1. The court did not err in directing a verdict for the plaintiff for the principal amount sued for, with interest.
2. The inclusion in the verdict of an amount for a penalty and attorney's fees was not authorized under the law and the evidence, and direction is being given that such amount be written from the judgment.
3. The only two special grounds of the defendant's motion for new trial which are not expressly abandoned are without merit.
In this opinion we shall call Doctor L. E. Owen the plaintiff, and Continental Casualty Company the defendant, and designate Hertz Driv-Ur-Self System, Inc., as U-Drive-It. When necessary to refer to Travelers Insurance Company and Glens Falls Indemnity Company, we shall refer to them as "Travelers", since the policies issued to the plaintiff are identical as to provisions and vary only as to the amounts. Travelers Insurance Company insured the plaintiff for $100,000 personal-injury coverage and $5,000 property-damage coverage; Glens Falls insured the plaintiff for $20,000 personal-injury coverage and $5,000 property-damage coverage. The policy of the defendant insurance carrier insured for $10,000 personal-injury coverage and $5,000 property-damage coverage.
The plaintiff filed an action against the defendant and U-Drive-It, seeking to recover $9,300 plus 7% interest for property and personal damages to Thomas L. Oseicki, including personal damages to five of Oseicki's relatives, who were at the time riding in the automobile of Oseicki, besides 25% of the amount for penalty, and in addition $3,082 as attorneys' fees.
The petition alleged that the plaintiff lived in Miami, Florida, and that on May 26, 1951, he arrived over Eastern Airlines at an airport near Hapeville, Georgia; that upon arrival he procured from U-Drive-It a 1951 Chevrolet two door sedan for the purpose of driving to a point in North Carolina where the wife and son of the plaintiff were then living; that he procured a rental contract, a copy of which is attached to the petition. The rental contract for the Chevrolet thus rented stipulated that automobile-liability insurance has limits of $10,000 to any person injured during the duration of the rental contract and $5,000 property damage. The rental agreement is what is known to the insurance trade as a blanket-insurance policy, issued to U-Drive-It by the defendant insurance carrier, Continental Casualty Company; and said policy of insurance was effective on May 26, 1951. It is alleged that the plaintiff purchased such "spot" liability insurance as required by section 23 of the Motor Vehicle Act (Ga. B. 1951, p. 565 et seq.). It is further alleged: that the plaintiff was required to purchase such "spot" insurance before U-Drive-It would rent the car to him; that, on the same day, the Chevrolet was rented and during the rental agreement, while the plaintiff was driving the rented car on U. S. Highway Number 23 between Gainesville, Georgia, and Cornelia, Georgia, the plaintiff became blinded by the lights of an oncoming car and crossed over the dividing line of the highway and crashed into the oncoming car; that the oncoming car was driven by Thomas L. Oseicki, and the collision inflicted described personal injuries upon him and others riding in the car with him, and property damage as hereinbefore mentioned; that the injured persons notified the plaintiff that they would expect him to pay $9,300 as the least possible amount acceptable to them; that the plaintiff notified the defendant on November 23, 1951, that the settlement could be made with the injured persons, and that, if the defendant would not thus settle the claim, the plaintiff would make the settlement and then take necessary steps to recover the amount so paid from the defendant insurance company. The defendant refused and neglected to take any part in the proposed settlement and had never taken any steps whatsoever to defend or aid the plaintiff in defending against the claims of the injured persons; the plaintiff felt that it was to his best interest and was reasonable that the claims of the injured persons should be settled, for, if the claims of the injured persons were to be settled in a court action, it would cost more than the amount which the injured persons agreed to accept.
The plaintiff, more than ten days after notifying the defendant insurance company to take part in negotiating a settlement, paid over to the injured persons the total sum of $9,300, and procured from them releases which also released the defendant insurance company. The plaintiff further alleged that he and U-Drive-It had performed all things to be done according to the terms of the liability insurance between the defendant and U-Drive-It. It is further alleged that the defendant breached the following provisions of the contract with U-Drive-It and with the plaintiff:
"(1) The defendant insurance company agreed 'To pay on behalf of the Insured all sums which the Insured shall became obligated to pay by reason of the liability imposed upon the Insured by law for damages, including damages for care and loss of services, because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons, caused by accident during the policy period and arising out of the ownership, maintenance, or use, including loading or unloading . . .'
"(2) The defendant insurance company also agreed 'To pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon the Insured by law for damages because of damage to or destruction of property, including the loss of use thereof, caused by accident during the policy period and arising out of the ownership, maintenance, or use, including loading or unloading . . . '
"(3) The defendant insurance company further agreed 'To defend for the Insured any suits, even if groundless, brought against the Insured to recover damages unless the Company shall elect to effect settlement thereof . . .' "
It is further alleged: that, under the terms of the said insurance policy, the defendant was bound to defend the claim by the injured persons against the petitioner and was bound to pay the $9,300 paid by the plaintiff in settlement of the claim; that the plaintiff had repeatedly demanded of the defendant the payment of the said sum, but the defendant refused to do so; and that, on May 1, 1952, the attorneys for the petitioner made written demand on the defendant to pay the said settlement sum; that the defendant was informed that, unless the sum was paid within sixty days from the date the written demand was made on the defendant, suit would be entered against the defendant; that the defendant refused; that the defendant by such refusal and neglect had acted in bad faith, and by reason of such bad faith the defendant was due, in addition to the principal amount, interest and penalty and reasonable attorneys' fees as herein above specified.
No demurrer was filed to the petition. The defendant's answer as amended denied all material allegations of the petition, and under paragraph 14 further answered, stating (a) that prior to the rental of the car from U-Drive-It, the plaintiff had acquired, and there were of force on the date of the collision, policies of insurance from the "Travelers" primary automobile liability insurance coverable to the plaintiff in his operation of any automobile; that the limits of the liability far exceeded $20,000; (b) that the defendant did not have a copy of the insurance policies to which reference was made, but that the plaintiff did have them and was notified to produce such policies at the trial; (c) that, promptly following the collision, the plaintiff notified the "Travelers" of the fact of such collision and to investigate the circumstances surrounding the collision and to negotiate with the persons involved therein and to determine to its own satisfaction the action which it should take with reference thereto; and that the "Travelers" did effectuate a purported settlement with the injured persons, purportedly releasing the plaintiff and any others who might be responsible through the plaintiff for any claims, damages, or causes of action which might result in favor of such injured persons, and the "Travelers" in connection therewith did advance and pay to the injured persons the money deemed advisable under the circumstances; (d) that the negotiations and settlements with the persons involved were unwarranted and the amounts paid in settlement to the persons were unreasonable, excessive, and unjustified by the extent of the injuries of the persons involved; (e) that the insurance coverage afforded to the plaintiff by the defendant was provided by the policy of insurance between the defendant and U-Drive-It, a specimen copy being attached; that said last policy of insurance provided: "Exclusions. This policy does not cover: Any liability for such loss as is covered on a primary, contributory, excess, or any other basis by a policy of another insurance company"; (f) that the coverage afforded the plaintiff by the defendant does not impose any liability "covered on a primary, contributory excess, or any other basis by a policy of another insurance company"; (g) that the insurance afforded to the plaintiff by the defendant was conditioned upon the defendant having exclusive night to settle any claim or suit without any interference or negotiation or in the conduct of any suit by the plaintiff. In the face of such conditions and limits, the plaintiff, without just cause and contrary to the facts, conceded liability to the persons injured and negotiated with them for settlement, and fixed and established in the minds of the jury the rights of the injured persons to receive for their injuries, $9,300; that in so doing the defendant interfered with and precluded any proper investigation, negotiation, and settlement by the defendant; (II) "That such insurance coverage as was afforded to the plaintiff by this defendant at the time of, and in connection with, his rental of an automobile from Hertz Driv-Ur-Self System, Inc., made any recovery against this defendant under the said policy conditioned upon the previous fair determination of the amount of loss, either by judgment against the insured after actual trial or by written agreement of the insured, the claimants and the defendant insurance company. No liability or amount of loss having been so determined, the plaintiff has no night of recovery against this defendant."
The original answer of the defendant was several times amended, and at different stages of the pleadings the plaintiff filed demurrers and objections, some of which were overruled and some sustained by the court, and the answer was finally rewritten to meet the order of the court. On the rulings of the court adverse to the plaintiff, he assigned error in a cross-bill of exceptions to this court, but for reasons which will hereinafter appear it is unnecessary to set forth these assignments of error.
The court directed a verdict for the plaintiff for $9,300 plus 7% interest. The court submitted to the jury the question of the penalty and attorneys' fees, to determine whether or not, under the evidence, the plaintiff should have damages as a penalty and also have attorneys' fees because the defendant had acted in bad faith. The jury returned a verdict for $9,300 with interest at 7% per annum from July 14, 1952, to the date of the judgment, in the amount of $527.76, or total of principal and interest of $9,827.76 plus a penalty of $2,325 and attorneys' fees for $3,082. Judgment was rendered accordingly.
The defendant filed a motion for new trial and by amendment added several special grounds. Since, however, in its brief in this court all special grounds except those numbered 7 and 9 are expressly abandoned, only these two special grounds need be ruled on.
Under the general grounds it is contended: (1) The trial court erred in denying the motion for new trial as amended, because the verdict finding the defendant liable to the plaintiff for breach of contract is contrary to law, contrary to the evidence, and without evidence to support it, the evidence demanding a verdict for the defendant under the terms of the policy which affords no coverage to the plaintiff. (2) The verdict finding the defendant liable for a penalty and attorneys' fees is contrary to law, contrary to the evidence, and without evidence to support it, the evidence demanding a verdict finding that the defendant did not act in bad faith in relying on the terms of the policy and refusing to pay the plaintiff.
Special ground 7 assigns error on the following excerpt from the charge of the court: "Now, gentlemen, the defendant filed an answer in the case in which it denied liability. It denied that they were liable under the terms of the policy to the plaintiff in any amount and also denied that the settlement was a reasonable and fair settlement. But the defendant has, in open court, admitted or agreed that the settlement of $9,300 was not an excessive settlement and was fair, and the court has ruled that the defendant is liable and responsible to the plaintiffs in the sum of $9,300 with interest there on from the date that this suit was filed. So those questions are not before you at this time; and you will find a verdict for the plaintiff against the defendant for the sum of $9,300 with 7 percent interest from the date of filing the suit, which was on the 14th day of July, 1952."
Error is assigned on this excerpt, as follows: (a) because it was confusing and misleading to the jury in that the court did not state on what grounds it had determined as a matter of law that the defendant was liable to the plaintiff for the principal sum of $9,300, plus interest; that the court thus left with the jury the impression that the defendant had no legal defense to the plaintiff's action and that the defendant's defense was frivolous and without reasons to justify it; (b) that the failure of the court to explain to the jury the ground of which the court held the defendant liable to the plaintiff as a matter of law were prejudicial and injurious to the cause of the defendant and thus left to the complete discretion of the jury the determination of whether the defendant had acted in bad faith in refusing to pay the claim of the plaintiff under his policy of insurance with the defendant; that thus the jury, without any knowledge as to why the court determined the defendant liable as a matter of law, necessarily felt compelled to find that the defendant had refused in bad faith to pay the plaintiff.
Special ground 9 assigns error because the court directed a verdict for the plaintiff for $9,300 with interest from July 14, 1952 (this verdict has been hereinbefore set out). Error is assigned in this special ground: (a) because the direction of the verdict was contrary to law and equity and the evidence submitted was prejudicial to the defendant; (b) because it was erroneous and prejudicial to direct the verdict because the verdict was not demanded by the evidence; the evidence in this case would have authorized the jury to return a different verdict and because the pleadings and the evidence in the case raised questions of fact which should have been submitted to a jury.
The court denied the amended motion for new trial. To this judgment the defendant assigns error here. The plaintiff by cross-bill assigns error as hereinbefore stated.
1. As to the general grounds, the assignments of error thereon, except the claim for a penalty and attorneys' fees, are without merit, and the court did not err in directing a, verdict for the principal amount of $9,300 and interest. We will discuss the question of a penalty and attorneys' fees in the next division of this opinion.
2. We will now discuss whether or not the plaintiff, under the facts of this case, should be permitted to recover the penalty and attorneys' fees, according to the jury's verdict. The act of 1951 (Ga. L. 1951, p. 565, et seq.), generally known as the Motor Vehicle Safety Responsibility Act, provides in section 23 as follows: "Any person, firm, corporation or association who rents motor vehicles from a U-Drive-It owner is hereby required to provide their own insurance or bond and the insurance companies referred to in Section 17 of this Act shall be required by the Insurance Commissioner to provide 'spot' insurance which shall be purchased by said third person, finn, corporation or association before said U-Driv-It owner shall be authorized to turn a motor vehicle over to said person, firm, corporation or association. Provided, however, that in the event said U-Drive-It owner turns over any motor vehicle to said person, firm, corporation or association without first ascertaining that such 'spot' insurance has been obtained, then said U-Drive-It owner shall not be exempted from the provisions of this Act as provided in Section 15 of this Act, as to that particular rental transaction."
On the day the collision in question occurred, the plaintiff, Dr. Owen, procured a Chevrolet car from U-Drive-It for the purpose of traveling from Hapeville, Georgia, to North Carolina. On the trip and while in Georgia, he had a head-on collision with another automobile. Before the plaintiff could obtain the car from U-Drive-It, he was required by U-Drive-It to take out a "spot" insurance policy with the defendant. It appears from this record that the defendant wrote all the insurance for U-Drive-It and charged to the class of renters, such as the plaintiff, a fee of five mills per mile. Seven cents per mile was charged for driving the car, and five dollars per day was charged for the use of the car. The five mills per mile charge was remitted by U-Drive-It to the defendant at required intervals, as appears from the above statement of facts. There is evidence to the effect that the plaintiff informed U-Drive-It that he had car-insurance coverage. Nevertheless, U-Drive-It would not rent a car to the plaintiff until the policy of insurance furnished by the defendant was obtained. The record does not disclose just when the plaintiff notified U-Drive-It or the defendant of the collision. So far as the record reveals, tile Travelers first began the investigation which took place with the injured parties. It was agreed thereafter that the injured parties should receive the principal amount mentioned above. On November 23, 1951, the plaintiff by letter notified the defendant of the amount which would be required to settle the claims and also stated that the plaintiff would give the defendant ten days in which to settle the claims with the injured parties; otherwise, the plaintiff would be obliged to settle the claims with the injured parties himself and would look to the defendant to reimburse him. Thereafter, on May 1, 1952, the attorneys of record for the plaintiff wrote the defendant to the effect that they were notifying the defendant that the plaintiff had settled with the injured parties for the injuries received because of the collision in May, 1951, and that the rental agreement to the renter which the plaintiff had with U-Drive-It covered the amount which the plaintiff had paid to the injured parties. The letter of the attorneys for the plaintiff further stated that, unless the principal amount of $9,300 was paid within sixty days from May 1, 1952, legal proceedings would be instituted for the said principal sum, besides interest at the legal rate of 7%, and 25% as penalty on the entire amount, plus reasonable attorneys' fees. Thereafter suit was instituted by the plaintiff against the defendant and U-Drive-It to recover the sums alleged in the notice, and a verdict was rendered for the principal amount, interest, penalty, and attorneys' fees.
Attached to the pleadings will be found a copy of the policy of Travelers Insurance Company and a copy of the policy of the U-Drive-It rental agreement. The policy of Travelers Insurance Company is what is generally known as a standard automobile insurance policy and insures the plaintiff against personal-injury damages and property-damage loss, as above stated. A copy of the policy between U-Drive-It and the defendant is attached. That policy also has a property-damage provision and a personal-injury loss provision. The Travelers Insurance Company,s policy covered damage to property and personal damages, $5,000 and $100,000 respectively when the insured was driving any automobile. The defendant's policy, in the amount of $5,000 property damage and $10,000 personal-injury damages covered only a particular car which was rented to anyone by U-Drive-It,--in this instance the particular car which the plaintiff was driving at the. time of the collision. It is conceded that the car which the plaintiff was driving on the occasion in question was a car rented under section 23 of the acts of 1951, p. 565 et seq. This last-mentioned policy had in it what is referred to as an exclusion clause, as follows: " 'Exclusions: This policy does not cover: '(d) Any liability for such loss as is covered on a primary, contributory, excess, or any other basis by a policy of another insurance company.' "
The plaintiff contends that the policy of the defendant is liable for the loss in the instant case, and the defendant contends that, under its exclusion clause, the plaintiff or the Travelers would be liable. The defendant introduced evidence to the effect that U-Drive-It would be unable to do business if it had to comply with the above provisions of section 23, in that, if a proposed renter of U-Drive-It exhibited a policy of insurance, U-Drive-It did not leave facilities for investigating to determine whether or not the policy was in force nor its provisions, etc. Of course, U-Drive-It was not obliged to do business in Georgia if it could not abide with the provisions of the law, and it is elementary that, where the law provides a specific type of insurance, if the person or corporation operating under the law executes an insurance policy, it must meet tile provisions of law in relation thereto. Where, as here, the U-Drive-It undertook to provide the "spot" insurance according to the acts of 1951, the law itself set forth the provisions of the insurance policy, which is in the nature of a bond to guarantee the public against damages by some irresponsible renter of a car of the U-Drive-It. We have been unable to find any definition of "spot" insurance, but we take it to mean a specific policy on a particular car by U-Drive-It rented to a specific renter. This is a first-impression case under the act of 1951, supra. There is a case not altogether similar but analogous to the instant one which we think covers the situation here. That case is Hartford Steam Boiler Inspection & Ins. Co. v. Cochran Oil Mill & Ginnery Co., 26 Ga. App. 288 (105 S. E. 856). The headnote of that opinion reads: "Where two policies of insurance are partly coextensive as to the character and subject matter of the risk assumed, but afford protection in common as to injuries to one particular class of persons when brought about by one particular cause, and where both contain certain inconsistent clauses whereby each insurer attempts to limit its liability for a loss of that kind to excess insurance only and provides that in such a case the other insurer is to be primarily, and it only secondarily, liable, and where effect can be given to only one or the other of these limitations without defeating the protection of the insured under both policies, the rule to be adopted is to require that the company whose policy affords specific insurance so far as such particular risk is concerned shall primarily for the loss."
We might also state in this connection that, since the defendant received a premium of five mills per mile from the plaintiff, there should be, and we think there is, under the law some sort of liability on the part of the defendant. Otherwise, the policy of insurance would be a mere piece of paper for which the plaintiff paid dearly. See the special concurrence in Liberty Mutual Ins. Co. v. Atlantic Coast Line R. Co., 66 Ga. App. 826 (19 S. E. 2d 377). There are many cases cited by distinguished counsel for both parties, but we see no necessity for referring to them here. We think what we have said covers the situation.
We come to consider whether or not the verdict for attorneys' fees and the penalty under Code 56-706 should be allowed to stand. Attorneys' fees and the penalty provided for in that section should never be permitted unless the defendant acts in bad faith that is, that the defense is frivolous and unfounded. The attorneys for both parties here all specialize in insurance contracts. The question in this case has caused this court to use much consideration, and the voluminous briefs and the record in the case indicate that evidently the attorneys, as well as the trial judge, had no easy job in determining the law applicable, under all the facts and circumstances involved. We call attention to the following cases as authority for this court to set aside this portion of the judgment: Life & Casualty Ins. Co. of Tenn. v. Freemon, 80 Ga. App. 433 (c) (56 S. E. 2d 303), Northwestern Mutual Life Ins. Co. v. Ross, 63 Ga. 199; Mass. Benefit Life Assn. v. Robinson, 104 Ga. 256, 291 (30 S. E. 918, 42 L. R. A. 261); Equitable Life Assur. Society v. Gillam, 195 Ga. 797, 805 (255. E. 2d 686, 147 A. L. R. 1008).
So, within ten days from the time the remittur is received in the trial court, let the amount of the penalty and attorneys' fees be written from the judgment; otherwise the judgment will stand reversed.
3. Special grounds 7 and 9 of the amended motion for new trial--the only special grounds not expressly abandoned--are without merit.
Judgment affirmed in part and reversed in part, with directions on the main bill of exceptions. Cross-bill of exceptions dismissed. Townsend and Carlisle, JJ., concur.