Henry v. Nationwide Insurance Company

• Decision Date: 31 March 1956
• Docket Number: Civ. No. 838.
• Citation: 139 F. Supp. 806
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Earl HENRY, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant.

139 F. Supp. 806

Earl HENRY, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant.

Civ. No. 838.

United States District Court E. D. North Carolina, Raleigh Division.

March 31, 1956.

Doffermyre & Stewart, Dunn, for plaintiff.

Smith, Leach, Anderson & Dorsett, Raleigh, Salmon & Hooper, Dunn, for defendant.

GILLIAM, District Judge.

This action was brought by plaintiff who was insured by defendant against liability for personal injuries and property damages arising out of the use of a certain automobile, to recover the balance due on a judgment obtained against him for such personal injuries and property damage arising out of use of the covered vehicle. The defendant has paid on the judgment the full amount of its coverage, but the plaintiff avers that the defendant is liable to him for the remainder because of its bad faith or negligence in not accepting a compromise offer of settlement within the limit of the coverage. By consent the case was heard without a jury.

Three days after the collision which eventually gave rise to this suit, a trainee-adjuster representing the defendant, plaintiff's insurance carrier, visited Hamilton, who was injured and damaged, in the hospital, at which time the adjuster became convinced that liability was clear and that the injuries to Hamilton were serious, though, of course, at that time unpredictable as to the extent, whether permanent or temporary, or what the medical expenses would be. However, I find that he should have known that such injuries measured in dollars and cents probably would exceed the limit of his Company's liability for personal injuries under its policy.

The adjuster and Hamilton differ about what conversation occurred, but the adjuster's version is strongly supported by his written report to his Company made just afterwards. According to the former's version, Hamilton offered to settle his claim against Henry (and the insurance company) upon payment of $1,000 and all medical expenses and damage to his automobile, while Hamilton testified he agreed to accept $1,000 in full settlement. In any event, the adjuster, who was without authority to agree to any settlement, so advised Hamilton, and further stated he would return with some one who had such authority. Three days after the first interview between the adjuster and Hamilton, the trainee-adjuster accompanied by an experienced adjuster for defendant authorized to settle visited Hamilton at the hospital, and at that time, according to both adjusters, Hamilton was told they had come to settle the claim in accord with his offer made at the previous meeting; and, according to both adjusters, Hamilton refused to discuss settlement, saying "he was going all the way". On the other hand, Hamilton testified that at the second meeting he renewed his offer to accept $1,000 and that the adjusters rejected it, saying the insurance company would do no more than pay Hamilton's hospital bill and fix his car. Whatever may be the fact with regard to the second meeting, no agreement to settle was reached and finally an action was brought by Hamilton against the plaintiff herein in the Superior Court of Harnett County and the jury awarded damages of $25,300 against plaintiff — $300 for the damage to Hamilton's automobile, and $25,000 for his personal injuries. Judgment accordingly was entered. Thereupon, the defendant herein paid into court for credit on the judgment the sum of $5,300, the full amount of its liability under the policy. The plaintiff has made no payment on the judgment, and owns no property subject to execution.

Following the second meeting with Hamilton when, according to both adjusters, Hamilton refused to talk settlement, the trainee-adjuster kept posted with respect to the condition of Hamilton but made no further attempt to settle the claim with him.

When the action was instituted by Hamilton against Henry, the insurance company (defendant here), in accord with the policy, undertook the defense in behalf of the insured (plaintiff here). Counsel for the insurance company, sensing that the recovery might well be beyond the limit of liability on the part of the company, suggested to the insured that he should have his own counsel in the case. Accordingly, the insured employed counsel, and at the trial was represented by such counsel as well as counsel employed by the insurance company. Upon conference with counsel representing Henry in the action brought against him by Hamilton, the insurance company counsel learned that $7,500 would be accepted in settlement and he thereupon expressed willingness to pay the full amount of the company's liability under the policy, which he was authorized to do. The defendant declined to contribute anything...