Frank B. Connet Lumber Co. v. New Amsterdam Cas. Co.

• Decision Date: 09 August 1956
• Docket Number: No. 15521.,15521.
• Citation: 236 F.2d 117
• Parties: FRANK B. CONNET LUMBER COMPANY, a corporation, Appellant, v. NEW AMSTERDAM CASUALTY COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

236 F.2d 117 (1956)

FRANK B. CONNET LUMBER COMPANY, a corporation, Appellant, v. NEW AMSTERDAM CASUALTY COMPANY, a corporation, Appellee.

No. 15521.

United States Court of Appeals Eighth Circuit.

July 16, 1956.

Rehearing Denied August 9, 1956.

John Murphy, Kansas City, Mo. (R. Carter Tucker and Tucker, Murphy, Wilson & Siddens, Kansas City, Mo., on the brief), for appellant.

Henry W. Buck, Kansas City, Mo. (W. H. Hoffstot, John R. Gibson, and Morrison, Hecker, Buck, Cozad & Rogers, Kansas City, Mo., on the brief), for appellee.

Before SANBORN, WOODROUGH and JOHNSEN, Circuit Judges.

SANBORN, Circuit Judge.

This is an appeal by the Frank B. Connet Lumber Company, plaintiff, from a judgment for the New Amsterdam Casualty Company, defendant (appellee), entered upon a directed verdict in an action based upon the claim that the defendant, as the insurer of the plaintiff under an automobile liability policy, with a limit of $15,000 for the bodily injury of one person, was guilty of bad faith in the management of the defense of a personal injury action brought by Adolph T. Reimers against the plaintiff, and that, as a result, the plaintiff had been obliged to pay $20,000 of a $35,000 judgment recovered against it by Reimers. The plaintiff asked for both actual and punitive damages. The instant action originated in the Circuit Court of Jackson County, Missouri, and was removed by the defendant to the United States District Court for the Western District of Missouri on the ground of diversity of citizenship.

The event which gave rise to this controversy occurred on August 10, 1949, a clear, bright day, at about 11:30 in the forenoon, on Chelsea Avenue or Trafficway in Kansas City, Kansas, when a 1931 Ford four-door sedan automobile, being driven easterly by Reimers, came into collision with pieces of lumber protruding from the back of an International truck of the plaintiff being backed by David Masters, an employee of the plaintiff, from its lumber yard into the Avenue in a southerly direction.

The truck involved in the collision was covered by an automobile liability policy issued to the plaintiff by the defendant on March 22, 1949. The policy obligated the defendant, subject to the limits of liability specified, "To pay on behalf of the insured all sums which the insured plaintiff shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile." The policy also required the defendant to "defend any suit against the insured alleging such injury * * * and seeking damages on account thereof even if such suit is groundless, false or fraudulent"; and provided that "the company defendant may make such investigation, negotiation and settlement of any claim or suit as it deems expedient."

The defendant received notice of the accident on the day it occurred or on the next day. The law firm of Morrison, Nugent, Berger, Hecker & Buck, of Kansas City, Missouri, handled such matters for the defendant in that locality. In the investigation of the accident by that firm, a statement was, on August 11, 1949, obtained from David Masters, the driver of the truck, who stated that he was, at about 11:30 a. m. on August 10, 1949, backing the truck south out of the south alley of the plaintiff's lumber yard; that the truck was loaded with about 65 pieces of 2" × 8" and 2" × 6" boards, the longest of which were 26 feet, with a red flag on the end; that these pieces extended about 12 feet beyond the bed of the truck; that he stopped to let a streetcar, going east on Chelsea, pass the truck; that he then looked to see if there was other traffic; that he saw none; that he was backing the truck at the rate of three to five miles per hour; that he heard the lumber strike a car; that he stopped, pulled the truck off the street, and went to the car that had been hit; that the Reimers Ford had been on the streetcar track; that there were no skid marks; that he (Masters) heard no squeal of brakes or tires and no horn; that the Ford was struck on the left side; that the main damage was a broken left rear window of the Ford; and that one piece of lumber, 2" × 6" × 26', was broken.

A statement was also obtained from Frank Wooldridge, Sales Manager and Secretary-Treasurer of the plaintiff, who stated that, through the window of the lumber yard office, he saw the truck backing out of the lumber yard; that he noticed a Ford automobile driving southeast on Chelsea; that it was not traveling fast; that the Ford just kept going as if the driver did not see the truck; that the driver made no attempt to swerve or turn; that the Ford car was struck on the left side by the lumber protruding from the rear of the truck; that he (Wooldridge) went to the scene of the accident; that the driver of the Ford remained in the car until it had been pushed to the curb to clear the streetcar tracks.

A report of the automobile accident on a form of the defendant, dated August 11, 1949, and signed "Dave Masters, By: Morrison, Nugent, Berger, Hecker & Buck," states, in substance, that the accident was unavoidable; that the name of the injured person was Adolf "Reimer"; that his ribs were "X-rayed and found to be all right — Possible injury to spine"; that he was taken to Bethany Hospital; that Doctor Feehan was called; that Reimers "said he honked his horn." The report contains this statement in conclusion: "Assured was backing lumber truck out of driveway. Truck was loaded with 26 ft. lengths of lumber. Assured did not see anyone coming and backed over half way across Garfield Avenue evidently meaning Chelsea Avenue and the lumber struck claimant's car, breaking the left rear window of claimant's car and the lumber striking claimant in the ribs."

Within forty-eight hours from the time the accident occurred, Reimers was interviewed at the hospital. The unsigned report of the interview indicates that Reimers said that he was driving easterly upon Chelsea, going about 15 miles per hour on the right-hand side of the street, about 8 feet from the right curb; that he was following a streetcar; that the truck was backing out of a lumber yard on the north side of the street; that the truck had some long timbers on it; that the truck driver stopped for the streetcar; that he (Reimers) was 15-20 feet behind the streetcar, which was going at the same speed as his car; that he kept on going; that after the streetcar passed the truck, it started backing again; that he did not actually see the truck until just before the collision; that the streetcar, which was on his left, blocked his view; that when he saw the truck he tried to swerve to the right; that the timbers hit the left side of his car, his left arm, shoulder and side; that his arm and shoulder were black and blue; that the impact threw him over into the right front seat and knocked the wind out of him; that his car stopped "in its tracks"; that the police investigated the accident, and took him to the hospital; that his back was injured and pained him "a lot"; that his neck was stiff and both legs felt numb; that the truck driver said he did not see Reimers.

The report of the police of Kansas City, Kansas, who investigated the accident, was to the effect that Reimers' left arm was bruised below the elbow; that the left side of his chest was badly bruised; that his 1931 Ford sedan was driveable; that his age was 29; that he had 15 years driving experience; that Reimers said he did not see the truck backing, because of a streetcar; that the truck driver said he was backing south across Chelsea and did not see the Reimers car; that Reimers was taken to the Police Emergency Hospital and treated by Doctor Williams.

A report of Doctor Williams, dated August 12, 1949, indicates that Reimers had "Bruises to left arm and left side, with possible fracture"; that he was given an "adhesive dressing over rib," and sent home. The record shows that, while under treatment by Doctor Feehan, Reimers was in the hospital for four days in August immediately after the accident, and was again hospitalized briefly in November, 1949, for observation and a spinogram.

Reimers was employed as an outside bill collector by the Mace-Jones Company of Kansas City, Kansas. On August 22, 1949, that company, which was insured for workmen's compensation liability by the Employers Mutual Casualty Company of Des Moines, Iowa, reported the accident to the Workmen's Compensation Commissioner of Kansas, stating that Reimers had sustained injury to his back and chest, and had not returned to work. A "Physician's Report Blank," furnished the Commissioner by Doctor Feehan, stated, in regard to the nature and extent of Reimers' injury: "Pain in cervical area. Pain and considerable swelling of the left elbow. Pain in entire left side. Difficult to take a deep breath. Pain in lumbosacral and dorsolumbar spine. Expectorated blood." The Doctor's diagnosis, as shown in the report was: "1. Bruised left elbow. 2. Severe injury to dorsolumbar spine. 3. Intervertebral disc?" The Doctor also reported that Reimers would need further medical treatment for an indefinite period.

Reimers on January 12, 1950, filed an application for workmen's compensation with the Kansas Workmen's Compensation Commissioner, stating that while he was making calls as a bill collector his automobile was struck by a backing truck loaded with lumber, and that he sustained "Injury to left arm; injury to chest; injury to back resulting in herniated and protrusion of disk disc in the lumbar spine."

From the transcript of the evidence taken at a hearing before the Commissioner on February 21, 1950, at which Reimers, his employer and its insurer were all represented by counsel, it appears that Reimers, in answer to the question, "How did your accident occur, briefly?", testified: "I was going down Chelsea Trafficway on a truck sic and the truck backed out and hit...