Best Bldg. Co. v. Employers' Liab. Assur. Corp.
Citation | 160 N.E. 911,247 N.Y. 451 |
Parties | BEST BLDG. CO., Inc., v. EMPLOYERS' LIABILITY ASSUR. CORPORATION, Limited, et al. |
Decision Date | 27 March 1928 |
Court | New York Court of Appeals |
OPINION TEXT STARTS HERE
Action by the Best Building Company, Inc., against the Employers' Liability Assurance Corporation, Limited, and another. From a judgment of the Appellate Division (220 App. Div. 816, 222 N. Y. S. 770), affirming a judgment of the Trial Term, which set aside a verdict for plaintiff and dismissed the complaint, plaintiff appeals.
Affirmed.
Appeal from Supreme Court, Appellate Division, First department.
William Otis Badger, Jr., and Paul D. Compton, both of New York City, for appellant.
Walter L. Glenney, of New York City, for respondents.
The defendant insured the plaintiff against loss arising from the liability imposed by law for damages on account of bodily injuries accidentally suffered by an employee. An accident happened which resulted in a judgment against the plaintiff for $16,000. The defendant, according to the terms of its policy, undertook the defense for the plaintiff, and has paid, or is willing to pay, the sum of $10,000, the extent of its policy liability. The plaintiff has sued the defendant for its negligence in failing to settle the claim and asks to recover the excess of the judgment over the face of the policy; that is, the $6,000 less the $2,000 which the plaintiff alleges it was at all times willing to contribute. The facts regarding the proposed settlement are these:
During the course of negotiations the accident case could have been settled with the injured employee for $8,500. The defendant insurance company offered $6,500. The plaintiff was given no notice of either offer. It alleges that, if notice had been given to it, the difference of $2,000 between the two offers would have been readily paid by it, and the injury case settled. As the insurance company did not increase its offer, or meet the injured employee's demand, the case was not settled, and the plaintiff claims and alleges that the failure to settle was due to the defendant's negligence in handling the case, and particularly in its failure to notify the plaintiff of the offers which had been made by both sides. The question is directly raised whether under the terms of these accident policies as they now read the insurance company is liable for negligence in failing to settle a case when there was a possibility of so doing. That the insurance company in the handling of the litigation or in failing to settle is liable for its fraud or bad faith is conceded and has been repeatedly stated in all the cases bearing on the subject. So also it has been held by this court that the company is not liable on its contract for a failure to settle; a contract imposes upon it no such duty. Auerbach v. Maryland Casualty Co., 236 N. Y. 247, 140 N. E. 577, 28 A. L. R. 1294;Streat Coal Co. v. Frankfort General Ins. Co., 237 N. Y. 60, 142 N. E. 352. In the latter case this court said:
In the Auerbach Case this court said:
‘There are no allegations in the complaint to the effect that the insurance company was negligent either in investigating the facts connected with the accident, or in the defense of the action, not a suggestion that it was guilty of fraud or misrepresentation in any way.’
Thus these two cases seem to have reserved this question of negligence in failing to settle the claim.
On the other hand, the Supreme Court of New Hampshire, in Douglas v. United States Fidelity & Guaranty Co., 81 N. H 371, 127 A. 708, has held that a recovery may be had for a negligent failure to settle where the facts were similar to those in this case. That court said:
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