Hill v. Grandey

• Decision Date: 04 June 1974
• Docket Number: No. 177-73,177-73
• Citation: 132 Vt. 460,321 A.2d 28
• Parties: W. Michael HILL v. Charles GRANDEY et al.
• Court: Vermont Supreme Court

Page 28

321 A.2d 28

132 Vt. 460

W. Michael HILL v. Charles GRANDEY et al.

No. 177-73.

Supreme Court of Vermont.

June 4, 1974.

Stackpole & Amidon, Stowe, and Peter S. Sidel, Montpelier, of counsel, for plaintiff.

James C. Gallagher, Downs, Rachlin & Martin, St. Johnsbury, for defendants.

Before BARNEY, C. J., and SMITH, KEYSER, DALEY and LARROW, JJ. KEYSER, Justice.

In 1965, one Robert Houle leased his complete poultry farm operation in Morrisville to plaintiff Michael Hill. Mr. Houle had also conducted an off-premises barbecue business, and this was included in the lease. Houle had carried liability insurance coverage of his farm operation through defendant Grandey Insurance Agency with Concord General Mutual Insurance Company (Concord). Through Grandey, Concord issued a similar policy to Hill.

In 1966, an accident occurred in Hill's barbecue operation in Warren, Vermont, as a result of which Hill was sued. Concord instituted a declaratory judgment action (1967 case) to determine its liability for the claim against Hill. The court determined the barbecue operation was an off-premise activity and ruled that Concord was not obligated to defend or liable to pay any judgment against Hill.

Hill then brought this action on the ground of breach of contract and negligence for failure to provide him with liability insurance covering the barbecue business. Concord raised the preliminary issue of res judicata in a motion for summary judgment which the court denied. The court heard the case, made findings of fact, and entered judgment against defendant Concord for the plaintiff to recover $3000.00.

Two issues are raised by defendants' appeal-(1) whether the 1967 case was res judicata and (2) whether the court's finding of breach of contract by defendant Concord and negligence by defendant Grandey are supported by the evidence.

At the time of trial the parties stipulated on the record that the findings of fact made in the 1967 declaratory judgment action 'are deemed facts for the purposes of this case as well as the adjudicated facts for the purpose of this case.' Thus, the 1967 findings of fact became established facts as a part of the record here and were binding on the trial court.

The evidence shows the following facts. Houle leased his business operation known as the Houle Pultry Ranch which produced market eggs and broilers and included a barbecue business (mostly off-premises), and egg routes. Shortly, Hill left word at Mr. Grandey's office that he wanted to see him about liability insurance. When Grandey stopped at the farm, it was a busy time for Hill. He was in a hurry and did not take the time (10 minutes) to discuss any details of insurance with Grandey. Hill made no request except that he wanted the same type of policy that Houle had on his business. Grandey agreed to do so. Hill paid the premium that day and was given a receipt. This was the only meeting the parties had.

Houle had carried his insurance with defendant Concord through Grandey for about ten years, but it never insured the off-premises barbecue operation. Grandey was not shown the lease by Hill and was not acquainted with its terms. Grandey put in force a policy like Houle's for Hill.

The 1967 action is the basis of appellants' present assertion of res judicata. It is contended that the issues raised in the present action were, or should have been, raised and litigated in the 1967 case, and that the appellee should not be allowed to renew his cause by breaking it down into different issues brought against slightly different parties. Grandey was a witness, though not a party, to the 1967 action. The established facts of the 1967 case have been stipulated as part of the record here.

This Court has characterized the doctrine of res judicata as rendering a former judgment an absolute bar to a subsequent action only where the parties, subject matter and the causes of action are identical, or substantially so. McKee v. Martin, 119 Vt. 177, 122 A.2d 868 (1958). In certain actions involving the masterservant relationship, strict identity of parties may not be required. Generally this has been so because the doctrine of respondent superior which gives rise to the only distinction between the two cases creates no new cause of action. See Jones v. Valisi, 111 Vt. 481, 18 A.2d 179 (1941).

For res judicata purposes, the cause of action is the same if the same evidence will support the action in both instances. Trapeni v. Walker, 120 Vt. 510, 144 A.2d 831 (1958). With this as a limitation, a party will be barred from subsequent litigation as to all issues which he could have brought in his initial action. Such is the import of the rule that 'parties to a jdugment are concluded thereby . . . as to issues which might properly have been tried and determined in that action.' B & E Corp. v. Bessery, 130 Vt. 597, 298 A.2d 544 (1972). In that case, the plaintiff, who had failed in a suit for breach of contract against Northern Oil Co. Inc. as principal and Bessery as agent, attempted to bring a subsequent action against Bessery for breach as assignee of Northern's interest in a contract between Northern and Bessery. The contract in each instance was based on the same allegation of facts. The order of dismissal on the ground of res judicata was affirmed by this Court.

The present controversy presents an entirely different situation. In 1967, Hill and Concord General were joined in an action on the insurance policy to determine whether coverage extended to the off-premises barbecue operation. To the extent that evidence was admitted concerning the transactions which occurred between Hill and Grandey, we are satisfied from the record that such evidence, if material at all, was not essential to the question of coverage. Evidence that Grandey told Hill his barbecue business would be covered under the policy to be issued would not have supported an action for coverage, where the policy itself and the premiums paid thereunder were in evidence and sufficient to support a contrary conclusion as the trial court found.

Whether the same cause of action is present, so as to raise the bar of res judicata to subsequent litigation, must be determined on the facts of each case. The determination made by the lower court in the present instance was a correct one. The present action is based on an allegation of negligence and breach of a contract to procure insurance, as distinguished from the insurance contract itself. The evidence focuses on the communications between the agent Grandey and Hill. Concord General is joined as a party only on the premise of vicarious liability. It cannot be said that this action proceeds from an attempt by Hill to break down his case 'into a myriad of single issue actions to obtain the desired judgment.' B & E Corp. v. Bessery, supra, 130 Vt. at 601, 298 A.2d at 546. Rather, Hill now seeks to support a different contract on a different evidentiary basis than was available to him in the original suit.

An action on an insurance policy and an action for negligence and breach of contract for failure to procure such a policy are not inconsistent causes of actions. While not inconsistent, however, they are not identical. In an analogous situation, McKee v. Martin, supra, we held that res judicata did not apply. There, as here, the evidence required to support either one of the two actions would not support the other action. While the cause of action here raised might have been raised in the original proceedings, to have done so would have expanded the questions to be passed upon and the evidence to be considered. Such matters are best left to the discretion of the parties and the trial court, lest the proceedings become too unwieldy. See V.R.C.P., 13. We therefore now hold that the present action is not barred by res judicata.

The lower court found the contract between Hill and Grandey based on a promise by Grandey to provide liability insurance to cover all of Hill's 'poultry business including the barbecues.' The 1967 case established that the liability insurance which was provided did not cover the barbecue, so that, if there was a contract as found by the lower court, there can be little doubt that Grandey was in breach of that contract. The appellants contend here that there is no basis for the finding of such a contract.

There is no disagreement between the parties that Mr. Grandey's promise to insure, as that promise was made to Mr. Hill, did not in express terms include any reference to the barbecue operation. The 1967 court found that Grandey offered to 'secure a policy of liability insurance such as Mr. Houle . . . had.' The lower court here made an additional finding that 'Defendant Grandey explained to the Plaintiff Hill that he had the liability insurance covering all of Mr. Houle's business and that plaintiff as lessee ought to have similar coverage.' It further found that Hill agreed at the February 1965 meeting that 'he needed the coverage as suggested by Defendant Grandey' and that Hill 'signed the application for the liability insurance that Defendant Grandey suggested.'

The premise that Grandey's promise to insure was intended by him to include the barbecue business appears to be based on Findings 4, 5, 8 and 19 of the lower court's findings to the effect that the previous contract to insure between Grandey and Houle had included the barbecue business. The court concluded in Finding 15, that:

Defendant Grandey knew or in the exercise of reasoanble care and diligence should have known that the Plaintiff was conducting exactly the same type of poultry business as Mr. Houle including the off-premises barbecue business and had all the same or similar risks of liability exposure as Mr. Houle.

This Finding, however, insofar as it relates to Grandey's actual knowledge, is in conflict with Finding 18 of the incorporated 1967 findings that Grandey 'was not aware that Mr. Hill was doing any barbecue work or...