Sargent Manufacturing Co. v. Travelers' Insurance

Brooke, J. {after stating the facts). It will be noted that the learned circuit judge directed a verdict against defendant, upon the ground that, being fully advised of the facts as to the employment and injury of Lund, it elected to assume the defense of the action, instead of repudiating its liability. This direction assumes, first, that the duty of election rested upon defendant, and, secondly, that, in participating in the defense, it indicated an election to be bound, despite the limitations of its liability, under its contract with plaintiff. That contract provided, among other things, that if thereafter any suit, even if groundless, should be brought against the assured to recover damages on account of such injuries as are covered by the policy, the company would, at its own cost, defend against such suit in the name and on behalf of the assured. It is clear, therefore, that it was the duty of defendant to appear for the insured and undertake the defense of the case in the first instance. Had a judgment been rendered under the original declaration, defendant’s liability under [93] its policy would have been certain. As soon as tbe amendment to the declaration which charged the breach of a statutory duty, not covered by the policy, was received by defendant, it at once notified plaintiff of the situation and called attention to the fact that, if the assured should be held liable upon that ground, it would not pay the judgment. Plaintiff must be held to have acted thereafter with- full knowledge of defendant’s attitude as to liability. By its silence and subsequent participation, through its counsel, in defense of the action, it acquiesced therein. It is quite clear that defendant could not, with safety to itself, have repudiated liability under the policy. If Lund succeeded in recovering under his allegations of common-law liability, defendant was liable. Under the amendment, defendant could not, as a matter of law, determine for itself whether or not the assured-had employed Lund at labor dangerous to life and limb, in violation of the statute. That contention raised a question of fact for the determination of the jury, as we have repeatedly held. Sterling v. Carbide Co., 142 Mich. 284 (105 N. W. 755); Braasch v. Stove Co., 147 Mich. 676 (111 N. W. 197); Dalm v. Paper Co., 157 Mich. 550 (122. N. W. 257). The case here considered is readily distinguishable from the case of Tozer v. Guarantee Corporation, Ltd., 94 Minn. 478 (103 N. W. 509); cited and relied upon by plaintiff. In that case, after investigation, the insurance company advised the assured he was not liable and itself— “Accepted the control and defense of the action in the full belief on the part of both respondent and appellant that the claim so made against respondent was a loss within terms of the policy; that with full knowledge of the nature and character of the claim, appellant assumed the defense of the action, and employed an attorney who conducted the defense in the name of plaintiff, as provided by the contract. * * * Relying upon such course of conduct, respondent changed his attitude in respect to the case, and, instead, of reserving to himself the right to select [94] his own counsel, conduct a trial, or make settlement, he turned over to appellant the entire matter.” It was properly held that the insurance company, by its conduct, had estopped itself from denying liability. No such situation is presented by the case at bar. Plaintiff herein was seasonably advised of the position of the insurer upon the question of liability. It was not misled by any act of the insurer into surrendering control of the litigation or refusing to make a settlement of the claim. It had ample opportunity to do either after receipt of defendant’s letter defining its position. Moreover, it did not surrender the defense of the action to the insurance company. It retained its personal counsel to appear and assist in it3 defense at the trial. The other cases cited by plaintiff, viz., Royle Mining Co. v. Casualty Co., 126 Mo. App. 104 (103 S. W. 1098), Globe Navigation Co., Ltd. v. Casualty Co., 39 Wash. 299 (81 Pac. 826), and Glens Falls, etc., Cement Co. v. Insurance Co., 11 N. Y. App. Div. 411 (42 N. Y. Supp. 285), have been examined, but, in our opinion, are not applicable to the facts as they exist in the instant case. The case of Frank Unnewehr Co. v. Accident Ins. Co., 176 Fed. 16 (99 C. C. A. 490), is, as to the facts, very similar to the case at bar. There the defense to the suit brought by the boy was conducted jointly by the attorneys of plaintiff and defendant, but without prejudice to the rights of either. A judgment was recovered by the boy, which the plaintiff paid, and the defendant refused to reimburse plaintiff. It is urged by plaintiff herein that the case is to be distinguished from the case at bar, because there was an express agreement— “ That the defense to the suit brought by the boy was conducted jointly by the attorneys of plaintiff and defendant, but without prejudice to the rights of either.” We are unable to make the distinction. By its silence on receipt of the letter and its subsequent action in assist [95] ing in the defense, it must be held to have accepted the terms proposed by the defendant in its letter of notification. The judgment is reversed, and, inasmuch as there is no disputed question of fact, there will be no new trial. Bird, Hooker, Moore, and Stone, JJ., concurred.