Boling v. New Amsterdam Cas. Co., Case Number: 23419

• Decision Date: 28 May 1935
• Docket Number: Case Number: 23419
• Parties: BOLING v. NEW AMSTERDAM CASUALTY CO.
• Court: Oklahoma Supreme Court

1935 OK 587

46 P.2d 916

173 Okla. 160

BOLING v. NEW AMSTERDAM CASUALTY CO.

Case Number: 23419

Supreme Court of Oklahoma

Decided: May 28, 1935

Syllabus

¶0 1. Insurance - Accrual of Insured's Cause of Action Against Indemnity Insurer for in Bad Faith Refusing to Settle Judgment Against Insured.

Insured's cause of action against insurer based on insurer's bad faith in refusing to effect settlement within limits of policy accrued when judgment against insured in amount exceeding policy was affirmed by the Supreme Court and was satisfied by the insured.

2. Insurance - Liability of Indemnity Insurer Exceeding Amount of Policy by Reason of Insurer's Conduct.

Indemnity insurer may by its conduct become liable for entire judgment against insured, though exceeding amount named in policy of insurance.

3. Same - Duty of Insurer to Act in Good Faith Toward Insured Upon Offer of Settlement of Judgment Against Insured.

Indemnity insurer contracting to assume and assuming in trial court control of claim against insured owes insured duty to act in good faith when an offer is made of settlement of judgment pending right of appeal.

4. Same - Sufficiency of Petition in Action by Insured Against Indemnity Insurer.

A petition containing allegations appropriate to a cause of action based on bad faith or negligence in the performance of a contract and sounding in tort is sufficient and not demurrable.

Appeal from District Court, Tulsa County; Harry L.S. Halley, Judge.

Action by Dottie R. Boling against the New Amsterdam Casualty Company. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Searcy & Underwood and William Neff, for plaintiff in error.

James C. Cheek, for defendant in error.

RILEY, J.

¶1 Appellant, against whom a judgment for $20,000 was obtained by Julia E. Ashbridge for the wrongful death of her husband, resulting from the negligent operation of appellant's automobile (Boling v. Ashbridge, 84 Okla. 280, 203 P. 894), satisfied the judgment, with interest from December 3, 1920, after $5,000 of the amount thereof, the limit of the liability under a policy of automobile liability insurance which had been issued to appellant and which was in force at the time of the wrongful death of Mr. Ashbridge, had been realized in a garnishment proceeding instituted by Mrs. Ashbridge from the New Amsterdam Casualty Company (Boling v. Ashbridge et al., 111 Okla. 66, 238 P. 421). The appellant also, according to the allegations of the present petition, expended the sum of $2,000 in prosecution of the appeal in the cause first above mentioned. Appellant commenced this action for recovery from the insurance company of her detriment occasioned by the conduct of appellee.

¶2 The ground for recovery in the instant suit is appellant's bad faith in its failure and refusal to avail itself of the opportunity it had on December 14, 1920, to settle the judgment rendered December 3, 1920, within the $5,000 limit named in the policy of insurance.

¶3 It is alleged that after the rendition of the judgment of December 3, 1920, Julia E. Ashbridge offered to accept the sum of $6,000 in complete satisfaction of the $20,000 judgment, provided the same should be paid before the time limited for an appeal expired; that said offer was communicated to defendant, and plaintiff at the time offered to pay the $1,000 in excess of the $5,000 liability of the defendant under its policy. That by the terms of the policy defendant was entitled to have complete charge of the defense to any suit covered by the policy and had the absolute right to determine whether a settlement should be made; that defendant arbitrarily wrongfully, and oppressively, in disregard of its obligation to plaintiff, refused to allow the settlement to be made unless Plaintiff would pay $4,500 of said $6,000, thus to release defendant from $3,500 of its liability under said policy. That defendant at the time knew there was no reasonable prospect of reversing the Judgment by an appeal, and in fact did not appeal therefrom. That plaintiff, in order to protect her rights, appealed said cause, with the result stated. That defendant thereby became liable to plaintiff in the sum of $17,000, with interest.

¶4 The appellee, by the terms of its policy of insurance, agreed to indemnify the assured from any liability for damages on account of bodily injuries, including death, accidentally suffered-by person or persons by reason of the use of assured's automobile. In the event of legal proceedings to enforce any claim for damages arising from any accident covered by the policy, the appellee agreed to "defend such suit whether groundless or not in the name and on behalf of the assured. The expenses incurred by the company in defending such suit, including costs, if any, taxed against the assured will be borne by the company Whether the verdict is for or against the assured irrespective of the limit of liability expressed in the policy."

¶5 The appellee, as insurer, reserved the right to settle within the limits of the policy. Condition "D" of the policy provided:

"The assured shall not voluntarily assume any liability, nor shall the assured, without the written consent of the company previously given, incur any expense or settle any claims, except at its own cost, nor interfere in any negotiations for settlement or in any legal proceedings conducted by the company, on account of any claim," etc.

¶6 Condition "E" provides:

"No action shall lie against the company to recover any loss under or by reason of this policy unless it shall be brought in the name of the assured for loss actually sustained and paid in money, by the assured in satisfaction of a judgment after actual trial of the issue, nor unless such action is brought within two years after such judgment against the assured has been so paid and satisfied."

¶7 A demurrer to plaintiff's amended petition was sustained, and the cause of action was dismissed. This action of the court constituted error.

¶8 Appellee contends that whether this is a suit on a written contract or an action in tort, the statute of limitations has run (section 101, par. 1, O. S. 1931, and section 101, par. 3, O. S. 1931), inasmuch, as the present action was first commenced May 27, 1926, and the act complained of is the failure of the casualty company to settle the judgment on December 14, 1920.

¶9 No authorities are cited to support the defense of a bar by the statutes of limitation, nor was this defense pleaded below.

¶10 The bar of the statute does not appear upon the face of the petition, notwithstanding the allegations of the petition as to time of payment by appellant was subject to being made more definite and certain as to time of payment. Reverting to condition "e" of the contract of insurance, it is the contractual agreement that "no action shall lie against the company to recover any loss under or by reason of this policy unless it shall be brought in the name of the assured for loss actually sustained and paid in money by the assured in satisfaction of a judgment after actual trial of the issues, nor unless such action is brought within two years after such judgment against the assured has been so paid and satisfied." This court cannot say that the instant action was not brought within two years after satisfaction of the judgment in the original suit.

¶11 It is well settled in cases of limited liability insurance that the insurer may so conduct itself as to be liable for the entire judgment recovered against the insured, although the judgment exceeds the amount of liability named in the policy. Some of the cases permit recovery upon proof that insurer in refusing to settle a claim for damages covered by the policy was negligent. Douglas v. U.S. F. & G. Co., 81 N.H. 371, 37 A. L. R. 1477; Cavannugh Bros. v. General Accident, Fire & Life Assur. Corp., 79 N.H. 180, 106 A. 604; Attleboro Mfg. Co. v. Frankfort, Marine, etc., Ins. Co. (C. C. A.) 240 Fed. 573. Other decisions require proof that insurer acted in bad faith. New Orleans, etc., R. Co. v. Md. Cas. Co., 114 La. 154, 38 So. 89, 6 L. R. A. (N. S.) 562; Wisconsin Zinc Co. v. Fidelity. etc., Co., 162 Wis. 39, 155 N.W. 1081, Ann. Cas. 1918C, 399; Auerbach v. Maryland Cas. Co., 236 N.Y. 247, 140 N.E. 577, 28 A. L. R. 1294. The prevailing rule requires good faith on the part of insurer toward insured. Brassil v. Maryland Cas. Co., 210 N.Y. 235, 104 N.E. 622, L. R. A. 1915A. 629.

¶12 The action at bar is predicated on bad faith, which is a...