Opinion
Decided November 5, 1930.
An insurer against liability who assumes the defence of the assured assumes his liability, if any, and cannot avoid responsibility except by settlement with the plaintiff or payment to the assured. If such insurer unequivocally abandons the defence, the plaintiff may thereupon deal with the defendant-insured appearing "in his proper person"; and a consent judgment for the plaintiff thus entered into is binding on the insurer unless annulled for sufficient cause. If such insurer after withdrawing appearance because of an alleged breach of the policy by the insured fails to obtain a decree for cancellation thereof and thereupon obtains leave to appear and moves to set aside the consent judgment on any sufficient grounds, such motion should be entertained and an order denying the motion will be set aside where there is evidence tending to show no abandonment and there is evidence to support a conclusion that the judgment should be vacated as matter of law. Where upon exception to the denial of a motion no express findings have been made on issues necessarily presented and as to which there is evidence, the case will be remanded for further hearing unless it appears that the denial of the motion was the only conclusion which could be reached. Where it is doubtful whether a finding and ruling reported were intended to include a finding essential to a disposition of the cause the case should either be amended to include such finding if intended, or reopened to determine such essential issue. A judgment may be set aside on the ground of fraud or mistake and a motion to that effect presents the questions of fact whether the judgment was procured by fraud or resulted from mistake and whether under the circumstances justice requires that the judgment be vacated. An agreement made by the parties of record or their attorneys is presumed to have been made in good faith and a judgment entered thereon with the assumed assent of the court is binding upon all persons interested therein.
CASE, to recover damages for personal injuries sustained by the plaintiff while riding in the automobile of her husband, the defendant, George Lamarre. He was insured against liability by the defendant company which defended under the terms of its policy. The trial was by jury, resulting in a verdict for the plaintiff for $600, which was later set aside as inadequate. Immediately following the trial the company advised the insured by letter: "In view of your failure to cooperate in the defence of this case and your conduct during the trial of this case, this Company disclaims any and all liability on account of the same and on account of any verdict or judgment to be recovered herein. Counsel retained for the defense of the case will be glad to turn over . . . any information in his possession to you or your representative, upon request, which will assist you in any further steps you may care to take." The company's attorney withdrew his appearance and other counsel appeared for the insured. The company then brought a bill in equity against the insured and the plaintiff for cancellation of the policy because of conspiracy, fraud and collusion at the trial. Upon hearing, the bill was dismissed and the dismissal was sustained in this court by decision rendered January 3, 1928. 83 N.H. 206. Eight days later counsel for the insured withdrew his appearances in the superior court, and on the following day the insured appeared pro se and confessed judgment for $10,000. Thereupon the company, having obtained leave to appear, filed the motions here in issue, asking that the consent judgment be set aside, and that the case be reopened for trial on its merits, alleging as grounds therefor fraud, mistake, collusion and conspiracy.
Upon hearing on its motions the company's letter of February 19, 1924 was introduced. Its attorney admitted that the letter was sent, and the company's appearance withdrawn, against the advice of counsel. Upon these facts and the docket entries the court found and ruled as follows:
"The Maryland Casualty Co. was not a party to the agreement, and so its rights will not be affected by it unless the withdrawal of its counsel and its letter of February 19, 1924, as a matter of law amount to an abandonment or waiver of its rights. The court rules that they do not, and finds as a fact that if the plaintiff intends to look to the insurance company to satisfy her judgment, that company is not bound by the agreement, and has the right to be heard upon the question of liability and also upon the question of damages, but if she does not intend to seek satisfaction of her judgment from the insurance company, there is no reason why her agreement with the defendant should be disturbed. It is, therefore, ordered that the plaintiff file with the clerk on or before the fifteenth day of November, 1928, a written statement of her intentions with respect to the satisfaction of her judgment. If she fails to do so, or if she files a statement to the effect that she does not intend to look to the insurance company further, in either event, the Maryland Casualty Company will thereby be released from all further liability on account of its policy, and the judgment against the defendant may stand in accordance with the agreement. If the plaintiff signifies her intention to seek satisfaction from the Maryland Casualty Company, the agreement for judgment will thereby be rendered void, the judgment will be set aside, and the case will stand for trial upon its merits in its regular order." The plaintiff filed a written statement of her intention to look to the company for the satisfaction of her judgment.
The plaintiff's bill of exceptions to such findings, rulings and orders was allowed by Young, J. So far as material to the decision these will appear in the opinion.
Banigan Banigan, for the plaintiff.
O'Connor Saidel, for the defendants.
As the record is here interpreted, the court in effect ruled that, in the absence of a waiver of its rights, the company was not bound by the agreement for judgment between the parties of record, and rested such holding on the fact that the company was not a party thereto. The plaintiff excepted to this ruling and to the order based thereon.
The company undertook to indemnify the insured against liability. From the earlier transfer, and from concessions of counsel in argument here, it appears that the policy contained the usual provisions of such contracts, binding the company to defend or settle any suit brought to recover damages on account of any accident covered by the policy, and forbidding interference by the insured therewith, or with settlements except by the company's consent. It appears to be conceded that the policy covers the injury in suit. Pursuant to its contract the company appeared and defended the action. Its assumption of the defence was an assumption of the liability of the insured, if any, for the injury to the plaintiff, which the company could not thereafter escape except by settlement with the plaintiff or payment to the insured. Sanders v. Insurance Co., 72 N.H. 485, 495, 496, 501; Lombard v. Company, 78 N.H. 110, 111. The company's withdrawal did not deprive the plaintiff of her right to continue the prosecution of her suit in the usual course. Upon the disappearance of counsel for the defence she was at liberty to deal with the insured appearing "in his proper person." P. L., c. 325, s. 1. Such is the usual and ordinary course of procedure. An agreement made by the parties of record or their attorneys is presumed to have been made in good faith, and judgment entered thereon with the assumed assent of the court is binding upon all persons interested therein. Beliveau v. Company, 68 N.H. 225, 228. It follows that the ruling that the rights of the company were unaffected by the agreement because it was not a party thereto was error and the plaintiff's exceptions to such ruling and to the order based thereon must therefore be sustained.
The company's motion presupposes a judgment, valid until set aside, and seeks relief therefrom because of alleged "fraud, mistake, collusion, and conspiracy." A judgment may always be annulled for sufficient cause. Warner Bank v. Company, 58 N.H. 533; Raymond v. Goodrich, 80 N.H. 215, 216. Fraud to which the mover is not a party (Adams v. Adams, 51 N.H. 388, 397; Tebbetts v. Tilton, 31 N.H. 273, 287; Reed v. Prescott, 70 N.H. 88), or a mistake not due to his culpable negligence (Adams v. Adams, supra; Wingate v. Haywood, 40 N.H. 437, 441; Clough v. Moore, 63 N.H. 111, 112; Knight v. Hollings, 73 N.H. 495, 502; Scammon v. Pearson, 80 N.H. 122, 124; Watkins v. Railroad, 80 N.H. 468, 472, 474) may afford such a sufficient cause. The motion presents questions of fact, namely, whether (1) the judgment was procured by fraud or (2) resulted from a remediable mistake, and if either (3) whether, under the circumstances shown, justice requires that the judgment be set aside and the company be permitted to try the case upon its merits. Warner Bank v. Company, supra; Clough v. Moore, supra; Brown v. West, 65 N.H. 187; Melvin v. Melvin, 73 N.H. 602; Watkins v. Railroad, supra, 474. See Jaques v. Chandler, 73 N.H. 376, 381, 382; Cook v. Lee, 72 N.H. 569, 572; Shea v. Starr, 76 N.H. 538, 541.
No express findings were made upon these issues, and, in view of the ruling as to the effect of the consent judgment, none can be implied. In this situation the appropriate procedure is to return the case to the superior court for further trial (English v. Richardson, 80 N.H. 364, 370; Kaulbach v. Kaulbach, 63 N.H. 615), unless it conclusively appears from the record that the denial of the company's motion is the only conclusion which could be reached.
It is the contention of the plaintiff, however, that the company's withdrawal of appearance and its letter to the insured, as a matter of law, amounted to an abandonment or waiver of the company's right to interfere in the suit after judgment had been obtained by agreement. Her exception to the refusal of the court to so hold is overruled. Any inference of waiver or abandonment which might otherwise have been drawn from the letter and withdrawal is countered by the conduct of the company in immediately filing its bill in equity to cancel the policy, to restrain recovery thereon and to enjoin the trial of the action at law. It pursued this remedy by trial and by bill of exceptions upon which a decision was rendered by this court on January 3, 2928. 83 N.H. 206. The consent judgment was filed in the superior court January 12, without waiting for the expiration of either the ten day period allowed for filing motions for rehearing (Rule 10), or of the thirty day period required by statute (P. L., c. 315, s. 14) before the opinion was due to be handed down. The company's motion for leave to appear in the action at law was filed on February 9, or within ten days of the certification to the superior court of the order denying its exceptions.
If it were conceded that the course adopted, in withdrawing its appearance in the action at law and in relying solely upon its supposed equitable right to an annulment of the policy pending its determination, was not the appropriate procedure, it cannot be said as a matter of law that the company was culpably negligent in entertaining and pursuing such mistaken view of its rights. On the other hand its aggressive course in contesting its liability under the policy, followed by its seasonable motion to reappear in the action at law, tends to show, not only a want of any intention to abandon its rights, but reasonable diligence in their pursuit.
The evidence of record would support a finding that, by reason of a remediable mistake, justice requires that the judgment be set aside and trial of the action of law be had upon its merits. It may be that the finding and ruling reported were intended to include this essential finding. If so, the findings and order should be so amended as to make this clear. Otherwise the proceeding should be reopened for consideration of this issue.
Case discharged.
All concurred.