Commercial Union Assurance Co. Ltd., of London v. Chattahoochee Lumber Co.

60 S.E. 554, 130 Ga. 191, 1908 Ga. LEXIS 250

• Court: Supreme Court of Georgia
• Decided: February 7, 1908
• Status: Published

Opinions

Lumpkin, J.

The Chattahoochee Lumber Company sued the Commercial Union Assurance Company Limited, of London, on a fire-insurance policy. In addition to this policy there was another issued by the Home Insurance Company of New York, covering the same property, on which suit was likewise brought. The suit against the Home Insurance Company was first tried. It was agreed in writing in open court that the present case should “abide the result” of the other, and that, “whatever may be the final result in the termination of the latter suit, the same result is, agreed to be the final termination of the suit against the Commercial Union Assurance Company.” Judgment was recovered against the Home Insurance Company for the full amount of its policy,, crediting the defendant with a premium which had been returned to the plaintiff; the case was brought to the Supreme Court, and the judgment affirmed (126 Ga. 334 (55 S. E. 11), and this was; “the final termination” of that suit. When the case against the. Commercial Union Assurance Company came on for trial, it contended that it was only bound by the former judgment to the extent of determining that there was a liability on its policy, and that an effort which it had made to cancel the policy had not proved effectual. It conceded a liability, but asserted that the insurance was not in gross upon the entire property, but to the aggregate extent of $5,000 pro rata upon various items of property separately, and that some of the items were not destroyed by fire. Therefore it claimed that it was not liable for the full amount of its policy, but only for a pro rata amount determined by the ratio of the value of the items which were destroyed to the value of the whole property insured. It also filed a motion, alleging, 'that when its attorneys made the agreement to abide the result in the other case, they were under the belief that there was no dispute as to the loss being total, and that the only issue was the question whether the policies had been cancelled before the fire; that since the decision of the Supreme Court the attorneys had learned that some of the items were not destroyed by fire; and it was asked that the agreement should not be held to prevent the defendant from showing what was not destroyed and having the amount of the judgment determined accordingly. This was resisted. The plaintiff had sued for the full amount of the policy. Its counsel still contend that it was entitled to recover in full, and that the prorating clause had relation to other insurance, or at least was ambiguous, and that this was a matter necessarily controlled by the former judgment on a similar policy. Evidence was introduced. Both sides moved the direction of a verdict. The court directed one for the plaintiff for the full amount of the policy, less a credit apparently for a premium which the plaintiff conceded had been returned. The defendant excepted.

1. The rule is generally recognized that an attorney at law has implied authority to dq anything necessarily incident to the discharge of the purposes for which he was retained. He may make any agreement or stipulation which appears, in the progress of the ease, to be necessary or expedient for the advancement of his client’s interest, except where it is held that he can not compromise his client’s case or surrender his substantial rights. “Thus an attorney employed in several different suits by or against different parties, but all involving the same issues, and the interest of his client being of the same character in all, may stipulate that the trial of one shall determine the issues in -all the others.” 3 Am. & Eng. Enc. Law (2d ed.) 354 ; Ohlquest v. Farwell & Co., 71 Iowa, 231 (32 N. W. 277) Scarritt Furniture Co. v. Moser & Co., 48 Mo. App. 543. The Civil Code, §4417, declares that attorneys “have authority to bind their clients in any action or proceeding, by any agreement in relation to the cause, made in writing,” ■ It is not denied that the agreement which was made by the attorneys was binding on their clients; but it is contended that it did not cover or preclude the defense now sought to be set up, or, if it did, that it was made under a mistaken belief by the attorneys for the defendant that the entire property insured was totally destroyed, when in fact some of it was not burned. There were two policies of insurance, issued by different companies. Each of them described the property insured as consisting of different items; and were identical in all respects except as to the amount of each, one being for $20,000, and the other for $5,000. The policy, now under consideration provided that it was understood that it “covers pro rata on each of the above items aggregating $5,000.” The policy issued by the other company contained a like clause. The agreement made in open court, before the first case was tried, provided that the present suit should “abide the result of” that about to be tried, and that whatever might be “the final termination” of the suit first tried “the same result” should be “the final termination” of the other suit. The final 'termination of the first suit was a judgment for the full amount of the policy, less a small reduction on account of a certain premium admitted to have been returned to the insured when an effort was -made to cancel both policies. IIow shall the same result be made the final termination of this case, except by a judgment for the full amount of the policy, less the deduction admitted to be proper on account of the amount of premium returned by the defendant in the same effort to make a cancellation? To hold that the present defendant was only concluded as to the question of whether there was a cancellation or whether the policy was in force, leaving open all other defenses which might have been made in both eases, could hardly be called “a final termination” of this suit. ■ Under such a view, the adjudication on the other case would not produce a final result in this, but would only act a's one step in the litigation. ■ If the judgment in the former ease was conclusive only on the issue of cancellation or no. cancellation, why might not this defendant also have pleaded a violation ’ of some of the other terms of the policy which would have avoided it, such as that the insured concealed or misrepresented some material fact; or that the interest of the assured had hot been truly stated; or that the mill had been operated after ten o’clock at night; or that benzine, gasoline, or other prohibited articles had been allowed on ■the premises; or that some of the buildings had been vacant for more than ten days? None of these defenses were in fact set up; but if this defendant was only bound as to the defense of cancellation of the policy, why might not any or all of the possible defenses suggested, or others, have been made grounds of defense, in spite of the final adjudication in the other case? If so, the termination of that case might have been, not the final result or termination of this case, but practically only the beginning of the litigation. We do not think that the agreement is susceptible of such a construction. It may be said that the defendant conceded that the question of liability was conclusively determined by the judgment in the other case. But why? None of the defenses referred to were actually set up or litigated in that case. The writ- ■ ten motion made at the time of the trial of this case, that the defendant should be allowed to prove that its liability was less than the amount of the whole policy, stated that the only question made in the former case was as to cancellation. It may be that none of the defenses mentioned existed; but the question is, not whether they might have been established, but how far the present defendant was precluded from setting up those or other defenses. Certainly the Home Insurance Company could not say it was bound .alone as to the defense actually pleaded. It was concluded as to defenses which were set up, or might have been set up. If it was so concluded, was not the Commercial Union Assurance Company •equally concluded as to defenses common to the two cases, and which either were or could have been .set up in the former? If this be true, the defense that, under a proper construction of the' policy then before the court, the company was not liable for the full amount of insurance, but only for a proportionate part according to the value of certain items, could have been set up in that suit as well as in this. If the Home Insurance Company, has been adjudged to be liable for the total amount of insurance named in its policy, and the Commercial Union Assurance Company should now be adjudged liable, not for the whole insurance, but for a pro rata part, it is manifest that the result in one case and its final termination would not 'be the same as that in the other, as agreed. The results would only be the same in part, and different in part. The general rule is, that where two similar cases involving the same questions are pending, and it is agreed that one shall be tried and the other shall abide the result thereof, such an agreement is binding, and the final result in the one case will be made that in the other. Jarrett v. McLaughlin, 123 Ga. 256 (51 S. E. 329).

But it is said that if the agreement operated to conclude the defense as to the amount of the loss sued for, it was made under a mistake, and should have been opened so as to admit .proof that the loss was not total as to all the property covered by the policy, but that some of the items were not destroyed. In Jarrett v. McLaughlin, supra, it was said that “There was no merit in the motion to set aside the agreement of the parties, inasmuch as the plaintiff in error voluntarily chose to consent that his case should abide the result of that brought to trial and final judgment, whatever that result might be or however erroneously or through whatever misfortune it might be reached; and therefore he stands in no better position than does the losing party to that case, as to whom the judgment therein is certainly final.” That case was properly decided on its facts, and states the general rule. Mere errors, or failure to make all possible defenses or introduce all possible evidence on the trial of one case, would furnish no reason for allowing them to be urged on the trial of the other. But we do not wish to be understood as laying down an inflexible and invariable rule that all agreements between counsel for the advancement of the trial of a case, such as that certain facts may be treated as true without proof, stand exactly like contracts of bargain and sale, or that they can never be opened for fraud or mistake, upon proper application, notice and showing. In 1 Greenleaf on Evidence (16th ed.), §206, it is said: “It is only necessary here to add, that where judicial admissions have been made improvidently, and by mistake, the court will, in its discretion, relieve the party from the consequences of his error, by ordering a repleader, or by discharging the case stated, or the rule, or agreement, if made in court. Agreements made out of court, between attorneys, concerning the course of proceedings in court, are equally under its control, in effect, by means of its coercive power over the attorney in all matters relating to professional character and conduct. But, in all these admissions, unless a clear case of mistake is made out, entitling the party to relief, he is held to the admission; which the court will proceed to act upon,, not as truth in the abstract, but as a formula for the solution of the particular problem before it, námely, the case in judgment, without injury to the general administration of justice.” In Alexander v. Muirhead, 2 Des. (S. C.) 162, suits were brought on several policies of insurance. Upon the understanding that all of them involved the same question, an agreement was made that one case should decide the others. A verdict was rendered for the plaintiff. Judgments were also entered on the other policies. A new trial was granted in the first case, but the plaintiffs refused to allow the judgments to be set aside in the others. It was discovered that in fact the cases were different, and that the evidence applicable to one was not applicable to the others. On a bill in equity, the stipulation was so far opened as to allow the defendants in the cases not tried to have the benefit of a trial before a jury on a question of misrepresentation, which developed on the trial to be peculiar to them and not to be involved in the case tried. In Georgia an agreement like that involved in the Alexander case would have been considered as effective in the cases not tried, only on final judgment in the one tried. Peoples Bank v. Merchants and Mechanics Bank, 116 Ga. 279 (42 S. E. 490). See also, on the general subject, the discussion in the opinion of Green, C. J., and the dissenting opinion of Nevius, J., in Howe v. Lawrence, 2 Zab. (22 N. J. L.) 99 ; Harvey v. Thorpe, 28 Ala. 250 (65 Am. Dec. 344).

In Johnson v. Wright, 19 Ga. 512, it was declared to be a general rule that agreements made by parties in the progress of a case, which had been acted on by either party, can not be repudiated by the other;. at least not unless, on setting aside the agreements, things resume their position in statu quo. See Morris v. Milner, 20 Ga. 563 ; Varner v. Goldsby, 22 Ga. 302. In Wallace v. Matthews, 39 Ga. 617 (99 Am. D. 473), it was held that where a party to a suit made an admission for the purpose of saving’ the other party the expense and trouble of getting up the evidence on certain .points, and afterwards .discovered that he had by inadvertence or mistake admitted facts which were not true, or which it was proper for him to controvert, he might, by notice to the other party, withdraw the admission, and put his adversary on proof of the facts, provided there was sufficient time after the withdrawal of the admission for the preparation of the case, and the other party had not been injured thereby,.as for instance by the death of a witness or other like cause. In State v. Southwestern Railroad, 66 Ga. 403, a mistake in an agreement to settle a suit pending in court (which agreement was also made without authority) was allowed to be shown before the settlement was entered of record. In Hargroves v. Redd, 43 Ga. 142, it was held that an admission in writing of certain material facts, for the purpose of being used in the trial of a cause, can not be recalled after the trial has commenced. In Jonas v. Groover, Stubbs & Co., 46 Ga. 568, 577, where an attorney had given his consent that a rule absolute should be ’ taken on a mortgage foreclosure, and was absent when it was taken, it was said: “Had counsel intended to withdraw from his consent to let the rule be taken, he ought to have given notice of such intention. That there was, or may have been, a misunderstanding between himself and his client, is no reason why the judgment should be set aside.” See also Kite v. Lumpkin, 40 Ga. 506. So in Southwestern R. Co. v. Atlantic & Gulf R. Co., 53 Ga. 401, it was held that when counsel on both sides have entered into a written agreement as to certain facts, it is not competent, on the trial, for the party who introduced such, statement to the jury to prove a fact contrary to what was stated in the .agreement; and that, to avail himself of this right, proper notice should have been given. And see Wilson v. Bank of Louisiana, 55 Ga. 98 ; Western & Atlantic R. Co. v. Johnson, 59 Ga. 626 ; Caldwell v. McWilliams, 65 Ga. 99 ; Daniel v. Foster, 49 Ga. 303 ; Rosenbaum v. State, 33 Ala. 354, 362 ; Bradish v. Gee, Ambl. 229.

In Union Bank v. Geary, 5 Peters, 99 (8 U. S. (L. ed.) 60), in an action on a promissory note, the attorney for the plaintiff agreed with the defendant, whose intestate was an indorser on the note, that if .such defendant .would not dispute the liability but would confess judgment, the attorney would immediately proceed by execution to collect the amount from the maker, who, he said) had sufficient property to satisfy it. The defendant confessed judgment. Proceedings were not taken to enforce the claim by execution against the maker, and he removed with his property beyond the jurisdiction. It was held that proceedings on the judgment confessed by the administratrix of the indorser would be enjoined; and this enforcement of the agreement was not affected by the fact that, by a subsequent judicial decision, it had been determined that the - defense which, but for the agreement, - would have been urged was not good and would not have been sustained. In North Missouri R. Co. v. Stephens, 36 Mo. 150 (88 Am. Dec. 138), it was held that where several suits wore brought by the same plaintiffs against different defendants, the defenses being the same in each case, and the attorneys for the several parties agreed that all of the cases should abide the final decision in one •case, such agreement was within the authority of the attorneys and was binding upon the parties; and that this was true although the question involved in the case in which the stipulation was given had been changed by the repeal of an act of the legislature, which might, have changed the result in the second case but for the agreement. See also McCann v. McLennan, 3 Neb. 25, 29.

From the foregoing discussion it will be seen that if admissions have been improvidently made in the progress of a suit, upon due notice the court may allow them to be withdrawn, if no injury would happen to the adverse party from having relied or acted on them. In such a case due regard should be had to the rights of the adverse party, and that he be not misled and allowed to act to his injury in reliance on the admissions of his adversary, and then have them withdrawal. An agreement that one suit shall abide the result of another, where one is tried and the plaintiff allows the other action to stand without urging it to judgment promptly, in reliance upon the stipulation, is more formal, and can be less easily set aside. Perhaps few strongly contested cases are tried in which some point does not suggest itself to the mind of the losing party or his counsel in which he might strengthen his ease, if he -had -another opportunity. But considerations of this kind would- not require the opening or setting' aside of an agreement to abide the final result of the ease tried. It would seem that, in cases of fraud in procuring the agreement, relief may be had, and also in cases of mistake of fact in making the agreement, if it would work no wrong to the adverse side. In this case the proceeding is not by regular equitable suit but by application to the court to allow an .agreement to be opened or set aside, by invoking his coercive power over counsel, in the interest of the administration of justice. If relief can thus be had after the case has not been pressed -to trial, but has been allowed to stand until the other case has terminated, at least there is no arbitrary or absolute right to have such relief; but the nature of the two suits involved, the circumstances attending the making of the stipulation, the knowledge of the parties or their attorneys, or the opportunity for knowledge of all the facts, the time when the effort to open the agreement was made, the notice given to the adverse partjr, whether the latter would be placed in statu quo by the allowance, and all the circumstances may be legitimately considered by the court.

Here the agreement in writing was made on May 11, 1905, in open court, before the case of the Home Insurance Company was tried. The verdict in that case was against the defendant for the full amount of the policy, less a small credit on account of a premium. The judgment was brought to the Supreme Court, and affirmed. The plaintiff did not then press its case on the other policy to trial and judgment, but allowed it to stand for disposition under the terms of the agreement. The trial of the present case came on more than a year later, on November 12, 1906. Both parties announced ready, and the jury was impaneled. The bill of exceptions states that the “defendant then in open court tendered to the plaintiff in money the amount of principal and interest conceded to be due in its amended answer filed November 12, 1906, which tender was by the plaintiff refused.” The motion to be allowed to open or go behind the agreement was filed on the same day; whether before or after the trial began does not appear. As stated before, the policy issued by the Home Insurance -Company and that issued by the present defendant were identical in form, and contained the same items of property and the same clause in regard to • proration. The same agent represented both companies at Bainbridge, Decatur county, the county in which' the property insured was located. The schedule of prop■erty attached to the policies showed that there were four buildings. 'The schedule aggregated $41,000. After the fire, proofs of loss were furnished to each company, which may or may not have been in strict accordance with the requirements of the policies; but they showed that the plaintiff did not make out its claim as being for pro rata parts under separate items of the schedule, but for all ihe machinery and property which was destroyed, to the extent of ihe entire policy, in one list aggregating $44,117.17, which was more than the combined amount of both policies. The proofs of loss also showed that only two buildings were specified as having been destroyed. After the fire the president of the plaintiff company wrote to Graves, as the agent of the Home Insurance Company, notifying him of the destruction of the sawmill by fire, and .sajdng, “We would be glad if you will have your adjuster examine the property as early as convenient.” In his reply (signed Graves •& Co.) Graves noted the request to have “adjusters” examine the property, but said that “The policies of the Chattahoochee Lumber Company were cancelled on February 19, and return premium paid, for which we hold acknowledgment from Vice-President Cummings. Therefore you had no insurance with our office at the time of the fire, policies having gohe on to the company cancelled.” It is thus evident, that, though living in the same county where the fire, alleged to have consumed over $44,000 worth of property, occurred, and though invited to have the property examined, and .afterwards receiving proofs of loss which showed only two of the four buildings as claimed to have been destroyed, he or the insurance company preferred to plant themselves upon the defense ■of cancellation, and to rely solely upon it. It appears in the evidence that Mr. King, of counsel for the defendant, had no idea that there Avas any question about the loss being total until about the last of August or the first of September, 1906,; and that Mr. Little, also of counsel, had never heard, until October 2, that the ■entire plant was not destroyed. It is neither alleged nor was any evidence introduced to show that the company or its agents. Avcre ignorant of the facts, or of the agreement made by counsel; or that the company could not readily have known the facts; or, if it knew them, why it did not communicate them to its counsel. No claim of fraud or misrepresentation on the part of adverse .counsel in procuring the agreement is made. It does not. appear that the agreement wonlcl not have been made had all the facts-been known to counsel, though possibly they might have urged an additional defense in the test case. At least two possible questions appear to have been in each case: first, was the company liable on the policy at all; and second, if so, was it liable for the full amount of the policy, or for some less amount? Both of these-questions were concluded as to the Home Insurance Company against it; and we can not say that the presiding judge erred in holding the present defendant to be likewise concluded.

2-3. Objection was made to the admission of letters from the Chattahoochee Lumber Company to Graves as agent of the Home Insurance Company, and from Graves to the Lumber Company, and from the Home Insurance Company, by Messrs. King, Spalding & Little, its attorneys, to the Lumber Company. The ground of objection was that they were not written to or by the defendant, or on its behalf, and were not admissible to bind it. If the two cases had been tried independently, of course communications with one company would not have affected the other. But it will be remembered that the case against the Home Insurance Company was selected as a test case, and that it was agreed that the other case should abide the result thereof; and also that the present proceeding involved a construction of and .the motion to open the agreement, and the question of knowledge of the facts, and the opportunity for knowledge on the part of the defendant or its attorneys as to the extent .of the loss. The letter of Graves, the local agent, in reply to that of the plaintiff, did not confine itself to-the policy of the Home Insurance Company, but declared that the “policies” had been cancelled, and that the plaintiff had no insurance at the time of the fire; thus dealing with the defendant’s position as well as that of the other company. The letter of the attorneys for the Home Insurance Company also indicated that it had received and transmitted, to them proofs of loss which were similar to those above referred to; and while they denied liability, they also suggested certain alleged defects in the proofs. Under the circumstances, there was no error in admitting this -evidence.

4. Error was also assigned, because, after the evidence closed, and the plaintiff’s attorney was about to proceed to make an argument to the jury, counsel for defendant moved that a verdict be directed for it; to which adverse counsel responded that he also-desired to move the direction of a verdict for the plaintiff. Both claimed the opening and conclusion of the argument on the motion. The court-awarded it to the plaintiff. In this we are inclined to think he erred. Counsel for the plaintiff urged before us, that, if the defendant were allowed to move for a verdict and obtain the opening and conclusion, though the argument would, in the eye of the law, be addressed to the court, it'would be in the presence of the jury, and would substantially deprive the plaintiff, on whom rests the burden of the case, of the right to open and conclude. The plaintiff has the right to open and conclude before the jury, •except in certain instances where the defendant has admitted a prima facie case; and the defendant can not affect that right by a motion to direct a verdict. If the discussion of the motion in the presence of the jury is calculated to injuriously affect the plaintiff’s right to open and conclude before them, the judge, on request of counsel, or of his own accord, can have them retire, while the motion to direct a verdict is being discussed. Indeed, we think this practice is to be commended as conducive both to moderation and brevity in the presentation of the motion to the court, in the absence of the jury; and also because it affords the judge an opportunity, if he deems it necessary, to refresh his memory as to the testimony and to call the attention of counsel to it, without danger of affecting the jury or appearing to intimate an opinion in their presence. While the ruling of the court on this point may have been erroneous, we can not say that it was harmful error, under the facts of this case. There was a motion on each side to direct a verdict. Formally the motion of the defendant would first have been taken up, argued, and disposed of; and then the motion of plaintiff would have been heard and determined. On the motion first made, the'defendant would have opened and concluded; and on the second motion the plaintiff would have opened and concluded. This court has several times hqld that while a presiding judge may, under certain circumstances, direct a verdict on motion, in no event will he be reversed for refusing to do so. Hence, had the defendant alone moved to direct a verdict, no matter who might have opened or concluded the argument on the motion, the judge’s refusal to grant it would not have necessitated a new trial. To save time, instead of hearing the defendant’s motion and overruling it, and then hearing the plaintiff’s motion and granting it, '.the court heard both together. The question of whether there ¡should be a reversal must at last hinge upon whether the direction .¡given was erroneous. Having held that there was no error in di■recting a verdict for the plaintiff, the mere question of opening and ■conclusion would not require a reargument and a redirection of the ¡same verdict. Collier Co. v. Murphey, 108 Ga. 777 (33 S. E. 641).

Both sides asked for the direction of a verdiet. Neither side -asked to go to the jury. Lydia Pinkham Medicine Co. v. Gibbs, 108 Ga. 138 (33 S. E. 945).

Judgment affirmed.

All the Justices concur, except Ilolden, J., ■who did not preside.