Opinion
41556.
ARGUED OCTOBER 4, 1965.
DECIDED NOVEMBER 3, 1965.
Suit on policy. Columbia Superior Court. Before Judge Killebrew.
Hull, Towill Norman, Julian B. Willingham, for plaintiff in error.
William C. Calhoun, contra.
The evidence did not authorize a finding that the failure and refusal of the defendant insurance company to settle two personal injury damage suits against the plaintiff insured within the limits of an automobile liability insurance policy issued by the insurer to the insured constituted bad faith which is the test of an insurance company's liability to its policyholder for an excess judgment.
ARGUED OCTOBER 4, 1965 — DECIDED NOVEMBER 3, 1965.
This was a suit to recover damages sustained by the plaintiff insured as a result of the defendant insurance company's alleged acts of bad faith in refusing to settle two personal injury damage suits against the insured within the limits of an automobile liability policy issued to the plaintiff by the defendant. In Cotton States Mut. Ins. Co. v. Phillips, 110 Ga. App. 581 ( 139 S.E.2d 412), this court held that count 1 of the petition did not state a cause of action as against general demurrer for the reason that it was not alleged that the suits could have been settled by the defendant insurer. Reference may be had to this decision and to Cotton States Mut. Ins. Co. v. Phillips, 108 Ga. App. 56 ( 131 S.E.2d 803), for a complete statement of the factual situation out of which this litigation arose.
Before the judgment of this court reversing the order of the trial court which had overruled the defendant's general demurrer to count 1 of the petition was made the judgment of the trial court, the plaintiff filed an amendment to his petition in which he alleged that the suits could have been settled within the policy limits both before and after verdict and judgment; and after the defendant's general and special demurrers to the amended petition were overruled, the plaintiff having dismissed count 2 of his petition, the case proceeded to trial. The jury returned a verdict for the plaintiff and the defendant filed a motion for a judgment notwithstanding the verdict based on its previous motion for a directed verdict and in the alternative a motion for new trial. The exception is to the denial of these motions and to the antecedent ruling on the demurrers.
Assuming for the sake of argument only that the evidence was sufficient to authorize a finding that the defendant insurer could have settled the damage suits against its insured for an amount within the policy limits both before and after judgment, there is no evidence which would authorize the finding that its failure and refusal to do so was capricious and constituted bad faith — this being the test of an insurer's liability in a case such as this. Cotton States Mut. Ins. Co. v. Fields, 106 Ga. App. 740 ( 128 S.E.2d 358); Georgia Cas. c. Co. v. Reville, 97 Ga. App. 888 ( 104 S.E.2d 643).
The plaintiff alleged both in his original and amended petition that the defendant's investigative file showed that the plaintiff insured was liable for the injuries of both claimants and that such injuries exceeded the policy limits, but this file was not introduced in evidence; nor was any other evidence adduced which would authorize the finding that it was the opinion of the defendant insurer that its insured was liable to both claimants for an amount in excess of the policy limits and that in view of such opinion it wilfully refused to entertain and accept an offer of settlement within the policy limits in conscious disregard of the position of the insured with respect to an excess judgment.
Conversely, the finding is authorized that the defendant insurer refused the offers of settlement on the ground that its liability under the policy was substantially less than such offers. The record shows that after judgments were entered in behalf of the plaintiffs in the damage suits against its insured, the defendant insurer paid to them the amount of its admitted liability, $10,000, as a credit on such judgments, and secured an agreement from these parties that they would not attempt to enforce their judgments against its insured until the insurer could seek and obtain a court adjudication of its liability under the policy by a proceeding for declaratory judgment. The contentions made by the insurer in this regard are fully are set forth in the decision of this court in Cotton States Mut, Ins. Co. v. Phillips, 108 Ga. App. 56, supra, and need not be restated here. This court in that case affirmed the judgment of the trial court which had ruled adversely to the contentions of the defendant insurer, and after certiorari was denied by the Supreme Court, the defendant insurer paid the additional sum of $11,300 on the judgments rendered against its insured.
While the issue of the amount of the defendant's liability under its policy with respect to these suits and the judgments entered thereon was decided adversely to the defendant, it cannot be said that it was guilty of bad faith in seeking a judicial determination of this issue, as it involved a close question of law previously undecided in this State. Indeed, the decision of this court in State Farm Mut. Automobile Ins. Co. v. Hodges, 111 Ga. App. 317 ( 141 S.E.2d 586), which followed the Phillips case, 108 Ga. App. 56, supra, was reversed by the Supreme Court in a decision rendered on September 22, 1965, State Farm Mut. Auto Ins. Co. v. Hodges, 221 Ga. 355 ( 144 S.E.2d 723), which in part sustained the position unsuccessfully advocated by the defendant insurer in the Phillips case, supra.
The evidence did not authorize a finding that the defendant insurance company was guilty of bad faith in refusing to settle the suits against its insured within the policy limits. A verdict was therefore demanded for the defendant, and the trial court erred in denying its motion for judgment notwithstanding the verdict. Since this ruling constitutes a final disposition of this case by this court, the remaining assignments of error need not be considered.
Judgment reversed with direction that judgment be entered for the defendant. Felton, C. J., and Deen, J., concur.