United States Fidelity Gty. Co. v. R. B. Tyler Co. , 215 Ky. 168 ( 1926 )

Affirming.

On the 6th of August, 1921, appellant, United States Fidelity Guaranty Company, issued and delivered to appellee, R.B. Tyler, a contractor's public liability policy, by which the former agreed to indemnify the latter:

"Against loss from the liability imposed by law upon the assured for damages on account of bodily injuries or death suffered as the result of an accident occurring while this policy is in force by any person or persons not employed by the assured, while at or about the work of the assured described in said schedule, during the prosecution of the said work at the place or places designated in statement numbered 6 of the said schedule.

And also agreed:

"To defend in the name and on behalf of the assured any suit brought against the assured to enforce a claim, whether groundless or not, for damages on account of bodily injuries or death suffered, or alleged to have been suffered, by any person or persons not employed by the assured, while at or about the work of the assured described in the said schedule, during the prosecution of the said work at the place or places designated in statement numbered 6 of the said schedule, and as the result of an accident occurring while this policy is in force."

While it was in force the insured was sued in the Barren circuit court on a claim for damages on account of bodily injuries. The insurer was notified, whether promptly or not is immaterial, in view of the other facts appearing in the record. At a term of court when that case stood for trial an agreed judgment for $500.00 was entered in favor of the plaintiff in that action. Appellee thereafter was compelled to and did pay that judgment, its interest and the cost of the action and certain attorneys' fees. It thereupon instituted this action under the insurance contract to recover from appellant the sums it had so been compelled to pay. The issues made by the answer were tried by a jury, which returned a verdict in favor of appellee for the full amount sued for. Appellant prosecutes the appeal from that judgment.

It is agreed by appellant that H.L. Means, its agent and attorney, with full authority to act for it, was present in Glasgow, Kentucky, on the occasion when the agreed judgment was entered against assured; that he was acting for appellant, insurer, under its obligation under the policy to defend the suit brought against insured in which the agreed judgment was entered; and that he was present at all of the conferences held by the attorneys appearing for insured with reference to the settlement of the pending action.

The following quoted from the testimony of Mr. Means seems to this court to be conclusive of the questions presented by the appeal:

"I participated in it (the conference leading to the settlement), and finally it got down to the point where they were willing to accept $500.00. I had, in that room and elsewhere, insisted with Mr. Tyler that we were not liable, but we wanted to do what we could to help dispose of it. I told him that I thought it should be settled for $500.00, because that was cheaper than it could be defeated. It had been suggested that the lawyers — in fact, Judge Richardson mentioned that to us, that he understood that White Smith were preparing to charge a thousand-dollar fee in the event it was tried that day; and I might say that White Smith quite opposed the settlement. Judge Richardson, however, insisted, and his insistence finally prevailed and the case was settled. I talked to Mr. Tyler several times about it during the morning, and agreed with him, after this had been decided upon, to pay $250.00 of the judgment, and asked him to pay the other $250.00. Mr. Tyler, as he has stated, declined to pay anything. The final analysis of the situation was, as I understood it, that the matter should be suffered to go and that Mr. Tyler and my company should determine later on as to who was liable for this $500.00."

Tyler testified most positively that when it was suggested that a judgment for $500.00 be consented to in the case against him he declined to pay any part of it or to agree to it upon the condition that he pay any part of it because he was insured and looked to his insurer to save him harmless. It will be observed that appellant's agent admits that Tyler declined to pay anything. The statement found in the testimony of Means that the final analysis of the situation was, as he understood it, that the matter should be suffered to go and Mr. Tyler and his company would determine later the question of liability between himself and the company is a mere conclusion and means nothing. He did not testify to anything he said or that Tyler said which led to his understanding that the question of the insured's liability might be settled later. Tyler he admits declined to pay anything upon the ground that his insurance policy protected him and he then for the insurance company consented that the agreed judgment be entered.

When the judgment was entered it was a "liability imposed by law upon the assured" against loss from which the policy indemnified him. When appellant admitted that it consented that the judgment be entered after insured decline to agree to pay any part of it upon the ground that he was protected by the insurance contract and expected the insurance company to pay all of the judgment if one be consented to, it admitted itself out of court. Having consented that the judgment be entered under those circumstances which it admits existed appellant could not thereafter assert nonliability under the insurance contract. If the liability was one of which insurer could be relieved under the policy only by defeating recovery against insured, by consenting to the judgment it made itself liable. If it was one for which, though judgment be recovered against insured, under the policy insurer would not be liable, since by the policy insurer agreed to defend all actions whether groundless or not, and whether it would be liable or not, when the proposition to settle was made and insured declined to pay any part of the proposed agreed judgment, insurer became liable by then consenting that the judgment be entered.

The trial court might properly under the evidence have directed a verdict for appellee. The errors, if any, being favorable rather than prejudicial to appellant, do not authorize a reversal of the judgment.

Judgment affirmed.