Haluka v. Baker

• Decision Date: 27 January 1941
• Citation: 34 N.E.2d 68,66 Ohio App. 308
• Parties: HALUKA et al. v. BAKER.
• Court: Ohio Court of Appeals

34 N.E.2d 68

66 Ohio App. 308

HALUKA et al. v. BAKER.

Court of Appeals of Ohio, Ninth District, Wayne.

January 27, 1941

Syllabus by the Court.

Where a liability insurer, by its policy contract, reserves to itself the right to defend, in the name of the insured, actions to recover for personal injuries or property damage, to employ counsel of its own choosing, to litigate or settle as it sees fit, and the insured is, by the contract nor permitted to interfere with the insurer's handling of the litigation or settlement, but is required to assist and co-operate with the insurer in the investigation, preparation and presentation of the defense, such insurer in settling such litigation without the express consent of the insured or without his subsequent ratification of the insured's handling thereof, acts in its own behalf, and not as the agent of the insured. Under such circumstances, the insured is not personally bound by the agreement of settlement made by the insurer, unless it was expressly authorized or subsequently ratified by him, and he likewise is not bound to pay the amount of the settlement agreed upon.

Lewis, Levin & Cronin, of Youngstown, and Geo. H. Barnard, of Wooster, for appellants.

Weygandt & Ross, of Wooster, for appellee.

STEVENS Judge.

Defendant Baker's automobile came into collision with an automobile driven by John Haluka, in which Haluka's wife, Anna, was riding as a passenger.

As a result of the collision, a suit seeking damages was filed against Baker by each of the Halukas.

Defendant, Baker, was insured against liability for personal injuries and property damage by the Continental Automobile Mutual Insurance Company, of Mansfield, Ohio, which insurance company was represented by the law firm of Beam & Beam, of Mansfield, as general counsel.

Upon the filing of said actions by the Halukas against Baker, all steps in conformity to the policy provisions were taken by Baker, and the firm of Beam & Beam, at the instance of the insurance company, undertook the defense of the actions.

When the actions had matured to the point of being set for trial, a telephone conversation on March 4, 1939, between counsel for plaintiffs and counsel for the insurance company, resulted in an agreement between them that the plaintiffs should receive from the defense the sum of $250 as in full settlement of their claims, and that the defense should pay certain costs which had accrued. On March 4, 1939, L. H. Beam notified defendant that said actions had been settled, and that he (defendant) need not appear for the trial of the cases on the following Monday.

Defendant was consulted by no one concerning the amount of the settlement, and was not advised as to the amount thereof until he received a letter from counsel for plaintiff on August 29, 1939, notifying him that the insurance company had not paid the agreed amount, and giving to him an opportunity to settle the claim for the amount agreed upon between counsel for the insurance company and counsel for plaintiffs.

On June 1, 1939, the insurance company was taken over for liquidation by the Superintendent of Insurance of the state of Ohio.

On September 2, 1939, defendant retained the firm of Weygandt & Ross, of Wooster, as his counsel to represent him in the actions filed by plaintiffs, which actions had not then been dismissed.

On November 13, 1939, the personal injury actions of these plaintiffs was dismissed by their counsel, and on December 6, 1939, the present action, seeking recovery of the agreed settlement amount, was filed against the defendant.

This instant action is, of course, predicated upon the claim that the law firm of Beam & Beam, who, while general counsel for the insurance company, were also counsel of record for defendant, were the agents of the defendant in making said settlement agreement, and that the defendant is accordingly bound by the terms of the agreement, and liable to pay the amount thereof.

The answer of the defendant set up two defenses: First, that he neither made any settlement, with the plaintiffs, nor authorized any one to act as his agent in making any settlement; second, if it should be found that defendant was bound by the settlement agreement negotiated by Beam & Beam, that plaintiffs thereafter elected to and did rescind such agreement, and stood upon their actions for damages against defendant.

The trial court, to which the case was submitted upon an agreed statement of facts and without the intervention of a jury, resolved the issues in favor of defendant.

Appeal on questions of law ensued.

Was the insurance company the agent of defendant in negotiating a settlement, and is the defendant, as principal, personally liable to pay plaintiffs the amount agreed upon as a settlement between counsel for plaintiffs and counsel for the insurance company?

Neither counsel nor the court have found Ohio authority decisive of the questions raised. However, the subject has been considered and decided in other jurisdictions.

One case bearing upon the subject is that of Countryman v. Breen, the judicial history of which case is found in the following citations: 147 Misc. 246, 263 N.Y.S. 603; 241 A.D. 392, 271 N.Y.S. 744; and 268 N.Y. 643, 198 N.E. 536. The facts in that case are almost identical with those here under consideration, except for immaterial procedural questions.

There husband and wife, occupants of the same motor vehicle, were injured in a collision with the automobile of defendant. They instituted separate actions for damages against defendant,...