Court Opinion

ID: 8200697
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:27:21.329703+00
Date Added: 2024-06-11T16:40:54.501208
License: Public Domain

Currie, J.
The following three issues are presented on this appeal:
(1) Was it error for the trial court to permit the defendants to file an amended answer on the day of trial, so as to set up additional defenses based upon the prior compromise settlement and the order dismissing the circuit court action ?
(2) Is the order of dismissal of the circuit court action commenced by Tronca against Heinemann, in which Tronca was plaintiff and Heinemann defendant, res adjudícala as to the rights of the plaintiffs to recover in the instant action ?
(3) Are the plaintiffs estopped from bringing the instant action by the compromise settlement made with Tronca *448whereby the Indemnity Company paid Tronca $150 and took his release?
No advance notice was given by the attorneys for the defendants to plaintiffs’ counsel of the intention to ask leave of the court to file or serve the amended answer. However, counsel for plaintiffs have not indicated that by reason of surprise they were unprepared to meet the issues presented by the new defenses alleged in the answer. There was no showing made that they were prevented from subpoenaing necessary witnesses as was the case in Puccio v. Mathewson (1951), 260 Wis. 258, 264, 50 N. W. (2d) 390, where a new trial was granted on the ground of prejudice due to surprise as a result of granting permission during the course of trial to one of the parties to file a cross complaint raising a new issue. The trial court apparently granted time to plaintiffs’ attorneys in which to prepare and file a brief on the issues of law raised by the additional defenses pleaded in the amended answer. We, therefore, hold there was no abuse of discretion in the trial court granting leave to file such amended answer.
We are satisfied that the order of dismissal of the circuit court action is not res adjudicata as to plaintiffs’ right of recovery in the instant action. This is because it was optional with Pleinemann whether or not to file a counterclaim in the original circuit court action asking for its damages. This very point was recently passed upon by this court in Kassien v. Menako (1955), ante, p. 309, 70 N. W. (2d) 670. The Missouri supreme court reached the opposite conclusion in Keller v. Keklikian (1951), 362 Mo. 919, 244 S. W. (2d) 1001, but such latter decision was grounded upon a Missouri statute under which the defendant is required to file a counterclaim under penalty that, if he fails so to do, of not being able thereafter to institute a separate action against plaintiff *449grounded upon the same facts which he might have interposed by way of counterclaim.
Our holding in Kassien v. Menako, supra, is in accord with Restatement, Judgments, p. 230, sec. 58, which reads as follows:
“Where the defendant does not interpose a counterclaim although he is entitled to do so, he is not precluded thereby from subsequently maintaining an action against the plaintiff on the cause of action which could have been set up as a counterclaim.”
Comment b of such section of the Restatement states (p. 231):
“Where facts constituting defense are ground for counterclaim. Where the same facts constitute a ground for defense to the plaintiff’s claim and also a ground for a counterclaim, and the defendant fails to allege these facts either as a defense or as a counterclaim, he is not precluded from relying upon them thereafter in an action brought by him against the plaintiff. The defendant has had his day in court in so far as the plaintiff’s claim against him is concerned, and his failure to interpose' a defense to the plaintiff’s claim precludes him from thereafter asserting the defense (see sec. 47). His claim against the plaintiff, however, is a different cause of action from the plaintiff's claim against him, and is not merged in the judgment given in the action on the plaintiff’s claim. It is immaterial whether in the plaintiff’s action against him he defaulted or interposed a defense setting up facts other than those which formed the basis of his claim against the plaintiff.” (Italics supplied.)
Comment f of such section of the Restatement contained in the 1948 supplement, page 332, points out that in some jurisdictions a counterclaim is compulsory on the part of the defendant in that, if he fails to interpose such counterclaim, he cannot later bring a separate action against plaintiff. It is clear that the Missouri statute before the court in Keller v. Keklikian, supra, falls in this category. On the other hand, *450sec. 263.14 (1), Stats.,1 is not of such compulsory type. This is made clear by the following comment of the advisory committee on pleading and practice appearing in Wis. Anno. (1950), 1070:
“The new rule 263.14, governing counterclaims, is much like federal rule 13. There is some difference between these two rules: Under 263.14 counterclaims are purely permissive. The defendant has the choice of counterclaiming or not, as to him seems best. Under the federal rule counterclaims are divided into two classes, viz., compulsory and permissive.” (Italics supplied.)
Having concluded that the order of dismissal in the circuit court action is not res adjudicata as to plaintiffs’ cause of action in the case at bar, we now turn to the third and last issue presented on this appeal, viz., whether the compromise settlement made with Tronca, which preceded the order of dismissal of the circuit court action, constituted conduct which estops plaintiffs from prosecuting the instant action.
On this point the recent decision of the New Jersey supreme court in the case of Kelleher v. Lozzi (1951), 7 N. J. 17, 80 Atl. (2d) 196, is directly in point. An automobile collision had taken place between automobiles owned and driven by the plaintiff Mrs. Kelleher and the defendant Lozzi. Lozzi commenced suit against Kelleher alleging negligence. Kelleher filed an answer denying liability. Thereafter at the pretrial conference Kelleher made settlement by paying Lozzi $550 damages, the attorneys signed a stipulation for the dismissal of the action without costs, and an order was entered for such dismissal. The court in its decision stated (7 N. J. 24, 80 Atl. (2d) 199) :
“By every fair expectation the question of Lozzi’s negligence as between him and Kelleher was settled in the negative *451by the parties inter sese. It is difficult to understand how, on sound reasoning or equitable dealing, any other result could be reached. . . .
“It is logically and factually impossible to reconcile a valid claim by Kelleher with a valid claim by Lozzi. As Kelleher by her act acknowledged a valid claim by Lozzi and effected a settlement on that basis, we are brought to the conclusion that she estopped herself from taking the opposite position; that consequently she, in her own suit, has failed to state a claim upon which relief can be granted; . . .”
There is one difference in the fact situation presented in the instant case from that in Kelleher v. Lozzi, supra. This consists of the fact that the release given by Tronca contained the following recital: “It is further agreed and understood that said payment is not to be construed as an admission of any liability.” We do not deem that such recital of non-liability should be held to override the inference to be drawn from the act of the plaintiff Indemnity Company in paying damages to Tronca, that the Indemnity Company had no claim against Tronca arising out of the accident. Tronca had the right to act upon such assumption in accepting the $150 damages it tendered in settlement. Therefore, it is only equitable that the rule of estoppel invoked by the New Jersey court in Kelleher v. Lozzi, supra, should be equally applicable here.
The decision in Giles v. Smith (1949), 80 Ga. App. 540, 56 S. E. (2d) 860, is also directly in point and the result therein is in accord with that reached by the New Jersey court in Kelleher v. Lozzi, supra. The following cases by implication recognize the correctness of such rule, but hold it not applicable under a fact situation where an insurance carrier made the compromise settlement under circumstances in which the insured did not personally participate therein. U. S. A. C. Transport, Inc., v. Corley (5th Cir. 1953), 202 Fed. (2d) 8; Foremost Dairies, Inc., v. Campbell Coal Co. *452(1938), 57 Ga. App. 500, 196 S. E. 279; Perry v. Faulkner (1954), 98 N. H. 474, 102 Atl. (2d) 908; De Carlucci v. Brasley (1951), 16 N. J. Super. 48, 83 Atl. (2d) 823; Jetton v. Polk (1933), 17 Tenn. App. 395, 68 S. W. (2d) 127; and Wieding v. Krisch (Tex. Civ. App. 1954), 271 S. W. (2d) 458.
Inasmuch as it was the plaintiff Indemnity Company which paid the $150 in compromise settlement to Tronca, the Indemnity Company is estopped by such conduct from prosecuting the instant action to recover the sum of $2,214.22 which it paid as collision loss to Heinemann.
The record is silent as to whether Heinemann participated in the compromise settlement made with Tronca. If Heine-mann was not consulted with respect to such settlement and did not participate therein, Heinemann’s cause of action to recover the $100 not covered by its collision policy issued by the Indemnity Company would not be barred by such settlement. The fact that the attorney of record for Heinemann in the circuit court action purported to act for Heinemann in effecting the settlement and stipulating for the dismissal of the action is not conclusive on such issue. An insured, who is sued for damages as a result of the insured vehicle participating in an accident, and thereupon turns over the defense of the action to his insurance company, does not by such action impliedly authorize counsel, employed by the insurance company to defend the action, to make a compromise settlement without his consent which will prejudice his right to recover his own damages from the other party to the accident.
The judgment should be reversed as to Heinemann, and the cause remanded to resolve the issue of whether it actually was consulted with respect to the compromise settlement and participated therein to the extent of consenting thereto.
*452aBy the Court.- — -The judgment as to the plaintiff Manufacturers & Merchants Indemnity Company is affirmed; the judgment as to the plaintiff Heinemann Creameries, Inc., is reversed, and cause remanded for further proceedings not inconsistent with this opinion.

 Sec. 263.14 (1) A defendant may counterclaim any claim which he has against a plaintiff, upon which a judgment may be had in the action. (Italics supplied.)