Appeal from order of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1964, No. 209, in case of Robert A. Gray v. Nationwide Mutual Insurance Company.
Milford J. Meyer, with him Charles H. Weidner, and Meyer, Lasch, Hankin & Poul, and Stevens & Lee, for appellant.
Michael Shekmar, for appellee.
Ervin, P. J., Wright, Watkins, Montgomery, Jacobs, and Hoffman, JJ. (Flood, J., absent). Wright, J., files an opinion supporting the affirmance of the order, in which Montgomery, J., joins. Jacobs, J., also files an opinion supporting the affirmance of the order. Hoffman, J., files a dissenting opinion, in which Ervin, P. J., and Watkins, J., join.
The six judges who heard the argument of this appeal being equally divided in opinion, the order of the court below is affirmed.
Robert A. Gray filed a complaint in assumpsit against Nationwide Mutual Insurance Company based on a purported assignment from Robert B. MacLatchie. A prior trespass action by Gray against MacLatchie had resulted in a $15,000.00 verdict. See Gray v. MacLatchie, 403 Pa. 595, 170 A.2d 590. MacLatchie was insured by Nationwide against liability to the extent of $5,000.00, which amount Nationwide paid. In settlement of the balance, MacLatchie assigned to Gray his alleged right to recover from Nationwide for its failure to settle within the policy limit. The Court below dismissed Gray's complaint.
Breach of an insurer's obligation to act in good faith and with due care in representing the interests of the insured creates a cause of action in tort, not in assumpsit. A claim of the instant nature is not assignable before verdict: Sensenig v. Pa. Railroad Co., 229 Pa. 168, 78 A. 91; Seaboard Commercial Corp. v. Bardell, 49 Pa. D. & C. 300. I also agree with President Judge Alessandroni that the attempted assignment violates public policy because of its collusive nature and the opportunity for fraud. It is therefore proper to affirm the order of the court below.
I would affirm the order of the court below for the following reasons:
Any liability of the insurer over the $5,000 policy limit arises from the fiduciary relationship assumed by the insurer toward the insured. Gedeon v. State Farm Mutual Automobile Insurance Company, 410 Pa. 55, 188 A.2d 320 (1963). "Claimant is a stranger to that relationship", as is pointed out by Professor Keeton in his comprehensive and scholarly article in 67 Harvard Law Review 1136 at 1176. The insurer owed no duty to this plaintiff (claimant). Therefore, no right of plaintiff has been affected which would allow plaintiff to recover directly from the insurer. I would not permit plaintiff to do indirectly by assignment what he cannot do directly.
As a practical matter, if only the insurer's bad faith prevented a settlement for $5,000., I fail to see how plaintiff was injured (except for the expense of trial) by the insurer's refusal to settle. Furthermore, to permit plaintiff to sue the insurer directly for the full amount of any judgment it holds against the insured, despite ...