State Farm Mut. Auto. Ins. Co. v. Phillips
| Decision Date | 03 July 1936 |
| Docket Number | 26677. |
| Citation | 2 N.E.2d 989,210 Ind. 561 |
| Parties | STATE FARM MUT. AUTOMOBILE INS. CO. v. PHILLIPS. |
| Court | Indiana Supreme Court |
Action by Philemon H. Phillips against the State Farm Mutual Automobile Insurance Company. Verdict and judgment for plaintiff, and defendant appeals.
Reversed.
" Waiver" must be an intentional relinquishment of right which ordinarily must be predicated on full knowledge of all the facts.
Appeal from Marshall Circuit Court, Albert Chipman Judge.
Kitch & Kitch, of Plymouth, and Rees & Smith, of La Porte, for appellant.
McKesson & Kizer, of Plymouth, for appellee.
The appellee filed this action against the appellant, State Farm Mutual Automobile Insurance Company, upon a policy of insurance issued by appellant to appellee, insuring him against losses and claims growing out of accidents and injuries sustained in the operation of his automobile. A copy of the insurance policy is filed with and made part of the complaint.
It is alleged in the complaint that on September 1, 1930, the appellee, together with Daisy Bunch and Helen Bunch, was riding in appellee's automobile, and while so riding the automobile was in a collision with a train; that as a result of said collision Daisy Bunch sustained serious injuries; that, pursuant to the terms of the policy of insurance, the appellee immediately notified the appellant, and its representative made an investigation of the accident. In making such investigation, the written statements of appellee, Daisy, and Helen Bunch were given to the investigator. In these statements it was made to appear that the accident was caused and the injury sustained by reason of negligence of the railroad company in operating its train. No negligence upon the part of appellee was shown in these statements.
Afterwards, December 16, 1930, Daisy Bunch filed an action against appellee for damages on account of injuries sustained. Appellee immediately notified appellant of the filing of said action. Appellant, pursuant to the terms of the policy, appeared and made defense in the name of the appellee. The cause was submitted to a jury for trial in the month of June, 1931. After all the evidence had been introduced, but before argument, Daisy Bunch, through her attorneys, asked leave of court to amend her complaint by interlining these words: ‘ And plaintiff was then and there so riding in defendant's (appellee's) automobile as an employee of defendant (appellee).’
The motion was sustained, and thereupon the appellee herein, defendant therein, asked that the submission of the cause to jury be set aside and the cause continued, on account of the changed issue in the case. This was done.
Thereafter, on September 9, 1931, Daisy Bunch filed an amended complaint against the appellee in which she alleged that at the time of the accident she was in the employ of the appellee. Thereupon the appellant herein, through its attorneys, between September 15 and 25, 1931, notified appellee that it could not be held to respond in damages for the injury sustained by Daisy Bunch, for the reason that, by the terms of clause E of the policy of insurance, it was liable only for damages ‘ suffered or alleged to have been suffered by any person, other than the Assured or those in his household, service or employment.’
The complaint of appellee against appellant not only set out in full a copy of the insurance policy, but contained full and complete copies of the complaints of Daisy Bunch against the appellee. The policy of insurance provided that, when any claim is made against the assured on account of any accident, he should give notice thereof, with full particulars, and at all times render service to, co-operate with, and assist the company in making a defense to such claim. If suit was brought against the insured, it became his duty to forward the summons to the company immediately, or any other process served upon him, and the company agreed at its own expense to defend such suit in the name and on behalf of the assured. The assured agreed to aid in effecting settlement, securing information and evidence, the attendance of witnesses, and to not voluntarily assume any liability, settle any claim, interfere in any settlement or legal proceedings, or incur any expense, except at his own cost, without the written consent of the company.
The theory of the appellee's complaint is that, by reason of the fact that appellant undertook the defense of the action as provided by the terms of the policy, it thereby is estopped from denying liability.
Appellee alleged that Daisy Bunch recovered judgment against him in the sum of $1,100 and costs; that by reason thereof, and the facts alleged in his complaint, the appellant is liable therefor. The appellant filed a demurrer to the complaint, which contained a memoranda full and complete enough to present the questions as to the sufficiency of the complaint to state a cause of action against appellant, and as to whether or not there had been a waiver by the appellant of its liability to the appellee. Also as to whether or not the appellant had estopped itself to defend against appellee's action. The demurrer was overruled by the court.
Appellant filed an answer in general denial and an affirmative answer, in which it fully pleaded the fact that Daisy Bunch filed her action against appellee upon the theory that she was a guest in the automobile at the time of the accident, and thereafter amended her complaint by alleging that she was an employee in his service; that, upon learning that fact, appellant immediately notified appellee that it would not consider itself liable if Daisy Bunch recovered from him upon the theory that she was an employee; that appellant was willing to continue to conduct the defense for appellee in that case if appellee so desired, otherwise it would withdraw from the case; that appellee directed appellant to continue the defense in co-operation with attorneys employed by appellee at the time the Bunch suit was filed against him. Appellant alleged in its answer that by reason of clause E of the policy it was required to defend actions filed against the insured. As soon as the appellant learned that Daisy Bunch claimed that she was an employee of the appellee, it notified appellee that it would withdraw from the case and deny liability in the event Daisy Bunch recovered damages as an employee.
The cause was submitted to the jury for trial upon the complaint, the answer in general denial, and the affirmative answer, to which appellee filed a reply in denial. A verdict in favor of the appellee was returned by the jury upon which the court rendered judgment in the sum of $1,248.35. The appellant has assigned as errors in this court the overruling of appellant's demurrer to appellee's complaint and the overruling of its motion for a new trial.
The principal question involved in this appeal is whether or not, as a matter of law, the appellant waived the benefits of clause E of the insurance policy by its appearance and undertaking upon behalf of appellee to defend the action against him by Daisy Bunch. If appellant's conduct constituted a waiver or an estoppel, the cause must be affirmed; otherwise it must be reversed.
It is the position of the appellee that, by assuming the defense in the action of Daisy Bunch, the appellant waived its right to deny liability under the terms of the insurance policy, and is estopped to deny such liability. As an authority for such assertion, the appellant relies chiefly upon the cases of Patterson v. Adan (1912) 119 Minn. 308, 138 N.W. 281, 283,48 L.R.A.(N.S.) 184, and Oehme v. Johnson (1930) 181 Minn. 138, 231 N.W. 817, 81 A.L.R. 1308.
The Patterson Case, supra, was based upon a policy of insurance issued to indemnify the assured against loss resulting from an automobile accident. The policy indemnified the assured against loss for damages on account of bodily injury and death suffered by any person by reason of the maintenance and use of the assured's automobile. The company agreed to investigate all accidents upon notice and to make all negotiations for settlement of any resulting claim. It agreed, in the name of the assured, to defend all suits, even though the ‘ demands are wholly groundless, false, or fraudulent,’ to provide appeal bonds, pay all costs in any legal proceeding defended by the company, and all expenses incurred in investigation, negotiation, or defense. Its liability was limited in one respect only, and that was as to the amount of the liability. After a judgment was rendered against the assured in the sum of $5,000, it appears that he was wholly insolvent. Thereupon the judgment creditor filed garnishment proceedings against the insurance company to collect the judgment.
It was held under that policy that the company was liable. The language used by that court, upon which the appellee herein particularly relies, is the following: ‘ By undertaking the defense the company elected to treat plaintiff's cause of action, if he had any, as covered by its contract.’
It will be noted that the policy sued upon in the Patterson Case is more comprehensive than the policy sued upon in the instant case. There appears to be no limitation or reservation in favor of the insurance company, except that it would be liable for the sum of $5,000 only in any one case. Otherwise it was the duty of the company to defend and satisfy all actions filed against the assured, however unjust or wrongful such actions may be.
Oehme v. Johnson, supra, is another Minnesota case much like the Patterson...
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