The opinion of the court was delivered by: WOOD
This is a motion for summary judgment against a garnishee insurance company. On October 16, 1963, judgment was entered in an action for personal injuries against the Dauphin Realty Company for the sum of $ 86,000.00. This judgment has been appealed and is presently before the United States Court of Appeals for the Third Circuit awaiting decision.
Neither the defendant, Dauphin Realty Company, nor its insurer, the Boston Insurance Company, has filed a supersedeas bond to stay execution of the judgment as required by Fed.R.Civ.P. 73(d). A writ of execution issued against the defendant on December 18, 1963, but the plaintiff has not yet sold the defendant's assets.
On January 20, 1964, a writ of execution was filed against the Boston Insurance Company and Interrogatories in Attachment Execution to the garnishee were filed on January 24, 1964.
In its Answer, the Boston Insurance Company admits that it provides the defendant with insurance in the amount of $ 25,000.00, but contends that it is not obligated to post security for its insured in any Court, and further, that under the policy the instant judgment having been appealed is not a final determination of the garnishee's obligation to its insured.
We disagree. The Boston Insurance Company has undertaken the complete charge of the defense in this action, and posting security as required by Rule 73 is a very important aspect of such representation not to be avoided by the insurer.
To accept the insurer's interpretation of its obligations under the policy does violence to the very purpose of insurance and the clear language of the contract as selected by the Boston Insurance Company. The clause in issue which conditions the insurer's obligation to pay reads as follows:
'* * * until the amount of the insured's obligation to pay shall have been finally determined either by judgment against after actual trial or by written agreement. * * * '
The insurer, having assumed the complete and exclusive control of the defense in this action, has adopted the liability of its insured with all of the attendant consequences flowing from a final judgment.
This Court has had occasion to consider a policy provision similar to the clause involved in this matter. In Arsht v. Hatton, 80 F.Supp. 148 (E.D.Pa.1948), our late colleague, Judge McGrannery, concluded that such a policy clause prevents judgment and execution against an insurer until the appealed judgment has been affirmed. In reaching this decision the Court applied Pennsylvania law as delineated in the case of DiGregorio v. Skinner, 351 Pa. 448, 41 A.2d 653, 159 A.L.R. 760 (1945). However, the Pennsylvania Supreme Court in DiGregorio never actually ruled that a judgment which had been appealed is not a final determination within the terms of the insurance policy because in a companion case decided the same day the Court had affirmed the judgment of the lower Court in DiGregorio v. Skinner, 351 Pa. 441, 442, 41 A.2d 649 (1945).
The Supreme Court said at page 450 of 351 Pa., at page 654 of 41 A.2d 159 A.L.R. 760:
'In view of our affirmance of the judgments entered against Skinner, there can now be no question as to the finality of the cause of action as to him. That, we are convinced, solves the present controversy, for 'the amount of the insured's obligation to pay' has 'been finally determined."
Applying 'converse' reasoning this Court in the Arsht case, supra, 80 F.Supp. at p. 150, reasoned as follows:
'The Court's view clearly was that affirming a judgment on appeal 'finally determines' the 'obligation to pay,' and, I feel its opinion indicates the converse view as well; i.e., prior to affirmance on ...