Salonen v. Paanenen

• Decision Date: 06 January 1947
• Citation: Salonen v. Paanenen, 320 Mass. 568, 71 N.E.2d 227 (Mass. 1947)
• Court: Supreme Judicial Court of Massachusetts
• Parties: MARTHA SALONEN v. LYDIA J. PAANENEN & another.

320 Mass. 568

71 N.E.2d 227

MARTHA SALONEN v. LYDIA J. PAANENEN & another.

Supreme Judicial Court of Massachusetts, Plymouth.

January 6, 1947

November 4, 1946.

Present: FIELD, C.

J., LUMMUS, QUA DOLAN, & SPALDING, JJ.

Insurance, Motor vehicle liability insurance, Disclaimer of liability. Estoppel. Evidence, General objection to admission of evidence.

A finding of breach by the insured of a provision of a motor vehicle liability insurance policy requiring him to "cooperate with" the insurer and to "assist in . . . securing and giving evidence . . . and in the conduct of suits" was not plainly wrong on evidence that the insured, after having given a statement to the insurer as to the occurrence of an accident in which an occupant of his automobile, operated by him, was injured, repudiated that statement at a hearing before an auditor in an action against him by the injured person and in his testimony before the auditor described the occurrence of the accident in a manner much more favorable to the injured person.

A conclusion that an insurer was not estopped to disclaim liability under a motor vehicle liability insurance policy because of breach by the insured of a provision of the policy requiring him to "cooperate with" the insurer was proper where it appeared that, after a guest occupant of the insured automobile had been injured while it was being operated by the insured, the insured committed the breach through falsity either in a statement as to the accident given to the insurer or in testimony contradictory to that statement later given by him at an auditor's hearing in an action by the injured person against him; that seasonably after the giving of such testimony and before the auditor's report the insurer notified the insured that because of such conduct on his part it would not satisfy any judgment against him but "reserve[d] all [its] rights and defences" under the policy, that the insured was at liberty to engage counsel at his own expense to protect his interest and to have the insurer's counsel associate with him and that the insurer would continue to defend the action under such reservation that the insured did not offer or attempt to assume defence of the action; that the insurer thereafter continued the defence until judgment was entered against the insured; and that the insurer did not take any unfair advantage of the insured.

A defence available to the insurer under a motor vehicle liability insurance policy as against the insured for breach of the policy by the insured was equally available to the insurer as against a judgment creditor of the insured seeking to reach and apply to the satisfaction of his judgment the insurer's obligation under noncompulsory "guest occupant" coverage in the policy.

A general objection to the admission in evidence of a previous inconsistent statement of a witness, admissible only for the limited purpose of affecting his credibility, was unavailing.

BILL IN EQUITY filed in the Superior Court on April 20, 1945. The suit was heard by Sullivan, J.

A. F. Lyon, for the plaintiff. H. B. White, for the defendant Maryland Casualty Company.

SPALDING, J. The plaintiff, having recovered a judgment against the defendant Paanenen (hereinafter called the assured), brought this bill in equity to reach and apply the obligation of the defendant insurance company (hereinafter called the company) under a motor vehicle liability policy issued by it to the assured. See G. L. (Ter. Ed.) c. 175, Section 113; c. 214, Section 3 (10). The judge made voluntary findings of fact and ordered the bill dismissed. From a final decree entered pursuant to this order the plaintiff appealed. The evidence is reported.

The facts may be summarized as follows: The judgment which the plaintiff is seeking to satisfy stems from an action of tort brought by her against her sister, the assured, to recover compensation for personal injuries which she sustained on July 6, 1940 while riding as a guest in an automobile owned and operated by the assured. At the time of the accident the assured was the holder of a motor vehicle liability policy issued by the company. The policy contained a cooperation clause, ^[1] and also a provision that "no action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all of the terms of this policy."

On July 18, 1940, twelve days after the accident, one Meehan, a representative of the company, called upon the assured and obtained from her a statement of what she knew about the accident. Meehan, who had written down what the assured had told him, then read the statement to her, and she stated that it was true and correct but refused to sign it until it had been approved by her husband. The latter, however, withheld his approval and the assured never signed it. In it the assured stated that just prior to the accident she noticed an "old Ford travelling in the opposite direction"; that she did not remember much after that; that she moved over a little closer to her right side of the road; that her "auto must have gone off the road and struck a tree on the right side"; and that she was unable to say whether or not the Ford had crowded her off the road. She also stated that her sister "did not object to the manner or the speed of. . . [her] auto on this occasion."

When the case came on for trial before an auditor, the assured repudiated material portions of the statement and corroborated a substantially different version of the accident given by the plaintiff, which in substance was that the assured was travelling at forty to forty-five miles per hour and her automobile swerved from one side of the road to the other several times; that the plaintiff objected to the manner in which the assured was driving; and that the assured without slackening her speed looked around to comment about some milk that the plaintiff had spilled and while she was doing this the automobile went off the road. The assured also testified that she did not see the "old Ford" referred to in the statement. She admitted that she desired to see her sister compensated for her injuries. After the auditor's hearing and before his finding, the company wrote the assured on March 3, 1943, advising her that it would not satisfy any judgment that might be rendered against her and that it "reserve[d] all rights and defences which it . . . [had] under the . . . policy," assigning as its reasons that the assured had failed to cooperate and that the furnishing of inaccurate information with respect to the happening of the accident had impeded its investigation and preparation of the case for trial. The letter also stated that the assured was at liberty at her own expense to engage counsel to protect her interest and to have him associated with its counsel, and that the company would continue the defence of the case under its reservation of rights.

On April 22, 1943, the company wrote to the assured informing her that the auditor had found for the plaintiff in the amount of $2,400 and that it would continue in the defence of the action subject to the reservation previously made; the letter also stated that she was "at liberty to engage . . . [her] own counsel as previously advised" but at her own expense. The case was then tried to a jury, which returned a verdict in an amount slightly larger than that found by the auditor. Exceptions brought to this court by the defendant were overruled. ^[1] After judgment was entered the company informed the assured that pursuant to its reservation of rights in its letters of March 3, 1943, and April 22, 1943, it would not honor the execution.

The judge found that the assured had violated the cooperation clause and that the disclaimer by the company was justified. He also found that notice of the disclaimer was given to the assured as soon as possible after the grounds for it were discovered by the company; that no unfair advantage was taken of the assured; and that the company was not estopped to deny liability under the policy.

We think that the finding of the judge that the assured violated the, "cooperation" clause cannot be said to be plainly wrong. We reach this conclusion without reliance on the finding of the judge, which is not supported by the evidence, that at the jury trial, because of her repudiation of her statement, the assured was not called as a witness by the company's counsel who defended her at that trial. ^[2] The evidence amply warranted a finding that the assured, in her testimony, repudiated in material respects her version of the accident contained in the statement. Either the statement or the testimony was false; both could not be true. The intentional furnishing of false information of a material nature either before or at the trial would be a breach of the cooperation clause. Searls v. Standard Accident Ins. Co. 316 Mass. 606 . Brogdon v. American Automobile Ins. Co. 290 Mich. 130, 135. Bassi v. Bassi, 165 Minn.

100. Coleman v.

New Amsterdam Casualty Co. 247 N.Y. 271, 276. Francis v. London Guarantee & Accident Co. 100 Vt. 425, 430. United States Fidelity & Guaranty Co. v. Wyer, 60 F.2d 856 (C. C. A. 10). Ocean Accident & Guarantee Corp. Ltd. v. Lucas, 74 F.2d 115 (C. C. A. 6). See note in 72 Am. L. R. 1446. As we said in the Searls case cited above, "Cooperation requires that there must be an effort to tell the truth no matter who is helped or hurt. There is nothing more mischievous in litigation or destructive to the administration of justice than the deliberately untruthful witness, be he apparently aiding in preparation for trial or committing perjury on the stand" (page 609).

The plaintiff argues that the defence of failure to cooperate is not open to the company because, by...