Fullerton v. U.S. Casualty Co.

• Decision Date: 20 May 1918
• Docket Number: 31992
• Citation: 167 N.W. 700,184 Iowa 219
• Parties: ROBERT FULLERTON, Appellee, v. UNITED STATES CASUALTY COMPANY, Appellant
• Court: Iowa Supreme Court

167 N.W. 700

184 Iowa 219

ROBERT FULLERTON, Appellee, v. UNITED STATES CASUALTY COMPANY, Appellant

No. 31992

Supreme Court of Iowa, Des Moines

May 20, 1918

REHEARING DENIED SEPTEMBER 20, 1918.

Appeal from Polk District Court.--LAWRENCE DEGRAFF, Judge.

Affirmed.

Sullivan & Sullivan, for appellant.

Nourse & Nourse, for appellee.

WEAVER J. PRESTON, C. J., GAYNOR and STEVENS, JJ., concur.

OPINION

THE opinion sufficiently states the case.--Affirmed.

WEAVER J.

On July 14, 1913, the defendant, a liability insurance company, by its duly authorized agent, issued a policy of insurance to Robert Fullerton, plaintiff herein, indemnifying him for the period of one year against loss arising or resulting from claims for damages on account of bodily injuries sustained or alleged to have been suffered by any person or persons by reason of the ownership, maintenance, or use of a certain described Pierce-Arrow automobile, kept and used by said owner for the purpose of business calls and pleasure. Among other things, the policy provided that, in case any suit was brought to enforce a claim of that nature, plaintiff would promptly give notice thereof to the company, which would assume and conduct the defense in plaintiff's name, but at its own cost, whether the claim so sued upon was groundless or not. The company also reserved to itself the right to settle any claim at its own cost at any time. When the policy was issued, it was known and understood by the company that plaintiff did not himself drive or operate the car. At that time, and at the time of the accident hereinafter mentioned, plaintiff was a resident of the city of Des Moines, and head of a family. He had a son and daughter, both of whom had arrived at their majority, but were still living at home, as dependent members of his family. On July 3, 1914, while the policy was in full force, plaintiff's said son, Donald P. Fullerton, accompanied by his sister and others, was driving the car upon the streets of Des Moines, for pleasure. A collision occurred between said vehicle and a buggy occupied by one Hockenburg and wife and a friend, Mrs. Jacobson, with the result that the persons last mentioned, or some of them, were injured. The Hockenburgs having made claim for damages, the insurance company came forward and took charge of the negotiations for a settlement, which was finally effected for the sum of $ 1,250, paid by the insurer.

Mrs. Jacobson also presented a claim for damages on her own account; and for a considerable period, negotiations were carried on between her and the appellant, looking to an adjustment of such claim without litigation, but no agreement upon the amount to be paid was reached. In December, 1914, Mrs. Jacobson brought suit upon her claim in the district court of Adair County, naming as defendant in such action Donald P. Fullerton, son of the plaintiff in this action. Plaintiff promptly gave notice of this action to the insurance company, which caused its own attorneys, Sullivan & Sullivan, to appear and assume conduct of the defense. As the district court of Polk County afforded a more convenient venue for all parties, Sullivan & Sullivan requested counsel for Mrs. Jacobson to dismiss the suit in Adair County and begin it anew in Polk County, agreeing that, if this was done, they would appear thereto for the defense, and accept or waive service of formal notice. This agreement was made and performed. The action in Adair County was dismissed, and petition filed in the district court of Polk County in time for the January, 1915, term of the district court. Service of notice was accepted, December 23, 1914. On December 30, 1914, Sullivan & Sullivan, appearing for the defense, filed a motion to require plaintiff to give a cost bond. On February 18, 1915, and before the issues had been settled, Sullivan & Sullivan withdrew their appearance for the defense, and appellant thence-forward took no part in said action. No explanation of such withdrawal appears in the record of that case; but the position taken by the appellant in the case at bar, as hereinafter shown, indicates that it acted on the theory that the claim asserted by Mrs. Jacobson in that action was not one against which the policy of insurance afforded any indemnity. When the defense had thus been abandoned by appellant, plaintiff herein employed other counsel, Nourse & Nourse, to appear in said cause, and later, by their assistance, effected a settlement by the terms of which Mrs. Jacobson accepted $ 1,500, paid by the plaintiff herein in full satisfaction and discharge of her claim for damages against both Robert Fullerton and Donald P. Fullerton. Thereafter, plaintiff brought the present action in equity, to correct the policy issued by the defendant, and to recover thereon the amount expended in satisfying the Jacobson claim, and in payment of counsel fees for services in that case after the defense thereof had been abandoned by the company.

In this petition, plaintiff sets out the facts substantially as hereinbefore related. He further avers that the policy was applied for and issued with the mutual agreement and understanding that it was to cover all damages and claims for damages resulting from injury to any person by the operation of said car when driven by his servant or any member of his family, and "if the contract as written is found not to be fairly susceptible of that construction, then it does not express the real contract between the parties, and it should be reformed or corrected to express such intent." The defendant denies the allegations of the petition, in so far as it charges any failure of the policy to express the contract of insurance, and denies that it has in any manner failed to perform its agreement. It admits the issuance of the policy sued upon, but alleges that the injuries to the Hockenburgs and Mrs. Jacobson occurred while the car was being driven by Donald P. Fullerton, plaintiff's adult son, and that such injuries created no liability on the part of the plaintiff herein against which the policy undertook to indemnify him. As a further answer, it is alleged that, if plaintiff paid damages to Mrs. Jacobson, as alleged, it was a purely voluntary act on his part, and defendant is under no contract obligation to reimburse him for such expenditure.

Trial to the court upon the issues thus joined resulted in plaintiff's favor, and a decree for the relief prayed was entered. The defendant appeals.

I. The first proposition argued by counsel is that plaintiff failed to make a case for reformation of the policy of insurance. It is fundamental, of course, that, to be entitled to equitable relief of this kind, the party asking it must show, not only that the alleged mistake occurred, but also that it was mutual. In other words, it must be made to appear that, by mistake, the contract as written fails to express the mutual intent of the parties; and if the mistake be denied, the fact must be established by a clear and satisfactory preponderance of the evidence. Basing its contention upon the law as thus stated, appellant argues that no mutual mistake appears to have been made in the terms of the policy as written.

If plaintiff's case were left to rest solely upon his own unaided testimony as a witness on the trial below, this objection would have to be held good; for, in some respects, his statements of what occurred when the insurance was taken out are vague and uncertain; but, taking all the circumstances attending that transaction together with the practical interpretation put upon the policy by the company, as well as by plaintiff, from the time of its issuance down to the date when the company withdrew from the Jacobson suit, there is little room for doubt that both considered and treated the contract as providing indemnity against claims for damages arising from or caused by the operation of the plaintiff's car in the course of its ordinary use, as specified in the policy, without regard to whether the car was being driven by the plaintiff himself or by any other member of his family, acting with his permission or by his authority. While plaintiff does not attempt to state the language used in the negotiations between him and the defendant's agent, he says the subject was discussed, and that he understood that the policy to be issued would cover the use of the car by the members of his family; and that, if any accident occurred in such use, the company undertook the defense of damage claims so arising. The agent does not deny that such was the mutual understanding. He speaks of his general custom to have the terms of insurance issued by him clearly understood, but says: "I don't know what was said at this particular time. I can't remember." Further, with reference to the writing out of the policy as issued, he says:

"I signed Exhibit A (the policy), and the blanks were filled out by a clerk under my direction. That is, I gave the policy writer the information to fill out the blanks. Q. And did that, as you understand it, cover the items that you gave him or her to put in the policy as expressed in this exhibit? A. I think so. Q. And this, at the time, expressed what you thought the policy ought to be? A. At the time the policy was issued. Q. That is what you intended to have in the policy, just as it appears now? A. At the time the policy was issued."

It does not even appear that the witness read the policy, after it was filled out by his clerk. He does say that he was told, or that he knew the fact to be, that Mr. Fullerton did not himself drive or operate the car, and that he so informed the company; but aside from this, he states nothing from his own independent recollection as to the terms discussed between him and the plaintiff. The policy itself...