Greenwood Cemetery, Inc. v. Travelers Indemnity Co.

Per curiam.

This is a policy case, insurance and public, here on certiorari. Travelers Indemnity Co. v. Greenwood Cemetery, 139 Ga. App. 222 (228 SE2d 139) (1976).

In 1937, Greenwood sold a cemetery lot to C. G. Bozeman by deed permitting erection of a marker not to exceed 2' x 1' x 1'. A provision in the sales contract giving the cemetery the right to include reasonable regulations was not incorporated in the deed.

In July 1969 Travelers issued a comprehensive general liability policy to Greenwood. Its standard coverage clause¹ was amended as follows: "With respect to any professional malpractice, error or mistake in the practice of the named insured’s operations as a cemetery the policy is amended to read as follows: The coverages are replaced by the following:

"Coverage A — To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages. (1) For bodily injury, sickness, disease or death including mental anguish. (2) For injury to or destruction of property of others which is not in the care, custody or control of the insured. Because of any professional malpractice, error or mistake in the embalming handling, disposition, burial disinterment or removal of any deceased human body or any conduct or any memorial service by the insured, even though no deceased human body actually be present, or because of any injury to destruction or interference with the right of burial of a deceased human body.

"Coverage B — To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of urns, caskets, linings or fittings, casket cases, crypts, mausoleums of other facilities for the care of burial of a deceased human body, belonging to burying or caring for a deceased human body.” (Sic.)

Mr. Bozeman died. A dispute arose as to the size of the marker which could be placed upon his grave. His widow and son had a marker conforming to the deed erected. The marker was larger than that allowed by the cemetery’s regulations and Greenwood removed it. Suit was filed by the Bozemans against the cemetery praying for $3,000 damages for mental anguish and damage to their peace, feelings and happiness, as well as $25,000 punitive damages.

Travelers undertook defense of the suit but notified the cemetery that its policy did not cover punitive damages. The jury returned a verdict in favor of the Bozemans for $1,500 damages to their peace and happiness and $10,000 punitive damages. After notice to the cemetery and payment of the $1,500, Travelers withdrew from participation in the litigation.

The cemetery negotiated with the Bozemans so as to reduce the punitive damage award to $5,000, paid it, and filed this suit against Travelers in July 1974.

Travelers moved for summary judgment on May 16, 1975,² and the cemetery moved for summary judgment in August 1975. The trial court granted the cemetery’s motion and denied Travelers’. The Court of Appeals reversed.

In Westview Cemetery v. Blanchard, 234 Ga. 540 (216 SE2d 776) (1975), this court held that where the only injury is to peace, feelings and happiness of the plaintiff, an additional award of punitive damages is an unauthorized double recovery.

The Court of Appeals correctly found that our decision in Westview Cemetery, supra, rendered the punitive damage portion of the Bozeman judgment an illegal double recovery. The Court of Appeals went further however and held that even if there was insurance coverage, an illegal judgment against an insured cannot be enforced against an insurer. In this that court erred.

Clearly, even though illegal, the punitive damage portion of the Bozeman judgment could be enforced by the Bozemans against Greenwood Cemetery — because it was there. A judgment against an insured is the responsibility of the insurer, even though the judgment be for or include illegal damages, when that judgment is covered by insurance.

The first question in this case thus is the question of coverage. The insurer argues convincingly that because the Bozemans were not seeking damages to the grave marker, coverage B of the endorsement cannot be used to cover the punitive damage award. We agree.

The insured argues that due to the insurer’s use of periods where one would expect some other form of punctuation, the insurer agreed under coverage A "To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages.” We cannot accept this as having been the intent of the parties (Liberty Mut. Ins. Co. v. Mead Corp., 219 Ga. 6, 8(131 SE2d 534) (1963)), because such an interpretation would render the remainder of the endorsement, including coverage B (as well as other policies of insurance), surplusage.

However, we find coverage of these punitive damages in the following language of the endorsement: "Coverage A — To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages (1) for . . . mental anguish . . . because of any professional malpractice, error or mistake in . . . any conduct... by the insured. . .” (Emphasis supplied.) The word "for” has numerous meanings. The insurer would read the word "for” as meaning "equivalent to” (and therefore not greater than) or "to the amount, value or extent of.” The insured would read the word "for” as meaning "by reason of’ or "because of, on account of.” See Black’s Law Dictionary (Rev. 4th Ed., 1968); Webster’s 3d New International Dictionary (1967). See also Lumbermens Mutual Casualty Co. v. Yeroyan, 90 N. H. 145 (5 A2d 726) (1939); American Ins. Co. v. Naylor, 103 Colo. 461 (87 P2d 260) (1939).

In view of this ambiguity, that interpretation which favors the insured prevails. Liberty Mut. Ins. Co. v. Mead Corp., supra. We find that this insurance policy covered punitive damages of the type here in issue. In this connection we note that although there is an exclusion as to known criminal acts, there is no exclusion as to punitive damages arising from acts which are not crimes.

The insurer next urges that contracts which insure against punitive damages are illegal as a matter of public policy. It argues that the deterrent effect of punitive damages is lost when such damages are paid by the insurer. This appears to be a question of first impression in Georgia. However, it has been held that it is not against public policy to insure against damages for wilful and wanton misconduct. Travelers Indem. Co. v. Hood, 110 Ga. App. 855 (140 SE2d 68) (1964). Courts of other jurisdictions are divided on the question. See Northwestern Nat. Casualty Co. v. McNulty, 307 F2d 432 (5th Cir., 1962); Lazenby v. Universal Underwriters Ins. Co., 214 Tenn. 639 (383 SW2d 1) (1964); 7 Appleman’s Ins. Law and Practice, § 4312 at 86 (Cum. Supp. 1972). In our opinion the question has been resolved in Georgia by Acts of the Legislature.

"[CJourts cannot declare agreements or acts authorized by statute to be contrary to public policy.” 17 AmJur2d 538, Contracts, § 177. As stated in Board of Lights &c. v. Dobbs, 151 Ga. 53, 56 (105 SE 611) (1920), "In the absence of express legislative authority it might well be said . . . that such contracts were against public policy. But it has nowhere been held, so far as we are aware, that where the legislature has expressly provided for such contracts, such legislative authority is illegal and contrary to public policy. The expression of the legislature is conclusive on the question of public policy.”

Argued November 8, 1976 — Decided January 27, 1977 Rehearing denied February 14, 1977. Hurt, Richardson, Garner & Todd, W. Seaborn Jones, Paul M. Talmadge, Jr., for appellant. Powell, Goldstein, Frazer & Murphy, Frank Love, Jr., Scott M. Hobby, for appellee.

The Georgia Insurance Code (Code Ann. § 56-101 et seq.), authorizes the issuance of liability insurance. Code Ann. § 56-408 (1) provides, "Liability insurance, which is insurance against legal liability for . . . damage to property. . .” (Emphasis supplied.) Punitive damages is a legal liability and accordingly insurance against such damages is expressly authorized. This conclusion is fortified by Code Ann. § 56-408 (11) which provides, "Miscellaneous insurance, which is insurance against any other kind of loss, damage or liability properly a subject of insurance and not within any other kind of insurance as defined in this Title, if such insurance is not disapproved by the Commissioner as being contrary to law or public policy.” In our opinion these enactments conform to the general policy that the freedom to contract should not be curtailed on public policy grounds unless the case is free from doubt. Equitable Loan &c. Co. v. Waring, 117 Ga. 599 (1, 2) (44 SE 320) (1903).

Judgment reversed.

All the Justices concur, except Jordan and Hill, JJ., who dissent.

1 The standard coverage clause read as follows: "The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of Coverage A, bodily injury or Coverage B, property damage, to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent. . .”

2 This court decided Westview Cemetery v. Blanchard, 234 Ga. 540 (216 SE2d 776), on May 20, 1975.