Norwich Union Indemnity Co. v. Haas

• Decision Date: 07 February 1950
• Docket Number: No. 9980.,9980.
• Citation: 179 F.2d 827
• Parties: NORWICH UNION INDEMNITY CO. v. HAAS et al.
• Court: U.S. Court of Appeals — Seventh Circuit

179 F.2d 827 (1950)

NORWICH UNION INDEMNITY CO. v. HAAS et al.

No. 9980.

United States Court of Appeals, Seventh Circuit.

February 7, 1950.

Melville A. Gray, Frank H. Masters, Jr., and Gray, Thomas & Wallace, Joliet, Ill., for appellant.

Erwin W. Roemer, James A. Velde, Chicago, Ill. (Gardner, Carton & Douglas, Wayland B. Cedarquist, Chicago, Ill., of counsel), for appellee.

Before MAJOR, Chief Judge, and LINDLEY and SWAIM, Circuit Judge.

LINDLEY, Circuit Judge.

Plaintiff appeals from a judgment for defendants in an action in which plaintiff sought a declaratory judgment that defendant Haas had violated the terms of an insurance policy issued to him by plaintiff and that, consequently, plaintiff was not liable to pay a judgment rendered against Haas in the state court. The policy provided that, as a condition precedent to liability of the company, the insured would comply with all the terms of the policy, one of which was that "The Insured shall cooperate with the Company, and, upon the Company's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits." It was Haas' alleged breach of this obligation upon which plaintiff relied.

On July 27, 1947, while the policy was in effect, Haas was involved in an accident in which defendant DeMitchell was injured and the automobile of defendant Halstead damaged. The automobile driven by the insured, Haas, collided with the Halstead car, driven by DeMitchell, on Route 66, on the outskirts of Joliet. The next day plaintiff, through its agents, instituted its investigation of the accident. Maute, an attorney retained by plaintiff, took a statement from Haas in which the latter averred that, at the time of the accident, he was returning to Joliet from Chicago, where he had attended a party. Haas testified that, before he signed the statement, he thought he had asked Maute "if it made any difference" where the party had been held. Haas was then referred to Harvey, an attorney whom Maute had employed to assist in the investigation. Haas was in Harvey's office at the time and in the presence of defendant DeMitchell when the latter said to Harvey that Haas had been drinking, (Haas admitted to Harvey that he had had "a few beers") and insisted that the accident had been due to the fact that Haas was driving without lights. When Harvey observed that it would be impossible for a man to drive from Chicago to Joliet at night without lights, DeMitchell told Harvey, "* * you will find that the party they attended * * * was held locally on 4-A Highway." Harvey thereupon asked Haas where he had been before the accident; Haas asked Harvey if it made any difference. Harvey replied that "it didn't make any difference," but that he wanted the facts concerning the accident. Haas then said that the party had been somewhere in Chicago.

In August, 1947, after defendants DeMitchell and Halstead had filed their complaint against Haas in the Circuit Court, Maute delivered his file on the accident to the lawyers who had been employed by plaintiff to defend the suit. Thereafter, neither Maute nor Harvey had any further connection with the case, which was placed in the hands of Mr. Masters, a member of the defending firm. In January, 1948, when his discovery deposition was taken, Haas testified concerning the party from which he stated he was returning at the time of the accident. Some three months later, Masters was told, by the attorney for DeMitchell and Halstead, "* * * you will find that Mr. Haas and the people in his car were at Elsie's," a tavern located on Route 66 about eight blocks from the scene of the accident. Masters promptly called Mrs. Haas, who, when told of what DeMitchell's attorney had said, admitted that the party had not been held in Chicago but at the Hi-Ho Club, near Lockport. Haas, also, admitted that the story he had related in his earlier statements and on discovery deposition was not true in that one respect, whereupon Masters told him that his action had been such as to furnish a basis for disclaimer of liability by the insurance company. However, with the authorization of plaintiff, Masters continued to represent Haas after the latter signed a reservation of rights agreement by which plaintiff reserved any defense it might have, due to Haas' "failure to cooperate."

The action in the state court resulted in a judgment against Haas, which was affirmed by the Appellate Court. Meanwhile, subsequent to the entry of judgment by the trial court but prior to the appeal therefrom, plaintiff had filed, in the District Court, its complaint for a declaratory judgment absolving it from all liability upon the policy held by Haas. The court below held that Haas had not broken the promises made by him in the cooperation clause, for the reason that his statement that he had been in Chicago prior to the accident did not relate to a material issue and that, even if the alleged breach were regarded as material, it had been waived by plaintiff; accordingly, judgment was entered denying the relief sought.

It is plaintiff's contention that the evidence shows conclusively that Haas failed to perform his obligations under the policy and that plaintiff did not waive such breach, and, consequently, that the judgment should be reversed. Plaintiff also urges that the findings of fact are insufficient and, in part, incorrect.

Plaintiff's criticism of the trial court's findings stems from the fact that no reference is made therein to Haas' misstatements in his deposition and that paragraph 6 of the findings contains an erroneous statement of fact. With respect to the lower court's failure to find that Haas had testified falsely, we observe that, under the decision of this court, in Gay Games, Inc. v. Smith, 7 Cir., 132 F.2d 930, 932, Rule 52 of the Federal Rules of Civil Procedure, 28 U.S.C.A., does "not require the court to do more than to cover the ultimate fact issues" (See also Klimkiewicz v. Westminister Deposit & Trust Co., 74 App.D.C. 333, 122 F.2d 957, 958, and Schilling v. Schwitzer-Cummins Co., 79 U.S.App.D.C. 20, 142 F.2d 82.) Consequently such finding was unnecessary, for Haas' misstatements, which stood admitted, were not ultimate facts at issue in this case.

Paragraph 6 of the findings of fact, which plaintiff asserts is incorrect, is as follows: "On July 28, 1947, the day following said accident, plaintiff insurance company, through its agents, upon being informed of the happening of said accident, caused an investigation to be made concerning the same. In the course of the investigation on said day, plaintiff insurance company, through its agents, asked defendant Walter C. Haas where he had been before the accident. Whereupon said Walter C. Haas asked whether it made any difference where he had been before the accident and whether it was any of their business. In reply, said agents said in substance that they were not interested in what he was doing before the accident; and what they wanted was the facts at the time of the accident. Thereupon said Walter C. Haas stated that he had attended a birthday party in the City of Chicago, Illinois, before the accident, and signed a written statement to that effect."

Plaintiff, apparently relying on the last eight words of this paragraph, in conjunction with the word "thereupon" in the last sentence thereof, asserts that it is stated, in effect, that "Haas signed his written statement after his conversation with Harvey and DeMitchell," whereas the "true fact * * * is that Haas signed the statement before he ever saw Harvey." So to interpret this finding is to assume that Haas signed only one statement — the one prepared by Maute —...