DAVISON v. MARYLAND CASUALTY CO

Insurance, Against liability. By a policy of insurance against liability for accidents, the insurer agreed that the insured was to be reimbursed for sums paid by him not exceeding $5,000 on judgments recovered after a trial founded on an accident described in the policy. An action was brought against the insured for injuries from an accident covered by the policy. The insurer defended the action under a provision in the policy that it should do so "at its own cost" and "in the name and on behalf of the insured." The plaintiff in the action obtained a judgment for $5,000, and, against the remonstance of the insured, the insurer alleged exceptions which were overruled by this court, the necessary delay causing an increase in the interest on the amount of the verdict. Final judgment was entered for $5,420, made up of $5,000 for the amount of the verdict, $90 for taxable costs and $330 for interest on the amount of the verdict. The insurer paid $5,090, including the amount of the verdict and the taxable costs, but refused to pay the $330 for interest included in the judgment. Execution for this last named amount issued against the insured, who paid it, and sued the insurer for reimbursement under his policy. Held, that the plaintiff could not recover, the defendant having discharged fully its obligations under the policy; that the provision in the policy that the insurer should defend such an action against the insured "at its own cost" was not intended to extend the limit of its liability, and that the provision that the defence should be "in the name and behalf of the insured" did not mean that the insurer should regard the interest of the insured to the prejudice of its own interest if there was a conflict between them, such as occurred on the question of carrying the case to this court on exceptions; that the fact that the defendant had paid the amount of the taxable costs included in the judgment was immaterial and it was not necessary to consider whether the defendant was bound to pay these costs or not; that under the policy the limit of the defendant's obligation was a judgment not exceeding $5,000 and the fact that the amount of the judgment in excess of that sum was made up of interest was immaterial.

LORING, J.

The contract here sued on is one to "indemnify" the plaintiff "against loss from common law or statutory liability for damages on account of bodily injuries . . . caused through the negligence of the assured," c. What is meant by the words "against loss" is described in article 8 of the conditions precedent to which the insurance is stated to be subject. Article 8 provides that no action shall lie for "any loss," unless brought "to reimburse" the assured "for loss actually sustained and paid by him in satisfaction of a judgment after trial of the issue." By special agreement A, "the company's liability for an accident resulting in injuries to . . . one person is limited to five thousand dollars."

The result of these provisions is that the plaintiff was to be reimbursed for sums paid by him not exceeding $5,000, on judgments recovered after a trial founded on accidents described in the policy. See Connolly v. Bolster, 187 Mass. 266, and cases there cited.

The first argument of the plaintiff's counsel in support of the ruling made in the court below is that interest accruing on the verdict included in the judgment is a part of the expense of litigation which is to be borne by the defendant under article 2 of the conditions precedent. That article provides that the company will "defend against such proceeding in the name and on behalf of the assured, or settle the same at its own cost." Doubtless the defendant must pay all expenses of the defence of the action against the insured, whether the words "at its own cost" qualify the verb "defend" or are to be limited to the words "settle the same." But this article is not put in to add to the indemnity to which the plaintiffs are entitled. It is manifestly inserted to describe the terms on which the defence of the action which is given to the company for its own benefit by articles 2 and 3 is to be conducted. See in this connection Connolly v. Bolster, 187 Mass. 266, 270.

The next argument put forward by the plaintiff's counsel is that the effort made to upset the verdict for $5,000 was made in the interest of the defendant alone; that the plaintiff had nothing to gain from it, and as matter of fact he remonstrated against the case being carried further. Unless the words in article 2 of the conditions precedent "in the name and on behalf of the insured" are to be construed to require the defendant, in conducting the defence of the action brought against the assured, to consult the interest of the insured to the prejudice of its own interests in case of a conflict between the two, this argument cannot prevail; and we are of opinion that these words cannot be given that construction. Take for example the possibility suggested by the plaintiff's counsel in connection with the defendant's determination to carry the exceptions in the case at bar to this court. If the defendant had been successful in getting the verdict of $5,000 set aside, the jury, on the new trial, might have brought in a verdict for $10,000. We cannot believe that these words required the defendant to forbear pressing the exceptions which had been taken in the hope that a second trial would result more favorably to it, because a second trial might result to the detriment of the plaintiff, who had nothing to pay on the verdict in question if the case was not carried further.

By articles 2 and 3 of the conditions precedent, the conduct of the defence is given to the defendant in the fullest terms, manifestly for its (the insuring company's) benefit. These words ("in the name and on behalf of the insured") were not in our opinion inserted to describe or qualify the discretion of the defendant in the conduct of that defence, but to state that although the case is against the assured the conduct of the defence shall be in the insurer alone.

Such a contingency as that which has happened in the case at bar furnishes a reason for such a contract of indemnity as that now before us in terms other than those employed in the case at bar. But the terms of the contract here in question are plain and admit of but one construction.

The last argument put forward by the plaintiff is that the interest here in question stands on the same footing as taxable costs; and since the defendant paid the taxable costs it must, if "consistent," pay this interest. For the reasons already stated we are of opinion that the defendant was not bound to pay the interest. There is no occasion for us to consider whether the defendant was bound to pay the costs which it paid.

An insured who pays $5,000 or a smaller sum on a judgment can recover the sum paid with interest. But the fact that the amount of the judgment is made up in part of interest on the verdict is immaterial. The measure of the defendant's obligation is a judgment not exceeding $5,000. With the possible exception of Cudahy Packing Co. v. New Amsterdam Casualty Co. 132 Fed. Rep. 623, this result has been reached in all the cases brought to our attention. See National Providence Worsted Mills v. Frankfort Ins. Co. 28 R.I. 126 and cases there cited.

Judgment for the defendant.