Allegretto v. Oregon Automobile Ins. Co.

• Decision Date: 06 September 1932
• Citation: 140 Or. 538,13 P.2d 647
• Parties: ALLEGRETTO v. OREGON AUTOMOBILE INS. CO. [*]
• Court: Oregon Supreme Court

13 P.2d 647

140 Or. 538

ALLEGRETTO v. OREGON AUTOMOBILE INS. CO. ^[*]

Supreme Court of Oregon

September 6, 1932

Department 2.

Appeal from Circuit Court, Multnomah County; H. K. Zimmerman, Judge.

Action by Carolina F. Allegretto against the Oregon Automobile Insurance Company. From a judgment in favor of plaintiff defendant appeals, and plaintiff files motion to dismiss appeal.

Motion to dismiss denied, judgment reversed, and action dismissed.

W. H. Maguire, of Portland (Dey, Hampson & Nelson and R. R. Morris, all of Portland, on the brief), for appellant.

Frederick H. Drake, of Portland, for respondent.

On Motion to Dismiss Appeal.

BELT J.

Respondent contends that the appeal should be dismissed for the reason that there has been a violation of rule 10 of the Supreme Court, which provides in part as follows: "Points and authorities shall follow each assignment of error or proposition of law. Not exceeding five adjudicated cases should be cited under any particular point. Names of the parties and the volume and page of the case reported shall be stated. In citing textbooks, the edition, together with the number of the volume, page or section shall be given. Care should be used in the selection of cases cited. There is much waste of time in reading cases not in point."

While there has been a clear violation of the above rule, we think this is not a ground for dismissal of the appeal. A motion to strike the brief from the files would have been a more appropriate remedy. Even had such motion been made, its disposition would rest in the discretion of the court.

The motion to dismiss is denied.

On the Merits.

BELT J.

This is an action to recover on an insurance policy issued by the defendant company to indemnify Edward B. Harris against liability arising out of the operation and use of an automobile. During the life of the policy, the plaintiff was injured in an automobile accident, and thereafter instituted action against Harris and Harold Victor Akre on the theory that they were joint tort-feasors. Judgment in favor of plaintiff was obtained against both defendants, and, upon execution being returned unsatisfied, the plaintiff commenced the instant action. Upon trial both parties moved for a directed verdict. The court allowed the motion of plaintiff. Hence this appeal by the defendant insurance company.

Defendant asserts that Harris, the insured, breached the terms of his policy by failing to co-operate in the defense of the original action, in that he made false and fraudulent representations as to the facts surrounding the accident and, by reason thereof, his rights under the policy were forfeited. It appears from the uncontradicted testimony that Harris willfully misrepresented to Mr. Swett, of counsel for the insurance company, that Akre was driving at the time of the accident. Harris later explained that his reason for so doing was that Akre had a driver's license with him, but that he did not. On the statement of Harris that Akre was the driver, Mr. Swett prepared the answer in the original action. About two or three days before trial, it was learned that Harris' statement was false. Mr. Swett thereupon so advised the court, and was granted permission at commencement of the trial to amend the answer by alleging that Harris was in truth and in fact, the driver. When Mr. Swett was advised by Harris and Akre as to the truth, he told Harris that the insurance company disclaimed any liability, by reason of his breach, and that "it was now his lawsuit and not the insurance company." Swett further testified: "I told him, however, that I would go ahead and try that case, but I wanted him to understand that in trying it I was expressly saving all rights of the insurance company as to denying liability, and that I wanted it understood and wanted it to be agreeable to him, or I would not try it under any other circumstances, and he said it would be agreeable to him."

We are convinced that the willfully false statement of Harris constituted a breach of the co-operation clause of the policy. It was his contractual obligation to make a full, fair, and complete disclosure of the facts relative to the automobile accident in order to enable the insurance company to determine whether the claim should be contested. Co-operation, within the meaning of the policy, does not mean that the insured is to aid and assist the insurer in the maintenance of a sham defense. It does, however, imply good faith. The insured is not obliged to keep his mouth closed merely because an insurance policy is involved. When he does speak, however, it must be to tell the truth. When the misrepresentation concerns a material matter and substantially affects the rights of the insurer, there is unquestionably a breach of the policy. Seltzer v. Indemnity Ins. Co. of N. Y., 252 N.Y. 330, 169 N.E. 403; Rochon v. Preferred Accident Insurance Company of New York, 114 Conn. 313, 158 A. 815; George v. Employers' Liability Assurance Corporation, 219 Ala. 307, 122 So. 175, 72 A. L. R. 1438; Huddy on Automobiles (9th Ed.) vol. 13-14, § 298; Vance on Insurance (2d Ed.) p. 915. See cases in note 72, A. L. R. page 1453. Judge Rudkin, in New Jersey Fidelity & Plate Glass Co. v. Clark (C. C. A.) 33 F. (2d) 235, in construing the Oregon statute which authorizes an action of this character, said: "*** In the event of the bankruptcy or insolvency of the insured the policy gives a right of action to the injured party, but such an action cannot be maintained until a judgment has been recovered against the insured and an execution returned unsatisfied. *** It would seem that it was the intent and purpose of this statute to subrogate the injured party to the rights of the insured upon the contingencies named and to give the injured party all the rights which the insured would have if he had paid the judgment, or if bankruptcy or insolvency had not intervened, including the right to recover costs and interest irrespective of the limits of liability contained in the policy."

Metropolitan Casualty Co. v. Albritton, 214 Ky. 16, 282 S.W. 187, supports the theory of respondent that the rights of the person injured are not subrogated to the rights of the assured, but such case is not in keeping with the decided weight of authority. Zimmerman v. Union Automobile Insurance Co., 133 Or. 600, 291 P. 495, does not decide the precise question involved here, and, although some of the language used tends to support plaintiff's contention, it must be read in the light of the question before the court for consideration. Slavens v. Standard Accident Ins. Co. (C. C. A.) 27 F. (2d) 859, follows the minority rule.

We think it is going too far to say that it must be shown that the misrepresentation affected the verdict. In Coleman v. New Amsterdam Casualty Company, 247 N.Y. 271, 160 N.E. 367, 369, 72 A. L. R. 1443, it was urged that the default in co-operation should be condoned since there was no evidence that the co-operation would have defeated the claim for damages or diminished its extent. Chief Justice Cardozo, in answering such contention, said: "The argument misconceives the effect of a refusal. Co-operation with the insurer is one of the conditions of the policy."

It is true that, so far as the liability of the insurance company is concerned, it was immaterial, under the terms of the policy, whether Harris or Akre was driving the car, but can it reasonably be said that the insurance company's rights were not substantially prejudiced when it was obliged to file an amended pleading...