Opinion
No. 25064
Decided May 8, 1935.
Judgments — No contribution or co-suretyship between indemnitors of joint tort-feasors — Two indemnity companies issued independent policies and joint judgment rendered against indemnitees — Sections 9510-3 and 9510-4, General Code.
Two distinct indemnity companies issued independent insurance policy contracts whereby one agreed to indemnify A, a motor company, against liability for wrongful death caused by the operation of its motor vehicles; the other indemnity company likewise agreed to indemnify B, a motor company, against liability for wrongful death caused by the operation of B's vehicles. Later a plaintiff secured a joint judgment against both tort-feasors, the indemnitees A and B, for concurring negligence in the operation of their respective vehicles, the larger part of which judgment the indemnitor of A paid. Held:
1. No relationship of co-sureties was created between the indemnitors of A and B under such policy contracts; nor does the right of contribution accrue to the indemnitor of A against B's indemnitor by reason of the former's payment of the judgment.
2. Sections 9510-3 and 9510-4, General Code, do not create any relationship of co-sureties between such separate and independent sureties. The statute deals with such indemnifying insurance companies separately and not jointly, each being made responsible for the payment of the judgment.
ERROR to the Court of Appeals of Cuyahoga county.
The parties here stand in the same relation as they did in the Common Pleas Court, where the United States Casualty Company brought suit to recover a judgment by way of contribution against the Indemnity Insurance Company of North America. The indemnity company filed a general demurrer to the petition of the casualty company. The trial court sustained the demurrer to the petition and the plaintiff not desiring to plead further the court dismissed the action. That judgment was affirmed by the Court of Appeals and the cause is here by certification upon the allowance of a motion by this court.
The salient facts contained in the petition are as follows: On May 12, 1929, a passenger on a motor bus owned and operated by Greyhound Lines, Inc., met her death as a result of a collision between the bus and a motor truck and trailer owned and operated by Motor Freight, Inc. Subsequently, one Hampton was appointed administrator of the estate of the passenger and brought suit for damages in the Common Pleas Court of Cuyahoga county against the two operating companies, alleging that the death was caused as a result of the concurring negligence of both companies. The cause was thereafter removed to the United States District Court, where the administrator, on May 12, 1930, recovered a judgment in the amount of $7,500 and costs against the Greyhound Lines, Inc., and the Motor Freight, Inc., jointly. The Motor Freight, Inc., sought no review of that judgment, but the Greyhound Lines appealed to the United States Circuit Court of Appeals, which affirmed the judgment on May 11, 1931.
The casualty company and the indemnity company were both duly licensed to insure owners and operators of motor vehicles against liability for wrongful death caused by reason of the operation of their vehicles. At the time of the collision the motor bus was covered by a policy of liability insurance issued by the casualty company, whereby the latter agreed to indemnify Greyhound Lines, Inc., and the driver of the bus against a liability not exceeding $20,000 to any one person for wrongful death caused by the operation of the bus involved in the collision. Likewise, at the time of the collision the truck and trailer involved in the accident were covered by a policy of liability insurance issued by the indemnity company, whereby the latter agreed to indemnify Motor Freight, Inc., and the driver of the truck and trailer involved in the collision against damage and liability not exceeding $20,000 to any one person for wrongful death caused to others by reason of the operation of its truck and trailer. Both policies were in full force at the time of the collision. In its petition, the casualty company alleged that when judgment was rendered in the federal case against both of these insurance companies, they became jointly liable as co-sureties for the payment of the said judgment under the provisions of Section 9510-4, General Code of Ohio.
Later the indemnity company, on behalf of its assured Motor Freight, Inc., paid to the administrator the sum of $1,000 toward the satisfaction of the judgment procured in the federal court, and refused to pay more, and the administrator refused to attempt the collection of a greater sum from the indemnity company. On June 2, 1931, in order to prevent levy of execution against the property of the Greyhound Lines, Inc., the casualty company was obliged to pay the administrator the balance of $6,500 plus $414.36 interest in order to satisfy the judgment procured in the federal court. The casualty company, in its petition, alleges that it demanded that the indemnity company reimburse the casualty company for the amount of the indemnity company's share of the obligation, which the casualty company was obliged to pay, but the indemnity company refused to do so. The petition alleged that the indemnity company refused to do so. The petition alleged that the indemnity company's share of the judgment and interest amounts to $3,957.18 and that, after a credit of $1,000 on the judgment which the indemnity company paid, that there is due from the latter to the casualty company, by way of contribution, the sum of $2,957.18 with interest from the time the casualty company paid the administrator. The petition asks judgment against the indemnity company for that amount.
Messrs. Hartshorn, Thomas Abele, Mr. William H. Thomas and Mr. H.W. Arant, for plaintiff in error.
Messrs. Keenan Butler, for defendant in error.
Since the casualty company paid the major part of the judgment rendered against its own assured and the assured of the indemnity company jointly, it invokes the equitable doctrine of contribution ordinarily applicable to co-sureties. It seeks to recover from the indemnity company, by way of contribution, the latter's proportionate share of the amount paid by the casualty company to fully satisfy the judgment. Before the casualty company can invoke the doctrine of contribution it must show that both it and the indemnity company entered into a co-surety relationship whereby each agreed to indemnify the same or common principal in respect to the same debt or obligation. Where several distinct surety companies became bound to the same principal by separate instruments, yet, if each limited its pecuniary liability in the event of default of such principal, the suretyship of each became separate and distinct transactions, and the relationship of co-suretyship would not arise; nor would the right of contribution exist. Assets Realization Co. v. American Bonding Co. of Baltimore, 88 Ohio St. 216, 102 N.E. 719, Ann. Cas. 1915A, 1194. In the course of the opinion the judge cites Hartwell v. Smith, 15 Ohio St. 200, 203, which announces the following principle: "Whenever several sureties stand in the relation to each other of co-sureties, by being bound for the same person, and for the same debt or engagement, so that they have a common interest, or a common burden to bear, if one of them be compelled to bear the whole or a part of the burden alone, he may call upon his co-sureties to equalize the burden by contribution." In the course of the opinion in the Bonding Co. case the rule is stated thus: "It seems then that the test of co-suretyship is, as stated by counsel, common liability upon the same obligation. * * * It is an equity which springs up at the time the relation of co-sureties is entered into and ripens into a cause of action when one surety pays more than his portion of the debt."
Applying the doctrine to the instant case, it is manifest that the constituent elements creating the relationship of co-suretyship are absent in the case at bar. The several sureties were not bound to the same person; nor for a common principal; nor for the same debt or obligation when the claimed relationship of co-sureties was entered into. In the American Bonding Co. case, supra, each of the sureties limited its liability in money payable to the obligee in an amount proportionate to the total loss sustained. In the instant case, each company, by its indemnity insurance policy expressly limited its liability to its own assured only by agreeing to indemnify it against liability for wrongful death caused by the operation of its own motor vehicles. Neither agreed to assume liability for negligent operation of the vehicles of the other. If the contention of counsel for plaintiff in error be sustained, it would result in the insurance against negligence of any and all tort-feasors occasioning the accident and would so enlarge the civil liability of the indemnity company as to indemnify tort-feasors who were strangers to its surety contract. It would increase the scope of liability beyond that which its bond was intended to cover. It is manifest, therefore, that the doctrine of contribution between co-sureties cannot be applied unless the following legal contention advanced by counsel for plaintiff in error is sound. They argue that, while there may have been no co-surety relationship prior to the rendition of the joint judgment against the separate tort-feasors, since a joint judgment was thereafter actually rendered against both, the separate sureties thereby became indemnitors for the same principal (the plaintiff) and for the same civil debt or liability, viz., for the total amount of the joint judgment rendered in the federal court against both tort-feasors; that the amount of the judgment became collectible against both under the provisions of Sections 9510-3 and 9510-4, General Code. They therefore argue that both indemnitors, though they may not have been co-sureties originally, became co-sureties for the same debt or obligation by virtue of said sections. This argument rests upon a legal fallacy deduced from an unwarranted construction of the statute. The co-surety relationship "is an equity which springs up at the time the relation of co-sureties is entered into", and which arises from a transaction contemplated in the indemnifying contracts where they were made.
Neither the joint judgment recovered against the separate tort-feasors nor the sections of the statute alluded to create any co-suretyship relation between the separate sureties; under no construction of the statute can such purpose be implied. The statute seeks only to safeguard the judgment creditor by applying the insurance money provided in the insurance contract between the insurance company and its particular indemnitee to the satisfaction of the judgment. Had the statute attempted to apportion liability between two or more indemnitors of tort-feasors by providing for contribution in case of a joint judgment against their indemnitees, there would have been some provision in the statute to that effect. This the statute does not do. It deals with the indemnifying insurance companies separately and not jointly. Each is made responsible for the payment of the judgment.
Had there been a common obligation between two sureties, though evidenced by separate policy contracts, whereby each assumed to indemnify the same or a common principal for the same liability or obligation, contribution from one after payment by the other might be urged with some degree of plausibility; but we have no such case presented here.
This case might well be disposed of under authority of the rule announced in Royal Indemnity Co. v. Becker, 122 Ohio St. 582, 173 N.E. 194, 75 A. L. R., 1481. It was there held that there was no right of contribution between two joint tort-feasors whose concurrent negligence made them liable in damages. It also sustained the following principle, to wit: that had one of the tort-feasors paid the judgment it would have no right of contribution from its joint tort-feasor; that an indemnitor who had satisfied a joint judgment against its indemnitee and another, having no greater right than its indemnitee, could not enforce contribution from a co-defendant of such indemnitee. And certainly if contribution is not enforcible against a codefendant, it is unenforcible against the co-defendant's indemnitor. For the reasons herein stated, the judgment of the Court of Appeals will be affirmed.
Judgment affirmed.
WEYGANDT, C.J., STEPHENSON, MATTHIAS, DAY and ZIMMERMAN, JJ., concur.
Contribution is an equitable doctrine grounded upon the maxim, "equality is equity." It is of general application in all cases where two or more parties are liable for exactly the same debt and stand in aequali jure, provided, of course, there is no other principle applicable which would render the relief inequitable.
In B. O. Rd. Co. v. Walker, 45 Ohio St. 577, at page 588, the court quotes with apparent approval from 2 Wait's Actions Defenses, 288: " 'The doctrine of contribution rests upon the broad principle of justice, that where one has discharged a debt or obligation which others were equally bound with him to discharge, and thus removed a common burden, the others who have received a benefit ought in conscience to refund to him a rateable proportion. It depends rather upon principles of equity than of contract. * * * From the equitable obligation the law implies a contract, since all who have become jointly liable may reasonably be considered as mutually contracting among themselves with reference to the duty in conscience.' " The same passage is emphasized in Assets Realization Co. v. Am. Bonding Co., 88 Ohio St. 216, at
It is stated in Thorsen v. Poe, 123 Ark. 77, 81, 184 S.W. 427, 428: "It is a familiar principle that where several parties are equally liable for the same debt, or bound to the discharge of an obligation, and one is compelled to pay or satisfy the whole of it, he may have contribution against the others to obtain payment for their respective shares." It is said in Asylum of St. Vincent de Paul v. McGuire, 239 N.Y. 375, 382, 146 N.E. 632, 634, 38 A. L. R., 1214, 1217: "And of these principles no one is more explicit and outstanding than the one that where the situation of parties is equal and one has borne more than his just share of the common burden he is entitled to contribution from others who have been dealt with more fortunately." In Putnam v. Misochi, 189 Mass. 421, 422, 75 N.E. 956, 957, 109 Am. St. Rep., 648, 649, the following language is used: "It is a familiar principle that, when several parties are equally liable for the same debt and one is compelled to pay the whole of it, he may have contribution against the others to obtain from them the payment of their respective shares. This right to contribution is not founded upon contract, but upon a principle of natural equity and justice.
The same principle is sustained in Ellis v. Chicago N.W. Ry. Co., 167 Wis. 392, 167 N.W. 1048; Owens v. Greenlee, 68 Colo. 114, 188 P. 721, 9 A. L. R., 1184; Aspinwall v. Sacchi, 57 N.Y. 331; 6 Ruling Case Law, 1036, Section 2, and 1054, Section 17.
There are other cases holding that contribution is not based on contract but arises out of the equities of the case. Case v. McKinnis, 107 Ore., 223, 213 P. 422, 32 A.L.R., 167. In re Toole, 274: Fed., 337, 24 A. L. R., 470; Wait v. Pierce, 191 Wis. 202, 209 N.W. 475, 48 A. L. R., 276; Blankenhorn-Hunter-Dulin Co. v. Thayer, 199 Cal. 90, 247 P. 1088, 48 A. L. R., 797; Asylum of St. Vincent de Paul v. McGuire, supra.
While it would afford equality to compel contribution between wrongdoers, it is a general rule that contribution will not be allowed in the case of joint tort-feasors for the reason that chancery will leave wrongdoers where it finds them in accordance with the equitable maxim: "He who comes into equity must come with clean hands."
However, in some cases it has been held that there may be contribution between tort-feasors where the parties seeking relief have not committed wanton or intentional wrong. Acheson v. Miller, 2 Ohio St. 203, 59 Am. Dec., 663; Ellis v. Railway Co., supra; Horrabin v. City of Des Moines, 198 Iowa 549, 199 N.W. 988, 38 A. L. R., 554; 13 Corpus Juris, 829, Section 20. Nevertheless what is said in this opinion is based upon the theory that joint tort-feasors cannot have contribution.
While the doctrine of contribution has been most frequently applied to co-sureties it is not limited to that relationship. 5 Pomeroy Equity Jurisprudence (2nd Ed.), 5170, Section 2339.
In the instant case the liability of the insurance companies was not in the nature of suretyship, for the surety when compelled to pay the debt may recover over from the principal. The obligation of the insurance companies to protect their insured arose out of the separate contracts of insurance and by statute each was liable directly to the judgment creditor for the amount of the judgment. It is the statutory obligation which is involved here and if the one insurance company which paid more than the other to the judgment creditor stood in the shoes of anyone, it was in those of the judgment creditor. However, the authorities are to the effect that contribution is not based on subrogation. Obviously this is true because the underlying principles of the two remedies are different. In the case of the subrogated debtor he may recover the full amount of the debt to which he is subrogated. In contribution equity restores equality. The insurance companies were in no sense wrongdoers but were bound by lawful contract each to his insured and by statute both to the judgment creditor. Contribution in the instant case would make them bear the statutory burden equally.
It would seem that both insurance companies stand in equal right and are liable exactly for the same debt and that the plaintiff in the trial court came in with clean hands. To the writer there seems to be no good reason why the rule that prevents contribution between two joint tort-feasors should be carried to such an extent as to prevent the insurer of one tort-feasor from enforcing contribution against the insurer of the other tort-feasor, after a joint judgment has been rendered as in this case. Wrongdoers are tainted; the insurance company here has clean hands. Where the reason for the rule fails, the rule also should fail.
In Royal Indemnity Co. v. Becker, 122 Ohio St. 582, 173 N.E. 194, 75 A. L. R., 1481, it was held that contribution would not lie. However it may be urged in distinction that in that case the parties did not stand in equal right. The insurer of one joint tort-feasor was seeking contribution from the other joint tort-feasor and it is apparent that the rights of the parties thereto were wholly different. For instance there was no mutuality of remedy, in that a joint tort-feasor, who has paid more than his share of a joint judgment, cannot have contribution from the insurer of another jointly liable on such judgment for the same tort.
For these reasons it is the judgment of the writer that the contribution should lie.