Blackwood v. Maryland Casualty Co.

Citation227 Ala. 343,150 So. 180
Decision Date09 June 1933
Docket Number7 Div. 185.
CourtSupreme Court of Alabama

Rehearing Denied Oct. 12, 1933.

Certiorari to Court of Appeals.

Ruby Blackwood sued the Maryland Casualty Company to recover the amount of a judgment obtained by her against D. R. Bostick in an action against Bostick (driver of an automobile) and one Finch (owner and insured). From a judgment for defendant plaintiff appealed to the Court of Appeals. The judgment being there affirmed, she brings this petition for certiorari to the Court of Appeals to review and revise the judgment and decision of that Court in Blackwood v. Maryland Casualty Company, 150 So. 179.

Writ denied.

FOSTER J., ANDERSON, C.J., and BROWN, J., dissenting in part.

Young &amp Longshore and Rutherford Lapesey, all of Anniston, for appellant.

Knox, Acker, Sterne & Liles, of Anniston, for appellee.

BOULDIN, Justice.

The facts found by the Court of Appeals in the opinion now presented, incorporating by reference the facts recited in the former opinion (Blackwood v. Maryland Casualty Co., 24 Ala. App. 527, 137 So. 467), disclose that the attorney of the insured agreed in writing "that the action of the" insurer, "in participating in said trial and in representing the defendant" the insured "was not and should not be a waiver of the right of the" insurer "to claim and rely upon the want of co-operation of the" insured "as a valid defense to any liability of whatsoever kind of the" insurer "under the policy of insurance," a liability or indemnity policy.

This was no agreement that the policy had been forfeited by non co-operation. That question was left open to be litigated on its merits if and when such question should arise. So such agreement was not a surrender of any right of the insured in existence when the agreement was made. But a stipulation that, by continuing in the case for the defense of both the insurer and insured as against the plaintiff in that action, the insurer would create no new right in favor of the insured by way of estoppel.

"An attorney has authority to bind his client, in any action or proceeding, by any agreement in relation to such cause, made in writing." Code, § 6253.

"We do not think the effect of this statute is to invest the attorney with power over the entire cause equal to that of his client, but to invest him with authority to bind his client in all matters which relate to the prosecution or defense of the rights of his client, to collect and receipt for him, to sue out and direct process, to make all such preliminary agreements as he may deem necessary to lead to or secure a trial of the cause, and settle, by agreement or waiver, any and all questions which incidentally arise during the progress of the trial." Senn v. Joseph, 106 Ala. 454, 457, 17 So. 543.

See, also, Norman v. Burns, 67 Ala. 248; Ex parte Hayes, 92 Ala. 120, 9 So. 156; Charles v. Miller, 36 Ala. 141.

"Subject to the rule that an attorney cannot compromise his client's case or surrender his substantial rights, an attorney may make any agreement or stipulation which appears, in the progress of the case, to be necessary or expedient for the advancement of his client's interest; and this right, it seems, is exclusive as far as it applies to stipulations relating purely to the management of the case in court." 6 C.J. pp. 647, 648, § 156, and full array of authorities in notes 58 and 59.

Our late cases are not intended to overturn the rule of Senn v. Joseph, supra, which is cited as authority therein.

The agreement of counsel here related directly to the conduct of the cause, surrendered no substantial right of the defendant, but secured the services of counsel for the insurer on behalf of defendant, upon agreement that such action should be without prejudice to the insurer-should not raise up a new estoppel against the insurer setting up the true status as to non co-operation when occasion should arise.

The agreement in question was within the lawful powers of the attorney as such, without any proof of express authority conferred by his client.

The Court of Appeals erred on the first appeal. The result of the decision on the present appeal is correct, but it is based on erroneous grounds.

The writ of certiorari is therefore denied.

Writ denied.


FOSTER Justice (dissenting).

The opinion of the Court of Appeals limits our inquiry to the effect of notice by the insurance carrier in liability insurance given to the attorney for the insured and the consent of such attorney, that the insurer will not waive the right to claim a forfeiture of the contract for a breach of its co-operation clause, by reason of its continued defense of the insured in the suit against him, and by its failure to withdraw from such defense upon a discovery of the breach committed by insured.

It was held on the former appeal of this case that the agreement of the attorney for insured with the attorney for insurer that such continued defense shall not be a waiver of the breach is not binding as an agreement by the insured because he had no such implied authority. But the Court of Appeals now holds that an agreement is not necessary, but that notice of such claim to the insured is all that is required, and that such notice may be effectually given to defendant's attorney appearing for him in the case. This theory is predicated upon section 9491, Code, that written notice to the attorney of record is as effectual as notice to the party. The authority of the attorney, as treated by the Court of Appeals, is that he was employed by insured and appeared for him to defend the suit. We cannot go to the record to see what additional authority the evidence showed that the attorney had conferred on him beyond that stated by the Court of Appeals. Counsel argue that it shows sufficient authority, but that court has declined to find whether that is so or not. So that much that is argued in brief on that subject is outside the facts relied on by that court, and is beyond the range of our consideration.

The question therefore involves only two inquiries: (1) Whether and when notice to the insured is sufficient to relieve the insurer of the consequences of what would otherwise be a waiver of the breach; and (2) whether the attorney for the insured may accept such notice so as to affect the client.

Other questions have heretofore been determined by this court, as the Court of Appeals rightly held. For that court finds as a fact that insured violated the co-operation clause of the contract, which is a complete defense unless effectually waived, as we have repeatedly held. Metropolitan Cas. Ins. Co. v. Blue, 219 Ala. 37, 121 So. 25; George v. Employers' Liability Assur. Corporation, 219 Ala. 307, 122 So. 175, 72 A. L. R. 1438.

But we are not in agreement with the Court of Appeals that it is sufficient to give notice to the attorney of the insured that the insurer reserves the right to insist on the forfeiture on account of the neglect of the insured, unless such attorney is authorized to consent to such reservation. The cases cited in the opinion of the Court of Appeals are predicated upon an inference that the insured acquiesced in such nonwaiver reservation. And in the case of Miller v. Union Indemnity Co., 209 A.D. 455, 204 N.Y.S. 730, the insurer requested the insured to consent that his continued defense of the case would not waive its right to claim a forfeiture. The insured refused to agree, and the insurer nevertheless continued to defend the suit. The court held that the insurer could either claim the forfeiture and refuse to go on, or it could abandon such claim and conduct the defense of the action, but it could not do both: that the choice of one waived the other right. We believe that is the true rule.

The insured may be said to have acquiesced in the nonwaiver claim of the insurer if notice is given to him of such claim and he makes no protest or other objection but permits the insurer to continue to defend the suit upon the belief that by doing so it does not waive the forfeiture. But this cannot be so treated unless the insured has acquiesced in such claim of the insurer, or otherwise agreed to it, or is estopped to insist to the contrary. It is by virtue of acquiescence that the insured is treated as having consented to, or is estopped to deny, the claim. It is upon the strength of an agreement expressed or implied, or construed by law, which operates to the advantage of the insurer. But there can be no implied contract, nor an estoppel, when the parties to it could not expressly so contract. So that the effect of notice to, and acquiescence in, such nonwaiver claim, by the attorney, is effective against the insurer, client, only to the extent that such attorney could bind his client by an express agreement. An agreement was expressly made. Its validity is therefore the controlling inquiry.

We are advised by counsel in brief that there was much evidence to show full authority of the attorney to make the agreement for his client. But without authority beyond his employment to defend the litigation, and extending to the making of such a contract, the attorney of insured could not waive his client's rights...

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