Malmgren v. Southwestern Automobile Insurance

California Court of Appeal Sep 21, 1932 No. Docket No. 8417.Published

Before: Spence

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Holding. The court held that the plaintiff's action to recover on the insurance policy was barred by the statute of limitations and that the insurer's obligation to pay interest "irrespective of the limits" of the policy applied only to judgments for which the insurer was liable for the principal sum.

Issues

Whether the plaintiff's action to recover on the insurance policy was barred by the statute of limitations.
Whether the insurer is liable for interest on a judgment for which it is not liable for the principal sum.

Disposition. affirmed

Quotations verified verbatim against the opinion

“his right of action, if any, against respondent for the principal sum of the judgment and costs arose as soon as the judgment became final. It was therefore barred by the statute of limitations.”

“The only logical construction to place upon the word “interest”, as used in the above-mentioned policy, is that it referred only to interest accruing on the principal sum of a judgment for which respondent was liable under the terms of the policy.”

SPENCE, J.

Plaintiff recovered a judgment against one J. A. Eddy for damages sustained by him in consequence of personal injuries to plaintiff’s wife caused by the negligent operation of an automobile by said J. A. Eddy. Plaintiff subsequently brought this action against the defendant insurance company which had issued a policy of insurance to said- J. A. Eddy. The parties entered into a stipulation concerning the facts and a further stipulation that either party might move “for judgment upon the pleadings and the facts stipulated”. The cause was tried upon the motions and judgment was entered in favor of defendant. From this judgment plaintiff appeals.

Before discussing the facts appearing from the pleadings and stipulation, we shall first consider the theory upon which plaintiff based his alleged right to recover from the defendant company. The policy upon which this action was brought contained the following provisions: “The insolvency or bankruptcy of the assured shall not release the company from any payment for which it would otherwise be liable under this policy, and if such insolvency or bankruptcy shall occur and an execution on a judgment recovered in a suit against the assured covered by this policy shall

[137]

be returned unsatisfied, the judgment creditor shall have a right of action to recover the amount of such judgment against the company to the same extent that the assured would have had to recover against the company had the assured paid the said judgment; but in no event shall the company’s liability exceed the limits expressed in this policy.” There was neither allegation nor proof in the present action of insolvency or bankruptcy of the assured; nor was there any allegation or proof that execution had been returned unsatisfied. We therefore conclude that plaintiff as judgment creditor had not attempted to plead and prove a cause of action under the above-mentioned provision of the policy. In this connection the pleading and proof merely showed that plaintiff’s judgment against the assured had become final and that no part thereof had been paid.

This action was filed following the decision in

Malmgren

Southwestern Automobile Ins. Co.,

Malmgren v. Southwestern Automobile Insurance

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SPENCE, J.

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