Standard Printing Co. v. Fid. & Deposit Co. of Md.

• Decision Date: 16 November 1917
• Docket Number: No. 20403.,20403.
• Citation: 138 Minn. 304,164 N.W. 1022
• Court: Minnesota Supreme Court
• Parties: STANDARD PRINTING CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND.

138 Minn. 304

164 N.W. 1022

STANDARD PRINTING CO.

v.FIDELITY & DEPOSIT CO. OF MARYLAND.

No. 20403.

Supreme Court of Minnesota.

Nov. 16, 1917.

Appeal from District Court, Hennepin County; Daniel Fish, Judge.

Action by the Standard Printing Company against the Fidelity & Deposit Company of Maryland. Judgment for plaintiff, and defendant appeals. Affirmed.

Syllabus by the Court

When the insurer, in an employer's liability policy, assumes the exclusive control of the defense of a suit upon an employé's claim, it becomes liable for the payment of a judgment obtained to the employé and an action may be maintained by the employer to recover from the insurer the amount of the judgment for the benefit of the employé without payment of the judgment.

Having once assumed the defense, the insurer cannot relieve itself of this measure of liability by an unwarranted withdrawal from the case.

There was no impropriety in an agreement by the employer to prosecute the suit for the benefit of the employé nor in counsel commenting on that fact.

Under such circumstances, the employer may recover expenses incurred in defense of the employé's action after the insured withdrew, without payment of such expenses. Briggs, Thygeson & Everall, of St. Paul, for appellant.

Kerr, Fowler, Schmitt & Furber, of Minneapolis, for respondent.

HALLAM, J.

In July, 1913, plaintiff carried a liability policy in defendant company. Georgia Arabella Johnson, an employé of plaintiff, was injured in the course of her employment and sued plaintiff for damages.

The summons and complaint were turned over to defendant for attention. Defendant assumed the defense of the action and employed attorneys to that end. Its attorneys answered, interviewed witnesses, and made the usual investigation incident to a lawsuit. As the time approached for trial, two of defendant's representatives called on plaintiff's secretary for the purpose of further preparing the case for trial. A dispute arose; defendant accused plaintiff of refusing to co-operate with defendant in defending the action and in fact accused plaintiff of assisting the employé in the prosecution of her case, and thereupon defendant, assigning such want of co-operation, withdrew from the defense of the case and notified plaintiff in writing to that effect. Plaintiff employed other attorneys and the case was tried. The employé recovered a verdict and a judgment in the sum of $963.87. Defendant refused to pay the judgment. By that time, plaintiff had become insolvent and had transferred all its assets to its principal creditor, and this creditor agreed to pay plaintiff's debts, not including this claim. No other debt or claim was outstanding. There was no recourse for the collection of this judgment from plaintiff except by resort to stockholders' liability. It was then agreed between the judgment creditor and plaintiff that plaintiff would give its promissory note to Miss Johnson for the amount of her judgment and that she would satisfy the judgment. It was further agreed that she should have the benefit of any recovery which plaintiff might have against the defendant under its bond. Thereupon the note was given, the judgment satisfied and this action brought on the bond. This case was submitted to a jury and a verdict was rendered for plaintiff.

The policy was in the usual form. It required defendant to defend any suit brought against plaintiff to enforce a claim covered by the bond and to pay the expense of the litigation. It gave to defendant the exclusive control of the case with the right to settle or litigate as it saw fit, and denied the right of plaintiff to interfere. It required plaintiff, when requested by defendant, to aid in securing information, evidence and the attendance of witnesses, and to render all co-operation and assistance within its power. The trial court charged the jury that if plaintiff broke this provision of its contract, defendant was justified in withdrawing from the defense and was relieved from liability on its bond, but that if plaintiff did not break its contract in this particular, then plaintiff might recover. The jury by its verdict in effect found that plaintiff did not break its contract and that defendant's withdrawal from the case was wrongful or without warrant.

[1] 1. The court did not submit the question whether the transaction...