Quintin v. Miller, 67-79

• Decision Date: 27 June 1980
• Docket Number: No. 67-79,67-79
• Court: Vermont Supreme Court
• Parties: Theodore QUINTIN and Linda Quintin v. Daniel MILLER and Cooperative Fire Insurance Association of Vermont.

Page 941

417 A.2d 941

138 Vt. 487

Theodore QUINTIN and Linda Quintin v. Daniel MILLER and Cooperative Fire Insurance Association of Vermont.

No. 67-79.

Supreme Court of Vermont.

June 27, 1980.

Rexford, Kilmartin, Chimileski & White, Newport, for plaintiff.

Charity A. Downs of Conley & Foote, Middlebury, for Cooperative Fire Ins. Ass'n.

Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.

HILL, Justice.

Plaintiffs, Theodore and Linda Quintin, are the owners of a ski lodge in Montgomery Center, Vermont. During the summer of 1974, defendant, Daniel Miller, was doing carpentry work for them. On August 20, 1974, while building a fire escape to the ski lodge, Miller was badly injured. Defendant, Cooperative Fire Insurance Association of Vermont (Cooperative), was informed of the accident, since it was the insurance carrier for plaintiffs.

On February 5, 1975, Miller filed a complaint against the Quintins alleging negligence in the maintenance of their premises. Cooperative, pursuant to its insurance policy with the Quintins, entered an appearance through counsel. This appearance was subsequently withdrawn, however, since, according to Cooperative, the Quintins had withheld and misrepresented material facts. Although the policy expressly excluded employees from its coverage, the Quintins allegedly had told Cooperative's claims adjuster that Miller was a prospective guest looking for a room rental while in fact he was an employee. Therefore, Cooperative claimed that it was not required to defend the Quintins.

On July 20, 1977, plaintiffs brought this action seeking a declaratory judgment that defendant, Cooperative, was obligated to defend them in the suit brought by Daniel Miller and to pay any judgment therein. Cooperative asserted concealment and misrepresentation of material facts as an affirmative defense, and counter-claimed for monies paid to the Medical Center Hospital of Vermont in reliance on the Quintins' misrepresentations. The superior court concluded that in light of the misrepresentations Cooperative was not obligated to defend plaintiffs in the suit brought by Miller, and that it was entitled to a refund of the monies paid to the hospital for Miller's injuries. It is from this decision that plaintiffs appeal. They claim that the evidence does not support the trial court's findings and that the findings do not support the court's legal conclusions. We agree that this is the case with respect to plaintiff, Linda Quintin, but disagree that it is the case with respect to plaintiff, Theodore Quintin.

It is well settled that an intentional concealment or misrepresentation of a material fact by an insured to an insurer will be considered a refusal to cooperate within the terms of the insurance contract, thereby vitiating the policy and relieving the insurer of its obligation to defend the insured. Kirk v. Home Indemnity Co., 431 F.2d 554 (7th Cir. 1970); Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367 (1928) (Cardozo, C. J.). It is likewise well settled that an insurer who has paid a claim based on facts misrepresented to it, or withheld from its knowledge, is entitled to recover the amount paid. Perovich v. Glens Falls Insurance Co., 401 F.2d 145 (9th Cir. 1968). Therefore, to be relieved from its contractual obligation to defend, and to recover the monies paid, Cooperative had to prove that there was "an intentional misrepresentation of existing fact, affecting the essence of the transaction, (that) was false when made and known to be false by the maker, was not open to the defrauded party's knowledge, and was relied on by the defrauded party to his damage." Union Bank v. Jones, 138 Vt. 115, 121, 411 A.2d 1338, 1342 (1980); accord, Anderson v. Knapp, 126 Vt. 129, 133, 225 A.2d 72, 76 (1966); see Firemen's Insurance Co. v. Smith, 180 F.2d 371 (8th...