{ "id": 2736319, "name": "H. H. SATTERWHITE, Plaintiff, v. L. W. STOLZ, Jr., Defendant-Appellant, v. The WESTERN CASUALTY & SURETY COMPANY, a corporation, Third-Party Defendant-Appellee", "name_abbreviation": "Satterwhite v. Stolz", "decision_date": "1968-06-07", "docket_number": "No. 118", "first_page": "320", "last_page": "327", "citations": [ { "type": "official", "cite": "79 N.M. 320" }, { "type": "parallel", "cite": "442 P.2d 810" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "349 F.2d 919", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 854577 ], "year": 1965, "opinion_index": 0, "case_paths": [ "/f2d/349/0919-01" ] }, { "cite": "63 N.M. 364", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2778625 ], "weight": 2, "year": 1958, "opinion_index": 0, "case_paths": [ "/nm/63/0364-01" ] }, { "cite": "69 N.M. 238", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2787407 ], "weight": 2, "year": 1961, "opinion_index": 0, "case_paths": [ "/nm/69/0238-01" ] }, { "cite": "276 S.W. 170", "category": "reporters:state_regional", "reporter": "S.W.", "case_ids": [ 10292538 ], "opinion_index": 0, "case_paths": [ "/sw/276/0170-01" ] }, { "cite": "269 S.W. 83", "category": "reporters:state_regional", "reporter": "S.W.", "case_ids": [ 10294295 ], "opinion_index": 0, "case_paths": [ "/sw/269/0083-01" ] }, { "cite": "215 S.W. 126", "category": "reporters:state_regional", "reporter": "S.W.", "case_ids": [ 10310895 ], "opinion_index": 0, "case_paths": [ "/sw/215/0126-01" ] }, { "cite": "241 F.2d 296", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 417536 ], "opinion_index": 0, "case_paths": [ "/f2d/241/0296-01" ] }, { "cite": "78 N.M. 474", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5324680 ], "weight": 2, "year": 1967, "opinion_index": 0, "case_paths": [ "/nm/78/0474-01" ] }, { "cite": "38 N.M. 271", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1559210 ], "weight": 2, "year": 1934, "opinion_index": 0, "case_paths": [ "/nm/38/0271-01" ] }, { "cite": "201 U.S. 173", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 344949 ], "weight": 3, "year": 1906, "opinion_index": 0, "case_paths": [ "/us/201/0173-01" ] }, { "cite": "347 S.W.2d 601", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 2261892, 10165423 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/tex/162/0497-01", "/sw2d/347/0601-01" ] }, { "cite": "162 Tex. 497", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2261892 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/tex/162/0497-01" ] }, { "cite": "47 N.M. 377", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1562240 ], "weight": 2, "year": 1943, "opinion_index": 0, "case_paths": [ "/nm/47/0377-01" ] }, { "cite": "21 F.R.D. 190", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 3782565 ], "year": 1957, "opinion_index": 0, "case_paths": [ "/frd/21/0190-01" ] }, { "cite": "7 F.R.D. 140", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 3747604 ], "year": 1945, "opinion_index": 0, "case_paths": [ "/frd/7/0140-01" ] }, { "cite": "225 F.Supp. 890", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 52797 ], "year": 1964, "opinion_index": 0, "case_paths": [ "/f-supp/225/0890-01" ] }, { "cite": "242 F.Supp. 789", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 382051 ], "year": 1965, "opinion_index": 0, "case_paths": [ "/f-supp/242/0789-01" ] }, { "cite": "392 S.W.2d 713", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10174314 ], "opinion_index": 0, "case_paths": [ "/sw2d/392/0713-01" ] }, { "cite": "426 P.2d 456", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 2098306 ], "year": 1967, "opinion_index": 0, "case_paths": [ "/or/246/0517-01" ] }, { "cite": "423 P. 2d 518", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 2100051 ], "year": 1967, "opinion_index": 0, "case_paths": [ "/or/245/0557-01" ] }, { "cite": "245 Or. 577", "category": "reporters:state", "reporter": "Or.", "year": 1967, "opinion_index": 0 }, { "cite": "177 F.2d 793", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1166373 ], "opinion_index": 0, "case_paths": [ "/f2d/177/0793-01" ] }, { "cite": "308 F.2d 748", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 201038 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/f2d/308/0748-01" ] }, { "cite": "342 F.2d 427", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 875109 ], "opinion_index": 0, "case_paths": [ "/f2d/342/0427-01" ] }, { "cite": "369 P.2d 216", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 10492056 ], "opinion_index": 0, "case_paths": [ "/p2d/369/0216-01" ] }, { "cite": "34 S.W.2d 815", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10277290 ], "opinion_index": 0, "case_paths": [ "/sw2d/34/0815-01" ] }, { "cite": "352 S.W2d 888", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10178266 ], "opinion_index": 0, "case_paths": [ "/sw2d/352/0888-01" ] }, { "cite": "418 S.W.2d 712", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10138862 ], "opinion_index": 0, "case_paths": [ "/sw2d/418/0712-01" ] }, { "cite": "138 S.W.2d 1095", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10250891 ], "opinion_index": 0, "case_paths": [ "/sw2d/138/1095-01" ] }, { "cite": "358 S. W.2d 243", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10156774 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/sw2d/358/0243-01" ] }, { "cite": "388 S.W.2d 20", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10154284 ], "opinion_index": 0, "case_paths": [ "/sw2d/388/0020-01" ] }, { "cite": "387 S.W.2d 22", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10154484 ], "opinion_index": 0, "case_paths": [ "/sw2d/387/0022-01" ] }, { "cite": "348 F.2d 275", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 857592 ], "opinion_index": 0, "case_paths": [ "/f2d/348/0275-01" ] }, { "cite": "76 N.M. 455", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 8502874 ], "weight": 2, "year": 1966, "opinion_index": 0, "case_paths": [ "/nm/76/0455-01" ] }, { "cite": "59 N.M. 154", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1589318 ], "weight": 3, "year": 1955, "opinion_index": 0, "case_paths": [ "/nm/59/0154-01" ] }, { "cite": "53 N.M. 56", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1580786 ], "weight": 2, "year": 1949, "opinion_index": 0, "case_paths": [ "/nm/53/0056-01" ] } ], "analysis": { "cardinality": 933, "char_count": 21889, "ocr_confidence": 0.66, "pagerank": { "raw": 2.4871375748208873e-07, "percentile": 0.8081737583928639 }, "sha256": "220a2604c01d7cad43b3f887a9009fb33cfb10d61a62260eeb9a324a0b51d60b", "simhash": "1:5ec66eb7662541f4", "word_count": 3504 }, "last_updated": "2023-07-14T18:21:18.946358+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "OMAN and ARMIJO, JJ., concur." ], "parties": [ "H. H. SATTERWHITE, Plaintiff, v. L. W. STOLZ, Jr., Defendant-Appellant, v. The WESTERN CASUALTY & SURETY COMPANY, a corporation, Third-Party Defendant-Appellee." ], "opinions": [ { "text": "OPINION-\nWOOD, Judge.\nThe questions presented concern a \u201ccomprehensive personal liability policy\u201d issued by third-party defendant to Stolz (defendant-third party plaintiff). They are: (1) Duty to defend; (2) Conflict of interest in defending; (3) The \u201cno-action\u201d clause; and (4) Duty to pay.\nPlaintiff sought damages for personal injuries allegedly inflicted by Stolz. Third-party defendant refused to defend Stolz.\nStolz filed his third-party complaint alleging that third-party defendant; (a) \u201cis o.r may be\u201d liable to Stolz for all or part of plaintiff\u2019s claim; (b) is obligated to defend against plaintiff\u2019s claim; .and (c) is obligated to pay any judgment that plaintiff obtained against Stolz.. The third-panty complaint asked that third-party defendant: (a) pay any and all sums adjudged against Stolz, and (b) reimburse Stolz for sums reasonably incurred in defending against plaintiff\u2019s claim.\nThird-party defendant moved to dismiss the third-party complaint on the basis that there was no coverage, that it was not obligated to defend and that by the terms of the policy Stolz was precluded from bringing an action against third-party defendant. By stipulation, the motion was considered a motion for summary judgment. The trial court determined there was no genuine issue of fact and entered its order sustaining the motion for summary judgment and dismissing the third-party complaint. Stolz appeals.\nThe appeal involves the application of law to the undisputed facts; our conc.ern is \u201cwhether a genuine cause of action * * * exists.\u201d Agnew v. Libby, 53 N.M. 56, 201 P.2d 775- (1949). No issue' is raised as to, and we are not concerned with: (a) whether the claim for reimbursement is proper under \u00a7 21-1-1(14), N.M.S.A.1953, and (b) if the third party complaint is reinstated, whether there should be a separate trial of the third-party issues. See \u00a7 21-1-1(42) (b), N.M..S.A. 1953.\nA contract is made \u201cat the time when the last act necessary for its formation is done, and at the place where the final act is done.\u201d Merriman v. Harter, 59 N.M. 154, 280 P.2d 1045 (1955).. The place where the final act is done determines the applicable law for the interpretation of the contract. See Miller v. Mutual Benefit Health & Acc. Ass\u2019n, 76 N.M. 455, 415 P.2d 841 (1966) ; Merriman v. Harter, supra; Spiess v. United Services Life Ins. Co., 348 F.2d 275 (10th Cir.1965).\nThe policy declarations show that Stolz\u2019s address was La Grange, Texas. The policy was countersigned at La Grange, Texas. On this basis. Stolz asserts that the last act necessary for a contract occurred in Texas and that the policy should be construed under Texas law. Third-party defendant does not dispute these contentions. Accordingly, we apply Texas law in interpreting the insurance policy.\n1. The Duty to Defend.\nThe policy provides:\n\u201cI. Coverage L. \u2014 Personal Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the company shall defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent; but the company may make such investigation and settlement of any claim or suit as it deems expedient.\n* * * * * *\n''This policy does not apply:\n******\n\u201c(c) under coverages L and M, to bodily injury or property damage caused intentionally or at the direction of the insured;\u201d\nThus, under the policy, third-party defendant is obligated to defend suits for bodily injury seeking damages \u201cwhich are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent; * * * \u201d Under such policy provisions, Texas holds that the duty to defend is determined by the allegations of the petition filed by a claimant against the insured. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22 (Tex.1965) ; Sewer Constructors, Inc. v. Employers Casualty Co., 388 S.W.2d 20 (Tex.Civ.App.1965); Superior Insurance Co. v. Jenkins, 358 S. W.2d 243 (Tex.Civ.App.1962); Maryland Casualty Co. v. Moritz, 138 S.W.2d 1095 (Tex.Civ.App.1940). See Cook v. Ohio Casualty Ins. Co., 418 S.W.2d 712 (Tex.Civ.App.1967).\nThird-party defendant agrees that under Texas law the duty of the insurer to defend is determined by the allegations of the complaint filed by a claimant against the insured. It contends that a corollary to this rule applies here \u2014 that if the allegations show a state of facts to which the policy coverage does not apply then the insurer is not required to defend. Travelers Insurance Co. v. Newsom, 352 S.W2d 888 (Tex.Civ.App.1961) ; United States Fidelity & Guaranty Co. v. Baldwin Motor Co., 34 S.W.2d 815 (Tex.Com.App.1931).\nWhat are the allegations of plaintiff\u2019s complaint? Two claims are asserted. First, plaintiff alleges that Stolz committed various intentional, wilful and malicious acts which caused plaintiff\u2019s alleged injuries. No contention is made that this first claim is within the policy coverage.\nSecond, plaintiff asserts that Stolz committed various negligent acts which caused plaintiff\u2019s alleged injuries. Stolz asserts that the allegations as to negligent acts require third-party defendant to defend. Third-party defendant contends that although the acts are characterized as negligent, \u201c * * * the allegations that Stolz struck, lifted, dropped and fell upon the plaintiff * * * \u201d describe intentional acts; that \u201c * * * adding the word \u2018negligently\u2019 certainly does not make the acts any less intentional.\u201d\nThus, third-party defendant would have us determine whether the allegations of negligence are true or false. The policy obligates the insurance company to defend even if the allegations are \u201cgroundless, false or fraudulent.\u201d In determining the duty to defend, the issue is whether the allegations are sufficient to state a claim within the terms of the policy. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., supra, states:\n\u201c * * * ^Lg allegations of the complainant should be considered in the light of the policy provisions without reference to the truth or falsity of such allegations and without reference to what the parties know or believe the true facts to be, or without reference to a legal determination thereof. * * * \u201d\nFurther in the opinion: \u201c * * * in considering such allegations a liberal interpretation of their meaning should be indulged. * * * \u201d\nThe claim of negligent acts was sufficient to require third-party defendant to defend against that claim. Superior Insurance Co. v. Jenkins, supra. See Annot., 2 A.L.R.3d \u00a7 7, p. 1250 (1965); compare \u00a7 6, p. 1249 (1965).\nEven if the allegations of negligence were construed to be allegations of intentional acts, Stolz asserts that third-party defendant had a duty to defend because plaintiff\u2019s complaint did not allege intentional harm. The distinction sought to be made is a distinction between intentional conduct resulting in harm and intent to cause harm. See Annot., 2 A.L.R.3d \u00a7\u00a7 4a and 4b, pp. 1243-1245 (1965); Compare Aim v. Hartford Fire Insurance Co., 369 P.2d 216 (Wyo.1962) and Pendergraft v. Commercial Standard Fire & Marine Co., 342 F.2d 427 (10th Cir.1965).\nWe have held that under Texas law the allegations of negligence were sufficient to require third-party defendant to defend the negligence claim. Accordingly, it is not necessary to decide whether the asserted distinction should be made.\n2. Conflict of Interest in Defending.\nPlaintiff makes two claims \u2014 intentional assault and battery and negligence. If plaintiff\u2019s alleged injuries resulted from an intentional tort, the policy exclusion applies and third-party defendant is not liable for payment of a judgment entered against Stolz. If the alleged injuries resulted from negligence, the policy exclusion is not applicable and third-party defendant would be liable to pay a judgment against Stolz. This situation raises a conflict of interest. While distinguishable on its facts, the conflict is well-stated in Harbin v. Assurance Company of America, 308 F.2d 748 (10th Cir.1962) :\n\u201cThe type of situation presented here places an insurer in a dilemma of conflicting interests. It cannot possibly defend * * * and protect both its own interests and the interests of its insureds. If it tries to exculpate itself by showing an intentional injury, it exposes the insured to a greater liability and a possible award of exemplary damages. If it urges an unintentional injury, it foregoes the exclusionary provision of the policy. In such circumstances the control of the defense by the insurer carries with it the potential of prejudice to the insureds and the assumption of such control without a reservation of the right to deny liability would have obligated the insurer to pay within the policy limits if the plaintiff should succeed.\u201d\nBecause of this conflict of interest, third-party defendant contends that it should be relieved of its duty to defend. It relies on Harbin v. Assurance Company of America, supra; Farm Bureau Mut. Automobile Ins. Co. v. Hammer, 177 F.2d 793 (4th Cir.1949) and Williams v. Farmers Mutual of Enumclaw, 245 Or. 577, 423 P. 2d 518 (1967). See McKee v. Allstate Ins. Co., Or., 426 P.2d 456 (1967). In each of these cases it was held that the insurer had no duty to defend. In each case the conflict of interest between insurer and insured was a reason given for reaching such result. We express no opinion concerning the correctness of the holding in these cases because their facts distinguish them from this case. In each of the three cases the question was whether the insurer should have taken over the defense of the suit against the insured.\nStolz does not ask the third-party defendant to take over his defense of plaintiff\u2019s suit. Stolz asks that third-party defendant be required to defend plaintiff\u2019s claim only to the extent of reimbursing him for reasonable sums incurred by him in conducting the defense.\nThe distinction between conducting the defense and reimbursing the insured for his costs in conducting his own defense has been recognized by Texas. In Steel Erection Co., Inc. v. Travelers Indemnity Co., 392 S.W.2d 713 (Tex.Civ.App.1965), the insurer was not in a position to defend the suit brought against its insured because of a conflict of interest. There the insurer was held liable for attorney fees expended by its insured in defending against the allegation that was within the policy coverage.\nApplying Texas law, we hold that third-party defendant is not in a position to defend Stolz against plaintiff\u2019s negligence claim because of the conflict of interest, but this conflict does not relieve third-party defendant of all obligation under its policy in this regard. Because of the conflict the duty assumed by third-party defendant may be enforced in the manner here sought \u2014 that of reimbursing Stolz for his costs in defending against the claim alleged to be within the policy coverage.\n3. The \u201cNo-Action\" Clause.\nCoverage L of the policy covers personal liability of Stolz for damages based on bodily injury. The applicable \u201cno-action\u201d provision is a condition of the policy. It reads:\n\u201cConditions.\n******\n\u201c8. Action Against Company \u2014 Coverage L.\nNo action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured\u2019s obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and _.the company.\n\u2022 \u201cAny'person or organization or the le'gal representativ\u00e9 thereof who has secured such judgment or writteii agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. No person or organization shall have any right under this policy to join the company as a party to any action against the insured to determine the insured\u2019s liability, nor shall the company be impleaded by the insured or his legal representative. * * * \u201d\nThird-party defendant\u2019s obligation to pay has not been finally determined. The policy states that \u201cno action shall lie\u201d until this has been done. Third-party defendant has been impleaded by its insured. The policy states that no person shall have the right to do this.\nWhat is the effect of the \u201cno-action\u201d clause? In presenting this issue the parties raise four points: (a) Public policy; (b) Discretion of the trial court; (c) Texas third-party practice, and (d) Impossibility of performance or waiver.\n(a) Public policy.\nSection 21-1-1(14), N.M.S.A.1953, authorizes a third-party complaint against one \u201cwho is or may be\u201d liable to third-party plaintiff for all or part of the plaintiff\u2019s claim against the third-party plaintiff.\nStolz asserts that this rule indicates a public policy permitting the impleading of third-party defendant regardless of the \u201cno-action\u201d clause. He cites the following cases in support of his position: Purcell v. United States, D.C., 242 F.Supp. 789 (1965); Vaughn v. United States, D.C., 225 F.Supp. 890 (1964); Jordan v. Stephens, D.C., 7 F.R.D. 140 (1945). In opposing this contention, third-party defendant cites American Zinc Co. of 111. v. H. H. Hall Construction Co., D.C., 21 F.R.D. 190 (1957).\nA good discussion of the problem is found in 1A Barron and Holtzoff, Federal Practice and Procedure, \u00a7 426.2 (Rules ed. 1960). See also 3 Moore, Federal Practice, \u00a7 14.12 (2d ed. 1967). Because of our' holding in connection with impossibility of performance or waiver, it is not necessary for us to decide the question.\n(b)Discretion of the court.\nA third-party complaint required permission of the court. Section 21-1-1(14), N. M.S.A.1953. Third-party defendant asserts that summary judgment as to the third-party claim was proper because allowing a third-party claim to be filed is discretionary with the court. It points out that a jury demand has been filed (which Stolz asserts was untimely) and relies on that portion of 3 Moore, Federal Practice, \u00a7 14.-12, supra, which states:\n\u201cEven where impleader is otherwise permissible on the facts of the case, the court as a matter of discretion may see fit to deny it because of the risk of prejudice if the jury learns that the defendant is insured. * * * \u201d\nSee 8 Appleman, Insurance Law and Practice \u00a7 4861 (1942). But compare Olguin v. Thygesen, 47 N.M. 377, 143 P.2d 585 (1943).\nThus, third-party defendant asserts that dismissal of Stolz\u2019s third-party complaint was in the exercise of the trial court\u2019s discretion; that because of the possibility of prejudice, this discretionary action was proper.\nThis contention does not accord with the facts. The trial court entered its order authorizing the filing of the third-party complaint. It exercised its discretion at that time. It then disposed of the third-party complaint by an order that treated third-party defendant\u2019s motion to dismiss as a motion for summary judgment, that sustained the motion and dismissed the third-party complaint. The trial court sustained the motion without indicating on what basis it ruled. Even if the trial court had discretion to dismiss a third-party complaint after authorizing it to be filed, this was not the nature of the action taken by that court. The trial court granted summary judgment.\nThus, we must still determine the effect of the \u201cno-action\u201d clause.\n(c) Texas third-party practice.\nRule 38(a) and (c), Vernon\u2019s Texas Rules of Civil Procedure read: '\u25a0\n\u201c(a) When defendant may bring in third party. A defendant, on notice to the plaintiff, may ask leave of the court to file a cross-action against a person not a party to the action who is or may be liable to him or to the plaintiff for all or part of the plaintiff\u2019s claim against the defendant. * * *\n\u00bbf* \u00abI\u00bb j{\u00bb\n\u201c(c) This rule shall not be applied, in tort cases, so as to permit the joinder of a liability or indemnity insurance company, unless such company is by statute or contract liable to the person injured or damaged.\u201d\nIf these rules are procedural they do not determine the effect of the \u201cno-action clause.\u201d Rules of procedure are governed by the law of the forum. Penny v. Powell, 162 Tex. 497, 347 S.W.2d 601 (1961); Restatement, Conflict of Laws \u00a7 585 (1934).\nThird-party defendant contends that Rule 38(c) is substantive to the extent that it prohibits joinder of a liability insurance company; that since Texas\u2019 substantive law is applicable, Rule 38(c) bars the third-party complaint.\nThe Texas Supreme Court characterized Rule 38(c) as procedural in Penny v. Powell, supra. We accept that characterization.\n(d) Impossibility of performance or waiver.\nStolz asserts that the \"no-action\u201d clause was either impossible of performance or waived by third-party defendant\u2019s refusal to defend him. We agree.\nThe third-party defendant did not limit its refusal to defend to a refusal to participate in the defense because of the conflict above discussed, but denied any and all liability under its policy, including its duty to defend. The very fact that third-party defendant sought and recovered a summary judgment, the effect of which is hereinafter discussed, clearly demonstrates that it took and still takes the position that it has no obligation under the policy.\nIn St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U.S. 173, 26 S.Ct. 400, 50 L.Ed. 712 (1906), the insurer refused to defend an action against its insured. The insured then settled with the complainant and sued the insurer for the settlement sum plus its costs in defending the claim. The \u201cno-action\u201d clause of rthe policy in question provided that no action would lie against the insurer unless the loss was actually sustained in satisfying a judgment after trial. It was held that the insurer\u2019s wrongful refusal to defend \u201c * * * cut at the very root of the mutual obligation, and put an end to its right to demand further compliance with the supposed term of the contract on the other side. * * * \u201d\nIn so holding, Justice Holmes stated:\ni \u201cLooking at the substance of the matter, it makes no practical difference * * * whether we say that the defendant, by its conduct, made performance of the conditions by the plaintiff impossible, and therefore was chargeable for the sum which it would have had to pay if those conditions had been performed, or answer, * * * that performance of the conditions was waived. * * * \u201d\nIn following the Dressed Beef decision, Collier v. Union Indemnity Co., 38 N.M. 271, 31 P.2d 697 (1934) states:\n\u201c * * * But the real principle set forth was that a breach by the insurer relieved the assured of these restrictive provisions of the contract. * * * \u201d\nSee Halmon v. Pico Drilling Co., 78 N.M. 474, 432 P.2d 830 (1967).\nUnited Services Automobile Association v. Russom, 241 F.2d 296 (5th Cir.1957) states:\n\u00ab * * * go long as there is no fraud or collusion wrongfully destroying or impairing the insurer\u2019s rights, repudiation of the insurer\u2019s duty to defend excuses compliance by the assured * * with the No-action Clause. * * * \u201d\nThe Dressed Beef case is followed by the Texas courts. Continental Paper Bag Co. v. Bosworth, 215 S.W. 126 (Tex.Civ.App.1919), aff\u2019d. 269 S.W. 83 (Tex.Com.App.1925), rehearing denied, 276 S.W. 170 (Tex.Com.App.1925). Since Texas law is applicable, the no-action clause was either impossible of performance or waived when third-party defendant refused to defend Stolz.\n4. Duty to Pay.\nAs noted previously, the trial court did not state on what basis it dismissed the third-party complaint. During oral argument, the question arose as to the effect of the dismissal. If the order of dismissal is affirmed would it bar a suit seeking to require third-party defendant to pay pursuant to its policy in the event plaintiff obtained a judgment against Stolz based on negligence? Specifically the question is whether the order of dismissal ruled on the question of third-party defendant\u2019s obligation to pay under policy provisions.\nA summary judgment by its own terms is a final judgment. Morris v. Miller & Smith Mfg. Co., 69 N.M. 238, 365 P. 2d 664 (1961); Pederson v. Lothman, 63 N.M. 364, 320 P.2d 378 (1958).\nSince the third-party complaint was dismissed by summary judgment and since that dismissal is a final judgment, final judgment has been given as to the claims asserted in the third-party complaint. One of these claims is that third-party defendant is obligated to pay any judgment entered in favor of plaintiff against Stolz. Such a claim, of course, would be limited to coverage provided by the policy.\nWe do not see how summary judgment could be entered determining that third-party defendant had no duty to pay. The facts concerning the altercation between plaintiff and Stolz had not been determined (actually, had not been presented) when the order of dismissal was entered. Third-party defendant could have a duty to pay even though, because of the allegations of the complaint, it might not have a duty to defend. Green v. Aetna Insurance Co., 349 F.2d 919 (5th Cir. 1965).\nThe third-party complaint alleged a \u201cgenuine cause of action;\u201d the order summarily dismissing the third-party complaint was improper and is reversed. The cause is remanded with instructions to set aside the order of dismissal and reinstate the third-party complaint on the docket.\nIt is so ordered.\nOMAN and ARMIJO, JJ., concur.", "type": "majority", "author": "WOOD, Judge." } ], "attorneys": [ "Dale W. Ek, Allen C. Dewey, Modrall, Seymour, Sperling, Roehl & Harris, Albuquerque, for appellant.", "Thomas B. Catron, III, Catron & Catron, Santa Fe, for appellee." ], "corrections": "", "head_matter": "442 P.2d 810\nH. H. SATTERWHITE, Plaintiff, v. L. W. STOLZ, Jr., Defendant-Appellant, v. The WESTERN CASUALTY & SURETY COMPANY, a corporation, Third-Party Defendant-Appellee.\nNo. 118.\nCourt of Appeals of New Mexico.\nJune 7, 1968.\nDale W. Ek, Allen C. Dewey, Modrall, Seymour, Sperling, Roehl & Harris, Albuquerque, for appellant.\nThomas B. Catron, III, Catron & Catron, Santa Fe, for appellee." }, "file_name": "0320-01", "first_page_order": 352, "last_page_order": 359 }