Gibbs v. Lumbermen's Mut. Cas. Co.

• Decision Date: 05 June 1934
• Citation: 173 A. 372
• Court: New Hampshire Supreme Court
• Parties: GIBBS v. LUMBERMEN'S MUT. CASUALTY CO.

173 A. 372

GIBBS

v. LUMBERMEN'S MUT. CASUALTY CO.

Supreme Court of New Hampshire. Merrimack.

June 5, 1934.

Transferred from Superior Court, Merrimack County; Young, Judge.

Action of assumpsit by E. Payson Gibbs against the Lumbermen's Mutual Casualty Company. Directed verdict for defendant, and plaintiff brings exceptions.

Judgment for defendant.

Assumpsit, upon a policy insuring the plaintiff's automobile liability. Trial by jury. In an accident he injured three persons who brought suits which were tried together and which the insurer defended. Before the trial the husband of one of the persons injured brought suit for his consequential damages. It was not then returnable, and his proposal for its entry in advance of the return date in order to permit its trial with that of the other suits was declined. Thereafter the plaintiff, upon service of the writ in the suit, took the copy to his personal attorney, who sent it to the attorneys representing the insurer in the other suits. Without informing the insurer of the suit, but assuming that the policy covered the liability and that they were authorized to defend the suit in the insurer's behalf, they conducted its defense. After the husband obtained judgment, they notified the insurer. Liability to pay the judgment was disclaimed on the grounds that the insurer had no notice of the suit in accordance with the terms of the policy and that the policy did not cover the husband's loss.

When the other suits were brought, the plaintiff notified the insurer, and he was referred to one of its claim agents. He took the copies of the writs served on him to the agent who took him to the attorneys who defended the suits. They had no authority to act for the insurer except in cases for which they were specially engaged. They were under no retainer from the insurer and were at liberty to bring suits on claims protected by its policies.

The policy indemnifies the insured for his liability "on account of bodily injuries * * accidentally suffered or alleged to have been suffered by any person or persons as a result of the * * * use * * * of the automobile described" therein. It contains a clause that the insurer will investigate cases covered by the policy, conduct negotiations for the settlement or in contesting any claims in such cases, and defend or settle suits for such claims; the insurer being constituted the insured's agent therefor. Under a heading of General Conditions it is required that the insured shall give immediate written notice to the insurer of any accident covered by the policy, like notice of any claims, on account of the accident, and that, in the event of suit, he shall immediately forward to the insurer the summons or process served on him.

Other facts appear in the opinion.

The plaintiff excepted to a directed verdict for the defendant.

Robert W. Upton and Laurence I. Duncan, both of Concord, for plaintiff.

Murchie, Murchie & Blandin, of Concord, (Alexander Murchie, of Concord, orally), for defendant.

ALLEN, Justice.

If the plaintiff may charge the defendant with conducting the defense of the action, the issue of coverage may not now be litigated. The defendant as insurer had no interest to defend unless there was coverage, and this was a preliminary question to be determined. American Motorists Ins. Co. v. Central Garage (N. H.) 169 A. 121, and cases cited. If held to have been represented by the defending attorneys in the trial, its "binding acknowledgment" of coverage would appear to follow. When the action went to trial, it knew the facts upon which its position against coverage stood. If it defended, it did so "without reservation, with a full knowledge of the facts, and without excusing circumstances," and thus was estopped from denying that the policy gave insurance for the claim defended against. Sauriolle v. O'Gorman, 86 N. H. 39, 49, 163 A. 717. Its defense of the action, without seeking prior determination of the issue of coverage, would therefore dispose of the issue in the plaintiff's favor.

The issue of notice of the action affects the defendant's liability in two respects. Primarily, if there was notice, the issue of coverage would now be presented provided the defendant did not conduct the defense of the action. If held to have defended, then it became estopped from asserting noncompliance with the requirement of notice in the manner the policy prescribed. Wilson v. Insurance Co., 77 N. H. 344, 91 A. 913. Notice as an issue is to be given the same procedural treatment as coverage and other matters on which the insurer's right or duty to defend depends. In a secondary way, upon the issue of the defendant's chargeability for conducting the defense, the issue of notice has relevant bearing. Notice given in a manner authorized would be a material if not controlling circumstance of the situation in its support of the claim that the defendant held the defending attorneys out to the plaintiff as authorized to carry on the defense in its behalf.

Actual authority from the insurer to the attorneys to receive notice and to conduct the defense is not a conclusion the evidence permits. To support the claim of it reliance is placed upon the insurer's payment of a bill rendered by the attorneys for services in the other actions with an alleged inclusion in the bill of two small items for services in the suit. When the bill was made up, it was for an amount for the services in their entirety. It did not specify the amount of each of the items, and whether it showed them at all is doubtful. "The bill that goes in is the total of all these various items, and the bill goes in as a total." And it is not clear that, if the bill did show the items, they were stated in a manner to indicate their reference to the suit and not to the other actions. The attorneys intended to cancel all charges in the suit, and, if any remained, it was by mistake. In the light of the defendant's...