Farmer Gin Co. v. St. Paul Mercury Indemnity Co

• Decision Date: 16 October 1939
• Docket Number: 33811
• Citation: 186 Miss. 747,191 So. 415
• Court: Mississippi Supreme Court
• Parties: FARMER GIN CO. v. ST. PAUL MERCURY INDEMNITY CO

191 So. 415

186 Miss. 747

FARMER GIN CO. v. ST. PAUL MERCURY INDEMNITY CO

No. 33811

Supreme Court of Mississippi, Division B

October 16, 1939

APPEAL from the circuit court of Madison county HON. JULIAN P ALEXANDER, Judge.

Suit by the Farmers Gin Company against the Saint Paul Mercury Indemnity Company, on public liability policy, for excess of judgment recovered against plaintiff above liability limit fixed in policy. From a judgment for defendant, based on a peremptory instruction, the plaintiff appeals. Affirmed.

Affirmed.

Bob Ray and Vardaman S. Dunn, both of Jackson, for appellant.

The appellee by the terms of its contract undertook, as a duty and service to appellant, the negotiation of settlements.

It is universally conceded by all the authorities that the insurance company must exercise ordinary care in investigating claims, as it is universally conceded that it must exercise such care in the defense of actions. Under the terms of the present contract, the company agrees to negotiate claims as well as to investigate accidents. We respectfully submit that the same rule of ordinary care must be imposed in both connections, and we can perceive no reason why one rule should apply to investigation and another to the negotiation of settlements.

The rule is well settled that the court will take judicial knowledge of the fact that a great majority of claims arising under these policies are settled, and that the percentage of litigated cases is small. The parties must have known this when they executed the contract of insurance here involved.

Douglas v. U.S. F. & G. Co. (N. H. 1924), 127 A. 708, 37 A.L.R. 1477 1483; Bartlett v. Travelers Ins. Co. (Conn. 1933) 167 A. 180; Hilker v. Western Automobile Ins. Co. of Fort Scott, Kansas (Wis. 1930), 231 N.W. 257, 235 N.W. 413; Auto Mutual Indemnity Co. v. Shaw (Fla. 1938), 184 So. 853.

We respectfully submit that appellee owed a duty to exercise reasonable care to negotiate a settlement of the Leach case when the opportunity presented itself, and the jury was warranted on the facts in drawing the inference that appellee was negligent in the performance of its duty in failing to negotiate a settlement within the policy limits.

Douglas v. U.S. F. & G. Co. (N. H. 1924), 127 A. 708, 37 A.L.R., 1477; G. A. Stowers Furniture Co. v. American Indemnity Co. (Texas 1929), 15 S.W.2d 544; Attleboro Mfg. Co. v. Frankford Marine Accident & Plate Glass Ins. Co. (C. C. A. 1st Cir. 1917), 240 F. 573; Universal Auto Ins. Co. v. Culberson (Texas 1932), 54 S.W.2d 1061.

We respectfully submit that appellee, under the terms of the policy involved, owed a duty to exercise the utmost fidelity and good faith in negotiating a settlement when the opportunity presented itself, and that a jury would be warranted on the facts in drawing the inference that appellee, in declining the offered settlement, failed to exercise the requisite good faith.

Hilker v. Western Automobile Ins. Co. of Fort Scott, Kansas (Wis. 1930), 231 N.W. 257, 235 N.W. 413; Wisconsin Zinc Co. v. Fidelity & D. Co., 162 Wis. 39, 155 N.W. 1081, Ann. Cas. 1918C, 399; Auto Mutual Indemnity Co. v. Shaw (Fla. 1938), 184 So. 852; Johnson v. Hardware Mutual Casualty Co. (Vt. 1936), 187 A. 877, 1 A.2d 817; Tiger River Pine Co. v. Maryland Casualty Co. (S. C. 1931), 161 S.E. 491, 170 S.E. 346; Georgia Casualty Co. v. Mann, 242 Ky. 447, 46 S.W.2d 777; McCombs v. Fidelity & Casualty Co. of N. Y. (Mo. 1935), 89 S.W.2d 114; Bartlett v. Travelers Ins. Co. (Conn. 1933), 167 A. 180; St. Joseph Transfer & Storage Co. v. Employer's Indemnity Corp. (Kans. 1930), 29 S.W.2d 215; Maryland Casualty Co. v. Wyoming Valley Paper Co. (C. C. A., 1st Cir. 1936), 84 F.2d 633; Ballard v. Ocean Accident & Guaranty Co. (C. C. A., 7th. Cir., 1936), 86 F.2d 449.

An insurance company is bound, in the good faith performance of its contract, to exercise that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business, were he investigating and adjusting claims.

Hilker v. Western Automobile Ins. Co., 204 Wis. 1, 231 N.W. 257, 235. N.W. 413.

Watkins & Eager, of Jackson, for appellee.

The provision of the policy contract extending to the insurer the option to settle imposes no absolute duty to do so.

Georgia Casualty Co. v. Cotton Mills Products Co., 159 Miss. 396, 132 So. 73.

Appellant's allegation of bad faith and fraud is unsupported by the evidence, and but the mere erroneous conclusion of the pleader.

Jackson Steam Laundry v. Aetna Casualty & Surety Co., 156 Miss. 649, 653, 126 So. 478; Home Mutual Fire Insurance Co. v. Pittman, 111 Miss. 420, 425, 71 So. 739.

This brief would be extended beyond all reasonable proportions if all of the cases of other courts which follow Your Honors in the Georgia Casualty Company case were cited and quoted from. We therefore have endeavored to select a representative number of the expressions of the courts of other jurisdictions which are in accord with this court's previous decision, and which unquestionably represent the recognized majority rule supported by the great weight of authority in this country.

Wynnewood Lumber Company v. The Travelers Insurance Company, 173 N.C. 269, 91 S.E. 946; Rumford Falls Paper Company v. The Fidelity & Casualty Company, 92 Me. 574, 43 A. 503; City of Wakefield v. Globe Indemnity Company, 246 Mich. 645, 225 N.W. 643; Brazil v. Maryland Casualty Co., 210 N.Y. 235, 104 N.E. 622; Levin v. New England Casualty Company, 166 N.Y.S. 1055; Mendota Company v. New York Indemnity Company, 169 Minn. 377, 211 N.W. 317; Georgia Casualty Company v. Mann, 242 Ky. 447, 46 S.W.2d 777; New Orleans & C. R. Co. v. Maryland Casualty Company, 6 L.R.A. (N.S.), 562, 38 So. 89; Auerbach et al. v. Maryland Casualty Company, 140 N.E. 577, 579, 236 N.Y. 247; Neuberger v. Preferred Accident Insurance Co., (Ala.), 89 So. 90; Kingan & Co., Ltd. v. Maryland Casualty Company, 65 Ind.App. 301, 115 N.E. 348; Streat Coal Co. v. Frankfort General Ins. Co., 237 N.Y. 60, 142 N.E. 352; Best Building Company v. Employers' Liability Assurance Corp., 247 N.Y. 451, 160 N.E. 911; Schmidt & Sons Brewing Co. v. Travelers' Insurance Co., 244 Pa. 286, 90 A. 653, 52 L.R.A. (N.S.) 126; 34 A.L.R. 730; 43 A.L.R. 326; 71 A.L.R. 1485; 37 A.L.R. 1485.

Appellant by its own affirmative action ratified and approved every act of appellee, and all subsequent to the rendition of the judgment in the Leach case.

OPINION

McGowen, J.

This case is the sequel of Farmers Gin Company v. Leach, 178 Miss. 784, 174 So. 566, in which case Mrs. Leach recovered on a jury verdict and judgment for $ 7, 500 for the death of her husband against the Farmers Gin Company, and a statement of that case is found in the above mentioned report. The record in that case was made a part of the record in this case. In the case at bar, the Farmers Gin Company sued the Saint Paul Mercury Indemnity Company upon its contract of public liability insurance for the excess of that judgment above the liability limit of $ 5, 000, fixed in the insurance contract which the indemnity company had issued to the gin company. On the trial of the case now before us, the court below gave a peremptory instruction for the indemnity company, and appeal is prosecuted here by the insured, Farmers Gin Company.

In the case of Georgia Casualty Company v. Cotton Mills Products Company, 159 Miss. 396, 132 So. 73, the Court had before it a policy of insurance which cannot be differentiated from the policy in suit in this case. However, the allegations in this case on separate counts is that the indemnity company was negligent because it did not settle the case within the limits of the policy, and, upon the same facts charged, that the indemnity company was guilty of fraud.

In the Georgia Casualty case, supra, we had before us a policy issued to an employer covering liability to employees for injuries received in the course of employment, which required the insurer to defend a suit against an employer in the name and on behalf of the assured, required the insurer to pay all expenses incurred, including court costs assessed against insured, regardless of policy...