Summary
In Ericson, the Court of Appeals held that a person driving a car with the owner's permission (thereby qualifying as an "insured" under the owner's policy) was bound by the settlement entered into by the injured party and the vehicle owner's insurer since the permissive driver had "chosen to invoke the coverage" provided by the owner's insurer.
Summary of this case from Ga. Farm Bureau Mut. Ins. Co. v. MartinOpinion
40627.
DECIDED MAY 27, 1964.
Action for damages, etc. DeKalb Superior Court. Before Judge Guess.
Poole, Pearce Hall, William F. Lozier, for plaintiff in error.
Nall, Miller, Cadenhead Dennis, Edward S. White, contra.
1. (a) One who is entitled to be an insured or additional insured under an automobile liability policy is not a party to the contract but has the right to elect whether to come under the coverage offered by the policy.
(b) An additional insured once having elected to invoke the coverage of an automobile liability policy after the event insured against occurred becomes bound by the terms of the agreement, and neither the additional insured, the insurer, nor the named insured can thereafter materially modify or change the contract so as to affect the rights of the additional insured except by the mutual accord of all three.
(c) Once an additional insured has elected to invoke the coverage offered by an automobile liability policy, the right of coverage, arising as it does from the contract, is impressed with the restrictions imposed by the contract's terms.
(d) The case of Aetna Cas. c. Co. v. Brooks, 218 Ga. 593 ( 129 S.E.2d 798) controls this case adversely to the plaintiff in error.
2. Where an additional insured requested the insurer to defend her case and insisted that the insurer pay any judgment which might be rendered against her on the counterclaim, these acts served effectively to constitute her election to seek the protection of the policy and to ratify the settlement previously taken by the insurer as her agent. Brooks, supra.
3. The provisions of Ga. L. 1963, pp. 643-644, are not applicable to this case for the reasons stated in Division 3 of the opinion.
DECIDED MAY 27, 1964.
The plaintiff in the trial court, Mrs. Ericson, was entitled to be an additional insured under an automobile liability policy at the time she was involved in a collision between the car she was driving and one being driven by the defendant Hill. The automobile driven by Mrs. Ericson was owned by her deceased husband whose estate succeeded to the benefit of the policy. On February 8, 1960, the day following the collision, Mrs. Ericson reported the mishap to Allstate Insurance Company, the insurer. On May 20, 1960, the insurer entered into a settlement with Hill whereby Hill released all claims against Mrs. Ericson resulting from the collision. Mrs. Ericson admits the existence of the release but asserts it is not binding on her for the threefold reason: that it was not secured with her knowledge, consent, or approval; that she had no contractual relationship with the insurer; and that the insurer was not acting as her agent in making the settlement.
Mrs. Ericson filed suit for damages against Hill on June 19, 1961. On July 19, 1961, Hill filed his answer to the suit and entered a counterclaim against Mrs. Ericson. By letter to the Allstate Insurance Company dated July 26, 1961, counsel for Mrs. Ericson enclosed the answer and counterclaim and requested of the insurer "that you take the necessary steps to defend and protect Mrs. Ericson under the terms of her insurance policy with Allstate which was in effect at the time of the occurrence in question." The insurer through its counsel by letter dated August 21, 1961, agreed to defend the counterclaim and notified Mrs. Erickson of its intention to file a plea in bar based upon the release. On December 21, 1961, Mrs. Ericson informed the insurer: that she would not permit the filing of the release as a plea in bar to the counterclaim; that she was not waiving her insurance coverage; and that she insisted the insurer defend the counterclaim and pay any judgment that might be rendered against her.
The defendant Hill filed a motion for summary judgment in his favor on the ground that the release taken by Allstate Insurance Company from him constituted a settlement of Mrs. Ericson's claim against him and bars any action by her against him. The motion for summary judgment was granted and judgment entered in the defendant's favor. It is to this judgment that exceptions are brought.
1. The plaintiff in error insists that the settlement acquired by the insurer from the one she sues which purports to release her from all liability arising from the automobile collision is not binding on her for the reasons that it was not secured with her knowledge or approval, that she had no contractual relationship with the insurer, and that the insurer was not acting as her agent in making the settlement. These contentions have no merit.
While the insurance contract has not been made a part of the record in this case, the admissions and the evidence show conclusively that Mrs. Ericson was an insured under the policy though she was not the named insured. In this capacity she was not a party to the contract. She was merely a third party beneficiary who had an independent power of election and one who was under no contractual duty either to the named insured or the insurer. At that point, had she wished to do so, she could have decided to reject the insurance coverage offered her by the contract of others. If she had followed that course, then nothing done by either the named insured or by the insurer could have affected her private rights. But once having chosen to invoke the coverage after the event insured against occurred, as she did, she became bound by the terms of the agreement and neither she, the insurer, nor the named insured could thereafter materially modify or change the contract so as to affect her rights except by the mutual accord of all three. Liner v. Travelers Ins. Co., 50 Ga. App. 643, 645 ( 180 S.E. 383). Mrs. Ericson's election served to vest in her the privilege of the liability coverage sanctioned by the policy agreement. In turn this right of coverage, arising as it did from the contract, is impressed with the restrictions imposed by the contract's terms. One of these restrictions, as shown by the pleadings and the evidence, is that "Allstate . . . may make such settlement of any claim or suit [against any insured] as it deems expedient." It was established in Aetna Cas. c. Co. v. Brooks, 218 Ga. 593 ( 129 S.E.2d 798) that similar language in an automobile liability insurance policy authorized the insurer as agent for the insured to make settlement of any claim against its insured with or without the consent, ratification or knowledge of the insured. The Brooks case held further, that where settlement was made by the insurer in that capacity, the settlement was binding on the insured and barred any action on the cause which the insured might bring against the other party to the release agreement. These holdings control adversely to the plaintiff in error the only issues raised in this case.
2. It is not necessary for us to consider whether the report of the collision rendered by the plaintiff in error to the insurer on the day following the accident is sufficient to constitute the required notice under the terms of the policy and thus adequate to constitute her election to invoke the liability coverage the contract offered her. Whether the report was enough or not is immaterial, as the record shows by admission and evidence that the plaintiff in error, after the counterclaim was filed, requested the insurer to defend her and insisted that the insurer pay any judgment which might be rendered against her on the counterclaim. These demands served effectively, on their acceptance by the insurer, to constitute her election to seek the protection of the policy and to ratify the settlement previously taken by the insurer.
3. We are aware of the provisions in Ga. L. 1963, pp. 643-644, which otherwise might bear on the issue here had not the contractual rights of the parties accrued prior to its passage and effective date.
The trial judge properly granted the defendant's motion for summary judgment and entered judgment in his favor.
Judgment affirmed. Jordan and Eberhardt, JJ., concur.