173 F.2d 830 (10th Cir. 1949), 3780, American Fidelity & Cas. Co. v. G. A. Nichols Co.

Docket Nº:3780.
Citation:173 F.2d 830
Case Date:March 21, 1949
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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173 F.2d 830 (10th Cir. 1949)




No. 3780.

United States Court of Appeals, Tenth Circuit.

March 21, 1949

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., on the brief), for appellee.

Before PHILLIPS, Chief Judge, HUXMAN, Circuit Judge, and SAVAGE, District Judge.

PHILLIPS, Chief Judge.

G. A. Nichols Company 1 brought this action against the American Fidelity and Casualty Company 2 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

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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:

'American Fidelity and Casualty Co. * * * (Herein called the Company,) * * * Hereby Agrees * * *

'(3) To defend in the name and on behalf of the Assured any suit brought against the Assured to enforce a claim, * * * for damages suffered or alleged to have been suffered on account of bodily injuries or death, * * * as the result of an accident covered by this Policy * * *

'* * * The Company may settle and pay any claim asserted, whether reduced to judgment or not, * * *

'* * * The assured shall not admit or voluntarily assume any liability nor offer to settle any claim nor incur any expense * * * without the written consent of the Company. The assured shall at all times render to the Company all cooperation and assistance within his power.'

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 on 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

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the bus of Nichols, at its waiting room at...

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