Court Opinion

ID: 6632779
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:38:23.784827+00
Date Added: 2024-06-11T15:58:59.398536
License: Public Domain

DISSENTING OPINION
FARRINGTON, J.
— Plaintiff recovered a judgment against the defendant for three thousand dollars. The suit was based on a policy of insurance issued by the defendant by which it undertook to insure the plaintiff against loss by way of damages arising from personal injuries sustained by the latter’s employees, and furthermore to take charge of any claim that was made and of the defense of any action for such injuries.
As I view the contract, it was more than a simple contract of indemnity. The provisions of the policy, pertinent here, are as follows:
“THE TRAVELERS’ INSURANCE COMPANY, of Hartford, Connecticut, (Herein called -the Company) DOES HEREBY AGREE WITH THE ASSURED named and described as such in the Declarations forming a part hereof, as respects bodily in*333juries accidentally sustained, including death, at any time resulting therefrom as follows:
“INDEMNITY FOR LOSS
“I. To Indemnify the Assured against loss by reason of the liability imposed upon him by law for damages on account of such injuries.
“SERVICE
“II. To Serve the Assured upon notice of such injuries by such investigation thereof, or by such negotiation or Settlement of any resulting claims as may be deemed expedient by the company.
“DEFENSE
“III. To Defend in the name and on behalf of the Assured any suits which may at any time be brought against him on account of such injuries, including suits alleging such injuries and demanding damages therefor, although such suits, allegations or demands are wholly groundless, false or fraudulent.
“EXPENSES
“IV. To pay all costs taxed against the Assured in any legal proceeding defended by the Company, all interest accruing after entry of judgment upon such part thereof as shall not be in excess of the limits of the Company’s liability as hereinafter expressed, all expenses incurred by the Company for investigation, negotiation or defense, and the expense incurred by the Assured for such immediate surgical relief as shall be imperative at the time any such injury is sustained.
“THIS AGREEMENT IS SUBJECT TO THE FOLLOWING CONDITIONS:
“NOTICE
“D. The Assured upon the occurrence of an accident, shall give immediate written notice thereof to the Company, or to its duly authorized agent, with the fullest, information obtainable. He shall give like notice with full particulars of .any claim on account of *334such accident. If, thereafter, any suit is brought against the Assured he shall immediately forward to the Company every summons or other process served upon him. The Assured, when requested by the Company shall aid in effecting settlements, securing evidence, the attendance of witnesses and in prosecuting appeals. The Assured shall not voluntarily assume any liability, settle any claim or incur any expense except at his own cost, or interfere in any negotiation for settlement or legal proceeding without the consent of the Company previously given in writing.
“RECOVERY
“E. No action shall lie against the Company to recover for any loss under PARAGRAPH I foregoing, unless it shall be brought by the Assured for loss actually sustained and paid by him in money in satisfaction of a judgment after trial of the issue, and no such action shall lie to recover under any other agreement of the Company herein contained unless brought by the Assured himself to recover money actually expended by him. In no event shall any such action lie unless brought within ninety days after the right of action accrues as herein provided. . . .”
During the time this policy was in force an employee of the plaintiff, named Perry, was injured. Some two years after the injury occurred he brought suit against plaintiff herein for four thousand dollars. His petition, when served on the stone company, was immediately forwarded to the insurance company and it acknowledged receipt thereof but informed the stone company by letter that it had no record of ever having been notified of the injury at the time of its occurrence as required by the policy; that it would, however, file such pleas as would prevent a default judgment and in the meantime determine whether the notice was given and in that way decide whether it was liable under the policy. A motion for security for costs and a demurrer were filed by the insurance company’s law*335yers. Afterwards it determined for itself that no notice was given hy the assured and subsequently notified the assured that its lawyers would withdraw from the defense of the Perry damage suit. However, there is no evidence that the petition and other papers, of the suit were ever returned at this or any later time. Both the assured and the insurer did nothing and a default judgment was entered in Perry’s favor for three thousand dollars. Plaintiff herein then asked that that judgment be set aside, which was done. The adjuster of the insurance company appeared on the scene in April, and although his company had long prior thereto disclaimed any liability under the policy or interest in the Perry suit, he saw Perry’s lawyer and ascertained that the Perry ease could be settled for one hundred and fifty dollars. The insurer made no offer to settle for that amount but still protested its nonliability. The insurance company then wrote the following letter to the assured, dated April 8, 1912, on which no action was taken by either party: (Formal parts omitted.) “Dear Sir: I wish formally to advise you that the case of Perry v. your Company can be settled for $150. Inasmuch as the Travelers’ Insurance Company have declined the defense of this case, of which fact you have heretofore been informed, I desire to say that that Company by way of compromise offers to pay one-half of the suggested amount, or $75, for a release and a stipulation of dismissal of the case.
“I wish also in this connection to advise you that it is your duty to mitigate the damages as much as possible, and that your claim against the Insurance Company can only be for such amount as was necessary for you to pay in settlement of the case.
‘ ‘ While in your city on the 5th inst. I took this matter up with Mr. J. D. Harris, attorney for the plaintiff, and advised him as to our position.
“You may consider this proposition open for ten days.
*336“Awaiting your early reply, I am, . .
The Perry suit again came on for hearing and no defense was made, resulting, after an ex parte hearing, in Perry being awarded a judgment for three thousand dollars, which the plaintiff in this case was compelled to and did pay.
This suit is brought to recover from the insurance company the amount the plaintiff herein was required to pay on the Perry judgment.
The plaintiff offered in evidence the policy and the judgment and proved payment thereof, and went into th¿ question of its liability to Perry and the amount that Perry was. damaged. The jury found a verdict for three thousand dollars which went to a judgment, thus finding that plaintiff was insured, that defendant was liable, that Perry’s damages were three thousand dollars, that plaintiff was liable to Perry, and that plaintiff gave written notice of the injury at the time it happened. There was evidence tending to prove each of these findings.
A number of defenses were made by the insurance company, two of which are held to be good by the majority opinion, and as it is'on these points that I differ with my-associates my opinion is confined to them. First, it is contended that the letter of April 8, 1912, should have been admitted in evidence to show that Perry’s case could have been settled for one hundred and fifty dollars, and that plaintiff, knowing this, should have settled for that amount in order that the damages might be minimized as between it and the insurance company; and second, that the letter was the written consent to settle as was provided for in the policy. I will take up the consent proposition first.
It seems a strained construction to place on this letter to say that it is a written consent given by the insurance company to the stone company to settle with Perry for one hundred and.fifty dollars. To do so requires one to read out of the letter the proposition *337.to compromise; in other words, it is giving the letter a construction most favorable to the one who wrote it, and that is contrary to law. However, the letter, speaks for itself, and to my mind was simply an offer on the part of the insurance company to authorize a settlement for one hundred and fifty dollars provided the assured would put up one-half the amount. The most that can be said of the letter is that it gave written consent to the assured to pay out seventy-five dollars of the insurance company’s money on a settlement and consent to the assured to pay out seventy-five dollars of. its own money. On what theory or by what authority the insurance company assumed to give this “consent,” having long prior thereto denied all liability under the policy and long prior thereto asserted its position of “no liability,” does not appear, unless, as I construe the letter (in favor of the assured), it was an offer of compromise and not a consent. Consent implies not merely that a person accedes to but authorizes an act. [8 Cyc. 585.] Suppose the stone company, acting on this letter hád settled for one hundred and fifty dollars and paid one-half of the amount from its own funds; this would be as much an admission on its part that it had not given the notice as it would have been an admission on the part of the insurance company, had it paid the one hundred and fifty dollars, that it was liable and that it had received the notice at the time the jury in this case found it was received. Viewing the letter from another angle, suppose the stone company had written to the insurance company that it could settle the claim for one hundred and fifty dollars and had recognized what the majority opinion says was the stone company’s duty to minimize the damage and had asked the insurance company to pay the one hundred and fifty dollars; and the insurance company had written to pay the said amount if the stone company would pay one-half of it. I think it is taking up useless time *338and space to argue that in that case the assured when coming onto the insurance company for its loss would have been limited to the sum of seventy-five dollars.
In clause D of the policy under “Notice,” the use of the word “consent” in the last line, in the connection in which it is used I think means that the assured is to get the written consent of the insurance company to pay out the latter’s faoney on a claim. In other words, it is another evidence of the determination on the part of the insurance company to keep its hand in control of all proceedings after an injury occurs under the terms of the policy.
This all goes to show that the rights, obligations, duties and privileges of these parties were fixed at the time the notice was given as found by the jury. This is merely saying that the rights of the parties were fixed by the contract. And while it may be argued that the insurance company could not pay out this one hundred and fifty dollars without recognizing liability to the stone company, it can be argued with equal force that the stone company could not pay out the one hundred and fifty dollars without recognizing the fact that it had not given the required notice. I therefore do not believe that this letter made an offer or gave a consent to the assured to pay out one hundred and fifty dollars, and then, should it be determined that the notice was given that the stone company could hold the insurance company for one hundred and fifty dollars and no more.
The next proposition decided by the majority opinion is that, leaving out of consideration entirely the letter or any written consent, when the insurer disclaimed all liability and the knowledge that a settlement could be made with Perry for one hundred and fifty dollars came to the stone company, it then became the duty of the latter to settle for that amount, and, after doing so, to try the issue in another suit as to whether it gave or did not give the notice — this, be*339cause it was the duty of the assured to minimize the loss as to the insurance company.
I cannot agree to that proposition of law because I think this contract of insurance was more than one of mere indemnity. .There was not only an obligation on the insurance company to make good in money any loss sustained by the assured, but the premium was paid for the purpose of having the insurer step in and relieve the assured of the trouble and expense and burden of defending any lawsuit filed by an injured employee, whether it was a valid or fraudulent claim. The contractual relation of the parties established by the insurance policy was that the insurance company would be the party in interest in the defense of such suits or in the settlement of such claims. ■ When a suit was filed, it had agreed in consideration of the premium to step into the stone company’s shoes and to make settlement, if it chose, or to fight it out; and not only did the contract do this, but it made a provision that the insurer would not be' liable unless it be permitted to absolutely take charge of the defense or the negotiations, and denied to the assured the right to try the lawsuit brought against it or to voluntarily settle or fasten or acknowledge liability without the written consent of the insurance company.
I do not believe that the rule to minimize damage creates a duty on a party occupying the position the stone company occupies under this contract to a party occupying the position the insurance company obligated itself to fill. In other words, the insurance company was the real party in interest in the defense of Perry’s suit to the extent of the policy and the assured was what might be termed the “holder” of the lawsuit because necessarily prosecuted against it in name.
As an illustration: An assured owes an insurer that has issued an ordinary fire policy a legal duty to preserve the property remaining after a fire and save as much of the salvage as he can in order to minimize the *340loss; but suppose the insurer not only indemnified against loss bnt specially contracted that when notified of the fire it would in its own way carry out the goods and would itself minimize the loss, and that any act on the part of the assured in saving the property after the fire without the written consent of insurer would nullify the insurer’s liability. Having snch a contract, suppose the assured stood by the ruins with full knowledge of the fire and with full knowledge that the goods were depreciating and refused to fulfill the duty to save as much salvage as possible and walked away and left the property in that condition. In my judgment the insurer would be in no position to claim that the assured should have saved as much out of the ruins as possible and thus minimized the loss; the legal duty owed by the assured was superseded by the contract of the parties.
Section E under the “Recovery” clause of the policy, which provides that no action shall lie against the insurer to recover “for any loss . . . actually sustained and paid by him (the assured) in money in satisfaction of a judgment after trial of the issue,” I think means a trial which was had in which the insurer took part, and performing its contract made a defense for the assured, which resulted in a judgment against the assured. There is no intimation in the policy that the assured will ever defend the case and pay a judgment against it in which case it was to carry on the defense.
I agree with the cases (Butler Brothers v. American Fidelity Co., 120 Minn. 157, 139 N. W. 355, 44 L. R. A. (N. S.) 609, and St. Louis Dressed Beef and Provision Co. v. Maryland Casualty Co., 201 U. S. 172, 50 L. Ed. 712) holding that where the insurance company denies all liability the assured has the privilege, if he so desires, to defend the suit of effect a settlement and then hold the insurance company, as, by the denial of liability the necessity of obtaining consent to settle is done away with. But saying that the assured has the *341privilege of'doing this is far from saying that snch privilege accorded him places an obligation on him to do so for the benefit of the one who has contracted to assume the primary liability position. The insurance company saw fit to withdraw from the defense of Perry’s action. It was then the privilege of the stone company to go on and defend, but it certainly had no duty to do anything; and especially is this true since it was prohibited from compromising with Perry without the written consent of the insurance company.
There is a materially different relation existing in this case than that presented in the cases of Southern Ry. News Co. v. Fidelity & Casualty Co. of New York (Ky.), 83 S. W. 620, and Fidelity & Casualty Co. of New York v. Southern Ry. News Co. (Ky.), 101 S. W. 900, where it was held that if the insurer does not itself conduct the defense of the action of the insured person against the assured, the latter is bound to make the loss as small as it reasonably can. ■ I will admit that'the assured can, if the insurer refuse to do anything, proceed with the cause and defend or settle, and, if he acts in good faith, require the insurer to make him whole to the extent of the policy; and if he so elects to either settle or fight the action on the merits, and does so, then he must act in good faith in either making a settlement or making a defense as ordinary prudence and good sense deniands; his duty to do this, however, does not begin until he exercises such privilege, and by holding him to a duty to do so after he does exercise such privilege does not in my judgment argue that it was his duty to defend or settle — that is under a policy which is not merely one of indemnity against loss, but under a policy whereby the insurer has contracted that -it will, in order to fix liability, be permitted to carry on the litigation in the name of the assured.” And when the Kentucky court laid down the rule that the assured must minimize the loss as against the insurer, it was dealing with a case where the as*342sured had elected to act when the insurer had refused. In other words, one may be required to .do certain things or be required to conform to a certain standard of action where he voluntarily assumes authority or undertakes to do something, whereas had he done nothing, no liability or obligation would ever have arisen. One may, by affirmative action and assumption of authority, be required to exercise certain duties when the same things would not have been required of him by mere nonaction.
The determining question in this case under the policy seems to me to be: Who was the real party in interest in the defense of Perry’s damage suit1? I think the policy fixed that relation upon the insurance company, and that, whether Perry’s claim was bona fide or fraudulent; and the liability of the insurance company became fastened upon it and it occupied the position of the real party in interest the instant the assured gave the notice that an injury had been suffered by one of its employees. The jury has found, and we must take it as an established fact in dealing with this appeal, that the insurer received the notice; having received it, the defense of the case in court was then up to the insurer, and it was only the duty of the assured to aid, and to furnish the suit papers, and all information it was called upon to furnish. Every clause in the policy determines that the insurer occupied the relation of the real party in interest and became the primary party so far as that lawsuit was concerned, whether the claim was valid or fraudulent. As between the assured and Perry of course the relationship remained the same. Even.in simple contracts of indemnity, in equity the insurer has been held as the real party in interest and the one primarily liable as the. principal debtor to the injured party. [Beacon Lamp Co. v. Travellers’ Ins. Co. (N. J.), 47 Atl. 579.]
In this case not only did the insurance company contract to undertake the defense but it did in fact file *343a pleading in defense of the Perry damage suit. It is true that in its letters written before filing the pleading it was denying that if had received notice and stated that it would file such pleas as would prevent a default, reserving the right only of ascertaining whether the required notice had been given. To begin with, I do not think the insurance company should be permitted in one breath to say, “We are going into this law suit to defend” and in the next, “We are not going in to defend.” It will be held by its contract to defend, but more so by its actual participation in the proceedings. Its acts should certainly speak louder than a mere form of words in a letter. The only denial of liability at that time was based on the proposition that no notice of the injury had been given, and it seems to me that the stone company’s action against the insurance company should stand or fall on the question of the giving of. the notice. If the insurer did get notice, it was liable for the amount of the judgment recovered by Perry. It had its day in court on that question. Besides, having taken the steps it did I do not think it should be permitted to withdraw, denying liability on account of not receiving notice, and then refuse to pay, not because the stone company did something wrongful or negligent, but because it did nothing..
It seems to me that the relation existing between the stone company and the insurance company is somewhat similar to that existing between an assignor and an assignee of a chose in action. The common-law implied obligation of the assignor is that he will not interfere with the chose after the assignment, and if'he does interfere and does so to the damage of the assignee this renders him liable for any damages resulting from such interference. The assignee is the real party in interest and at common law must have brought the suit in the name of the assignor.. There was no duty, as I understand, resting on the assignor to do anything other than to fulfill his express and implied *344obligations neither of which was that he would undertake to settle with the debtor or litigate the question with the debtor. If he does undertake it and interferes to the damage of the assignee he can be held for any damage resulting therefrom. But this is far from saying that noninterference or nonaction will cast a liability on him or duty on him to minimize the damage.
I have not gone into the facts of this case and undertaken to discuss the merits of the question whether the notice was given or whether the action of the assured was evidence that the notice was or was not given or whether there was collusion between Perry and the stone company. I take it that on this appeal we must consider it as established that the notice was given immediately after the injury occurred as testified by the stone company’s witnesses and believed to be the fact by the jury trying that issue. But I view the case on these salient facts: The insurance company insured the stone company against loss, and was, in case notice of an injury was given in accordance with the terms of the policy, bound to defend the damage suit if one followed and to assume the stone company’s burden in case liability was made out ; that is, the insurance company was to carry the load to the extent of its policy. The injury occurred and the notice was given. The amount of the damage was established not only in the case of Perry v. Carthage Stone Company but was established again after a trial of the issue by the jury in this case at 'three thousand dollars. The insurance company did begin and undertake actually to defend that suit, and then, relying on the issue of fact only that no notice was given, withdrew from the defense. The assured according to the terms of the contract was merely to aid in the litigation, not to carry it' on. It did nothing. The facts were as well known to the insurer as to the assured. The insurer was in equally as good position to make the one hundred and fifty dollar settlement as was the assured. *345It was the insurance company’s lawsuit primarily because it was the real party in interest in the defense— made so by its own contract for a consideration — and it should be estopped from settiug up a failure to act on the part of the assured when it failed to act for its own protection.
The letter of April 8, 1912, was no consent to settle for any more than seventy-five dollars — certainly no written consent upon which it could be held for more than seventy-five dollars; and it is not claimed that Perry or his attorney ever offered to settle for that amount. Consent to do a thing must be unqualified and unconditional.
The construction placed upon the letter of April 8, 1912, in the majority opinion is most favorable to the writer, and it is therefore in conflict with many decisions holding that where á writing is uncertain or ambiguous it must be given a construction most strongly against the writer. [Rochester Mining Co. v. Maryland Casualty Co., 143 Mo. App. l. c. 561, 128 S. W. 204; Long Brothers Grocery Co. v. United States Fid. & Guar. Co., 130 Mo. App. l. c. 429, 110 S. W. 29; and McManus v. Gregory, 16 Mo. App. 375.] In this case wé need look no further than the answer of the defendant where it puts its own construction on the language of the letter, as follows: “That this defendant as a •matter of compromise and adjustment solely, and to get rid of any further trouble in regard to said case agreed to pay seventy-five dollars of said one hundred and fifty dollars so offered to be taken by the said Perry.”
The duty to Mitigate damages on a breach of contract is ordinarily an implied duty raised by the law. I think such duty can be by express contract placed upon either party to the transaction and consequently either party may be by express contract relieved of the duty; that is, the party seeking to invoke such duty can by express contract be estopped from insisting on *346it when he has agreed that the other party has been relieved; and this is certainly true where the party on whom it is claimed the duty rests would by his act tending to mitigate the other party’s loss place himself in a worse position or be required to relinquish rights that he had under the contract for which rights he had parted with a valuable consideration. The following language was used in the case of Howard v. Vaughn-Monnig Shoe Co., 82 Mo. App. l. c. 410-411: “Ordinarily, one hired for a definite time and wrongfully discharged prior to that time, should accept an offer to do similar work and his earnings will mitigate the damage. But where the offer of opportunity to so work is made by the wrongdoer in such way, or under such circumstances that its acceptance would force an abandonment of his rights under his contract of employment, he is under no obligation to accept.” A privilege to mitigate damages does not necessarily raise a duty to do so. It is not claimed that plaintiff did anything to aggravate the damages. Defendant complains on account of plaintiff’s nonaction, and in sustaining this defense the. majority opinion is in conflict with the case of Jarvis v. Railway Co., 26 Mo. App. 253. There- are many cases, such as Hurst v. Railroad, 117 Mo. App. 25, 94 S. W. 794, where there is no duty to mitigate damages; and I think the facts of this case bring it within the rule announced in the case last cited.
I therefore hold that the trial court committed no error and that the judgment should be affirmed, and further hold that the decision of the majority is in conflict with the following cases: Jarvis v. Railway Co., 26 Mo. App. 253; Hurst v. Railroad, 117 Mo. App. 25, 94 S. W. 794; Howard v. Vaughn-Monnig Shoe Co., 82 Mo. App. 405; McManus v. Gregory, 16 Mo. App. 375; Long Brothers Grocery Co. v. United States Fid. & Guaranty Co., 130 Mo. App. 421, 110 S. W. 29; and Rochester Mining Co. v. Maryland Casualty Co., 143 *347Mo. App. 555, 128 S. W. 204. For this reason I ask that the cause he certified to the Supreme Court for final determination.