Simmons v. Jeffords

• Decision Date: 21 November 1966
• Docket Number: Civ. A. No. 32441.
• Citation: 260 F. Supp. 641
• Parties: John W. SIMMONS v. Walter M. JEFFORDS, Jr. and Fidelity-Philadelphia Trust Company, Executors of the Estate of Sarah D. F. Jeffords.
• Court: U.S. District Court — Eastern District of Pennsylvania

260 F. Supp. 641

John W. SIMMONS v. Walter M. JEFFORDS, Jr. and Fidelity-Philadelphia Trust Company, Executors of the Estate of Sarah D. F. Jeffords.

Civ. A. No. 32441.

United States District Court E. D. Pennsylvania.

November 21, 1966.

Marshall A. Bernstein, Philadelphia, Pa., for plaintiff.

Peter P. Liebert, 3rd, Philadelphia, Pa., for Fidelity-Phila. Trust Co.

Francis E. Shields, Philadelphia, Pa., for Estate of Sarah D. F. Jeffords.

MEMORANDUM AND ORDER

JOHN W. LORD, Jr., District Judge.

This is an action for personal injuries suffered by the plaintiff while he was in the employ of Sarah D. F. Jeffords, who is now deceased. Since her death, her personal representatives have been substituted as parties defendant.

When the accident occurred, the decedent was insured against personal liability by The Employers' Liability Assurance Corporation, Ltd. (hereafter called Employers) to the extent of $25,000.00. After the accident, Employers conducted an intensive investigation of the circumstances surrounding the accident, and ultimately offered its full policy limits in settlement of the plaintiff's claim. This offer was rejected, and the matter is now before this Court on the motion of Employers for leave to pay the $25,000.00 into court and to withdraw their representation of the insured.

After considering the question carefully, it is the judgment of this Court that Employers is bound to defend the action, notwithstanding its offer to pay the proceeds into court. The policy itself is clear and unambiguous. The first paragraph thereof imposes three separate and distinct responsibilities on Employers. (See Appendix A) First, Employers agrees to pay on behalf of the insured any sums the insured should become legally obligated to pay; second, it promises to defend the insured in any suit against her alleging damages payable under the terms of the policy; finally, it assumed the responsibility of properly investigating the claim, and otherwise representing the interests of the insured in good faith.

There is no intimation in the policy that these duties may be satisfied merely by paying into court the applicable policy limits. On the contrary, a fair reading of the policy indicates that these were independent responsibilities. Certainly, if Employers could have effected a settlement of the claim and it saw fit to dispose of it in this fashion, there would be no duty to defend the action. This contingency is obviated by the last sentence of paragraph I (Appendix A) which authorizes Employers to settle any "claim or suit as it deems expedient." If, however, it is unable to effect a settlement, as has occurred in this case, it must defend the action. Otherwise, a most significant protection afforded by the policy—that of defense—is rendered a near nullity. In the view this Court takes, Employers' offer to pay its policy limits merely protects it from the additional exposure of being held responsible for a verdict in excess of the policy limits, which might be the case if it failed to use its best efforts to effectuate a settlement. See e. g. Keeton, Liability Insurance And Responsibility For Settlement, 67 Harv.L.Rev. 1136, 1139-42 (1959); Comment, 67 Dick.L.Rev. 321 (1963).

Employers has made much of the introductory language to paragraph II of the policy, limiting its responsibility to "such insurance as is afforded by the policy. * * *" (Appendix A). Its argument in this regard is unpersuasive; first, because no such introduction precedes paragraph I, that portion of the policy which the Court deems to be determinative of the rights of the parties; second, because paragraph II (a) is directed primarily, if not wholly, at post-trial expenses. However, even if similar...