Opinion
No. 33865.
November 13, 1939. Suggestion of Error Overruled December 11, 1939.
INSURANCE.
Where liability policy made insurer liable for expense of defending even groundless suits, but there was no liability under the terms of the policy for settling a claim not sued on, or attorney's fee in negotiating such settlement, insurer was not liable for amount expended in making settlement of a claim before suit brought, it being immaterial that the claim was settled before suit was brought for a less sum than it might have cost to defend suit, had suit been brought.
APPEAL from the circuit court of Scott county; HON. P.M. LEE, Judge.
Gilbert Cameron, of Meridian, for appellant.
That there was no legal liability of Mr. Cook on the claims settled as to Ruffin and Wallace, for which reimbursement is sought by this suit was ruled in the case of Cook v. Wright, 177 Miss. 644. In short, he settled these cases when there was no legal liability on his part.
No suits had been filed by either Ruffin or Wallace; they were merely threatening to do so.
For the purpose of this case it may be conceded that when an insurer denies liability and refuses to defend, and suits are filed, the insured may make prudent settlements of the lawsuit, provided the insured be legally liable under the law, but even if such settlement be made the insurer would not be liable unless the insured was liable to the plaintiff in the case so settled. In short, he couldn't settle because he had "cold feet" and demand reimbursement from the insurer.
St. Louis Dressed Beef Prov. Co. v. Casualty Co., 201 U.S. 173.
It has long been settled in this state that the insured has an option to settle any case, but is not required to settle even where the case could have been settled within the amount of the coverage and the failure of the insurer to settle caused a loss to the insured beyond the face of the policy.
Georgia Cas. Co. v. Cotton Mills, 159 Miss. 396.
The only thing the appellant was compelled to pay or could have been compelled to pay was the expense of defending a suit.
U.S.F. G.V. Cook, 181 Miss. 619.
The assured is entitled to the full indemnity called for by the policy but not to a penalty beyond the indemnity. The assured is entitled to full reimbursement where he settles an obligation required by law, but not one denied by law.
But he cannot compromise a case in which he is not legally liable and demand reimbursement, if within the coverage of the policy, and much less can he do so where the policy does not undertake to indemnify him. We submit the court erred in overruling the demurrer and entering judgment for appellee and the case should be reversed and rendered.
O.B. Triplett, Jr., of Forest, for appellee.
Full compensation is the measure of appellee's damages.
17 C.J. 847, Sec. 168; Y. M.V.R. Co. v. Ragsdale, 46 Miss. 458; B. Bluethenhal Co. v. McDougal, 141 So. 29, 163 Miss. 406; A.L.I. Restatement "Contracts" 326.
Appellee was obligated and entitled to mitigate the damages anticipated.
Upton v. Adcock, 110 So. 774, 145 Miss. 372; Moss v. Hendon, 171 So. 880, 178 Miss. 157; North Am. Acc. Ins. Co. v. Henderson, 177 So. 528, 180 Miss. 395; Y. M.V.R. Co. v. Ragsdale, 46 Miss. 458.
An assured is entitled to settle threatened suits where the insurer breaches his contract to defend.
St. Louis Dressed Beef Prov. Co. v. Maryland Cas. Co., 201 U.S. 173, 26 S.Ct. 400, 50 L.Ed. 712; 34 A.L.R. 741; Re Empire State Surety Co., 214 N.Y.S. 563, 108 N.E. 825; 36 C.J. 1116, Sec. 108; St. Paul, Etc., Ry. Co. v. U.S.F. G. Co. (Mo.), 105 S.W.2d 14.
Argued orally by O.B. Triplett, Jr., for appellee.
This is an appeal from the circuit court of Scott County. Mr. W.G. Cook sued the appellant on the policy. A demurrer was filed to the declaration and overruled. The company declined to plead over, and judgment was entered in favor of the appellee, from which judgment this appeal is prosecuted.
The appellee, Cook, had a contract with the State Highway Commission for the maintenance of a highway, and sublet this work to an independent contractor. In the performance of this work a number of trucks were used, and one of the trucks so used caused an injury to several workmen. Some of the workmen sued Mr. Cook, and one of them, Eddie Wright, secured a judgment for $4,000 in the trial court, but on appeal the case was reversed and judgment rendered, holding that Cook was not liable for the injury. See Cook v. Wright, 177 Miss. 644, 171 So. 686.
The present suit is brought on the same policy which contained a provision: "The company further agrees (a) to defend in his name and behalf any suit against the Assured seeking damages on account of such bodily injury or property damage, even if such suit is groundless, false or fraudulent."
While the case of Cook v. Wright, supra, was pending and before its decision in this court, Cook compromised with one of the parties injured at the same time and in the same collision that Wright was injured, the compromise being for a nominal sum, referred to in the briefs as nuisance value.
Prior to the filing of these suits the insurance company had disclaimed liability for the injury inflicted upon the employees mentioned, claiming that it was not responsible under its policy and was not called upon to defend the suit, and declined so to do. The present suit is to recover $350 for the settlement with two of the persons injured, without suit being filed therefor, each of the said claims being settled by Cook for $150, making a total of $300, plus the $50 fee paid by Cook to his attorney for services rendered in effectuating said settlement. Subsequent to the decision in Cook v. Wright, supra, Cook filed suit against the appellant on liability insurance on the policy involved herein for a reimbursement for attorney's fees paid and cost incurred in defending a suit, filed by McCray, and it was held in the case of United States Fidelity Guaranty Co. v. Cook, 181 Miss. 619, 179 So. 551, that the appellant was liable for attorney's fees incurred in defending a suit by one of the persons, to-wit, D. McCray, for the recovery of damages, etc., for personal injury, the Court holding that the policy involved, under the terms of the policy, imposed liability upon the appellant to defend the suit brought, even if such suit is groundless, false or fraudulent; and that the company was liable for the expense of defending the suit, although there was no liability for the injury of McCray imposed by law on Cook. In that case suit was brought against, and was defended by, Cook, and he was allowed the expenses incurred in defending it. In the present case no suit was brought, and consequently the obligation of the appellant to defend was not incurred under the policy. It is immaterial that the claim was settled in the present case before suit was instituted for a less sum than it might have cost to defend the suit, had suit been brought. There was no liability under the terms of the policy for the settling of the claim which had not been sued on, or attorney's fees in negotiating such settlement. It does not come within the terms of the policy and the obligations of the parties are fixed by the contract.
It follows that the demurrer should have been sustained and the suit dismissed, and the judgment of the court below will be reversed and judgment rendered here dismissing the suit.
Reversed and rendered.