State Farm Mutual Automobile Insurance Company, a Corporation v. Audra H. Palmer

On January 17, 1948 between Buckeye and Liberty, Arizona, an automobile owned and driven by Ralph E. Nollner was involved in an accident. Nollner’s wife was killed in the accident and two passengers in Nollner’s car, Mrs. Tressie Hillyer, and appellee, Mrs. Audra Palmer, were injured.

Both Mrs. Hillyer and Mrs. Palmer brought suit against Mr. Nollner in the Superior Court of the State of Arizona in and for the County of Maricopa. Appellant, State Farm Mutual Automobile Insurance Company, had issued previously to Mr. Nollner an automobile liability insurance policy, and upon due notice of the accident and suits filed, preparations were commenced for the defense or settlement of the suits. A settlement was made with Mrs. Hillyer, the daughter of Mr. Nollner, for $1,750 and her suit was dismissed. The suit by Mrs. Palmer was not settled and on January 18, 1951 judgment was entered against Nollner in the amount of $27,500. Execution was returned unsatisfied on the judgment and upon demand of appellant for its policy limits ($10,000) and their refusal to pay this action was commenced in the United States District Court.

Appellant Insurance Company seeks to avoid its liability under…