{
  "id": 11269549,
  "name": "CANNON MANUFACTURING COMPANY v. EMPLOYERS' INDEMNITY COMPANY",
  "name_abbreviation": "Cannon Manufacturing Co. v. Employers' Indemnity Co.",
  "decision_date": "1912-12-04",
  "docket_number": "",
  "first_page": "19",
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      "cite": "157 N. C., 133",
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  "last_updated": "2023-07-14T14:55:28.078438+00:00",
  "provenance": {
    "date_added": "2019-08-29",
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  "casebody": {
    "judges": [],
    "parties": [
      "CANNON MANUFACTURING COMPANY v. EMPLOYERS\u2019 INDEMNITY COMPANY."
    ],
    "opinions": [
      {
        "text": "Brown, J.\nThe defendant issued to plaintiff an employers\u2019 indemnity policy of the usual kind, contracting that in the event one of plaintiff\u2019s employees should bring a suit against the plaintiff for damages sustained by the alleged negligence of the plaintiff, the defendant would \u201cat its own cost defend against such proceeding in the name of and on behalf of the assured, or settle the same,\u201d and providing also that the defendant\u2019s liability on account of injury to any one person should not exceed $5,000, and providing further that the assured should not settle the claim or incur any expense or interfere in any negotiations for a settlement or in any legal proceedings without the consent of the indemnity company.\nAt April Term, 1911, Ola Walker, administratrix of Odell M[alker, obtained judgment against plaintiff for $4,951.40 and $121.73 costs. The case was appealed to this Court by the indemnity company and no error found and a new trial refused. 157 N. C., 133.\nTbe only question presented on tbis appeal is tbe liability of defendant indemnity company for interest on tbe judgment from date of its rendition by tbe Superior Court.\nTbe defendant insists it is not liable in excess of $5,000 and costs. Tbe plaintiff paid tbe final judgment after a new trial was refused by tbis Court, tbe total surq being- $5,363.62.\nIn tbe policy we find tbis clause:\n\u201c6. No action shall lie against tbe company respecting any loss or expense under tbis policy, unless it shall be brought by tbe assured himself to reimburse him for loss or expense actually sustained and paid in money by him in satisfaction of a final judgment against him.\u201d\nWe are of opinion that under this clause tbe defendant is bound to reimburse plaintiff tbe full amount paid out on tbe final judgment in tbe Walker case, inasmuch as'the judgment when rendered did not exceed $5,000 and costs.\nTbe courts of tbis country have been divided upon tbis question.\n1. One class of decisions bolds that tbe indemnity company is liable for interest, although it is in excess of tbe limit fixed in tbe policy.\n2. Another class of decisions bolds that tbe indemnity company is liable for interest from tbe rendition of tbe final judgment by tbe Supreme Court.\n3. Tbe third class of decisions bolds that on account of tbe express terms of tbe contract limiting tbe amount to $5,000, tbe indemnity company is not liable for any interest if it carries tbe amount in excess of tbe limit fixed by tbe policy.\n. Under tbe first class of decisions are Paper Co. v. Casualty Co., 92 Me., 574, and Cudahy Packing Co. v. New Amsterdam Co., 132 Fed., 623. Both of these bold that tbe indemnity company is liable for interest from tbe time of tbe rendition of tbe judgment, although tbe interest carries tbe amount in excess of tbe limit in tbe policy.\n\"We candidly admit that tbe third class of decisions is largely in tbe majority. They all base their'judgments upon tbe ground that it is \u201cso nominated in tbe bond.\u201d We think tbe reasoning supporting those cases is technical and at variance with the purpose and meaning of the bond as well as elementary principles of justice.\nIn effecting such insurance the plaintiff was not purchasing a lawsuit, but indemnity. While it is provided that the defendant should have control of the litigation, it clearly was not contemplated that after judgment rendered the litigation should be indefinitely jorotracted by defendant at plaintiff\u2019s expense.\nIn one of the opinions of the third class we find the learned judge admits the injustice of his conclusion in these words: \u201cWhile it seems inequitable to compel the plaintiff to pay the interest on the judgment accruing while the defendant was engaged in an ineffectual attempt to relieve itself from liability, the answer to it is that the parties otherwise agreed.\u201d Trap Rock Co. v. Insurance Co., 128 N. Y. Supp., 822.\nIn that case we find a very strong dissenting opinion, from which we may with profit quote at length:\n\u201cWe need not go into an extended discussion of the various provisions of the policy in question. We find in it a separate independent clause, providing what the rights and liabilities shall he in case the assured is sued on account of an accident. The policy provides that the assured shall not settle or litigate, but must turn the summons over to the insurer, which at its own cost will defend against the suit, or settle the same. The words 'at its own cost\u2019 attach themselves as much to the words 'or settle the same\u2019 as to the words 'defend against the suit,\u2019 so that we have the absolute agreement of the company to defend against any suit at its own cost, or to settle the suit at its own cost.\n\u201cAn insurer does not at its own cost defend against a suit merely by employing lawyers, procuring the attendance of witnesses, and then leaving the assured to pay the judgment which may follow and leaving it to another action against the insurer for reimbursement. When the company -agreed to defend against a suit or settle the same at its own cost, the agreement is broken if the assured is compelled to pay the judgment. The language in question casts the duty of payment upon the insurer, and after the summons is delivered to it, it assumes all responsibility with reference to the suit, with the sole proviso that the limit of its liability on account of the damages to one person shall not exceed $5,000.\n\u201cThe damages were liquidated in this case at just $5,000, and, therefore, as between these parties, the plaintiff was absolved from all responsibility with reference to the lawsuit or judgment. It was between them virtually a judgment against this defendant.\n\u201cWhen the judgment was recovered it merged the original cause of action, and the liability thereafter rested upon the judgment itself and not upon the cause of action upon which it was founded. The interest in question is awarded by law as damages for nonpayment of money when due. Steiner v. Fourth Presbyterian Church, 17 App. Div., 500, 45 N. Y. Supp., 524.\n\u201cIt would, therefore, be unjust to charge upon the plaintiff the damages which the law has imposed on account of the delay and the neglect of the defendant. The interest in question does not represent any liability on account of or for the accident or the policy, but is a liability imposed by law for the delay of the defendant in paying the judgment which, as between the parties, it was legally obligated to pay. The interest, therefore, is the obligation of the defendant, and not of the plaintiff, and the plaintiff having been compelled to pay the same, is entitled to recover it without reference to the terms of the policy, other than that the judgment was to be paid by the defendant.\u201d\nWe think the decisions of the second class really are in accord \u2022with our views. They hold that the indemnity company is liable for interest from the time of the rendition of a final judgment by the appellate court.\nUnder our judicial system, this Court rarely ever enters judgment. It keeps no judgment docket such as is kept in the Superior Court, and issues no execution for money except for its own costs. The final judgment is rendered by the Superior Court, and while an appeal may be taken to review it and the trial which ended in it, yet the appeal does not vacate the judgment. It stands as the final judgment until set aside by this Court, and the bond given on appeal only operates as a cessed executio.\nIn tbe Walker case we rendered no 'technical judgment, but delivered an opinion finding \u201cno error\u201d on tbe trial in tbe lower court, and thereby affirmed tbe judgment of that court. Tbe interest on that judgment from tbe date when rendered is an incident attaching to tbe judgment by operation \u2019of law as a penalty for delay in payment. This is tbe view taken by this Court in Stafford v. Jones, 91 N. C., 189, a case in point.\nIn this case it is said: \u201cWhere a mortgage is made to indemnify one against loss by reason of becoming surety upon a note executed to negotiate a loan to carry on business, and tbe mortgagor makes default: Held, that while a provision in tbe deed rendering tbe property liable for \u2018no more than $5,000,\u2019 is a limitation upon any increase of tbe debt, yet interest is recoverable as an incident to tbe debt.\n\u201cAny interest due on it, if not paid, was incident to and part of it. If Steele bad paid tbe debt at maturity, be would have been entitled to interest upon tbe money so paid by him until be should be repaid. Why, then, should be not be indemnified for tbe incidental part of tbe debt as well as tbe debt itself? Tbe nature of tbe transaction suggests that tbe indemnity should extend to tbe interest. Apart from tbe stipulations in tbe agreement, in the order of such things, tbe indemnity would extend to tbe interest, and taking tbe stipulations and qualifications in their spirit, they contemplate that it shall so extend.\u201d\nTbe judgment of tbe Superior Court is\nAffirmed.",
        "type": "majority",
        "author": "Brown, J."
      }
    ],
    "attorneys": [
      "Tillett \u2022& Guthrie for plaintiff.",
      "Davis & Davis for defendant."
    ],
    "corrections": "",
    "head_matter": "CANNON MANUFACTURING COMPANY v. EMPLOYERS\u2019 INDEMNITY COMPANY.\n(Filed 4 December, 1912.)\n1. Insurance, Indemnity \u2014 Policy Contracts \u2014 Limited Liability \u2014 Judgments \u2014 Interest\u2014Appeal and Error.\nA policy indemnifying an employer against loss for injuries received by bis employees, limiting tbe insurer\u2019s liability in a certain sum for an injury caused to one person, containing a provision excluding the insured\u2019s interference with a settlement or the defense of an action brought by the employee, and requiring that no action shall lie against the insurer \u201crespecting any loss or expense under this policy unless it shall be brought by the assured himself,\u201d does not exclude the insurer\u2019s liability for interest on a final judgment rendered against tlae insured, though with the interest added, the amount of recovery exceeds that limited specifically in the policy.\n2. Money Judgments \u2014 Appeal and Error \u2014 Affirmance\u2014Final Judgments \u2014 Interest.\nAn appeal from a money judgment rendered in the Superior Court does not vacate the judgment, hut only operates as a cessat exacuiio, and when this judgment is affirmed on appeal, it becomes the final judgment of the court, hearing interest from its date.\nAppeal by defendant from justice, J., at September Term, 1912, of MECKLENBURG.\nControversy vsdthout action, beard by bis Honor, Judge Justice, at September Term, 1912, of the Superior Court of Meck-lenburg County. His Honor rendered judgment against defendant, and it appealed.\nThe facts are sufficiently stated in the opinion of the Court by Mr. Justice Walker.\nTillett \u2022& Guthrie for plaintiff.\nDavis & Davis for defendant."
  },
  "file_name": "0019-01",
  "first_page_order": 63,
  "last_page_order": 68
}