Western Cas. & Sur. Co. v. Fowler, 3213

• Decision Date: 24 March 1964
• Docket Number: No. 3213,3213
• Citation: 390 P.2d 602
• Parties: WESTERN CASUALTY AND SURETY COMPANY, Appellant (Defendant below), v. Klair FOWLER and Alba Fowler, d/b/a Fowler's, Appellees (Plaintiffs below).
• Court: Wyoming Supreme Court

Page 602

390 P.2d 602

WESTERN CASUALTY AND SURETY COMPANY, Appellant (Defendant below), v. Klair FOWLER and Alba Fowler, d/b/a Fowler's, Appellees (Plaintiffs below).

No. 3213.

Supreme Court of Wyoming.

March 24, 1964.

Lathrop, Lathrop & Tilker, Carleton A. Lathrop and James A. Tilker, Cheyenne, for appellant.

Loomis, Lazear, Wilson & Pickett, Edward T. Lazear, Cheyenne, for appellees.

Before PARKER, C. J., and HARNSBERGER, GRAY and McINTYRE, JJ.

Mr. Justice HARNSBERGER delivered the opinion of the court.

Plaintiffs were insured by defendant against liability with coverage limited to $10,000, when an employee claimed damages for injuries suffered in a fall from plaintiffs' ladder. The employee offered to settle her claim for $2,813.80, but when this offer was refused by the insurance carrier, the employee sued plaintiffs for $18,197.05. Upon trial the jury awarded the employee $18,102.50, and the court gave judgment accordingly. Thereafter, in order to avert an appeal, the employee accepted $15,000 in full satisfaction of the judgment, the insurer paying $10,000, and plaintiffs paying $5,000. Plaintiffs then brought action against defendant claiming defendant acted in bad faith in rejecting the employee's offer of settlement. Following trial to a jury, plaintiffs were awarded $5,000, and judgment against defendant for that sum was given plaintiffs. Defendant appeals.

Although appellant states at length its grounds for reversal, they sum up to mean: (1) The evidence was insufficient to show bad faith in refusing to accept the settlement which would have relieved the insured from any damage payment to the employee; and (2) there was error in refusal to give the jury defendant's offered instruction defining bad faith as, 'an intentional disregard of the financial interests of the insured or a failure to use honest and fair judgment in evaluating the probability or chances of success.'

Evidence shows the defendant's adjuster was told the ladder from which the employee fell was a light ladder, rather flimsy, and its condition caused the employee to fall; that the ladder had a tendency to be wobbly and could be easily upset; that the adjuster told plaintiffs not to admit any liability, that it would show negligence on 'our' part; that the adjuster told one plaintiff that 'if you are going to get on our side of the fence you have got to admit no liability or negligence. If you do you will lose your defense'; that the adjuster told plaintiffs not to continue paying the employee's salary, that if 'we' did we would admit negligence, so plaintiffs did stop paying the employee's salary; that when plaintiff recommended to defendant that the $2,813.80 be paid, the adjuster said the company would only pay $500; that one of plaintiffs told defendant's lawyer and the adjuster that the ladder was defective; that there was a screw, a nut, in the ladder that sometimes worked loose and fell off; that the ladder was loose, that the screws were loose, that the connections to support it were loose; that one of the plaintiffs many times pointed out to the adjuster some loose screws; that one of the plaintiffs had fallen from the ladder because it was light and easily upset; that plaintiffs provided the employee with an unsafe, wobbly ladder; and that defendant's lawyer was told all the facts about the accident.

The injured employee testified that the adjuster for the insurance company was her first visitor after the accident, when she was in the hospital, and before any offer of settlement was made; that the adjuster had a piece of paper and told her she had to sign it, that it was something he had to have for the doctor; that the adjuster talked about $500 and that the $500 was all the insurance her employer had; and that the adjuster did not ask about the ladder, what she was doing on the ladder, how often she used it, why or how she fell, or how it happened.

The injured employee's husband testified that before the negligence trial the adjuster told him that plaintiffs only had $500 insurance and if he did not accept that, and 'decide to take this thing to court you won't get a damn dime'; that the adjuster had the ladder with him and when the adjuster started to pick it up it collapsed; that the ladder had straps on the sides that are supposed to hold it apart, but the straps did not hold it apart, they would just collapse with the ladder, and when the witness reached down and started to pick the ladder up it just folded up and fell over.

The other plaintiff, who also worked in the store, testified the tenor of the adjuster's conversation before the negligence trial was that plaintiffs were to go along with the adjuster's idea, they were not to admit anything so far as the accident was concerned, that it was carelessness on the employee's part, and that the adjuster never asked her about the ladder. All this evidence being made available to the insurance adjuster and through him to the insurance company, bore materially upon the question of the company's good faith in rejecting the offer of settlement made by the claimant. Such evidence was certainly strongly adverse to the insurance company's position.

In 7 Am.Jur.2d, Automobile Insurance, § 157, p. 487, which deals with particular facts affecting questions of good faith, it is said, 'it appears from the decisions that it may be indicative of either such bad faith or negligence that the evidence as to liability and damages, in the action by the injured claimant, was strongly against the insured.' See Tennessee Farmers Mutual Insurance Company v. Wood, 6 Cir., 277 F.2d 21; Brown v. Guarantee Insurance Company, 155 Cal.App.2d 679, 319 P.2d 69, 66 A.L.R.2d 1202; also Annotations in 40 A.L.R.2d 196, 203, III, §§ 10, 11; Cowden v. Aetna Casualty and Surety Company, 389 Pa. 459, 134 A.2d 223; Boerger v. American General Insurance Company of Minnesota, 257 Minn. 72, 100 N.W.2d 133.

Also, in 6 Am.Jur., Proof of Facts, Insurance, at p. 420, the first element listed among those said to constitute important facts tending to prove bad faith on the part of the insurer in failing to accept a compromise offer where judgment is subsequently entered against the insured in excess of policy limits, is, 'Presence of strong evidence against insured as to liability and...