Court Opinion

ID: 7977206
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:01:15.559684+00
Date Added: 2024-06-11T16:34:56.428700
License: Public Domain

Hallam, J.
(dissenting.)
I dissent. It appears to me plaintiff has neither pleaded nor proved a cause of action. He was sued in malpractice and his claim is that defendant was, under its by-laws, obliged to defray the defense of the suit. I agree that the obligation devolved upon defendant’s council to investigate the claim made against plaintiff and to adjust it if possible, and, otherwise, to defend the suit if it was unjust or the damages demanded were excessive. I' agree to the further proposition that the council could not dispose of the rights conferred upon mere caprice or arbitrary discretion. Defendant is obliged to defend *329a case not adjustable, if tbe facts fairly warranted tbe conclusion, tbat tbe claim is unjust or tbe damages claimed excessive.
I do not agree with the majority of the court as to the effect to-be given to defendant’s denial of liability on this claim. the position of the majority of the court is that: “Defendant’s liability for bis. (plaintiff’s) expenditures would seem to follow from its failure to-investigate, and, if possible, to adjust the claim against him.” the by-law does not say defendant shall pay all expenses of defense of malpractice suits which it does not investigate. the denial of liability upon a claim, or the failure to investigate it as a contract or by-law may require, has never been held to establish the validity of the claim. the undoubted purpose of the by-law is to provide for the defense of malpractice suits against members, if they are unjust, or the damages claimed are excessive or an equitable adjustment is. not practicable. the examination of the claim by defendant’s council is merely a means by which the fact of liability of the defendant was to be determined. If the defendant denies liability and accordingly does not investigate, this relieves the plaintiff of the necessity of further compliance with the by-laws as to its presentation, but. it does not enlarge bis rights. It gave plaintiff no right to recover the: cost of making bis malpractice defense except in a meritorious case. Hoffman v. Michigan Home & Hospital Assn. 128 Mich. 323, 326, 87 N. W. 265, 54 L.R.A. 746. If be sues under such circumstances,' be is of course not obliged to prove that the defendant’s council would have approved bis claim for defense/ but be is obliged to prove that bis claim is one they were in duty bound to approve.
Tbe case is much like one where a party is required to perform a contract or do some act subject to a reasonable approval or satisfaction of tbe other party. In such case tbe refusal of tbe other to examine or approve, even through bad faith, still leaves tbe party asserting a claim with tbe burden of proving tbat be bas earned such approval.
In Bowery National Bank v. Mayor, 63 N. Y. 336, certain public work was to be done subject to the approval of the water purveyor. The contractor fully performed bis contract, but the water purveyor refused to give his certificate. The court held that it was necessary “either to prove upon the trial the making of such certificate by him, *330or to show that it was refused unreasonably, or in bad faith. It was unreasonable to refuse it, if it Ought, in the contemplation of the ■contract, to have been given * * * when, in very fact and beyond all pretense of dispute, the state of things existed, to which the water purveyor was to certify, to wit, the full completion of the contract in each and every one of its stipulations.”
In Russell v. Allerton, 108 N. Y. 288, 15 N. E. 391, a clause in .a charter party read: “Charterers to approve the ventilation.” It was held that this did not leave the subject of ventilation of a ship to the absolute,' unreasonable, and arbitrary decision of the charterer, but that it became a question of fact for the jury to say whether the refusal to load was or was not, under all the circumstances, unreason.able. “Upon such an issue, the evidence that the refusal to load was unreasonable should be clear and convincing; or, in other words, it should be clearly made out to the entire satisfaction of the jury that the ship was properly and sufficiently ventilated for the purpose ■of carrying live cattle when the defendant refused to load. It would not be necessary, however, to go so far as to show that the defendant’s refusal was in actual bad faith.”
The majority opinion says that the defendant is precluded from ¡shifting its position from ground of denial of liability to one of essentially remedial character after plaintiff has conformed his case to the former. It is never a shifting of position to assert that plaintiff .has not stated or proved a cause of action. When issues in this case were formed, plaintiff took the position that defendant must defend .all malpractice cases whether just or not, and defendant took the position that it was not required to defend any, where the malpractice .arose before the by-law was passed. Both acted in good faith. Under neither contention would the character of the claim have been material, and neither party offered proof on this point. This court •does not fully agree with either plaintiff or defendant. It agrees with plaintiff that the by-law is applicable to malpractice cases where the alleged malpractice accrued before the by-law was passed, if the malpractice suit was brought later, but, contrary to the contention •of plaintiff, it holds that the by-law does not obligate the defendant to defend its members against- just claims for malpractice, when the *331■damages sought are not excessive. This being the law, the character ■of the malpractice becomes material, and the question whether the malpractice claim was a just claim against this plaintiff becomes a vital question in the case.
Now, the fact is, there is not a syllable in the record to indicate •the character or merit of the-malpractice case, nor as to its outcome, nor are there any facts from which the court can determine whether or not the case was one which defendant was under obligation to •defend. It seems to me the burden was on the plaintiff to prove that his case was one which defendant was called upon to defend. The burden was upon him to prove the validity of his demand against the .association, and not upon the association to prove its invalidity. When a plaintiff demands money of a defendant in a lawsuit, it is incumbent upon him to prove himself entitled to it. Before he can recover damages for defendant’s refusal to defend his lawsuit, it is incumbent on him to prove that the lawsuit was such a one as the -defendant was under obligation to defend.
The majority opinion holds that the adverse determination of the •council is “a condition subsequent upon occurrence of which [the] •obligation ceases.” It appears to me that there are here none of the ■essentials of a condition subsequent. Certain clearly-defined facts •are essential to bring the case within the protection of the by-laws and to give rise to any cause of action. Proof of such facts is indispensable tó a cause of action. See Knutzen v. National Livestock Ins. Co. 108 Minn. 163, 121 N. W. 632. See also Finn v. Modern Brotherhood of America, 118 Minn. 307, 136 N. W. 850.
Insurance contracts often contain a requirement that the insured ■shall submit his claim to arbitration. In such cases the denial of liability by the insurer or its refusal to arbitrate permits the insured to sue without compliance with the provision, but such conduct is not an admission of liability, and it does not impose on the insurer the burden of proving the injustice of the claim. A similar principle is -applicable here. Plaintiff, having failed to prove fants establishing •defendant’s liability, cannot recover.