Carthage Stone Company v. The Traveler's Ins. Company

• Decision Date: 12 December 1914
• Parties: CARTHAGE STONE COMPANY, Respondent, v. THE TRAVELER'S INSURANCE COMPANY, Appellant
• Court: Missouri Court of Appeals

172 S.W. 458

186 Mo.App. 318

CARTHAGE STONE COMPANY, Respondent, v. THE TRAVELER'S INSURANCE COMPANY, Appellant

Court of Appeals of Missouri, Springfield

December 12, 1914

Appeal from Jasper County Circuit Court, Division No. Two.--Hon. D E. Blair, Judge.

Judgment reversed and cause remanded. Cause certified to Supreme Court.

O. C Mossman and McReynolds & Halliburton for appellant.

(1) Plaintiff is not entitled to recover because notice of the injury was not given defendant as provided by the policy. Anderson v. Frankfort Accident & Plate Glass Ins Co., 9 Cal.App. 473, 99 P. 537; London Guarantee & Accident Co. v. Siwy, 35 Ind.App. 340, 66 N.E. 481; Australian Accident Ins. Co., 19 Victoria (Australia) 139; Underwood Veneer Co. v. London Guarantee, etc., Co., 100 Wis. 378, 75 N.W. 996; Nat'l. Paper Box Co. v. Aetna Ins. Co., 170 Mo.App. 370; Cooley's Briefs on Insurance, 3570; Columbia Paper Stock Co. v. Fidelity and Casualty Co., 104 Mo.App. 157; Myers v. Travelers Ins. Co., 62 Oh. St. 760, 57 N.E. 458; London Co. v. Siwy, 66 N.E. 481; Underwood Veneer Co. v. London Co., 100 Wis. 378, 75 N.W. 996; Employers' Liability Assurance Corp. v. Light Co., 28 Ind.App. 473, 63 N.E. 54; Wolverton v. Fidelity & Casualty Co., 190 N.Y. 41, 16 L.R.A. 400; Smith-Dove Co. v. Insurance Co., 171 Mass. 357, 50 N.E. 516; Deer Trail Mining Co. v. Maryland Casualty Co., 36 Wash. 46, 78 P. 135; Crotty v. Casualty Co., 163 Mo.App. 636; Donnell Mf'g Co. v. Hart, 40 Mo.App. 512; Burgess v. Ins. Co., 114 Mo.App. 189; McFarland v. Accident Association, 124 Mo. 214. (2) Defendant having declined to defend the case of D. O. Perry v. Carthage Stone Company and notified plaintiff of that fact and that plaintiff must defend, it was the duty of plaintiff to make the loss as small as possible so far as it reasonably could. Fisher v. Goebel, 40 Mo. 275; Mandell v. Fidelity, etc., Ins. Co., 170 Mass. 173, 49 N.E. 110; Southern Ry. News Co. v. Fidelity, etc., Co., 83 S.W. 620; Barnett & O'Neil v. Grain Co., 153 Mo.App. 464; State, ex rel. v. Rice, 44 Mo. 436; Harrison v. Railroad, 88 Mo.App. 36; Dietrich v. Railroad, 89 Mo.App. 36; Knight Bros. v. Railroad, 122 Mo.App. 38; Vincil v. Railroad, 112 S.W. 1030.

Bailey & Bailey and Howard Gray for respondent.

(1) Appellant contends that the policy required respondent not only to give notice of the accident, but notice of the claim for damages when it was made. No such issue was submitted by the pleadings. In appellant's answer it set up that it refused to defend the cause because no notice of the accident had been given. This was a waiver of the clause requiring notice of claim. LaForce v. Insurance Co., 43 Mo.App. 518. (2) Failure to give notice was a matter which defendant was required to plead affirmatively and could not be raised by general denial. Hilburn v. Insurance Co., 140 Mo.App. 355; Burgess v. Insurance Co., 114 Mo.App. 169; Hester v. Fidelity etc. Co., 69 Mo.App. 186. (3) The rule requiring a party to mitigate his damages arising from a breach of contract does not require him to deal with the party who has breached his contract, and to pay him more or to give him any advantage that he did not have under the original contract. Camfield v. Sauer et al. 189 F. 576; Delafield v. J. K. Armsby Co., 116 N.Y.S. 71.

STURGIS, J. Robertson, P. J., concurs in holding that the rule as to mitigation of damages applies in this case, and in the result. Farrington, J., dissents in a separate opinion and deems the majority opinion in conflict with certain decisions of the Supreme and other appellate courts therein specified.

OPINION

STURGIS, J.

This suit is on a policy of indemnity insurance against damages arising from personal injuries. Because the plaintiff and defendant could not agree as to which of them should pay $ 150 in settlement of a personal injury case for $ 4000, this court must determine which of them shall bear the burden of paying $ 3000, with interest and costs for the same claim.

So far as necessary to a decision of this case, the facts are these: The policy in question provides that the defendant shall indemnify the plaintiff against loss by reason of liability imposed upon it by law for damages on account of bodily injuries accidentally sustained; that it will defend in the name and on behalf of the insured any suit which may be brought at any time against it on account of such injuries, including suits that are groundless, false or fraudulent; that it will pay the costs of such suit taxed against the insured, with interest on the judgment and expenses incurred for investigations, negotiations or defense. The policy further provides that the insured shall not voluntarily assume any liability, settle any claim, or incur any expense without the consent of the company; that no action shall lie against the company to recover for any loss except for loss actually sustained and paid by the insured in money in satisfaction of a judgment after trial of the issues.

While this policy was in force, one D. O. Perry was in April, 1909, injured while in plaintiff's employ and working in its mill by reason of alleged defective machinery. No suit was brought for such injury until on November 2, 1911, two and half years after the injury, although it appears that said Perry was making some claim to this plaintiff for his injury prior to that time. He then brought suit against this plaintiff for $ 4000, based on its negligence. On summons being served on this plaintiff, defendant in that case, it at once mailed the summons to this defendant at its Kansas City, Missouri, address. This defendant promptly replied, notifying plaintiff that it had never received any notice of Perry being injured. To this plaintiff made no reply, and, on November 17, 1911, the defendant by its attorneys again wrote this plaintiff as follows: "In the matter of the case of David O. Perry v. Carthage Stone Company, returnable to the November Term, 1911, circuit court for Jasper county, Missouri, we, as local attorneys for the Traveler's Insurance Company are instructed to notify you that the company has been waiting to hear from you as to whether or not this case was ever reported to the Traveler's Insurance Company; that they have no record of it and to date have not received any information from Mr. Logan as to whether the case was reported at the time. Pending the receipt of this information, they instruct us to advise your company and Mr. Logan on behalf of the Traveler's Insurance Company that the Traveler's Insurance Company will file through us the necessary pleadings in the case to protect against a default but that our action in so doing shall not be a recognition of liability on the part of the Insurance Company for the case, and shall be without prejudice to the rights of either party." The Mr. Logan referred to was the secretary and general manager of the plaintiff company. To this the present plaintiff, defendant in that case, made no response and the case drifted along until January 5, 1912, when this defendant notified plaintiff that it had, as before stated, appeared by its attorneys on notice to this plaintiff that it did not admit liability by so doing and did so to prevent the case going by default until it could determine its liability to plaintiff on account of the claimed injury, and adds: "We have been instructed by the Traveler's Insurance Company to withdraw as attorneys in that case, and to notify you that it will be necessary for you to employ attorneys to look after and defend that case, as the Traveler's Insurance Company has decided that it is not liable to you for the injuries alleged and sued for in that case. So you are hereby notified that we, as attorneys for the Traveler's Insurance Co., will not appear further in that case in the defense thereof, and that, if you desire to defend in that case you will employ attorneys to defend in your behalf." The attorneys for this defendant formally withdrew from the case on February 19, 1912. This plaintiff, though defendant in that action, paid no attention to the case and it drifted along. About April 5, 1912, a representative of this defendant went to Carthage, Missouri, for the purpose of further investigating the status of this damage suit, repeatedly sought an interview with Mr. Logan, the plaintiff's manager, who refused to see him but said, when called over the telephone, that he had already given all the information he had to give. In this conversation over the telephone, defendant's representative told Mr. Logan he had interviewed Mr. Perry's attorney and explained to him why his company had refused to defend the case on account of receiving no notice of the injury until after suit was brought and that Perry's attorney had told him the case could be settled for $ 150. This evidence as to Logan's refusal to interview this representative of defendant and what was said over the telephone was excluded by the court, but is here in the form of a deposition.

On the return of this representative of the defendant to Kansas City, Missouri, this defendant wrote, under date of April 8, 1912, and plaintiff received the following letter: "I wish to formally advise you that the case of Perry against your company can be settled for $ 150. Inasmuch as the Traveler's Insurance Company have declined the defense of this case, of which fact you have heretofore been informed, I desire to say that that company by way of compromise offers to pay one-half of the suggested amount of $ 75, for a release and a stipulation for dismissal in the case."

"I wish also in this connection to advise you that it is your duty to mitigate the damages as much as possible, and that your claim against the Insurance Company can only be for such amount as was necessary for you to pay in...