Bros v. Kan. Cas. & Sur. Co.

• Citation: 149 Minn. 482,184 N.W. 189
• Decision Date: 15 July 1921
• Docket Number: No. 22395.,22395.
• Parties: MANNHEIMER BROS. v. KANSAS CASUALTY & SURETY CO.
• Court: Supreme Court of Minnesota (US)

149 Minn. 482

184 N.W. 189

MANNHEIMER BROS.

v.KANSAS CASUALTY & SURETY CO.

No. 22395.

Supreme Court of Minnesota.

July 15, 1921.

Appeal from District Court, Ramsey County; F. M. Dickson, Judge.

Action by Mannheimer Brothers against the Kansas Casualty & Surety Company. From the judgment, both parties appeal. Affirmed on both appeals.

Syllabus by the Court

Defendant issued its policy of indemnity insurance thereby agreeing to indemnify and protect plaintiff, within the limits therein stated, from loss on account of injuries caused to third persons from the operation of its auto truck; and, further, to defend all actions brought against plaintiff to recover for such injuries:

It is held, that the refusal of the insurance company to conduct the defense of an action so brought does not expose it to greater liability to the insured for injuries to the persons complaining than the amount stated in the policy.

The measure of liability for a breach of the contract in that respect is: (1) The amount stated as for injuries to third persons; and (2) all necessary costs and expenses incurred by the insured in defending the action.

The insurance company is not entitled to a reduction of its liability for such cost and expense in proportion as its maximum liability bears to the amount to claimed by the injured party.

The contract to defend is indivisible and extends to the whole case, regardless of the amount involved or whether it exceeds or does not exceed the liability of the insurance company.

Counsel for defendant who was employed to defend the action following the refusal of defendant to do so, at the conclusion of the litigation presented a bill for his services which plaintiff acquiesced in and paid. There being no suggestion of fraud or collusion, or basis to justify an inference of an exorbitant charge, the presentation and payment of the bill is held sufficient evidence of reasonable value to justify the allowance thereof as an item incurred in the defense of the action. The rule applied in Mitchell v. Davies, 51 Minn. 168, 53 N. W. 363, should not be extended to include a showing of that kind.

The findings of the trial court that defendant repudiated its liability and refused to defend the action are sustained by the evidence. C. D. & R. D. O'Brien, of St. Paul, for appellant.

Dille, Hoke, Krause & Faegre and R. F. Merriam, all of Minneapolis, for respondent.

BROWN, C. J.

The facts in this case are not in dispute in any substantial respect. Defendant in due course issued to plaintiff its insurance policy, thereby agreeing for the consideration paid to indemnify plaintiff for any loss or injury occasioned to third persons from the operation of plaintiff's auto delivery truck in the city of St. Paul. There was subsequently a collision between the truck and an automobile in which one Hillstrom and one Hanscom were riding, resulting in serious injury to both. They thereafter brought separate suits against plaintiff, charging in their complaints as the basis of the actions that the collision was caused by the negligence of the operator of the truck, the servant and employ?CITE, 149 Minn. 484>>employe of plaintiff. Though the insurance policy obligated defendant to defend those actions on behalf of plaintiff, defendant therein, the company refused to do so, on the ground that by reason of certain facts not necessary here to repeat, it was not liable on the policy. Plaintiff then employed counsel who conducted the defense throughout the litigation. The trial of the actions resulted in a judgment for Hillstrom in the sum of $12,633.62, and for Hanscom in the sum of $2,630.73. There was an appeal in the Hillstrom Case and an affirmance in this court. 178 N. W. 881. Plaintiff then brought an action against defendant to recover on the policy the amount paid on the Hanscom judgment, and the costs incurred in defending that action, and recovered a default judgment which was affirmed on appeal. Mannheimer Bros. v. Kansas Casualty & Surety Co., 180 N. W. 229, wherein defendant's claim of nonliability was held without merit. Plaintiff paid the Hillstrom judgment, and then brought this action to recover on the policy, demanding therein the full amount of the Hillstrom judgment and the cost and expense of defending the action through the courts, including an attorney's fee of $1,500. Defendant in effect admitted liability; it could not well do otherwise, for the question was ruled adversely to it in the Hanscom action. But defendant claimed that it was not liable for the full amount of the judgment, since the policy limited its liability to $5,000, and demanded that plaintiff's recovery be confined to that amount. Defendant also demanded that the costs incurred by plaintiff on the appeal in the Hillstrom Case be apportioned between the parties in accordance with their separate interests therein.

The action was tried without a jury, at the conclusion of which the court gave judgment for plaintiff for the sum of $5,000 (the amount fixed by the policy), and all the costs incurred by plaintiff in defending the former action, including as attorney's fee of $1,500. The items of costs were $42.85 incurred in the district court, and $410.11 incurred on the appeal to this court. Judgment was entered accordingly, and both parties appealed.

[1] 1. Defendan...