Ericksen v. Pearson, 44002

• Decision Date: 07 May 1982
• Docket Number: No. 44002,44002
• Citation: 211 Neb. 466,319 N.W.2d 76
• Parties: James ERICKSEN, Appellee and Cross-Appellant, v. Dean C. PEARSON, doing business as Northeast Nebraska Insurance Agency, and A. R. Berry, employee, Appellants and Cross-Appellees.
• Court: Nebraska Supreme Court

Page 76

319 N.W.2d 76

211 Neb. 466

James ERICKSEN, Appellee and Cross-Appellant, v. Dean C. PEARSON, doing business as Northeast Nebraska Insurance Agency, and A. R. Berry, employee, Appellants and Cross-Appellees.

No. 44002.

Supreme Court of Nebraska.

May 7, 1982.

Syllabus by the Court

1. Insurance: Principal and Agent. Every agent or broker who shall solicit an application for insurance of any kind shall, in any controversy between the insured or his beneficiary and the company issuing any policy upon such application, be regarded as representing the company and not the insured. Neb.Rev.Stat. § 44-329 (Reissue 1978).

2. Insurance: Principal and Agent. Any person, firm, or corporation in this state who shall with authority receive or receipt for any money on account of, or for any contract of insurance made by him or them, or for any such insurance company or individual aforesaid, or who shall with authority receive or receipt for money from other persons to be transmitted to any such company or individual thereof, although such policy or policies of insurance may not be signed by him or them, as agent or agents of such company, or who shall in any wise make or cause to be made any contract or contracts of insurance for or on account of such company, shall be deemed to all intents and purposes an agent or agents of such company. Neb.Rev.Stat. § 44-328 (Reissue 1978).

3. Insurance: Principal and Agent: Releases. The general rule is that in the absence of a specific statute, where the liability of a principal for a tort committed by his agent is predicated solely upon the doctrine of respondeat superior, a valid release of either of the parties in such relationship operates to release the other.

Vince Kirby, Norfolk, for appellants.

Maurice S. Redmond, Dakota County Atty., South Sioux City, and J. Patrick Ryan, Sioux City, Iowa, for appellee.

Heard before KRIVOSHA, C. J., BOSLAUGH, McCOWN, WHITE, HASTINGS, and CAPORALE, JJ., and BRODKEY, J., Retired.

BRODKEY, Judge, Retired.

Plaintiff, James Ericksen, brought this negligence action against the defendants, Dean C. Pearson, doing business as Northeast Nebraska Insurance Agency, and A. R. Berry, employee, for failure to procure insurance in the amounts of coverage requested. A jury returned a verdict for the plaintiff, and defendants appeal from that verdict. The plaintiff cross-appeals on the issues of the credit allowed against the verdict and the failure of the court to allow attorney fees.

The facts out of which this case arose are as follows. Plaintiff, James Ericksen, was the owner of a gasoline filling station in Hubbard, Nebraska. In the fall of 1975, Ron Ericksen, the plaintiff's son, entered into negotiations with one A. R. Berry, an agent and employee of Pearson, for the purpose of purchasing various insurance policies from Northeast Nebraska Insurance Agency (Northeast), owned by Dean C. Pearson. As a result of the negotiations, the plaintiff agreed to purchase a fire and extended coverage policy for the filling station.

The filling station was already insured against fire by State Farmers Insurance Company (State Farmers) for $20,000 coverage for the building and $5,000 for the stock and fixtures. Plaintiff was unhappy with the State Farmers policy and planned to cancel coverage under that policy.

After examining the old State Farmers policy given him by plaintiff for the purpose of obtaining the legal description of the real estate, Berry filled out an application to Iowa Mutual Insurance Company (Iowa Mutual) for fire and extended coverage for the filling station, but only for approximately the same amounts as recited in the State Farmers policy. Ron Ericksen testified that he had requested and Berry had agreed to apply for $50,000 of the coverage for the filling station and $30,000 coverage on the contents.

On November 14, 1975, the filling station was severely damaged in a fire before the Iowa Mutual policy was delivered. The plaintiff's son testified he called Mr. Berry immediately and was assured by him that the Iowa Mutual policy was in force. However, Berry denied he had said the policy was for $80,000. On about November 19, 1975, the plaintiff received a copy of the Iowa Mutual policy and discovered the coverage was listed at $25,000 only.

After the fire, the plaintiff discovered that even though he had called State Farmers to cancel his existing policy, the policy had not been effectively canceled.

The plaintiff then began negotiating a settlement with both insurance companies under each of their respective insurance policies. When the parties were unable to reach any settlement, the plaintiff filed an action on September 3, 1976, against both insurance companies, praying for $25,000 from each of them. On April 1, 1977, the plaintiff amended his petition, adding A. R. Berry and Dean C. Pearson, doing business as Northeast Nebraska Insurance Agency, as defendants. On or about October 31, 1977, the plaintiff settled with State Farmers for $18,000 and later released it from all further claims and causes of action. The release is made part of the record, but was not admitted into evidence because of the possible prejudicial effect of permitting the jury to learn of the amount of the settlement. On July 11, 1978, the plaintiff successfully moved to separately docket his cause of action against the agents, Berry and Pearson, and the principal insurer, Iowa Mutual. In his separate petition the plaintiff prayed for damages against the agents in the amount of $78,446.80 and against Iowa Mutual in the same amount, and also prayed for reformation of the insurance policy to reflect $80,000 of coverage. On November 20, 1979, the plaintiff entered into an agreement with Iowa Mutual, releasing it from all further claims and causes of action in consideration of $25,000, the face amount of the policy, which release was testified to but was not admitted in evidence on plaintiff's motion in limine. The case proceeded to trial against Berry and Pearson, doing business as Northeast, then the sole defendants under an amended and separate petition filed by plaintiff, and the jury returned a verdict for the plaintiff in the amount of $60,000. The trial court, sua sponte, reduced the judgment by $50,000, apparently on the basis of the face value of the two policies under which the plaintiff settled.

In their brief on appeal to this court, the defendants have set out 12 separate assignments of error, contending that the court erred (1) in allowing the plaintiff to file separate petitions against Iowa Mutual and these defendants; (2) in overruling defendants' demurrer as amended, based upon the contention that the statute of limitations had run against this action; (3) in failing to sustain defendants' motion for summary judgment; (4) in setting aside its order dismissing the petition of the plaintiff for failure to produce certain requested documents; (5) in sustaining plaintiff's oral motion in limine restricting the defense from mentioning settlement with State Farmers and Iowa Mutual; (6) in allowing the testimony of a certain witness with regard to damages; (7) in admitting into evidence exhibit 5; (8) in overruling defendants' motion to dismiss or, in the alternative, for a directed verdict at the end of plaintiff's case in chief; (9) in giving instruction Nos. 2, 3, 4, 6, 7, 8, 9, 10, and 11 to the jury; (10) in overruling defendants' motion to dismiss or, in the alternative, for a directed verdict after all evidence was adduced; (11) in overruling defendants' motion for judgment notwithstanding the verdict; and (12) in overruling defendants' motion for a new trial.

While it appears that at least some of the foregoing assignments of error are possibly meritorious, we believe that it is possible to completely dispose of this appeal on the ground that the settlement of the plaintiff with Iowa Mutual, and plaintiff's release given to Iowa Mutual, had the effect of also releasing the defendants in this appeal, absolving them from all liability to the plaintiff for any negligence on their part in failing to obtain the proper insurance coverage and in failing to provide Iowa Mutual with the proper and correct information to be included in the policy issued to the plaintiff by Iowa Mutual.

This case was tried and submitted to the jury on the amended and separate petition filed by the plaintiff on September 10, 1980, the second amended answer to that petition filed by the defendants on October 30, 1980, and the reply of the plaintiff to defendants' amended answer. As previously stated, the amended and separate petition against the defendants Pearson and Berry is based upon allegations of negligence alone. After setting out the background facts previously recited, the plaintiff alleges specific acts of negligence on the part of the defendants and alleges that as a direct and proximate result of their failure to provide the plaintiff with the coverage which Berry assured him he had, the plaintiff was damaged in the amount set forth in the petition. In defendants' second amended answer to plaintiff's petition, they set out numerous defenses to the allegations contained therein, and further specifically state: "Further answering and as an affirmative defense to the Amended and Separate Petition filed herein by the plaintiff, defendants allege that the defendants herein are and were at all times material hereto the duly authorized agent of Iowa Mutual Insurance Company and not the agents of the insured plaintiff; that consequently the acts of the defendants are the acts of the Iowa Mutual Insurance Company; that because of the aforesaid principal-agent relationship the dismissal of the principal is the dismissal of the agent; that the settlement, dismissal and release of the principal, Iowa Mutual Insurance Company, amounted to a settlement, dismissal and release of the defendants." They also allege as a defense: "That in his Separate Petition...