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MCPHERSON v. MICHIGAN MUTUAL INS. CO.12/2/1991
iability policy, we also reverse the circuit court's decision to award the City attorneys' fees and costs. The court awarded the fees and costs to the City for establishing coverage under the policy. However, McPherson's injuries were excluded under the policy. The Fund properly denied coverage to the City and the insurance agreement was not breached. Therefore, the circuit court should not have awarded attorneys' fees and cost.
II.
Our decision regarding the coverage question also disposes of the issue of Michigan Mutual's liability on its contract of reinsurance with the Fund. Since the Fund is not liable to provide coverage under the general tort liability policy, Michigan Mutual is not liable under the reinsurance contract. However, even if the Fund were liable, McPherson and the City would have no direct cause of action against Michigan Mutual. As a reinsurer, Michigan Mutual has no contractual relationship with the Fund's insureds and may not be sued by them. A contract of reinsurance is a contract of indemnity which flows only to parties in privity of contract with the indemnitor. The original insured (here the City) may not sue the reinsurer (here Michigan Mutual), because there is no privity of contract between them. The right to indemnity is personal to the indemnitee and creates no legal or equitable interest in third party beneficiaries by contract or by lien. See United States v. Federal Surety Co., 5 F. Supp. 247 (D. Md. 1933), affirmed, 72 F.2d 964 (4th Cir. 1934), cert. denied, 294 U.S. 711, 55 S.Ct. 508, 79 L.Ed. 1245 (1935); Schuylkill Products, Inc. v. H. Rupert & Sons, Inc., 305 Pa. Super. 36, 451 A.2d 229 (1982). Accordingly, we affirm the circuit court on this issue.
Affirmed in part, reversed in part.
CURETON and GOOLSBY, JJ., concur.
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