Security Ins. Co. of Hartford v. Owen, 73--101

• Decision Date: 19 November 1973
• Docket Number: No. 73--101,73--101
• Parties: SECURITY INSURANCE COMPANY OF HARTFORD, Appellant, v. William Maurice OWEN and Maurice Owen, Appellees.
• Court: Arkansas Supreme Court

Page 229

501 S.W.2d 229

255 Ark. 526

SECURITY INSURANCE COMPANY OF HARTFORD, Appellant, v. William Maurice OWEN and Maurice Owen, Appellees.

No. 73--101.

Supreme Court of Arkansas.

Nov. 19, 1973.

Bridges, Young, Matthews & Davis, Pine Bluff, for appellant.

Jones, Matthews & Tolson, Pine Bluff, for appellees.

FOGLEMAN, Justice.

This is the second appeal of this case. In the first, Security Insurance Company of Hartford v. Owen, 252 Ark. 720, 480 S.W.2d 558 (1972), we reversed a judgment against appellant because of error in submitting to the jury the question of construction of one of the insurance policies involved. The case is a suit by William Maurice Owen and his father Maurice Owen against Security Insurance Company of Hartford, the insurer of W. H. Marks on two policies. One of them is an automobile liability policy with a limit of $50,000. The other is a Farmer's Comprehensive Personal Liability Policy with a limit of $25,000. The question at issue is which policy applies.

Owen, then a minor, was injured on August 7, 1965, while guiding a tractor belonging to Marks and being towed by a pickup driven by Marks. The purpose of the trip was to take the tractor and equipment to a duck hunting club in which Marks was interested. In a suit brought by Maurice Owen in behalf of himself and his son, a judgment for $34,250 was recovered. Appellant provided coverage in that suit, having acknowledged coverage under the comprehensive personal policy but denying coverage under the automobile policy. Appellant then paid the amount of its comprehensive policy limits but continued to deny liability under the automobile policy on the basis of a clause excluding employees of Marks from coverage. This suit was then brought against appellant by appellees to recover the balance of $9,250, Interest, statutory penalty and attorney's fees, as a subrogee of Marks, pursuant to Ark.Stat.Ann. § 66--4001 (Repl.1966). Of course, appellees asserted that the automobile policy provided coverage to Marks. Appellant has consistently maintained its position that the exclusion in that policy applied. Obviously, Marks has not paid any part of the judgment.

After the reversal of the judgment on the first appeal, a second trial, presided over by a special circuit judge because of illness of the regular judge, resulted in a jury verdict favorable to appellant. Timely motion for new trial was filed. It was heard and granted by the regular circuit judge, who had the transcript of the proceedings before him. This appeal was taken from the order granting a new trial. Appellant contends that this order constituted an abuse of the circuit judge's discretion because it was premised upon an error of law.

The grounds for the motion were allegations of error in the admission into evidence of two pretrial statements made by W. H. Marks, a witness but not a party to this action, and error in the failure of the trial judge to admonish the jury that such statements were to be considered by them only as bearing upon the credibility of the witness. The new trial was granted solely upon the finding of the regular circuit judge that there was error in the admission of the statements.

Error of law occurring at the trial and objected to by the moving party is one of the statutory grounds for a new trial. The trial court has a broad latitude of discretion in the granting of new trials. This discretion is not limited to cases where sufficiency of the evidence is the ground for the motion. See, e.g., Heil v. Roe, 253 Ark. 139, 484 S.W.2d 889; Millers Casualty Insurance Co. v. Holbert, 253 Ark. 69, 484 S.W.2d 528; Hardin v. Pennington, 240 Ark. 1000, 403 S.W.2d 71; Thomas v. Arnold, 192 Ark. 1127, 96 S.W.2d 1108. Of course, the latitude of the trial judge's discretion is much broader where the question is whether a jury verdict is supported by a preponderance of the evidence, because of the peculiar advantage of his position in evaluating all the factors bearing upon it. In determining questions as to errors of law, his position is not of the same superiority to that of the appellate court. Still, the action of the trial judge on a motion for new trial upon a statutory ground should not be reversed in the absence of manifest abuse of his discretion. Law v. Collins, 242 Ark. 83, 411 S.W.2d 877; Blackwood v. Eads, 98 Ark. 304, 135 S.W. 922. See also, Millers Casualty Ins. Co. v. Holbert, supra; Hardin v. Pennington, supra; Thomas v. Arnold, supra. The showing that this discretion was abused must be much stronger when a new trial has been granted than when it is denied. Heil v. Roe, supra; Worth James Construction Co. v. Herring, 242 Ark. 156, 412 S.W.2d 838; Blackwood v. Eads, supra.

The party who was the beneficiary of the verdict set aside by the granting of a new trial has much less basis for a claim of prejudice than does an unsuccessful movant for a new trial. In Porter v. Doe, 10 Ark. 186, the trial court, after a verdict for the defendants, granted the plaintiffs a new trial which resulted in a verdict for the plaintiffs. The defendants alleged that the new trial was improperly granted, apparently upon the basis that the verdict was not contrary to the evidence or instructions. This court said that since the verdict was in favor of the defendants they could not complain of either the misdirections of the judge, improper evidence admitted or a like cause, adding:

A verdict was all that they could ask, and when it was set aside they could only complain that the Circuit Court had exercised its discretion to their prejudice. The Supreme Court has already extended its revising control over the discretionary powers of the Circuit Court as far as the most liberal practice will warrant upon the subject of new trials. This is a new case and must be predicated solely upon the ground of abuse of the discretionary power of the Circuit Court. Whether this power was exercised prudently or not there was offered the defendants another opportunity for presenting their defence, and if they had injustice done them in that trial, this court is open to hear their complaint.

In Heil v. Roe, we said:

In Blackwood v. Eads, 98 Ark. 304, 135 S.W. 922, we pointed out that this court will much more reluctantly reverse the final judgment in a cause for error in granting than for error in refusing a new trial. Such reluctance is based on sound and practical reasoning. In the first place any competent judge is simply not as likely to find and admit error where none exists as he is to overlook or fail to recognize or accept error where it does exist. In the second place, final justice may be totally denied by the wrongful refusal of a new trial whereas final justice should be only postponed by the wrongful granting of a new trial.

Manifest abuse of discretion in granting a new trial means a discretion improvidently exercised, i.e., exercised thoughtlessly and without due consideration. Blackwood v. Eads, supra. Under the circumstances prevailing here we are unable to say that the circuit judge exercised his discretion improvidently, thoughtlessly or without due consideration.

Marks testified in the first trial of this case. He was subpoenaed and called to testify at the second trial by appellant. The issue in the case was whether young Owen was an employee of Marks. Appellees' cause of action, when the judgment against Marks remained unsatisfied for 30 days, was by statutory subrogation to the right of Marks under the policy. Ark.Stat.Ann. § 66--4001. Obviously, the interest of Marks in a favorable result in this litigation was identical to that of the Owens. Even though Marks was not a party to the action, or, strictly speaking, in privity with either of the Owens, a judgment unfavorable to the Owens would likely be binding upon Marks in any action he might bring against appellant, particularly when he could have asked to be made a party and his knowledge of the pendency of the action arose from his having been called as a witness on the critical issue. See Carrigan v. Carrigan, 218 Ark. 398, 236 S.W.2d 579; Roberson v. Hamilton, 240 Ark. 898, 405 S.W.2d 253; Hill v. Village Creek Drainage District, 215 Ark. 1, 219 S.W.2d 635; Moreland v. Meade, 162 Md. 95, 159 A. 101 (1932); Bacon v. Gardner, 38 Wash.2d 299, 229 P.2d 523 (1951); Talbot v. Quaker State Oil Refining Co., 104 F.2d 967 (3rd Cir. 1939); Terry and Wright of Kentucky v. Crick, 418 S.W.2d 217 (Ky. 1967); 50 C.J.S. Judgments § 786, p. 322. By the same token, a judgment against appellant would certainly relieve Marks from the payment of the judgment against him.

In this situation, the testimony of Marks and young Owen was critical because they appear to be the only ones who can actually shed any light on the existence of an employer-employee relationship. Appellant had promptly made inquiries of both soon after the wreck occurred. Young Owen testified Marks said nothing about paying him for steering the tractor, that he had not done any other work for Marks or been to the duck camp during the year in which he was injured, that he had never been paid any money by Marks, and that Marks had never offered to make any payment to him. On cross-examination, he admitted making a statement to George Sims, an insurance adjuster, that he was working for Marks at the time of his injury and that Marks was going to pay him. The statement was introduced. It contained a clause stating, in effect, that Owen was an occasional employee and that Marks paid him.$7.00 per day for eight hours' work. Owen explained the statement by saying he did not tell the adjuster the things contained in it. He said that, at the time, he had been 'doped up' for his fourth surgical procedure due to his injury and that Sims read the content of the statement, and, after each sentence, asked him if he agreed. Owen attributed his affirmative answers and his signing the statement to the influence of drugs. He admitted that all of the statement except those...