Dobbs v. New Amsterdam Casualty Co.

134 A. 864, 2 N.J. Misc. 649, 1924 N.J. Sup. Ct. LEXIS 122

• Court: Supreme Court of New Jersey
• Decided: July 8, 1924
• Status: Published

Opinion

Dongbs, J.

The suit is brought on two counts. The first count alleges a right to recover on the policy. The second count alleges a right to recover on an agreement to settle.

The right of plaintiff, must rest upon the second count. On the facts stated there can be no recovery under the terms of the policy.

Plaintiff’s claim must be determined upon the facts as stipulated. From these facts it appears that plaintiff did nothing to mislead defendant either as to the 'circumstances of the loss or as to defendant’s rights. Every fact was within defendant’s knowledge, and it had every opportunity to resist plaintiff’s claim on- the ground of no liability. It must be assumed that plaintiff asserted a claim in good faith, and that the settlement proposed was made only after .consideration of the circumstances of the loss and defendant’s liability to pay therefor:

Throughout the stipulation it appears that there was in fact an agreement to- settle. The second, question submitted is:

“2. Is the plaintiff entitled to recover under the second count of-the complaint, based upon the agreement of the defendant to settle the liability for $600 ?” I find, as a fact, that there was an agreement to settle, by compromise, without litigation, the matter in dispute between plaintiff and defendant.

The trend of authority supports an agreement to settle, without litigation, a inatter in dispute, even though it appear that the claim is, in fact, without substance. 8 Oyc. 518.

In Bowers Dredging Co. v. Hess, 71 N. J. L. 327, the Court of Errors and Appeals, speaking through Mr. Justice Port, said:

“An agreement to so settle without litigation a disputed claim of infringement made in good faith furnishes a good consideration to support a contract, even though it should appear that such claim was, in fact, wholly unfounded. The court will not inquire into the adequacy or inadequacy of the consideration of a compromise fairly and deliberately made.” Citing cases.

To the same effect are Worcester Loom Co. v. Heald, 78 N. J. L. 172, and Weir v. Allen, 89 N. J. L. 597.

The right to have such an agreement enforced does not rest upon the merits of the original claim, but rests upon the new agreement to compromise without litigation. After the existence of such an agreement is satisfactorily established, neither party may withdraw, except for fraud or unfair concealment.

Nor will an error of law or mistake of facts relieve a party of his undertaking, where, by reasonable diligence, he might inform himself. 8 Cyc. 526 et seq.

In the instant case it is established that there was a claim for $650; that there was an agreement to compromiso and settle for $600; that there was no fraud or concealment. In such a case I am of opinion that the agreement must be enforced, although one of the parties may have acted on a mistaken assumption of its rights, and without due inquiry as to all of the facts within its knowledge and possession.

To decide otherwise would be contrary to sound policy and shocking to conscience. It would abort fair efforts at eompro'mi.se, which are encouraged in law.

Plaintiff is entitled to judgment on the second count of his complaint for $600.