Mendota Electric Company v. New York Indemnity Company
| Decision Date | 13 July 1928 |
| Docket Number | 26,377 |
| Citation | 221 N.W. 61,175 Minn. 181 |
| Parties | MENDOTA ELECTRIC COMPANY v. NEW YORK INDEMNITY COMPANY |
| Court | Minnesota Supreme Court |
Defendant appealed from a judgment of the district court for Ramsey county, Hanft, J. Reversed.
Bad faith of insurer under policy of public liability not proved.
Bad faith, in the refusal of an insurer against liability for negligence to pay in settlement of a personal injury case against its insured the maximum amount of its liability, is not shown by mere mistake as to the liability of a codefendant of the insured and a consequent insistence, also mistaken, that the codefendant should pay a stated amount which it refused to pay.
Montreville J. Brown, for appellant.
Daggett & Redlund, for respondent.
This case was here before on appeal from an order sustaining a demurrer to the complaint. There was a reversal, 169 Minn. 377, 211 N.W. 317, since which a trial resulted in a verdict for plaintiff. Defendant moved for a directed verdict and thereafter for judgment notwithstanding. Both motions were denied, judgment was entered on the verdict, and defendant appeals.
Not much restatement of facts is needed. Plaintiff is an electric distributing company and sues on a policy of public liability insurance issued by defendant, the claim being that under the circumstances stated in the former opinion defendant acted in bad faith in refusing to pay more than $3,625 towards the settlement of an action brought by one Finch for serious personal injury alleged to have been sustained because of the negligence of this plaintiff and others. The maximum of defendant's policy liability was $5,000. It did contribute $3,625 to a settlement which might not have been made but for plaintiff's additional payment of $1,125. It is the purpose of this action to recover that sum.
The law of the case was established on the former appeal to the effect that where in such a case "the insured is clearly liable and the insurer refuses to make a settlement, thus protecting the insured from a possible judgment for damages in excess of the amount of the insurance, the refusal must be made in good faith and upon reasonable grounds for the belief that the amount required to effect a settlement is excessive." Plaintiff's claim is that it was compelled to make its payment by the refusal in bad faith of defendant, its insurer, to pay more than $3,625, and the imminence of a judgment of much more than the $5,000 for which it was insured.
Our examination of the record has failed to disclose any such proof of bad faith of defendant as will support a verdict against it. The controlling testimony came from the two attorneys who conducted the original negotiations, one for plaintiff and one for defendant, and who at the trial of this case participated both as witnesses and as counsel. In the main their testimony is in agreement. The settlement was for $18,000, of which $11,250 was paid by the Tri-State Telephone & Telegraph Company, $2,000 by the Northern States Power Company, $3,625 by defendant, as plaintiff's insurer, and $1,125 (the subject matter of this action) by plaintiff. The record puts it beyond question that counsel for defendant was sincere in his insistence that the...
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