Equity Fire & Cas. Ins. Co. v. Coleman

EQUITY FIRE & CASUALTY INSURANCE COMPANY v.
Mary Odean COLEMAN and Rudolph Coleman

95-761                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
              Opinion delivered September 30, 1996


1.   Venue -- plaintiffs' action improperly brought in their county
     of residence -- action here was contractual and not for
     personal injury. -- The action of the plaintiffs-appellees
     against appellant insurer was brought in the county where
     appellees lived, their complaint alleged venue was proper
     because the action was for personal injury and thus could be
     brought in the county of the plaintiffs' residence, but the
     action was brought under a subrogation statue that was clearly
     contractual in nature, thereby invalidating their action.

2.   Venue -- statute permitting contract action against
     nonresident foreign corporation in county of plaintiff's
     residence unconstitutional when corporation is qualified to do
     business in state -- special venue statute inapplicable to
     these facts. -- Arkansas Code Annotated  16-60-109 (1987),
     which permitted a contract action against a nonresident
     foreign corporation to be brought in the county of the
     plaintiff's residence, was found to be unconstitutional when
     the foreign corporation was one that had qualified to do
     business in the state; a special venue statute, Ark. Code Ann.
      23-79-204 (Repl. 1992), provides that the action is to be
     brought in the county in which the loss occurred or the county
     of the insured's residence at the time of the loss; neither of
     these provisions applied to the county in which this suit was
     filed. 

3.   Venue -- defendant neither resided in nor was summoned in
     county where action was brought -- action should have been
     brought in Pulaski County after proper service. -- Under the
     provisions of Ark. Code Ann.  16-60-116(a) (1987), appellee's
     action was improper; the defendant neither resided in nor was
     summoned in Crawford County; the action should have been
     brought in Pulaski County after proper service upon the
     defendant insurer by service upon the Insurance Commissioner. 
     
4.   Venue -- local-action rule inapplicable as used in appellee's
     argument -- case reversed and dismissed. -- Appellee's attempt
     to apply the local-action rule was without merit; the court
     has declined to follow the local-action rule, and the decision
     cited by appellees had no applicability to the facts; the case
     was reversed and dismissed.


     Appeal from Crawford Circuit Court; Floyd G. Rogers, Judge;
reversed and dismissed.
     Hardin, Jesson, Dawson & Terry, by:  Robert M. Honea, for
appellant.
     Bethel, Callaway, Robertson, Beasley & Cowan, by:  John R.
Cowan, for appellees.

     David Newbern, Justice.
     Mary Odean Coleman was involved in an automobile collision
with a car driven by Richard Feagin.  The car Mr. Feagin was
driving was owned by Velva Crase, an Oklahoma resident, who had
loaned it to her son, Billy Crase, who resided with Mr. Feagin in
Sebastian County.  The accident occurred in Sebastian County.  Mrs.
Coleman and her husband, Rudolph Coleman, sued Mr. Feagin and
obtained a default judgment for $17,500.  The Colemans then sued
the appellant, Equity Fire & Casualty Insurance Company (Equity),
alleging that a liability insurance policy issued by that Company
covered the vehicle being driven by Mr. Feagin.  
     The Colemans' direct action against Equity was brought
purportedly in accordance with Ark. Code Ann.  23-89-101 (Repl.
1992).  Such an action is allowed if, in the words of the statute,
"the judgment remains unsatisfied at the expiration of thirty (30)
days from the serving of notice of entry of judgment upon the
attorney for the insured or upon the insured or upon the insurer."
     The Colemans were awarded a judgment against Equity in the
amount of their earlier judgment against Mr. Feagin plus a penalty,
attorney's fee, and interest.  Equity has raised a number of points
in its appeal, but we need only consider one of them.  Because
venue was improperly laid we must reverse and dismiss the case.
     The action of the Colemans against Equity was brought in
Crawford County where the Colemans reside.  Their complaint alleged
venue was properly laid in Crawford County because the action was
for personal injury and thus could be brought in the county of the
plaintiffs' residence.  Ark. Code Ann.  16-60-112 (1987).   
     Equity answered the complaint, objected to the Crawford County
venue, and moved to dismiss.  Attached to the motion to dismiss was
an affidavit of an Equity adjuster to the effect that, at the time
of the accident Equity had not qualified to do business in
Arkansas, but by the time the complaint against it was filed, it
had so qualified and had appointed the Arkansas Insurance
Commissioner as its agent to receive process in Pulaski County.
     Section 23-89-101 provides:

          (a)  Any policy of insurance issued or delivered in this
     state indemnifying any person against any actual money loss
     sustained by the person for damages inflicted upon the
     property or person of another shall contain a provision that
     the injured person, or his or her personal representative,
     shall be subrogated to the right of the insured named in the
     policy.
     (b)  The policy shall also contain a provision that the
     injured person, or his or her personal representative, whether
     the provision is actually inserted in the policy or not, may
     maintain a direct cause of action against the insurer issuing
     the policy for the amount of the judgment rendered against the
     insured, not exceeding the amount of the policy, provided the
     judgment remains unsatisfied at the expiration of thirty (30)
     days from the serving of notice of entry of judgment upon the
     attorney for the insured or upon the insured or upon the
     insurer. 

     There is strong doubt  23-89-101 applies in this case in view
of evidence that the policy of insurance in question was neither
issued nor delivered in Arkansas.  But even if it were applicable,
it obviously is a subrogation statute, the purpose of which is to
confer upon an injured person the rights of the named insured
against the insurance company.  The action permitted by the statute
is thus contractual in nature and not for personal injury.  The
personal injury action ended with a judgment in favor of the
Colemans.  The statute, if it applies, places them in the shoes of
the insured suing the insurer alleging coverage under the insurance
agreement.
     We have held the statute permitting a contract action against
a nonresident foreign corporation to be brought in the county of
the plaintiff's residence, Ark. Code Ann.  16-60-109 (1987), to be
unconstitutional when the foreign corporation is one that has
qualified to do business in this State.  Philco-Ford v. Holland,
261 Ark. 404, 548 S.W.2d 828 (1977).  There is a special venue
statute, Ark. Code Ann.  23-79-204 (Repl. 1992), which governs an
action for loss by an insured or beneficiary under an insurance
policy.  It provides the action is to be brought in the county in
which the loss occurred or the county of the insured's residence at
the time of the loss.  Crawford County is neither.
     Remaining for consideration is our general or "catch-all"
venue provision found in Ark. Code Ann.  16-60-116(a) (1987).  It
provides, "Every other action may be brought in any county in which
the defendant, or one (1) of several defendants, resides or is
summoned."  Equity neither resided in nor was summoned in Crawford
County.  The action should have been brought in Pulaski County
after proper service upon Equity by service upon the Insurance
Commissioner.  
     In response to Equity's venue argument, the Colemans cite
Szalay v. Handcock, 307 Ark. 232, 819 S.W.2d 684 (1991), and
Reasor-Hill Corp. v. Harrison, 220 Ark. 521, 249 S.W.2d 994 (1952). 
The Szalay case has to do only with jurisdiction of a non-resident
insurer under a long-arm statute and nothing to do with venue.  The
Reasor-Hill Corp. case is a landmark decision.  The action in
question was for injury to real property located in Missouri.  The
party defending was an Arkansas resident.  According to the common
law "local action rule," the claim was required to be presented in
the jurisdiction in which the property lay.  The defendant,
however, could not be served in Missouri.  By following the local
action rule, the claim would have been entirely frustrated.  We
declined to follow the local action rule and permitted the action
to be brought in Arkansas.  That decision has no applicability to
the facts now before us.
     When venue is improperly laid, we reverse and dismiss. 
Junction City School Dist. v. Alphin, 313 Ark. 456, 855 S.W.2d 316
(1993).
     Reversed and Dismissed. 
Jesson, C.J., not participating.