American Fidelity & Casualty Co. v. GA Nichols Co.
| Decision Date | 21 March 1949 |
| Docket Number | No. 3780.,3780. |
| Citation | 173 F.2d 830 |
| Parties | AMERICAN FIDELITY & CASUALTY CO., Inc. v. G. A. NICHOLS CO. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Welcome D. Pierson, of Oklahoma City, Okl. (George F. Short, of Oklahoma City, Okl., on the brief), for appellant.
W. R. Withington, of Oklahoma City, Okl. (Gilliland, Ogden, Withington, Shirk & Vaught, of Oklahoma City, Okl., on the brief), for appellee.
Before PHILLIPS, Chief Judge, HUXMAN, Circuit Judge, and SAVAGE, District Judge.
G. A. Nichols Company1 brought this action against The American Fidelity and Casualty Company2 to recover an amount paid by Nichols in excess of the coverage of two policies of liability insurance issued by the Casualty Company to Nichols, in satisfaction of a judgment recovered against Nichols by Donald E. Courtney. The coverage of the policies aggregated $10,000. The action was predicated on the claim that the Casualty Company breached its duty under the policies and acted in bad faith by refusing offers to compromise the Courtney claim for $10,000. Each of the policies contained these provisions:
In February, 1946, Courtney brought an action against Nichols to recover damages for personal injuries, in the district court of Oklahoma County, Oklahoma.
The Casualty Company was duly notified of such action and elected to defend it in behalf of Nichols. Two days after the accident, the Casualty Company made an investigation thereof and secured written statements from three employees of Nichols. Dan Bradley, the driver of the bus, stated that he examined the bus after the accident; that there was no damage to the right side of the bus from any contact with a nearby steel electric light pole; and that when he brought the bus to a stop, there was a six-inch clearance between the side of the bus and the pole. Howard Cummins, an extra driver for Nichols, stated that he hit Courtney on the arm; that Courtney's arm was outside of the window as the bus passed by the pole and that Courtney's arm caught between the pole and the bus. Floyd Faubion, a dispatcher for Nichols, stated that Cummins struck Courtney while the latter was seated in the rear seat of the bus; that after the bus had started, Courtney extended his right arm out of the window to catch hold of Cummins and Courtney's right arm caught between the bus and the pole, resulting in the injuries to Courtney's arm. The Casualty Company also took Courtney's statement. He stated that he was playing with Cummins and struck at Cummins with his right hand when the bus started; that he pulled his arm in and laid it on the window sill; that the pole hit his elbow and knocked his arm out of the window and that the pole caught his arm and caused the fractures; that he blamed the driver and also blamed himself.
The Courtney case was set for trial on June 17, 1946. Nichols ascertained that the Courtney claim could be settled for $10,000 and on June 15, 1946, forwarded to counsel for the Casualty Company a written demand that the Casualty Company settle the Courtney claim for $10,000. The demand was received by counsel for the Casualty Company on the morning of June 17, 1946. The Casualty Company refused to make the settlement. The demand was reiterated and refused on June 17, 1946. The Courtney case came on for trial on June 18, 1946. After all of the evidence had been introduced and the case was ready for submission to the jury, counsel for Courtney again offered to accept $10,000 in settlement. Nichols demanded that the offer be accepted. The Casualty Company persisted in its refusal to accept the offer of settlement. The jury returned a judgment for $22,360. An appeal was taken to the Supreme Court of Oklahoma. While the appeal was pending, the case was settled for $15,500, the Casualty Company paying $10,000 and Nichols $5,500. When the Courtney case came on for trial it was discovered that Cummins was no longer employed by Nichols and was not available as a witness.
The evidence introduced in behalf of Courtney in his action against Nichols established these facts: Courtney was a member of the United States Marine Corps, stationed at Norman, Oklahoma. About 1 o'clock a. m., on August 7, 1945, he boarded the bus of Nichols, at its waiting room at Oklahoma City, as a passenger for hire to return to Norman. He took a seat in the rear of the bus. The windows of the bus were open. Courtney placed his right elbow on the window sill of the bus. When the bus moved out of the station, it struck a pole and the motion of the bus caused his arm to protrude outside the window and strike the light pole, resulting in a compound fracture of his right ulna and radius. An attempt was made to reduce the fractures and an operation was performed and metal plates were installed to hold the ends of the bones in place. The plates installed in the ulna broke and the ulna fracture did not knit. Whether it will knit in the future depends on the success or failure of a bone-grafting operation. Courtney suffered much pain as a result of the fractures and the failure of the ulna fracture to knit and, even if the operation should be successful, the functions of his right arm will be permanently impaired to the extent of 50 to 60 per cent. At the time of the accident, Courtney was 19 years of age. Prior to entering the Marines he had engaged in farming.
Faubion, a witness for the defendant at the Courtney trial, on...
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