Searls v. Standard Acc. Ins. Co.

• Decision Date: 27 June 1944
• Citation: 56 N.E.2d 127,316 Mass. 606
• Parties: SEARLS v. STANDARD ACC. INS. CO. et al. McGOWAN v. SAME.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

316 Mass. 606

56 N.E.2d 127

SEARLS

v.STANDARD ACC. INS. CO. et al.

McGOWAN

v.SAME.

Supreme Judicial Court of Massachusetts, Middlesex.

June 27, 1944.

Bills in equity by Gertrude McGowan Searls, and by John J. McGowan, against the Standard Accident Insurance Company and another to reach and apply, in satisfaction of judgments for injuries sustained when struck by automobile, the obligation of the defendant insurance company under an automobile liability policy. Decrees in favor of the plaintiffs, and the named defendant appeals.

Decrees affirmed.Appeal from Superior Court, Middlesex County; Dowd, Judge.

Before FIELD, C. J., and QUA. RONAN, and WILKINS, JJ.

W. E. Kane, of Woburn, for plaintiffs.

F. P. Garland, of Boston, for Standard Accident Ins. Co.

WILKINS, Justice.

The plaintiffs, a minor and her father, are the holders of judgments against the defendant O'Brien for bodily injuries and for consequential damages, respectively, arising from her being struck by an automobile on a public way in Woburn in this Commonwealth. These bills in equity under G.L.(Ter.Ed.) c. 175, § 113, and c. 214, § 3(10), are to reach and apply in satisfaction of their judgments the obligation of the defendant insurance company, hereinafter called the company, under an automobile liability policy. The company's answers set up that the policy contained the following ‘cooperation’ clause, which was made a condition precedent to bringing action thereon: ‘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.’ The answers also alleged that the defendant O'Brien failed to comply with this clause to the prejudice of the company; that ‘the assured was guilty of fraud, in that he falsely represented to the defendant [company] that he was not operating the automobile involved in the accident and was not present at the scene of the accident when it occurred’; and that this was a representation of a material fact on which the company relied to its prejudice. The bills of complaint were taken for confessed against the defendant O'Brien, and the suits were then heard by a judge, who entered final decrees ordering the company to pay the amounts of the judgments with interest. The company appealed, and the cases are here with a report of the testimony.

The judge filed in each case a ‘statement of findings, rulings and order for a decree.’ These findings were voluntary, and do not purport to contain all the material facts. See Birnbaum v. Pamoukis, 301 Mass. 559, 562, 17 N.E.2d 885;Restighini v. Hanagan, 302 Mass. 151, 154, 155, 18 N.E.2d 1007.

The facts found or admitted may be briefly summarized. The automobile was registered in Maine, and was owned by one Frank O'Brien, the father of the defendant O'Brien and a resident of Maine. The policy, which was issued in Maine to the owner on April 11, 1938, contained an extraterritorial clause covering operation on the highways of this Commonwealth and included within its protection ‘any person while using the automobile’ with the permission of the named insured. The accident occurred on January 5, 1939, on which date the defendant O'Brien, hereinafter called O'Brien, was using the automobile with his father's permission, and hence by the provisions of the policy was an ‘insured’ entitled to its protection and was by the same token charged with compliance with the cooperation clause quoted in the company's answers. The writs in the tort actions were dated May 6, 1939. The company's counsel represented O'Brien at the trial, which resulted in verdicts for the plaintiffs on May 16, 1941. On May 17 the company sent a letter to O'Brien disclaiming liability. On May 20 the company's counsel withdrew their appearance, and on June 9 judgments were entered on the verdicts. It was stipulated at the hearing that O'Brien was in fact operating the automobile and was present at the scene of the accident at the time the minor plaintiff was injured. The foregoing was undisputed, but the judge also made certain findings, which are the basis of the controversy in this court, to the effect that by reason of the company's knowledge or means of knowledge the disclaimer came too late.

The contract of insurance, having been made in the State of Maine, is governed by the law of Maine, and may be enforced here in the present procedure, but the plaintiffs have no greater rights than the insured. Klefbeck v. Dous, 302 Mass. 383, 384, 19 N.E.2d 308. The Revised Statutes of Maine (1930), c. 60, provide: ‘The liability of every company which insures any person, firm, or corporation against accidental loss or damage on account of personal injury * * * shall become absolute whenever such loss of damage for which the insured is responsible, occurs' Section 177. ‘None of the provisions of [s. 177] shall apply * * * (6) when there is fraud or collusion between the judgment creditor and the insured’ Section 180. By the law of Maine the giving by the insured of intentionally false information as to the details of the accident would be fraud constituting a defence under the statute to an action on the policy. Medico v. Employers' Liability Assurance Corp., Ltd., 132 M. 422, 172 A. 1;Laforge v. LeBlanc, 137 M. 208, 212, 18 A.2d 138. This would also be a breach of the ‘cooperation’ clause. United States Fidelity & Guaranty Co. v. Wyer, 10 Cir., 60 Fed.2d 856, 858, certiorari denied subnominee Wyer v. United States Fidelity & Guaranty Co., 287 U.S. 647, 53 S.Ct. 93, 77 L.Ed. 560;Buffalo v. United States Fidelity & Guaranty Co., 10 Cir., 84 F.2d 883, 885;Brogdon v. American Automobile Ins. Co., 290 Mich. 130, 135, 287 N.W. 406;Bassi v. Bassi, 165 Minn. 100, 102, 205 N.W. 947;Finkle v. Western Automobile Ins. Co., 224 Mo.App. 285, 296, 26 S.W.2d 843;Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 276, 160 N.E. 367, 72 A.L.R. 1443;Seltzer v. Indemnity Ins. Co., 252 N.Y. 330, 335, 169 N.E. 403;S. & E. Motor Hire Corp. v. New York Indemnity Co., 255 N.Y. 69, 174 N.E. 65, 81 A.L.R. 1318;Conroy v. Commercial Casualty Ins. Co., 292 Pa. 219, 225, 140 A. 905;Francis v. London Guarantee & Accident Co., 100 Vt. 425, 430, 138 A. 780;Buckner v. Buckner, 207 Wis. 303, 309, 310, 241 N.W. 342;Hunt v. Dollar, 224 Wis. 48, 53, 271 N.W. 405. As many of the cited cases show, it is immaterial whether the intentionally false information be an overstatement or understatement of the facts bearing upon liability. Coöperation requires that there must be an effort to sell 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.

‘The company, however, could not, after having acquired information sufficient to warrant a disclaimer, continue in defence of the action and, upon the rendition of an adverse verdict, then for the first time rely upon such information and withdraw. It was bound to exercise good faith and due diligence.’ Klefbeck v. Dous, 302 Mass. 383, 387, 19 N.E.2d 308, 311. See also Daly v. Employers' Liability Assurance Corp., Ltd., 269 Mass. 1, 4, 168 N.E. 111, 72 A.L.R. 1436;Barbeau v. Koljanen, 299 Mass. 329, 332, 333, 12 N.E.2d 839;Restighini v. Hanagan, 302 Mass. 151, 153, 18 N.E.2d 1007; Colby v. Preferred Accident Ins. Co., 134 M. 18, 181 A. 13. As was said in Goldberg v. Preferred Accident Ins. Co., 279 Mass. 393, 399, 181 N.E. 235, 237, ‘the insured is placed in a position in which it must separate itself from the defense decisively and completely if it desires to insist upon its right to disclaim upon breach of the condition.’

The judge's ruling in each case that the company, ‘having assumed the defence of said tort action, and having carried it to verdict, cannot now rely on the knowledge and information which it had at the time of said trial as a defence to this action’ was accordingly, correct provided his specific findings did not necessarily preclude such a ruling. See Birnbaum v. Pamoukis, 301 Mass. 559, 562, 17 N.E.2d 885. This the findings did not do. It is, however, open to the company to contend, as it does, that the following findings as to disclaimer were plainly wrong: ‘I find that on and before the date of the trial of said tort case, as a result of investigation by its agents, all the facts concerning the alleged accident which said insurance company now adduces in defence of this action were or could have been within its knowledge and possession. I find that such knowledge was sufficient to warrant the filing of a disclaimer by said company refusing to defend said action of tort.’

Much of the material evidence was documentary. From a statement dated January 9, 1939, given by O'Brien to one Paul, an agent of the company in Auburn, Maine, it appeared that he was thirty years of age, and had been in Woburn with his father's automobile on January 5, 1939, from about 5:45 P.M. until about 11 P.M.;...