American Mut. Liability Ins. Co. v. Cooper, 6542.

Citation61 F.2d 446
Decision Date03 November 1932
Docket NumberNo. 6542.,6542.
PartiesAMERICAN MUT. LIABILITY INS. CO. OF BOSTON, MASS., v. COOPER.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Geo. W. Yancey and Whit Windham, both of Birmingham, Ala., for appellant.

R. H. Scrivner, of Birmingham, Ala., for appellee.

Before BRYAN, FOSTER, and WALKER, Circuit Judges.

BRYAN, Circuit Judge.

Appellee, against whom a judgment for $13,500 was obtained by Mrs. Alice Auman in an action for injuring her as a result of negligently driving his automobile (Cooper v. Auman, 219 Ala. 336, 122 So. 351), satisfied that judgment with interest, and recovered judgment over against appellant for the full amount, less $5,000 paid by it as the limit of its liability under a policy of automobile liability insurance which it had issued to appellee and which was in force at the time of the accident to Mrs. Auman. The ground of recovery in the present suit was appellant's failure and refusal to avail itself of the opportunities it had to settle Mrs. Auman's claim for damages within the $5,000 limit named in the policy. There are many assignments of error, but it may safely be stated that no reversible error is made to appear unless the trial court erred in refusing appellant's request for a peremptory instruction. Originally appellee's cause of action was based upon appellant's negligence in refusing to settle Mrs. Auman's claim; but, upon a ruling by the trial court that the insured was not entitled to recover on the ground of mere negligence, the declaration was amended so as to allege only that the insurer acted in bad faith toward the insured in refusing to effect a settlement within the $5,000 limit named in the policy. By the terms of the policy the insured was required to give written notice to the insurer as soon as practicable of any accident covered by the policy, and, upon request, to render any assistance in his power in the investigation, settlement, or defense of any case, aid in securing witnesses, and in prosecuting an appeal; but it was therein provided that he should not, unless at his own expense, pay or settle any claim, incur any expense, voluntarily assume any liability in respect of any such accident, or interfere in any negotiations for settlement or in any legal proceeding, without the insurance company's written consent. In the event of legal proceedings to enforce any claim for damages arising from any accident covered by the policy, the insurer agreed to assume, "in the name and on behalf of the insured, but at its own cost and expense, and irrespective of the indemnity hereinafter provided for the entire management and defense of same." The insurer reserved the right to settle within the limits of the policy.

The accident occurred in the afternoon, while the insured was driving his automobile up a steep hill in a southerly direction on a street 40 feet in width, which at the time was not being much used. Shortly before the accident occurred, Mrs. Auman alighted from the automobile of a lady friend near the curb on the easterly side of the street, and, in crossing, away from a street intersection, to her home on the other side, according to at least one of the witnesses who testified in her behalf, she was dragged more than the length of the automobile. There was evidence for Mrs. Auman to the effect that the automobile in which she had been riding had moved away, and that there was no obstruction to prevent the insured from seeing her in ample time to avoid the accident. The insured testified that he did not see her until just at the very moment of the accident, although he said that he stopped his automobile within a distance of about 18 inches from the point where it struck her; but he did not claim that his view was obstructed by another automobile coming between him and Mrs. Auman.

The insured promptly reported the accident to the insurer, upon a blank form furnished by it for that purpose, giving the names of three people who he said lived in the same block in which Mrs. Auman lived, and stated that there were several other important witnesses whose names he did not learn. Mrs. Auman, before she brought her suit, made an offer to the insurer to settle her claim for damages against the insured for $3,000. Up to that time no witnesses had been interviewed, and no investigation concerning the merits of the case had been made by or on behalf of the insurance company, although it was informed by the report of the insured that both Mrs. Auman's forearms had been fractured, and that her right knee had been dislocated. Nevertheless the insurance company rejected Mrs. Auman's offer of settlement, and countered with the proposition to pay her either $200 or the amount of her doctors' bills in full settlement of her claim for...

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    ...to the contrary. The position of the Fourth Circuit, and of New Hampshire is also that of the Fifth Circuit (Alabama), American Mutual Liability Ins. Co. v. Cooper, 5 Cir., 1932, 61 F.2d 446; Oklahoma, Boling v. New Amsterdam Casualty Co., 1935, 173 Okl. 160, 46 P.2d 916; Minnesota (dictum)......
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    • James Publishing Practical Law Books How Insurance Companies Settle Cases
    • May 1, 2021
    ...and possible punitive damages. See Brandt v. Superior Court (1985) 37 Cal.3d 813; see also American Mut. Liab. Ins. Co. v. Cooper , 61 F.2d 446, 448 (5th Cir. 1932), cert. denied , 289 U.S. 736 (1933); Maryland Cas. Co. v. Elmira Coal Co. , 69 F.2d 616, 620 (8th Cir. 1934); Cotton States Mu......

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