Oehme v. Johnson
| Decision Date | 25 July 1930 |
| Docket Number | 27,563 |
| Citation | 231 N.W. 817,181 Minn. 138 |
| Parties | ALBERT OEHME v. EMILY JOHNSON AND OTHERS; CENTRAL WEST CASUALTY COMPANY, GARNISHEE |
| Court | Minnesota Supreme Court |
The garnishee appealed from an order of the district court for Ramsey county, Richard D. O'Brien, J. denying its motion for a new trial. Affirmed.
Insurer's assumption of defense of action -- liability.
The garnishee is a casualty company which insured the defendant Emily Johnson against loss imposed by law as a result of her ownership, use or maintenance of an auto. The plaintiff sued for damages alleged to have been sustained in a collision between her auto and his auto and recovered judgment.He claimed in his complaint four items of damages -- injury to himself, damage to his auto, expenses for hospital and medical treatment of his wife, and loss of her services and companionship. The company was given notice, and the summons and complaint were delivered to it. With knowledge of the claims made it assumed and conducted the defense. It told Mrs. Johnson to "forget about it"; and until after verdict for the plaintiff it made no claim that it was not liable, if they were proved, for all of the items of damages enumerated.
It is held that the finding of the trial court, that the company by its acts and omissions and its assumption and control of the trial to the exclusion of the insured made itself liable for all the damages proved and included in the verdict, is sustained; and this whether such liability is rested upon the ground of waiver, election or estoppel, or some kindred legal explanation is given.
L. K Eaton, for appellant.
Daggett & Redlund, for respondent.
The defendant Emily Johnson was the owner of an automobile and was insured by the Central West Casualty Company, the garnishee. On November 24, 1927, a collision occurred between the plaintiff's auto and the defendant's auto in which the plaintiff and his wife were injured and damage was done to his auto.
The casualty company settled with the plaintiff's wife for $5,000. Suit was brought by the plaintiff alleging four items of damages. The company assumed the defense. There was a verdict in the plaintiff's favor for $3,979.70 itemized by the jury as follows:
The insurer refused to pay. Following the recognized practice in this state the plaintiff instituted proceedings in garnishment against the casualty company, which resulted in findings and conclusions directing judgment for $4,041.57 against the garnishee. It appeals from the order denying its motion for a new trial.
The company admits its liability for so much of the judgment as is represented by the first and second items of the verdict amounting to $632.50. It disclaims liability for hospital and medical expenses and loss of companionship as found in the third and fourth items in the sum of $3,347.20 upon the ground that they are not within the coverage of the policy.
The trial court finds, and its finding is not disputed, that upon the occurrence of the accident Mrs. Johnson gave the insurer notice and full information; and that when the summons and complaint were served she delivered them to the company. The defendant assumed exclusive control of the defense. It did not deny its liability for any of the claims which might be established, said nothing to Mrs. Johnson to the effect that it was not liable for all of the items of damages, and did not question its liability until after the verdict went against her and her liability was fixed by judgment. When she went to see the company's representatives before trial, she says, and no one contradicts her, "they told me to forget about it." The trial court held that the company by what it did and failed to do, by its conduct and its actions, disabled itself from disclaiming liability for the items now contested. This holding is the basis of the judgment and the ground of the defendant's appeal.
The insurance was against "loss from liability imposed by law upon the assured for damages as a result of the ownership, maintenance or use of such automobile."
The insurer agreed:
"To investigate all accidents covered by this policy, and to defend in the name and on behalf of the assured any claim or suit covered by this policy and brought against assured, whether groundless or not, for damage suffered or alleged to have been suffered on account of bodily injuries or death or property damage."
The policy provided:
The policy is a liability policy as distinguished from what is sometimes termed an indemnity policy. An obligation to pay follows though the insured has not himself paid the loss in money. The policy does not contain a "no action" clause such as is found in some policies. There is no question of the plaintiff's right to recover of the casualty company now and in this proceeding if there is liability; that is, the procedure is proper.
We assume that the insurance company was not liable for items three and four if they were properly opposed. The question is one of difficulty to be determined upon the construction of the policy. The parties have given much space to it in their briefs. Our consideration of the question gives no immediate answer. In some other cases it may require close consideration. It should be understood that we do not hold that the defendant is not liable on the face of the policy for all the items claimed.
The facts which we have stated bring the case within the principle of the cases holding an insurance company liable where with knowledge of an exception to the risk it assumes the defense of the suit against the insured. The liability is variously referred to the ground of waiver, or estoppel, or waiver in the nature of estoppel, or contemporaneous construction of the contract, or an election by the insurer, or an estoppel by election -- all of which terms are at times used. Courts have approached the question from different angles, have used different phraseology, and have criticized that of others, but have reached the same result whatever they named their route; and although we appreciate the advantage of correct distinctions, especially in waiver and estoppel, as noted in Vance, Ins. (2 ed.) p. 457, et seq. the thing itself which fixes the serious rights of the parties is more important than its name. The case does not seem to invite an extended discussion; but counsel have so thoroughly discussed the principle involved and the cases cited, and the parties are so certain of their views, that we take the time to consider some cases, starting with our own, where but for the serious contest made it were perhaps as well to state the necessary result and the reason for it and stop; and if they are to be used it is as well to let them speak and not to paraphrase them or give their naked result.
The case of Tozer v. Ocean A. & G. Corp. Ltd. 94 Minn. 478, 103 N.W. 509, 511; Id. 99 Minn. 290, 109 N.W. 410, involved an employer's liability policy. The injured boy was under age and illegally employed, and by the terms of the policy the insurer was not liable to respond for his injury. It however assumed the defense, and the boy had a verdict. The court said :
"While it may be that the acts of appellant were not such as to constitute a waiver, strictly speaking, yet there was at least an election of positions; and, having pursued a course of action consistent with its liability, such conduct ripened into an equitable estoppel."
In Patterson v. Adan, 119 Minn. 308, 138 N.W. 281, 283, 48 L.R.A.(N.S.) 184, the company assumed the defense and there was a recovery. The policy provided that there should be no action brought by the insured until the payment by the insured in money of the loss after trial of the issue. The court held that by assuming the defense the insurer waived the condition of prior payment of the loss by the insured; in other words, that it waived the "no action" clause of the policy. The court said :
By the assumption of the defense the insurer elected to treat the cause of action one within the policy. The facts are quite different from those in the case at bar; but the case applies the principle of waiver or election or estoppel or whatever phrase we use to designate the ground of liability. It is the law of the state. It has been adopted in some others and disapproved in still others. Vance, Ins. (2 ed.) p. 682, et seq. And as remarked...
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