approximating equity as possible. Royal Exch. Assur.of London v. Thrower, 246 Fed. 768, 159 C.C.A. 70; Cooley'sBriefs on Insurance, vol. 2, p. 965.
It is apparent that these companies united in a combination policy, to indemnify against a combination of losses, which, at the time they contracted with the insured, they must have known, or at least should have known, under the practice followed in the state in which the policy was issued, might be combined in one judgment against the insured, without distinction or segregation as to the respective items of personal and property damage. Considering, therefore, the circumstances under which the policy before us was executed, the singular or collective reference to the alleged separate insurers throughout the instrument, the inconsistency of the construction the insurers seek now to be placed upon it, with the element of good faith and the presumption against fraud, we are of the opinion that the demurrer should have been overruled, and accordingly the judgment will be reversed, and the case remanded for trial.
Judgment reversed, and case remanded for trial, with costs tothe appellant.