Court Opinion

ID: 6662598
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:03:19.165921+00
Date Added: 2024-06-11T16:00:13.342810
License: Public Domain

Cornish, J.,
dissenting.
The maxim, “no wrong without a remedy,” refers to legal wrongs. . In a free state, where men buy, sell, contract, and mingle with each other, inequities arise of which the law takes no cognizance. My brothers of the bench feel sure that the plaintiff, if defeated, would suffer wrong. I think they are mistaken, and, whether mistaken or not, I feel sure that the decision does the defendant a legal wrong.
Stripped of legal verbiage, the question is: Will the courts permit a contract wherein the insurer promises to indemnify the employer against loss from accident to employees on condition that he shall be notified, shall consent to any settlement made, be permitted to defend the lawsuit, if any, and also on condition that it shall be so far an indemnity contract that the insurer shall not be liable until the employer has actually paid the loss sustained, as determined in settlement or in court?
If such a contract will be permitted, then the contract under consideration will be permitted. One can safely challenge opposition to find a term or provision lacking for such a contract. Its history is that it was carefully drawn with a view to the “payment-first” provision and agreed to by the parties to it. Now; when parties have freely contracted, the courts must abide by the terms of the contract, or tell why not; otherwise, the court makes the contract for the parties and becomes a legislative body. A mere inequity as between the parties is not sufficient. Some ambiguity or repugnancy must be slidwn, or that it is unconscionable, against public policy, or otherwise forbidden by law. Hard cases - make bad law. •
In the body of the opinion the court reaches its conclusion through an interpretation of the contract, and gives 'as a reason for its interpretation that to require payment by the employer of the judgment, before liability of the insurer arises, would make the • contract *840one against public policy. In tbe syllabus, which is supposed to state the law of the case, the rule is not made to depend upon interpretation at all, but applies to any contract containing the provision quoted in it. Suppose the next contract which comes before us should be one containing a provision like the one quoted in the syllabus, with these words in addition: “Let no one, either the courts or anybody else, construe this contract to mean that in a certain event the insurer is liable before payment of the loss by the employer; it means, as of course we always intended it to mean, that in no event, the parties having lived up to their contract, shall the insurer be liable until the employer has suffered the loss; that is, has paid it.” Will the court then, contrary to the opinion, refuse to call the contract void as against public policy? Will it, in accordance with the rule stated in the syllabus, hold that the liability still exists, even though the contract is against public policy? Probably not; for if, in any such case, the quoted provision is against public policy, then the whole contract, being inseparable, fails. The courts will, not perforce give a contract the construction that its language will not permit, to prevent its being void as against, public policy.
In the opinion, interpreting the contract, it is thought its provisions may “mean no more than an undertaking to contest an asserted claim against the assured, for which it (the insurer) is liable when established.” The “undertaking to contest” is squarely and fully provided for in a section preceding the quoted provision. The quoted provision is the only one in the contract ■which undertakes to tell when the liability for payment arises against the insurer. Read it again. It seems to the writer that it can have but one possible meaning;, that is, that the employer must pay the loss before he is entitled to be indemnified.
It is argued, not as a matter of estoppel, but of interpretation, that the quoted provision may have in *841mind a case where the insurer has refused to defend, in which case he will not be liable until the employer has paid the judgment. This suggestion does violence to the terms of the contract. The undertaking to defend is absolute.' It forgets that the policy throughout is one to indemnify against loss, and not against liability. The insurer has no right of election to defend or not. By its plain terms, the insurer must either settle, defend, or pay. Under such an interpretation, the insurer can defend only on penalty of assuming the entire liability of the suit.
Would a provision making liability contingent on payment by the employer, combined with the provision that the insurer shall have control of the defense, make the contract void as against public policy? Not, I think, unless we are to make new law. As said by one of the early judges, “Public policy is an unruly horse and dangerous to ride.” “Judges are more to be trusted as interpreters of the law.” Public .policy extended might lead us anywhere, just as would the practice, in deciding cases, of not applying the general rules of the. law, but following our sense of equity in the individual case.
So far is the provision requiring notice to the insurer and .a right to defend from being against public policy, that what is most valuable in that provision for him would be his, if the provision were entirely left out of the contract. He is the real party in interest, the one who should defend, the one who may have to pay the judgment. At common law, one who has to pay the judgment is entitled to notice, has a right to be present and even be given a voice in the trial. The court would protect his interest to see that no unjust judgment was obtained. The insurer’s case is not that of an intermeddler, or of a lawyer, buying a lawsnit, stirring up a lawsuit, or preventing settlement. Probably, at common law, without any contract for it, the employer could not hold him to a settlement without his consent. Under *842this contract, the employer is as free to settle as if he had never paid his $30 premium.
How can it be said that the insurer has no interest in the lawsuit when the employer is insolvent? That is to say that insolvents have no credit. Ordinarily, or at least in half of the cases, the insolvent will find it easy to get the money to pay the judgment. The argument assumes that the insurer will know of the insolvency.
Much time is spent in discussing the propriety and purpose of the quoted provision requiring payment first. I do not.care how hard this provision may appear to be in the present case. In my opinion, its meaning being clear and unambiguous, the particular purpose or reason which the parties had for inserting it is not the business of thq court. The fact that, as free contracting parties, they placed it there is sufficient. • If reasons are necessary, they are at hand. The insurer wished.to make a strictly indemnity contract. He did not care to be subrogated to a loss which the employer was released by his insolvency from paying. The insurance world recognizes the fact that the irresponsible man is a greater risk than the responsible one. In cases like the one in hand the danger of collusion between employer and employee at once arises. Again, the insurer, on grounds of business policy, may prefer to make sure that the money goes to the injured employee. Without the provision, it may go elsewhere. The opinion itself says: “This is a proper provision to protect the insurer” against the misapplication of the fund. But such need for this protection could only arise in case of insolvency.- So we have the court, at this point, making the provision a proper one for this purpose, but, later on in the opinion, holding that it never has any use or application except when the insurer has not conductéd the defense. If the provision is in for one purpose, it is in for all purposes within its expressed meaning. The court cannot say it shall apply for this purpose, and *843justify itself in refusing it for other purposes because, in the individual case, it would work a hardship, contrary to its notions of justice. The laws are adapted to those cases which more frequently occur. It seems to me the opinion exhibits a strained construction of the contract, due to the particular circumstances of the case. If these contracts work a hardship on employees, that is a consideration for the legislature, not the courts of justice.
The contract, on simple view, is clear and easily understood. Argument about it and the refinements of logic, to make it mean something else, are only confusing. Twenty-four courts, besides the trial court, have passed upon this contract. All but three of them have construed it to be an indemnity, not a liability contract. For a review of the cases, see the recent case entitled Fidelity & Casualty Co. v. Martin, 163 Ky. 12.
The courts must remember that they are neither lawmakers nor contract-makers, and that contracts not prohibited by law are the law between the parties to them. As said by Sir Frederick Pollock, in his article on Contracts, 7 Ency. Brit. p. 35, the enforcement of contracts is among “the most important functions of legal justice.” Page 38: “The business of the law, therefore, is to give effect so far as possible to the intention of the parties, and all the rules for interpreting contracts go back to this fundamental principle and are controlled by it. * * * A rulé which can take effect against the judicially known will of the parties is not a rule of construction or interpretation, but a positive rule of law.” If we deviate from this rule of construction, there will arise general confusion and uncertainty as to what the law is, not conducive to the ends of justice.