Hemmer-Miller Dev. Co. v. Hudson Ins. Co.

• Decision Date: 17 October 1934
• Docket Number: 7616
• Citation: 63 S.D. 109,256 N.W. 798
• Parties: HEMMER-MILLER DEVELOPMENT CO., Respondent, v. HUDSON INSURANCE CO. OF NEW YORK, Appellant.
• Court: South Dakota Supreme Court

63 S.D. 109

256 N.W. 798

HEMMER-MILLER DEVELOPMENT CO., Respondent, v. HUDSON INSURANCE CO. OF NEW YORK,

Appellant.

South Dakota Supreme Court

Appeal from Circuit Court, Fall River County, SD

Hon. H. R. Hanley, Judge

#7616—Affirmed

Paul E. Martin, W. P. Rooney, Hot Springs, SD

Attorneys for Appellant.

E. B. Adams, H. M. Lewis, Hot Springs, SD

Attorneys for Respondent.

Opinion filed Oct 17, 1934

ROBERTS, P. J.

Plaintiff is the insured in a hail insurance policy issued by defendant insurance company. On an appeal taken by the defendant, a judgment entered for the plaintiff was re versed by the decision of this court reported in and the cause was remanded for new trial. The policy was construed to be open, and not valued, preventing recovery thereon without proving the actual value of crops damaged.

Thereafter, the trial court granted a motion made before trial for leave to file an amended complaint, based not upon the policy of insurance, but on an agreement of settlement alleged to have been made between the parties. The first assignment is that the trial court erred in permitting such amendment. The contention of counsel is that plaintiff having brought an action upon the policy and having attempted to establish damages by offering proof of percentage of loss under the assumption that the policy was a valued policy cannot now, recover upon an agreement of settlement. Permitting or denying amendments to be made to pleadings is largely within the trial court’s discretion. Cornell v. Johnson, 241 N.W. 740. An appeal and a reversal of a case does not preclude amendments to the original complaint substituting an entirely different theory of the case from that upon which the case was first submitted. Tuthill v. Sherman, 165 N.W. 4. The motion of the plaintiff to amend was before trial, and the defendant was given opportunity and did in fact interpose an answer to the amended portions of the complaint. The trial court did not err in granting the amendment.

Plaintiff contends that the agreement on which this action is brought was made with the plaintiff through an agent of an insurance adjustment agency which was employed by the defendant company to adjust losses. Defendant company denied that the adjuster ever made an agreement to pay a named sum in settlement of plaintiff’s loss, and if the adjuster did make such an agreement it was not binding on the defendant for the reason that the adjuster had no authority to make such an agreement for the company.

The evidence shows that Hedwall-Sundberg Company, was an agent of the defendant company for the state of South Dakota with authority to adjust and settle losses. This company arranged with George M. Steele for an adjustment of the loss. A letter written by the company to Steele reads:

“We have consulted with Jake Nelson regarding having you make this adjustment for the reason first, that it is a large policy, second, that we have confidence in your ability and third, which is confidential, that one half of liability is re-insured in the Continental. You will however, be authorized to represent yourself to the agent and policy holder, so far as your judgment is concerned, as the agent for the Hedwall-Sundberg Company. Please have the loss notice signed by the Claimant, as well as the proof.

“As your company will ultimately pay one-half of loss, we are looking to you to keep the allowance down to the actual amount of damage done by hail only.

“Please return papers to us when the adjustment is completed together with statement of expenses. The assured has wired us to send an Adjuster immediately, but it will be satisfactory with us for you to make the adjustment at a time when in your judgment it will be done to the best advantage.”

There was attached to the letter a blank which was used by the adjuster and is Exhibit 5 in the record. This exhibit, under the heading “Hail. Adjustment Proof of Loss,” contains this statement:

“Storm which occurred on the 26th day of July 1926, about the o’clock M., loss was sustained to the growing crops described in your policy No. 10059 insuring the following described crops from the hour of 12 o’clock Noon M., on the 12th day of June, 1926. On all int. in 140 acres of Alfalfa in Sec. 19 T 11 R. 4 not to exceed $14 per acre. Amt. $1960. ... Actual loss or damage by Hail under the terms of said policy has been sustained as follows: 100% of $1960 on 140 acres of Alfalfa Sec. 19 T. 11 R. 4 at $14 (1-3) per acre. $653.33 ... Net amount claimed for last storm $7,635.72. ... I hereby agree to accept under the above described policy said net amount claimed, in full payment, compromise and satisfaction for loss and damage as aforesaid and further agree that said amount covers in full all loss and damage sustained previous to this date.”

Following the signature of the plaintiff, the exhibit contains this statement signed by the adjuster: “I hereby certify that I have made a careful examination of the above insured grain and believe that the amount claimed herein is just and fair and no more than assured is entitled to receive.”

John G. Hemmer, president of the plaintiff company, testified that he and Lou O’Connell were present when Steele appeared on the premises and made an adjustment of the loss; and that Steele agreed that the defendant company would pay to the plaintiff the amount stated in the proof of loss, Exhibit 5. Steele testified that he prepared the proof of loss; that he had no authority to make agreements of settlement for defendant; and that he made no promise or agreement that the defendant would pay plaintiff the amount of the adjustment.

Though there is conflict in the evidence, yet we are of the view that there was evidence sufficient to justify the jury in finding that a promise was made by the adjuster to pay the claim. It is not contended that Exhibit 5 in itself constituted a promise on the part of the defendant company to make payment, or that where a loss has occurred and the insured and the adjuster agree upon the amount of the loss, the law will imply a promise to pay. But it is claimed by the plaintiff that the adjuster promised to pay the amount of the adjustment. It does not appear from the record that Steele had express or specific authority to make a settlement. Without proof of such authority, the trial court in his instructions to the jury seems to have assumed that authority to settle came within the scope of the authorization to adjust the loss. This presents the principal contention. May an assured, having no notice either actual or constructive to the contrary, assume that the agent who has been directed by the insurer to make an adjustment and held out to the insured as an agent possessing the powers of an adjuster bind the insurer to the terms of an agreement of settlement?

Where insured relies upon the act...