Elliott v. Cas. Ass'n of Am.
| Decision Date | 01 June 1931 |
| Docket Number | No. 94.,94. |
| Citation | 254 Mich. 282,236 N.W. 782 |
| Parties | ELLIOTT et al. v. CASUALTY ASS'N OF AMERICA. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Wayne County; De Witt H. Merriam, Judge.
Suit by Clarence E. Elliott, assignee of Richard Frederick, and another, against the Casualty Association of America. Judgment for defendant, and plaintiff named appeals.
Reversed and remanded for entry of judgment.
Argued before the Entire Bench.Leithauser, Brown, Lenehan & O'Donnell, of Detroit, for appellant.
James B. Van Vechten, Jr., of Detroit, for appellee.
This is a suit to recover for loss under an indemnity automobile policy issued by the defendant to Richard Frederick insuring property described as a 1926 Ford truck, motor No. 12264548. The applicable portions of the policy are as follows:
To indemnify the assured against loss for liability imposed by law upon him for damages on account of bodily injuries or death suffered by any person other than an employee; to defend any suit brought against him to enforce a claim, ‘whether groundless or not’ for damages on account of bodily injuries or death to any person other than an employee; the association shall have the right to settle any claim or suit; the policy shall be void if the assured shall voluntarily assume any liability or interfere in any negotiations or legal proceedings conducted by the association or shall settle any claim or incur any other expense without the written consent of the association; if claim or damage is made to the assured, he shall give notice to the association with full particulars; if any suit is brought against him, he shall immediately forward to the association every summons or other process as soon as the same shall be served; no action shall be brought against the association under the policy except for loss and until final judgment has been rendered after a trial in a suit against the assured and within ninety days from the date of judgment.
On January 6, 1928, while the policy was in full force and effect, the Ford truck became involved in an accident in which two women, Nellie E. Silk and Harriet L. Silk, were seriously injured. On June 2, 1928, each began suit against the assured. Notice of the accident and suits was promptly given to the insurer. It denied liability and refused to defend on the alleged ground that the truck involved in the accident was not the truck covered by the policy. About three weeks thereafter, the assured retained an attorney and assumed the defense. After appearance was entered and plea filed, the insurer offered to defend the suits on certain conditions not acceptable to the assured. The suits were not defended by the insurer. Eventually they were settled by the assured. His pleas were withdrawn and a judgment by default entered in each case for $5,000 which was the liability limit of the policy. The assured borrowed $10,000 from Clarence E. Elliott to satisfy the judgments and to him they were assigned. This suit was brought under the policy to recover the loss. At the close of the plaintiff's case and on motion of defendant, Richard Frederick was dismissed as a party. The case was tried before the court without a jury. Findings of fact and conclusions of law were filed on which judgment was entered in favor of the defendant on the theory that the insured breached the policy and relieved the defendant of liability when it settled the suits without its permission.
The plaintiff has appealed.
The principal question involved is whether the defendant breached the policy by refusing to defend and thereby released the insured from his agreement not to settle without its consent the suits brought against him by Nellie Silk and Harriet Silk.
It was the duty of the insurer to defend there suits brought against its assured. It refused to do so under the erroneous impression that its policy did not cover the particular truck involved in the accident. It is now settled that it was the same truck. Its refusal to defend was a breach of the policy. It was not excused because the insured refused to sign an agreement to waive any objections to its defenses in an action under the policy. When these suits were commenced against the insured, one of two courses was open to the insurer. It could repudiate liability and refuse to defend, taking its chances on a showing that the truck involved in the accident was not the truck insured, or it could defend with notice to the insured that it reserved the right to later question the identity of the truck. At first, it repudiated liability and refused to defend. Later, after the insured had assumed the defense, it offered to defend if he would sign an agreement the applicable sections of which read as follows:
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...Missionaries of Co. Mary, Inc. v. Aetna Cas. & S. Co., 155 Conn. 104, 230 A.2d 21, 26 (1967); Elliott v. Casualty Association of America, 254 Mich. 282, 236 N.W. 782, 783-784 (1931); Butler Brothers v. American Fidelity Co., 120 Minn. 157, 139 N.W. 355, 359 (1913); Brinkman v. Western Autom......
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