Bartlett v. Travelers' Ins. Co.

• Decision Date: 27 June 1933
• Citation: 167 A. 180,117 Conn. 147
• Parties: BARTLETT v. TRAVELERS' INS. CO.
• Court: Connecticut Supreme Court

167 A. 180

117 Conn. 147

BARTLETT v. TRAVELERS' INS. CO.

Supreme Court of Errors of Connecticut.

June 27, 1933

Appeal from Superior Court, Hartford County; John Rufus Booth Judge.

Action by Donald Bartlett, administrator, etc., against the Travelers' Insurance Company, to recover under the terms of a liability insurance policy, tried to the court. From a judgment rendered for the plaintiff for $3,750, the plaintiff appeals.

No error.

Cyril F. Gaffney and Donald Gaffney, both of New Britain, for appellant.

Warren Maxwell and A. E. Brosmith, both of Hartford, for appellee.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY JJ.

HINMAN, Judge.

The defendant insured the automobile liability of William Pankonin by a policy limiting its total liability on account of one accident to $10,000. On May 31, 1931, Pankonin drove his automobile heedlessly and with reckless disregard for the rights of Thomas Botticelli, Joseph Buchieri, and Clifford Faulkner, his guests, as a result of which Botticelli was killed and the others seriously injured. Thereafter agents of the insurance company negotiated with Buchieri Faulkner's attorney, and the plaintiff as administrator of the estate of Botticelli in an effort to adjust their claims against Pankonin, and on July 2d settled with Buchieri for $1,000. Plaintiff was notified of this settlement. The plaintiff first demanded $6,500, the defendant offered $3,500, and the plaintiff reduced his demand to $5,000. On July 30th the defendant refused to pay this amount, but renewed its offer of $3,500. On August 14th Faulkner brought suit against Pankonin and threatened to attach his property unless the defendant promised in writing to pay Faulkner any sum he might recover up to the limit of its available coverage, which at the time was $9,000. Defendant notified plaintiff of Faulkner's suit and demand for indemnity, advised him that its offer of $3,500 could not be held open after August 17th in view thereof, and sought to prevail upon plaintiff to accept it, but he refused. On August 17th defendant issued its letter of indemnity to Faulkner agreeing to be responsible for final judgment obtained by him up to the sum of $9,000 subject to the terms and conditions of the policy. On October 19th plaintiff offered to accept $3,500 in settlement of his claim, but defendant was unable to pay this sum at that time because of its letter of indemnity to Faulkner, but advised the plaintiff that it was attempting to settle with Faulkner for $5,000, and that, if successful, it would then be able to pay plaintiff the $3,500. On October 21st the defendant, being ignorant of the fact that plaintiff had retained counsel, and believing that he would accept the $3,500 in settlement of his claim, in view of his willingness on October 19th, agreed with counsel for Faulkner to settle the latter's claim for $5,250, and on October 23d paid that amount. On October 22d plaintiff's attorneys notified the chief adjuster of the defendant company of institution of a suit against Pankonin, and on January 20, 1932, the superior court rendered judgment of $10,000 for the plaintiff in that action. Before hearing, the defendant tendered the plaintiff $3,750 and costs, but the tender was refused. Pankonin is financially unable to pay any part of the judgment.

The policy contained a provision (section 3a) that the Company agrees " to serve the assured *** by such investigation or by such negotiation or settlement of any resulting claims, as may be deemed expedient by the Company," and is made subject to a condition (D) that " the Assured shall not voluntarily make any payment, assume any obligation or incur any expense other than for immediate surgical relief, except at his own cost." It also provided in section 2 that, if any judgment obtained by any person or his legal representatives against the assured for damages because of injuries within the terms of the policy " is not satisfied within thirty days after it is rendered, then such person or his legal representatives may proceed against the Company to recover the amount of such judgment either at law or in equity, but not exceeding the limit of this policy applicable thereto."

On February 17, 1932, the plaintiff instituted the present action, alleging that the sum of $3,750 is inadequate and unreasonable compensation to the estate of Botticelli, that the defendant by the payments to Buchieri and Faulkner preferred them over the plaintiff, voluntarily made an inequitable distribution of the funds in its hands, and did not make the payments by reason of the liability imposed upon Pankonin by law for damages as provided in the policy. The trial court found the facts above set forth; also that the sums paid to Buchieri and Faulkner, respectively, while in full settlement of their respective claims against Pankonin, were neither paid nor accepted as full compensation but as fair compromise settlements of the claims.

The conclusions reached, and to which the assignments of error are addressed, are that the terms of the policy permitted the defendant to make such fair compromise settlements of claims against its assured as it deemed expedient, and that the settlements with Faulkner and Buchieri were such, and the defendant thus satisfied its liability to Pankonin under its policy to the extent of $6,250, and remained liable to him only to the extent of $3,750, the difference between those payments and its total liability of $10,000; also that, under section 4231 of the General Statutes, recovery in this action is limited to the right of the assured against the defendant and therefore to the amount which Pankonin might have recovered from the defendant under the policy, which amount was $3,750, plus costs, and judgment was accordingly rendered for the plaintiff to recover that sum.

The general proposition advanced by the appeal is that an insurer under a liability policy, the coverage of which is limited as to amount, may not settle less than all of multiple claims arising from an accident, or, if it does, and the amount limited by the policy proves insufficient to satisfy both the claims compromised and those not settled but, instead, reduced to judgment, it is liable upon such judgments without being entitled to take into account payments made in satisfaction of the compromised claims.

Specifically, one of the contentions is that the policy here involved does not authorize the insurer to make and pay compromise settlements and have credit for the amount in diminution of its total liability. While the present policy provision (section 3a) regarding settlements is not as explicit as that involved in Century Indemnity Co. v. Kofsky, 115 Conn. 193, 196, 161 A. 101, and does not specifically state, as did the latter, that payments made in settlement shall be accounted in diminution of the Company's liability, it cannot fairly be construed otherwise than as authorizing negotiations for settlement and the compromise of such claims as the Company, in good faith and in the exercise of fair and honest judgment, deems expedient. The right to deduct from the limited liability payments made for such settlements follows as a matter of reasonable and proper implication.

The appellant maintains, also, that under section 4231 of the General Statutes the insurer becomes absolutely liable to any such injured person as shall eventually pursue his claim to judgment, to the exclusion of, or at least prior to, claims which are amicably settled without being reduced to judgment. A claimant's rights under the statute are obtained by subrogation to the assured, and equally with him subject to the provisions of the policy contract, including the privilege of settlement. The provision in section 4231 that the insurer " shall, whenever a loss shall occur *** become absolutely liable" must be read with regard to the context, and this indicates that the Company's liability is made absolute only in the sense that payment for the loss shall not be dependent upon the satisfaction by the assured of a judgment against him as a condition precedent to recovery, as had been the case prior to the passage of this statute (Public Acts, 1919, c. 331). Shea v. United States Fidelity & Guaranty Co., 98 Conn. 447, 120 A 286. Also it may not be defeated by cancellation or annulment of the policy after the assured's liability to the injured party has accrued. Guerin v. Indemnity Ins. Co., 107 Conn. 649, 651, 653, 142 A. 268. It does not...