Wynnewood Lumber Co v. Travelers' Ins. Co

• Decision Date: 04 April 1917
• Docket Number: (No. 294.)
• Citation: 91 S.E. 946
• Parties: WYNNEWOOD LUMBER CO. v. TRAVELERS' INS. CO.
• Court: North Carolina Supreme Court

91 S.E. 946

(173 N.C. 269)

WYNNEWOOD LUMBER CO.

v.TRAVELERS' INS. CO.

(No. 294.)

Supreme Court of North Carolina.

April 4, 1917.

Appeal from Superior Court, New Hanover County; Connor, Judge.

Action by the Wynnewood Lumber Company against the Travelers' Insurance Company. From a judgment dismissing the action on demurrer, plaintiff appeals. Affirmed.

This is a civil action upon complaint and demurrer. The demurrer was sustained, and, the plaintiff electing to stand upon its complaint, the action was dismissed.

McClammy & Burgwin, of Wilmington, for appellant.

Geo. Rountree, Thomas W. Davis, and J. O. Carr, all of Wilmington, for appellee.

BROWN, J. This action is brought to recover the sum of $5,000, which the plaintiff alleges it was compelled to pay on a judgment obtained against it by one Joseph Jones, as damages for injuries sustained while in its employment. The complaint shows that the defendant had issued a policy of indemnity in the usual form in the sum of $5,000, indemnifying the plaintiff from loss by reason of injury to its employes. One Jefferson Jones, working on the logging road, was seriously injured, and plaintiff alleges that it gave notice to the defendant of the injuries and assisted in making the investigation, and that it could have settled the claim for from $1,000 to $2,500, but the defendant company refused to do so. Action was brought by Jones against the plaintiff, the Wynne-wood Lumber Company, and it was defended by counsel employed by the Travelers' Insurance Company. The trial resulted in a verdict for $20,000 damages. Subsequently the court reduced this verdict to the sum of $15,000, and by the negotiations entered into by counsel for the insurance company and the Wynnewood Lumber Company with counsel for the plaintiff, Joseph Jones, an agreement was entered into whereby the appeal was abandoned, and judgment was entered for $10,000. $5,000 of this sum was paid by the plaintiff in this action, and $5,000 by the defendant.

The ground of demurrer is that the facts set forth in the complaint do not constitute a cause of action. In the brief of the learned counsel for the plaintiff, it is said:

"This raises the question as to whether or not an insurance company, which has issued a policy of insurance indemnifying the plaintiff against loss which has the right under the terms of the policy, after notice of injury, to take absolute control of the litigation, and fails to settle at a time that it could settle, without loss to the insured, can evade payment, when it controls the suit, and the judgment rendered is for four times the amount of the policy issued."

It is true, as held by other courts, that where an insurer under an employers liability policy, on being notified of an action for injuries to the insurer's servant, assumes the defense thereof and was negligent in conducting the suit, to the loss of the employer, the latter was entitled to sue the insurance company for breach of its implied contract to exercise reasonable care in conducting the suit or in tort for negligence. Mfg. Co. v. Plate Glass Ins. Co. (C. C.) 171 Fed. 495.

There is no allegation in the complaint in this action that the defendant company was guilty of any negligence in the conduct of the suit brought against the plaintiff for the injuries to Jones. There is no allegation that it failed to employ competent counsel, and no allegation that the counsel employed by it was guilty of any negligence, the consequence of which was a verdict and judgment against the plaintiff. So far as the complaint shows, the case was conducted...