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Lawskills.com Georgia Caselaw
GREEN v. FAGAN.
46172.
Action for damages. Fulton Superior Court. Before Judge Etheridge.
EVANS, Judge.
In consideration of a motion for summary judgment, where the defendant seeks a judgment that the plaintiff had released the defendant from liability, and the defendant admits in open court that the release was executed without the written consent of the insured and that the petitioner had no written notice that the release was executed without such consent, the release is of "no effect, null and void" under the authority of Georgia Laws 1963, p. 643 (Code Ann. 56-408.1). The lower court erred in granting summary judgment based on the validity of the release.
Alice M. Green sued Maurice Fagan for personal injuries arising out of a collision allegedly occurring when Fagan negligently drove his motor vehicle across the center line of a highway and collided with a vehicle driven by the plaintiff. The original complaint alleged that the defendant had been released of plaintiff's automobile property damage only, in the amount of $171.01. The defendant's first defense denied the material portions of the complaint, and in denying the paragraph in regard to the release-- stated that it was not limited to automobile property damage alone, but covered any and all damages whatsoever arising out of the automobile collision. The defendant's second defense stated further that by reason of the release entered into with the plaintiff, the defendant was released from any and all liability whatsoever arising out of said collision; that payment was made to the plaintiff in the amount of $171.01 as full and complete satisfaction of any and all claims arising out of said collision, and for this reason the plaintiff is not entitled to recover of defendant or to further prosecute this case.
The appellant's brief states that the appellee stipulated the second defense to be heard by the court, sitting without a jury. During this hearing counsel for the plaintiff moved for a continuance to investigate facts as to whether or not the insurer had complied with Code Ann. 56-408.1 (Ga. L. 1963, p. 643) as to obtaining the written consent of its insured and notice thereof to the plaintiff in obtaining the release. Whereupon counsel for the defendant in open court stipulated "that the insurance company did not comply" with Code Ann. 56-408.1.
The court treated the second defense as a motion for summary judgment and dismissed the action. The appeal is from this judgment.
Although the appellate courts of Georgia have held time and again that a property damage settlement also settles a claim for personal injuries growing out of the same incident and against the same party, none of the cases cited in the appellee's brief has come to grips with the recent statute enacted in 1963 (Ga. L. 1963, p. 643; Code Ann. 56-408.1).
The new statute was enacted by the General Assembly to correct a situation dealt with in the case of Aetna Cas. & Surety Co. v. Brooks, 106 Ga. App. 427 (127 SE2d 183), in which case certiorari was granted by the Supreme Court of Georgia and the case was reversed in 218 Ga. 593 (129 SE2d 798). There an insurance company acted as agent of its insured and effectively compromised and settled its insured's claim against a third party by paying the third party and in effect admitting that its own insured was at fault.
The statute was adopted to affirm the Court of Appeals decision in Aetna, which had been reversed by the Supreme Court.
The Supreme Court in the Brooks case, supra, substantially holds that where A and B have an automobile collision, and each asserts a claim against the other, if A's insurer pays the claim asserted by B, then A cannot successfully maintain a suit against B, because A's own insurer (acting as his agent) has in effect admitted that B was right and A was wrong as to the negligence causing the collision. The new statute corrected this situation and requires the insurer to secure the written consent of its own insured before making settlement; and if it has no written consent, it must give notice to the person with whom settlement is being made of the insurer's lack of written consent at the time of making settlement: ". . . and upon the failure of the insurer to give such notice to such third person of the lack of consent of such insured, such release, covenant not to sue or other settlement shall be of no effect, null and void." Code Ann. 56-408.1.
In the case sub judice there was no written consent by the insured person authorizing his insurer to settle; and there was no notice given by the insurer of lack of such written consent, and the settlement was therefore "of no effect, null and void."
The cases of Jackson v. Kight, 117 Ga. App. 385 (2) (160 SE2d 668), Fillingame v. Cook, 119 Ga. App. 140 (3) (166 SE2d 440), and Fisher v. Pirtle, 119 Ga. App. 556 (167 SE2d 613), wherein Code Ann. 56-408.1, supra, has been construed by this court, are not applicable to the facts in the case sub judice.
While in Edwards v. Fincher, 122 Ga. App. 176 (176 SE2d 505) this court followed Gregory v. Schnurstein, 212 Ga. 497 (93 SE2d 680), examination of that case shows that no question was raised as to compliance with Code Ann. 56-408.1 and it is presumed that the statute was complied with, and that case and the Gregory case are therefore not applicable here. We have also examined Sorrells v. Atlanta Transit System, 218 Ga. 623 (129 SE2d 846), rendered by the Supreme Court at the January term 1963 and find it totally inapplicable, since the 1963 Act was passed by the General Assembly thereafter.
The statute is clear, concise and to the point and states unequivocally that upon the failure of the insurer to give such notice in writing to such third persons of the lack of consent of its insured "such release, covenant not to sue or other settlement shall be of no effect, null and void." The movant having admitted in open court that no such notice was given, the non-compliance with Code Ann. 56-408.1 renders the release and settlement here absolutely void.
Judgment reversed. Jordan, P. J., and Quillian, J., concur.
T. M. Smith, Jr., for appellee.
Bryan, Carter, Ansley & Smith, James B. Gurley, for appellant.
ARGUED MAY 5, 1971 -- DECIDED SEPTEMBER 10, 1971.
Friday May 22 15:50 EDT


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