Court Opinion

ID: 3499741
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:06:56.302748+00
Date Added: 2024-06-11T14:05:17.711734
License: Public Domain

The rule of law applicable to the issue here presented is, I think, correctly stated by Mr. Justice FEAD as follows:
"It is not bad faith if counsel for the insurer refuse settlement under the bona fide belief that they might defeat the action, or, in any event, can probably keep the verdict within the policy limit. * * * A mistake of judgment is not bad faith."
It is supported by the decisions in the cases cited by him. The quotation from Wisconsin Zinc Co. v. Fidelity  DepositCo., 162 Wis. 39 (155 N.W. 1081, Ann. Cas. 1918C, 399), is, I think, worthy of repetition:
"While the defendant had the right to consult what it deemed to be its own interest in making a settlement, it could not abuse the power vested in it and recklessly and contumaciously refuse to settle if it was apparent that in all reasonable probability its conduct would not only result in damage to the plaintiff but also in loss to itself."
But I do not concur in the conclusion reached by him that the evidence required the submission to the jury of the question, Did Mr. Campbell act in bad faith in declining to accept the offer of settlement?
In the ordinary affairs of life, many persons are at times called upon to decide matters in which the rights of others are involved. When such rights are not fixed by statute or court decision, there is but one criterion by which their actions in doing so should be judged, and that is: Did they exercise an honest judgment? As to most persons, it is to be expected that in making such decision they will be more or less influenced by their personal interest in the matter.
Corporations act through their officials. When the offer of settlement in the Borski Case was submitted *Page 657 
to Mr. Campbell at his office in Minneapolis by the telegram of Mr. Burritt, it was up to him to accept or reject it as his judgment, in view of all the facts then known to him, should dictate. He was under no legal obligation to do so. Let us try to place ourselves in his position at the time he was called upon to make decision. He knew that the offer, if accepted, called for the payment of $4,325, and that his clients were liable to indemnify the city to the amount of $10,000; that, if he should refuse to accept, his clients incurred the risk of paying an additional $5,675; that the amount of damages which the plaintiff might be awarded was not the only question in issue; that two defenses were being interposed, and, if either of them should be sustained as a matter of law, plaintiff could not recover in any amount; and that, on a former trial, a verdict had been directed in favor of the city and afterwards set aside and a new trial granted. He also had the right to consider the improbability of plaintiff's attorneys' offering to accept $4,325 in settlement if they felt at all certain of ultimate success, in view of the information conveyed to him in the telegram he had just received from Mr. Burritt that "This is a dangerous case. One hundred per cent. disability and maybe permanent." Possessed of this knowledge, and being required to make immediate decision, can it be said that an inference may be drawn therefrom that he did not exercise an honest judgment or act in good faith in refusing to accept the offer made? I think not.
One of the legal questions presented involved the claim of the city that it was operating its bus line in a governmental capacity, and therefore not liable. In disposing of the case in this court, Mr. Justice McDONALD, speaking for the court, said: "This precise question has never been considered by this *Page 658 
court." Counsel for the defendant cited several decisions of courts in other jurisdictions which supported its claim in this respect. Mr. Campbell's declination of the offer was but an expression of confidence on his part that the legal defenses interposed were well taken. Surely it cannot be said to have been actuated by a lack of honesty or fair dealing towards the city, amounting to what, in law, is denominated "bad faith," particularly in view of the fact that the amount of the offer, $4,325, must be increased by the verdict of the jury to more than $10,000 and sustained in such amount before any liability on the part of the city could attach.
Stress is laid upon the fact that Mr. Campbell as a witness did not disclose his reason for refusing the settlement. He was the first witness called by plaintiff's counsel, and was afterwards recalled by them. The purpose of his examination, as disclosed by the record, was to establish the fact that the attorneys for the indemnity companies assumed and had actual charge of the defense of the case. No suggestion was made during his examination by plaintiff's counsel that he had acted in bad faith in refusing to settle. Doubtless, this accounts for the omission of defendants' attorney to question him concerning his action in that respect. If, from a consideration of the entire evidence, no inference of bad faith may be drawn, his failure to state that he acted in good faith cannot, under the circumstances attendant upon his examination, be said to negative the presumption that he so acted. Upon the plaintiff rested the burden of proving that his refusal to settle was actuated by bad faith, and, unless the proof submitted by plaintiff bearing thereon was of sufficient weight to warrant submission of the question to the jury, no obligation rested upon him to make denial thereof. *Page 659 
The journal entry of the verdict and judgment, after stating the verdict of the jury, contains the following:
"Thereupon the motion of the defendants for a directed verdict in their favor reserved by the court under Act No. 217
of the Public Acts of 1915 is hereby denied, and judgment is hereby entered upon the verdict of the jury."
The judgment follows. Error is assigned upon the overruling of the motion for a directed verdict and upon the refusal of the court to enter judgment notwithstanding the verdict.
The judgment is reversed and set aside, with costs to appellants, and the cause remanded to the trial court with direction to enter a judgment for the defendants.
NORTH, C.J., and FELLOWS, WIEST, and CLARK, JJ., concurred with SHARPE, J.