Firemen's Insurance v. Motors Insurance

McALLISTER, J.,

dissenting.

This is an action by the plaintiff, Firemen’s Insurance Company, to require the defendant, Motors Insurance Corporation, to contribute pro rata to an automobile collision loss. The trial court sustained a demurrer to plaintiff’s complaint and when plaintiff refused to plead further, dismissed the action. Plaintiff appeals.

Plaintiff’s policy was issued to Courtesy Chevrolet Company and provided $100 deductible collision coverage for a 1964 Chevrolet automobile described in the policy. The automobile was damaged by collision while it was being driven by Eddie Lee Counts. The defendant, Motors Insurance, had issued a policy to Counts, providing $100 deductible collision coverage for a particular automobile described in its policy. The defendant’s policy also provided the same collision coverage for any non-owned automobile while being driven by Counts. The automobile owned by Courtesy Chevrolet was such a non-owned automobile within the terms of defendant’s policy.

This is a typical case in which each company, except for the existence of the other insurance, would be liable for the loss. Except for the other insurance, Firemen’s would be liable under its policy issued to Courtesy Chevrolet, and Motors Insurance would be liable under its policy issued to Counts. The question is how the liability of the two insurers is affected by the various provisions of the two policies.

*608Defendant demurred to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. Defendant contends that the complaint is defective because it does not allege that Courtesy Chevrolet, the insured under plaintiff’s policy, was also an insured, pursuant to an omnibus clause or other provision under defendant’s policy. Plaintiff, on the other hand, contends that the complaint is sufficient because it alleges facts entitling Courtesy Chevrolet to collect from defendant as a third party beneficiary under defendant’s policy. If the complaint states a cause of action on any theory, it will be sustained against a demurrer. Windle Adm’x v. Flinn, 196 Or 654, 664, 251 P2d 136 (1952).

It must be conceded that the complaint does not allege, directly or indirectly, that Courtesy Chevrolet is an insured under defendant’s policy. If that fact is controlling, the case is easily disposed of and should be affirmed. The controlling question, however, is whether Courtesy Chevrolet is a third party beneficiary of defendant’s policy. This is recognized by the majority. Instead of deciding that question, however, the majority insists on deciding, as if it were a complex problem, that Courtesy Chevrolet was not an insured under defendant’s policy, and rests its opinion on that premise. It thus ignores the controlling issue raised in the briefs.

It is alleged in the complaint that defendant agreed to pay for loss caused by collision to a non-owned automobile in the following language:

“COVERAGE E — COLLISION: To pay for loss caused by collision to the owned automobile or to a non-owned automobile but only for the amount of each such loss in excess of the deductible amount stated in the declarations as applicable hereto.

*609The non-owned automobile covered by the above provision is the automobile of Courtesy Chevrolet which was damaged by collision while being driven by defendant’s insured, Eddie Lee Counts. The language is specific and free from any ambiguity. The obligation to pay the loss is unequivocal. The company limits its liability to the excess of the amount of the loss over the deductible amount stated in the policy. There is no other limitation, express or implied. No intent to pay the loss only to Counts is expressed or implied. On the contrary, the intention of the company to pay, not to its insured, Counts, but to the owner of the property, Courtesy Chevrolet, is expressed in the following language :

“The company may settle any claim for loss either with the insured or the owner of the property.”

The above language is quoted in the complaint and specifically authorizes the defendant to pay to Courtesy Chevrolet the “loss caused by collision” to its automobile.

Based on the above facts as alleged in plaintiff’s complaint, it seems clear that Courtesy Chevrolet could maintain an action as a beneficiary of defendant’s policy to require defendant to pay for the loss caused by collision to its automobile while it was being driven by Counts. If this were an action by Courtesy Chevrolet to recover the amount of its loss from defendant, I think the court would unanimously hold that Courtesy Chevrolet could maintain the action.

As stated by the majority, this court has embraced the third party beneficiary rules of § 133, 1 Restatement, Contracts, which read in part:

“(1) Where performance of a promise in a con*610tract will benefit a person other than the promisee, that person is, except as stated in Subsection (3):
.“(a) a donee beneficiary if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee in obtaining the promise of all- or part of the performance thereof is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due or supposed or asserted to be due from the promisee to the beneficiary;
“(b) a creditor beneficiary if no purpose to make a gift appears from the terms'-of the promise in view of the accompanying circumstances and performance of the promise will satisfy an .actual or supposed or asserted duty of the promisee to. the beneficiary, or a right of the beneficiary against the promisee which has been barred by the. Statute- of Limitations or by a discharge in bankruptcy, or which- is unenforceable because of the Statute of Frauds;
“(c) an incidental beneficiary if neither the facts stated in Clause (a) nor those stated in Clause (b) exist.” .

In this case the promise of the defendant to pay for any damage sustained by Courtesy’s car while in the custody of Counts would satisfy “an actual or supposed or asserted” duty on the part of the promisee, Counts, to reimburse Courtesy for the damage. Under those circumstances Courtesy would be a creditor beneficiary. If the damage to the car occurred under such circumstances that Counts had no “actual or supposed or asserted” duty to reimburse Courtesy, then Courtesy would be a donee beneficiary. In either event Courtesy could maintain an action on the policy.

*611The' overwhelming weight of authority supports the doctrine that a third person may enforce a contract entered into between others for his benefit. 4 Corbin, Contracts §774 (1951), and Comment Note.— Eight of third person to enforce contract between others for his benefit. 81 ALR 1271 (1932). Our cases are in accord with the majority rule. Reid v. Kier, 175 Or 192, 210, 152 P2d 417 (1944); Phez Co. v. Salem Fruit Union, 103 Or 514, 531, 201 P 222, 205 P 970, 25 ALR 1090 (1922). Por a collection of cases upholding the right of the owner of property to maintain an action upon a fire insurance policy taken out by a bailee or warehouseman, see 61 ALR 720 (1929). See, also, Richartz v. Martin, 252 Wis 108, 31 NW2d 158 (1948); Aetna Insurance Company v. Eisenberg, 294 F2d 301 (8th Cir 1961). For a leading case on the right of a third party materialman to sue on a surety bond executed for the benefit of a contractor, see Socony-Vacuum Oil Co. v. Continental Casualty Co., 219 F2d 645 (2nd Cir 1955). See, also, cases collected in 77 ALE 21, 53 (1932), and 4 Corbin, Contracts §§798-804 (1951).

I dissent.

Sloan, J., concurs in this opinion.