Liddell v. Standard Acc. Ins. Co.

• Court: United States State Supreme Judicial Court of Massachusetts
• Citation: 187 N.E. 39,283 Mass. 340
• Parties: LIDDELL v. STANDARD ACC. INS. CO. et al.
• Decision Date: 12 September 1933

283 Mass. 340
187 N.E. 39

LIDDELL
v.
STANDARD ACC. INS. CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 12, 1933.

Appeal from Supreme Judicial Court, Suffolk County.

Action by Chester Liddell against the Standard Accident Insurance Company and others. From a decree dismissing the bill, plaintiff and defendant Bumford appeal.

Decree affirmed.

[283 Mass. 342]

[187 N.E. 40]

J. F. Daly, of Boston, for appellant Liddell.

D. H. Fulton, of Boston, for appellant Bumford.

G. B. Rowell and C. F. Albert, both of Boston, for appellee Standard Accident Ins. Co.

RUGG, Chief Justice.

The plaintiff was injured by an automobile on a public way in this commonwealth. Liability for his injuries thus received has been established against the defendant Bumford (hereafter called the defendant) by verdict of a jury and a decision of this court reported in 275 Mass. 346, 175 N. E. 737, under the name of Liddell v. Middlesex Motor Car Co. The declaration on which the plaintiff prevailed in that action alleged that the automboile was being operated negligently and was unlawfully on the highway because not duly registered, and that the defendant unlawfully and without right loaned for use on it registration plates issued to him. The contention that the defendant was liable was based upon proof of a nuisance on the highway for which the defendant was legally responsible. The defendant Standard Accident Insurance Company (hereafter called the insurer) insured the defendant with respect to certain motor vehicles. The insurer through its attorneys defended the original action brought by the plaintiff, but refused to satisfy the execution issued in his favor. After observance of the requisite preliminaries, this suit was brought under G. L. (Ter. Ed.) c. 175, §§ 112, 113, and chapter 214, § 3(10), to reach and apply, to the satisfaction of that execution, the interest of the defendant in the policy of insurance. The case was heard upon a statement of agreed facts and other facts found by the single justice. He ruled that there was no obligation on the part of the insurer which could be reached and applied in favor of the plaintiff. A decree was entered dismissing the bill, from which the plaintiff and the defendant appealed.

The facts material to the liability of the insurer under the policy are these: The defendant, a dealer in motor vehicles, sold the automobile involved in the accident to one Fee under a conditional sale agreement, and at the time of the accident the automobile had not been paid for in full. The defendant turned over to Fee for use on the [283 Mass. 343]automobile a set of dealer's plates issued to him in accordance with St. 1923, c. 464, § 2, now G. L. (Ter. Ed.) c. 90, § 5. These plates were on the automobile at the time of the accident. The automobile was turned over to Fee at the time of the conditional sale and never thereafter came into the control of the defendant, unless as matter of law on the other facts held to be under his control. At the time of the injury to the plaintiff, the automobile was being operated by the wife of Fee, not upon any business of the defendant or by his actual consent. The automobile was kept in the defendant's garage and used in his business. Fee was employed by the defendant as an automobile salesman.

The plaintiff alleged in his bill that the insurer prepared and presented the defence of the original action against the defendant and by its attorneys acted for him throughout that litigation and filed no disclaimer of liability. The insurer by its answer

[187 N.E. 41]

admitted this allegation but averred that all such acts were done under a nonwaiver agreement signed by the defendant to the effect that it denied that the accident then in issue was covered by its policy of insurance and that all its acts in connection with the claim and litigation arising out of the accident should not be construed as an admission by the insurer that the accident was covered by its policy. Evidence of such agreement was received at the trial subject to exception. This allegation of the bill was designed to fix liability on the insurer upon the principle stated in Lunt v. AEtna Life Ins. Co., 261 Mass. 469, 472, 473, 159 N. E. 461, and Daly v. Employers' Liability Assurance Corp., 269 Mass. 1, 168 N. E. 111, 72 A. L. R. 1436, to the effect that ‘where an insurance company takes control of the proceedings in an action brought against the assured, it is thereby estopped to say that the liability claimed is not within the terms of the contract.’ That rule was quoted with approval in Daly v. Employers' Liability Assurance Corp., 269 Mass. 1, 168 N. E. 111, 112, 72 A. L. R. 1436, but it was there intimated that the insurer could avoid such estoppel by notifying the assured that it disclaimed liability under the policy, or that by continuing the defense it would not waive its defences to any action on the policy. A [283 Mass. 344]course of conduct by an insurer which might otherwise constitute an admission of liability or waiver of rights is not to be so construed when taken pursuant to an agreement that it shall not have that effect. French v. Hartford Life & Annuity Ins. Co., 169 Mass. 510, 511, 48 N. E. 268,Urbaniak v. Firemen's Ins. Co., 227 Mass. 132, 134,...