Harrison v. Southern Transit Corp., 192 N.C. 545 (1926)

Nov. 17, 1926 · Supreme Court of North Carolina
192 N.C. 545


(Filed 17 November, 1926.)

1. Actions — Causes of Action — Parties — Pleadings — Misjoinder — Dismissal.

A misjoinder of parties and causes of action is demurrable and tbe action may be dismissed on defendant’s motion, but as to misjoinder of causes of action the same will be divided.

2. Same — Principal and Surety — Statutes—Contracts—Torts.

Under our statute (chapter 50, sec. 3, 6(g), Public Laws of 1925), the owners of passenger autobusses for hire upon the highways of this State are required to take out liability insurance for the protection of passengers and others, with the right of action given to the party injured by the negligence of the driver of the autobus, and thereunder a demurrer to the complaint against the autobus company and the surety on his bond, upon the ground that the action against the surety arises in contract, and that of the insured in tort, is bad. Cases where, under the contract, the principal alone is protected against loss, distinguished.

Appeal by defendants from a judgment of Bryson, J., at March Term, 1926, of the Superior Court of Guileokd County, overruling their demurrer to’the complaint.

The plaintiff is a minor suing by her next friend. The material allegations of her complaint are in effect as herein stated. The Southern Transit Company, a corporation organized under the laws of North Carolina, owned and operated motor vehicles for carrying passengers on the public highways between Ealeigh and Greensboro, one of which vehicles, a White truck, was known as “Pathfinder.” The city of Greensboro, a municipal corporation, enacted certain ordinances, forbidding the operation within the corporate limits of any motor vehicle in a careless or reckless manner or in such a way as to endanger life, limb, or property; forbidding a vehicle from turning to the left in going into a street without going around the center of intersection; and prohibiting the driving of any vehicle within the safety zone. On 20 July, 1925, the plaintiff was riding her bicycle on North Davie Street going south, and had passed the center of intersection of North Davie and Church streets and entered the safety zone on the right side when the “Pathfinder,” moving from the south on North Davie Street, was negligently turned and driven on the left side of North Davie Street without going around the center of intersection. The driver, by “cutting the corner,” ran the bus against the plaintiff’s bicycle, hurling her to the ground and inflicting the injury of which she complains. The sev*546eral acts of negligence are sufficiently set out. Prior to tbe injury tbe Carolina Mutual Casualty Insurance Company executed a bond or policy of casualty insurance in tbe sum of $25,000 conditioned to indemnify passengers and tbe public receiving personal injury by any act of negligence, as appears in tbe opinion.

Tbe defendants demurred to tbe complaint on two grounds: (1) There is a misjoinder of parties defendant in that there is no privity of contract between tbe plaintiff and tbe Casualty Company and no obligation which it owes to tbe plaintiff; (2) there is a misjoinder of actions in that as to tbe Transit Corporation tbe action is in tort while as to tbe Casualty Company it is a contract.

Tbe demurrer was overruled and tbe defendants excepted and appealed.

A. 0. Davis and Frazier & Frazier for plaintiff.

John W. Hester and Shuping & Hampton for defendants.

Adams, J.

If a complaint be demurrable for tbe reason that several causes of action have been improperly united tbe causes may be divided into as many actions as are necessary to a determination of tbe controversy; but if there be a misjoinder both of parties and of causes, tbe action may be dismissed. Mitchell v. Mitchell, 96 N. C., 14; Rose v. Warehouse Co., 182 N. C., 107; Shore v. Holt, 185 N. C., 312; C. S., 516. In this case tbe defendants have assigned both grounds of demurrer; we must, therefore, decide whether there is a misjoinder of actions or a misjoinder of parties defendant.

Tbe plaintiff alleges in substance that at tbe time she was injured tbe Southern Transit Corporation was a common carrier of passengers on one of tbe public highways of tbe State, and was liable in damages for personal injury caused by its negligence, and that its codefendant, tbe Carolina Mutual Casualty Insurance Company, having executed tbe bond or policy required by law, thereby became liable to tbe extent of its contract of indemnity. For this reason it is necessary to inquire into tbe relation of tbe parties. There is no question as to tbe liability of tbe Transit Corporation for personal injury caused by its negligence; tbe point in dispute involves tbe relation of tbe Casualty Company to its codefendant and to tbe plaintiff.

Tbe Casualty Company executed its bond or policy in pursuance of a statute enacted by tbe General Assembly in 1925. Public Laws 1925, eb. 50, sec. 3, 6(g). This bond or policy, in tbe language of tbe statute, was “conditioned to indemnify passengers and tbe public receiving personal injuries by any act of negligence” . . and was executed “for tbe benefit of and subject to action thereon by any person or per*547sons who shall have sustained an actionable injury protected thereby, notwithstanding any provision in said bond to the contrary.” It is provided that any bond or insurance policy so given shall conclusively be presumed to have been given according to and to contain all the provisions of the statute.

The defendants say that the effect of these provisions when made a part of the bond is to indemnify the Transit Company and to impose no liability upon the surety company except to save the Transit Company from loss. They take the position that the plaintiff’s action is in tort; that the relation between the two defendants is contractual; and that the surety company at present is under no kind of obligation to the plaintiff. In support of this position two cases are cited. One is O’Neal v. Transportation Company, 129 S. E. (W. Va.), 478. There it was held that the joinder in a declaration of a cause of action sounding in contract with one sounding in tort, is a misjoinder which makes the declaration demurrable; but it was said that the policy of insurance then considered was a contract between the carrier, that is, the assured, and the insurance company, whereby the latter agreed to pay and satisfy judgments finally establishing the liability of the assured. In the other case, Smith Stage Company v. Eckert, 7 A. L. R. (Ariz.), 995, the Court said that one of the terms of the policy was that the injured person must first establish his claim by suit against the assured, and that this provision would have been completely nullified if the injured person had been permitted to sue the indemnity company on the policy before he had proved his loss.

But under our statute, which is made a part of the bond or policy, a judgment against the carrier is not prerequisite to a suit on the bond. The Legislature no doubt intended to obviate the necessity of double litigation, for it provided that a carrier by automobile should give a bond in a surety company in an amount to be fixed by the Corporation Commission (unless in lieu thereof national, State, county, or municipal bonds were given), conditioned to indemnify the public as well as passengers receiving personal injuries by any act of negligence, and that this bond should be for the benefit of and subject to action thereon by any person protected thereby who has sustained actionable injury. The carrier and the surety company are thus made jointly liable for the actionable negligence of the assured. In an action ■ against the driver of a jitney bus and a casualty company which had executed an indemnity bond containing provisions very much like these in our statute, the Supreme Court of California, holding -that the casualty company was properly joined with the assured in an action for injuries caused by the driver’s negligence, said: “To read the statutory requirement into the bond, while it accords to the plaintiff the privilege of joining *548tbe casualty company in a suit against tbe operator of tbe bus, introduces no necessary inconsistency into tbe contract and leaves tbe substantial rights of tbe parties unimpaired. Tbe only ground upon wbicb it is suggested tbat tbe rights of tbe defendants might be injuriously affected is tbat a jury might be expected to return a larger verdict for tbe plaintiff in a suit in wbicb tbe casualty company appears as a party defendant, because they would necessarily know tbat tbe operator of tbe bus, whose act actually caused tbe injury, was insured. Tbe jury would presumably know in any event tbat the' operator was insured, since tbe law requiring tbe filing of tbe bond was one of wbicb all persons would be presumed to have knowledge. Nor can we doubt tbat tbe casualty company must be presumed to have taken tbe knowledge of tbe jury into account in fixing its charges for executing a bond or policy of insurance issued in assumed pursuance of an ordinance unequivocally prescribing tbat tbe bond should be enforceable in favor of tbe persons injured by tbe act of tbe operator of tbe motor bus.” Mulliron v. Dittman, 181 Pac., 779.

While v. Kane, 192 N. W. (Wis.), 97, was an action against tbe operator of a taxicab and a liability company wbicb bad contracted in its policy to pay tbe assured tbe amount of any final judgment for damages recovered against him not exceeding tbe limit stated. There was an added condition tbat tbe policy should be in accord with certain statutes and a designated city ordinance. Among these was a provision tbat tbe surety company should pay to any person injured whatever sum be was entitled to, not exceeding a certain amount. It was held tbat tbe policy was not an indemnity but a liability contract, and tbat tbe assured and tbe surety company were properly joined as parties defendant. In other courts a similar joinder of parties has been approved. Boyle v. Liability Ins. Co., 115 At. (N. J.), 383; Devoto v. United Auto Co., 223 Pac. (Wash.), 1050.

Tbe prevailing doctrine is tbat if tbe indemnity is clearly one against loss suffered by tbe assured no action can be maintained against tbe indemnity company until some loss or damage has been shown; but if tbe contract indemnifies against liability a right of action against tbe principal and the surety company accrues when tbe injury occurs. Clark v. Bonsal, 157 N. C., 270. See, also, Newton v. Seeley, 177 N. C., 528; Chappell v. Surety Co., 191 N. C., 703, 709.

We are of opinion tbat tbe action can be maintained against both tbe defendants and tbat there is no misjoinder either of causes of action or of parties defendant.

Tbe judgment is