Court Opinion

ID: 5416319
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:18:27.319383+00
Date Added: 2024-06-11T08:31:02.057072
License: Public Domain

Ordway, J.
(dissenting). I dissent. The defendant insists upon the strict letter of the contract in order to defeat its spirit and intent. Its conduct placed the plaintiff in a position where he was virtually compelled to pay part of the loss which he was insured against, and which he had the right to expect that the defendant would bear. This was neither fair nor just, nor in accordance with the intent of the parties. As was said by the Court of Appeals in a somewhat similar case (Brassil v. Maryland Casualty Co., 210 N. Y. 235, 240-241), where the defendant also relied upon the strict letter of the contract: “ The mere statement of this unique situation indicates that the true measure of the rights of the plaintiff on the one hand and of the obligations of the defendant on the other is not to be found in the letter of the contract of insurance. That contract, by its very terms, was designed to exclude any such liability. But there is a contractual obligation of universal force which underlies all written agreements. It is the obligation of good faith in carrying out what is written. The defendant’s failure to observe this requirement of the contract in suit is the thing upon which its liability may safely be predicated. ’ ’
In that case the court went on to say, at pages 241, 242: “ In the light of these conditions, it is idle to look to the letter of the insurance contract for the measure of the defendant’s liability, and the fact that there are no precedents for such an action as this, is a very impressive indication of the unusual and inequitable attitude of the defendant. Without attempting to fur*409ther characterize the defendant’s position, it is enough to say that it would be a reproach to the law if there were no remedy for so obvious a wrong as was inflicted upon this plaintiff. His rights, as we have said, go deeper than the mere surface of the contract written for him by the defendant. Its stipulations imposed obligations based upon those principles of fair dealing which enter into every contract. ’ ’
Undoubtedly the defendant had the right either to defend the suit against this plaintiff or to settle it at its option, but since it had by its contract deprived the plaintiff of any right to himself either defend the suit or settle it, or to interfere with the matter in any way, it was bound to use the utmost good faith towards him in handling the matter. Instead of doing so, it practically used its legal rights and powers as a club to compel the plaintiff to pay a portion of the loss against which it had indemnified him. By not denying the testimony of the plaintiff and his witnesses, it concedes that it represented to him that he was practically certain to lose the case against him, and that it was practically sure that there would be a very large verdict against him, much in excess of five thousand dollars, of which he would personally have to bear the excess over that amount, which was the limit of the policy of insurance, and that the proposed settlement for $3,150 was a reasonable and wise settlement, and a settlement which ought to be made; at the same time it informed him that no matter for what amount a settlement could be made it would refuse to make it or agree to it unless the plaintiff would contribute one-third of the amount of the settlement, and threatened to try the case although the result would almost certainly be a loss both to it and to the plaintiff unless he would contribute to the settlement; in other words, it threatened to subject both plaintiff and itself to almost cer*410tain additional loss unless plaintiff would pay part of the amount of the settlement. The plaintiff desired and requested that the settlement should be made and naturally claimed that the defendant should pay the full amount thereof, it being less than the limit of the insurance, but on the defendant’s refusing to make the settlement, unless he would contribute the sum of $750, he paid that amount to the defendant under protest and the settlement was made. In my opinion, this was a clear misuse'of the defendant’s powers under the contract of insurance; it showed a lack of good faith on defendant’s part, and amounted to coercion and a fraud upon the plaintiff which entitles him to recover the amount so paid by him.
The conclusion which I have reached is sustained by the case of Brunswick Realty Co. v. Frankfort Insurance Co., 99 Misc. Rep. 639, and Wisconsin Zinc Co. v. Fidelity & Deposit Co., 162 Wis. 39. In the latter case, the court said, page 54: “ While the defendant has 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 must not only result in damage to the plaintiff, but also in loss to itself.”
Judgment reversed, with costs.