Streat Coal Co. v. Frankfort General Insurance

Finch, J.: The defendant issued a policy of accident indemnity insurance to the plaintiff in the sum of $5,000. An accident occurred, as a result of which actions were commenced against the plaintiff, in which damages of $40,000 were demanded; and the defendant, pursuant to the terms of the policy, undertook to defend the same. [42] Judgments were obtained against the plaintiff and affirmed on appeal. The plaintiff paid $13,097.66 in satisfaction of said judgments, receiving from the defendant a contribution of $5,752.42 in payment of its liability under the policy. The plaintiff subsequently ascertained that the defendant insurance company had been offered a settlement of the actions for the sum of $5,000, which offer the defendant rejected, because, that being the amount of the policy, there was nothing to be gained by them in making such a settlement, as they could not lose more than $5,000 in any event. Said offer was not communicated by the defendant to the plaintiff. The plaintiff claimed it would have accepted said offer (and so testified) and brought this action to recover its damage. The jury by its verdict found the facts to be as claimed by the plaintiff. The court, however, set aside the verdict and dismissed the complaint upon the ground that the evidence does not sustain a finding that the plaintiff, had the offer been communicated to it, would have accepted the same. In this the learned court was in error. The court construed the contract as imposing upon the defendant the duty of informing the plaintiff of the offer of settlement, upon the theory that, since the contract provided a contingency under which the assured might settle a claim at its own expense, it, therefore, had a right to settle the same, and in order to exercise that right was entitled to be informed that there had been an offer of settlement. This theory was acquiesced in by both parties and thus bepame the law of the case. (Benjamin v. Village of Tupper Lake, 110 App. Div. 426; Schweinburg v. Altman, 145 id. 377; affd., 207 N. Y. 681; Gillan v. O’Leary, 124 App. Div. 498.) The case was submitted to the jury upon the sole question of fact whether there had been an offer of settlement as alleged, in which event they were instructed to find for the plaintiff. To this instruction there was no objection or exception and. no request for any contrary instruction. • If the defendant considered there was an issue as to whether the plaintiff would have accepted the offer of settlement, and desired such issue presented to the jury, it was incumbent on the defendant,to request the submission of the same to the jury. (Grealish v. Brooklyn, Queens County & Suburban R. R. Co., 130 App. Div. 238; affd., 197 N. Y. 540.) It follows that the judgment and order should be reversed, with costs, and the verdict reinstated. Dowling, Merrell and McAvoy, JJ., concur; Smith, J., dissents. Judgment and order reversed and verdict reinstated, with costs.