Isenhart v. General Cas. Co. of America

Decision Date19 December 1962
Citation377 P.2d 26,233 Or. 49
CourtOregon Supreme Court

Joseph W. Glaze, Portland, argued the cause for appellant. With him on the brief were Keller & Keller, Portland.

A. Allan Franzke, Portland, argued the cause for respondent. With him on the brief were Mautz, Souther, Spaulding, Kinsey & Williamson, Portland.


O'CONNELL, Justice.

This is an action to recover damages for the alleged breach of a contract of insurance. Plaintiff is the insured under a policy of insurance issued by defendant. The alleged breach consisted of defendant's refusal to defend a prior action brought by a third person against plaintiff for assault and battery. Plaintiff seeks to recover the amount expended by him in defending the prior action. Defendant demurred to the complaint on grounds which will be explained later. The demurrer was sustained and, plaintiff electing not to plead over, the trial court dismissed the case. Plaintiff appeals.

Plaintiff alleges that the policy is a 'blanket liability policy' which insured plaintiff 'for any liability of the plaintiff on account of bodily injury in the amount of $50,000.' The complaint further alleges that '[b]y said policies the defendant agreed to defend in the plaintiff's name and on his behalf any suit against the plaintiff alleging injury and seeking damages on account thereof, even if such suit were groundless, false or fraudulent.' The policy was not made a part of the pleadings and does not appear in the record of this case. It is not known whether or not the policy contains an exclusionary clause excepting assault and battery and other intentional torts.

The facts of record relating to the assault and battery action are as follows: In 1955 plaintiff's wife brought a suit for divorce against him and at the same time she filed an action against him for assault and battery. The defense of the case was tendered to defendant. The tender was refused. Plaintiff then employed counsel to represent him in the action. The case was subsequently dismissed for reasons which do not appear in the record. Plaintiff then brought the present action to recover the amount of attorney's fees and costs incurred in the assault and battery action. Defendant demurred to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. The demurrer recited that the complaint was deficient in this respect because the contract of insurance, 'if it existed, would be contrary to public policy and void.'

Defendant's obligation to defend an action brought against plaintiff, its insured, is to be determined from its contract with plaintiff. Since the contract of insurance is not a part of the record, we have only the allegations of plaintiff's complaint from which to ascertain the nature of the agreement with respect to defendant's duty to defend actions brought against plaintiff.

The complaint alleges that defendant agreed to defend any suit brought against plaintiff alleging bodily injury and seeking damages even if such suit were groundless, false or fraudulent. An action for assault and battery would fall within this coverage unless, as defendant asserts, coverage is precluded upon the ground that it would be contrary to public policy.

It is generally held that it is contrary to public policy to indemnify the insured for losses arising out of his commission of an intentional act which causes damage to another. 1 There is no direct authority in Oregon on this point. However, MacDonald v. United Pacific Ins. Co., 210 Or. 395, 411, 311 P.2d 425 (1957) contains a dictum supporting the general rule. There the court indicated that it favored 'the decisions holding that it is contrary to public policy to insure against liability arising directly against the insured from his own wilful and illegal act. Haser v. Maryland Casualty Company, 78 N.D. 893, 53 N.W.2d 508, 33 A.L.R.2d 1018; New Amsterdam Casualty Co. v. Jones, 6 Cir., 135 F.2d 191.' 2

A contract to indemnify the insured for damages he is forced to pay as a result of an intentionally inflicted injury upon another should not be regarded as contrary to public policy unless the fact of insurance coverage can be related in some substantial way to the commission of wrongful acts of that character. Plaintiff contends that a person's decision as to whether he will intentionally inflict an injury upon another will not ordinarily turn upon the existence or non-existence of insurance covering the insured's loss resulting from an action brought against him for such conduct. Generally this is probably true, 3 although depriving insured of coverage for intentionally inflicted injuries might have such a deterring effect in some cases. However, punishment rather than deterrence is the real basis upon which coverage should be excluded. A person should suffer the financial consequences flowing from his intentional conduct and should not be reimbursed for his loss, even though he bargains for it in the form of a contract of insurance. A similar idea is expressed in the cases which exclude coverage on the ground that 'a person should not profit from his own wrong.' 4

We hold that a clause in a contract of insurance purporting to indemnify the insured for damages recovered against him as a consequence of his intentional conduct in inflicting injury upon another is unenforceable by the insured on the ground that to permit recovery would be against public policy. Therefore, the insurance policy the present case must, in effect, be regarded as excluding such coverage.

Plaintiff argues that even though it may be against public policy to permit the insured to be indemnified for his own intentional wrongdoing, there was no evidence in the present case indicating that plaintiff was a wrongdoer. Plaintiff asserts that the action for assault and battery was groundless and that this fact could have been determined by defendant. There is some authority for the view that in determining whether...

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