Murch Bros. Construction Co. v. Fidelity & Casualty Co.

176 S.W. 399, 190 Mo. App. 490, 1915 Mo. App. LEXIS 447

Opinions

REYNOLDS, P, J.

(after stating the facts). — It is obvious that the first and crucial point in this case turns upon whether, at the conclusion of the second trial, which resulted in a judgment of $3000 against the Insurance Company, that company was authorized to withdraw from further defense of the case on the ground stated, namely, that the verdict and judgment in that case eliminated from the case all issues as to liability save the issue of violation of the city ordinance by the Construction Company. Whether that is the construction which is to be put upon that verdict and judgment turns largely upon the decision of the Supreme Court in Butz v. Murch Brothers Construction Co., 199 Mo., supra, and of our court in the same case as reported in 137 Mo. App. supra.

It is clear that violation of the section of the city ordinance is set up in the petition as a ground for recovery upon which the case went to trial at the first, second and third trials, the latter a mistrial. Violation of this ordinance was still in the petition when the cause was for trial at what is called the fourth trial, when a consent judgment was entered and the cause was settled by compromise; was in the petition until that petition was amended in pursuance of the compromise which was then made and at once carried out. It was admitted that the Construction Company had actual knowledge of the existence of this ordinance at the time it was engaged in the erection of the building in which the accident happened to Butz.

It is also clear that the petition, throughout all the various trials, had an averment covering common law liability.

Was that issue ever out of the case? We think not: this although it may not have been tried in the first or subsequent trials of the Butz case.

In Butz v. Murch Brothers Construction Co., 199 Mo. 279, 97 S. W. 895, an appeal by plaintiff from an involuntary nonsuit, Judge Brace, who delivered the opinion for the Supreme Court, states that the only question in the case is as to whether on the evidence under the pleadings the case should have gone to the jury, Judge Brace saying (l. c. 286): “That the defendant was guilty of a violation of the ordinance in regard to this floor on which the plaintiff was required to work in having it in the condition that it was at the time of the plaintiff’s injury is not disputed; and that the plaintiff did not assume the risk to him by reason of that condition, arising from the failure of the defendant to discharge the duty imposed upon it by the ordinance, is conceded in deference to a long line of decisions by the court.” The Supreme Court paid no attention whatever to the averments of common law negligence. That decision turned solely on the evidence of plaintiff tending to show failure to comply with the city ordinance, the Supreme Court holding that on plaintiff’s evidence, defendant introducing none, plaintiff should not have been driven to a nonsuit. So the case came back for a new trial on all the issues as then pleaded.

Following that decision the cause went back for its second trial on the same issues as before, the violation of the ordinance and the common law liability still in the case. From a judgment in favor of Butz the cause was appealed to our court. [See Butz v. Murch Brothers Construction Co., supra.]

The judgment of the circuit court at the second trial was reversed by our court for error in the first instruction and for conflict in the instructions. The error in plaintiff’s first instruction, as see page 227, was in the use of. the words ‘ ‘ and at said time. ’ ’ This “time,” said Judge Goode, has reference to the time of the accident to plaintiff in that case; that is, that at the time of the accident, the covering was not in place, as it was required to be by the ordinance. That instruction is beyond question bottomed exclusively on liability under the ordinance. It is said by Judge Goode on the same page (227) that like error appears, “but less conspicuously,” in the second instruction given for plaintiff. That instruction here before us is also predicated solely on ordinance liability. It refers to the necessity of keeping a floor or covering over these girders, practically over the whole flooring’ space, while the men were at work. This could relate only to ordinance violation.

An instruction, the seventh asked by the Construction Company, distinctly told the jury, in effect, that the ordinance should receive a reasonable construction; that it did not mean that the girders should be kept covered to the interference with work, This our court held was correct and was in sharp contrast with that given for the plaintiff, which, as seen, required the girders to be covered at the time the accident happened; that is, while the work progressed. On the theory of the counsel for the Construction Company, who handled the case at this second trial, if the jury found that it was not practicable to keep the girders covered at the time, there was no ordinance violation, and so our court held.

Our court, holding that these two instructions put a wrong construction upon the liability of the defendant under the ordinance, held that this seventh instruction, given for the defendant, presented the question of ordinance liability properly and was clearly in conflict with these given for the plaintiff; that the two sets submitted the case to the jury on such a contrary theory that the judgment could not stand.

So it is clear that — apart from side issues, such as contributory negligence, and the like — the point in decision before our court was liability or nonliability under the ordinance. Mr. Werner and his associate counsel contended at this second trial that there was no ordinance violation. That was in contest at the second trial. Before the trial court had passed upon that, which was raised by the motion for a new trial, and without following the case to our court on appeal and without taking the judgment of our court on this question, the Casualty Company abandoned the defense, its counsel withdrawing from the case. Common law liability for negligence was not in decision before our court, it is true, but the effect of that decision was that ordinance liability had not been properly submitted to and passed on by the jury. It is not a strained construction of the decision of our court in that case, to say that if the jury found that it was necessary, to remove the temporary flooring, ordinance violation was no longer present.

The case went back for trial on the same pleadings, ordinance and common law liability still present.

So that on no view is it possible to hold that at the second trial, or as the result of our judgment thereon, common law liability had been eliminated and ordinance liability alone left as an issue.

When, therefore, counsel for the' Casualty Company withdrew from the case on the theory that all that was left in it was ordinance liability, he was acting tinder a misconception. Neither he nor his client was justified in then abandoning the defense. Doing so, it was at their own risk and peril. By doing so, they left the Construction Company free to handle the case in its own way, to make any fair compromise and to hold the Casualty Company to its bond, if it should appear that the accident happened to Butz in consequence of acts of negligence as at common law.

When was liability for common law negligence first tried? As far as the record before us discloses, the first time that the issue of liability for common law negligence was present and tried, was in the trial now before us. At this trial between these parties, the learned circuit judge, of his own motion, instructed the jury as follows:

“The court instructs the jury that the fact that the amended petition in the said case of Butz v. Murch Brothers Construction Co., and upon which the judgment for $1500 was rendered, set out only common law acts of negligence, and contained no allegations of a violation of the ordinance, as the basis for said Butz’ claim, is not to be considered by you as any evidence showing that such common law acts of negligence were the sole cause of the injuries to said Butz.”

That instruction clearly left open to this jury the question of common law and ordinance negligence; it told this jury that the compromise judgment did not foreclose inquiries into these. So also the instructions given at this present trial at the instance of the plaintiff (respondent here) told the jury, charging them, in effect, that they must find that it was the failure of the Construction Company to furnish Butz a reasonably safe place in which to work which was the sole cause of the accident. At this present trial this appellant offered no evidence whatever on this issue. That offered by respondent, so far as it proved anything, tended to prove that the accident was not the result of a violation of the ordinance. No evidence contradicted this. It follows, then, that there was evidence at the trial of this present case tending to prove that common law negligence was the cause of the accident. Hence the Casualty Company had its “day in court” on that issue in this same case.

The jury were further charged at the instance of respondent that if they found that “acting in good faith,” plaintiff “consented to a judgment for $1500 and costs of suit in favor of” Butz, which it had paid, and if the jury found that the amount so paid was a “judicious compromise sum” in settlement of the claim, they should find for plaintiff.

Learned counsel for the appellant with great earnestness dwells on the fact that the amendment of the petition and the compromise arrangement was concealed from the Casualty Company and its counsel until long after it had been consummated, without giving it an opportunity to come back into the case and be heard, and he attacks the compromise judgment as not entered into in good faith, but with intent to defraud this respondent.

Knowledge of this compromise judgment and its attendant circumstances, involving a change in the pleadings, did not come to the Casualty Company until after the arrangement was consummated. Whether lack of this knowledge may be said to have been to the hurt of the Casualty Company, depends upon the question as to whether it was entitled to notice of the change of the pleadings and of the pending and intended compromise, after it had unequivocally abandoned and withdrawn from the defense of the case. The motive of the Construction Company, assigned by counsel for appellant for this change in the pleadings, was to hold the Casualty Company to its liability. We do not think the motive and purpose is of any particular significance, if the act was within the right of the Construction Company. We had occasion to say in Loewenberg v. DeVoigne, 145 Mo. App. 710, l. c. 716, 123 S. W. 99, that we found the weight of authority to be in support of the proposition “that the state of mind of the person doing the act complained of does not affect the right to do it. ‘If it was a lawful act, however ill the motive might be, he had a right to do it. If it was an unlawful act, however good .his motive might be, he would have no right to do it. Motives and intentions . . . are absolutely irrelevant.’ ” We cited what we thought very respectable, if somewhat ancient, authority for this. The Construction Company had a right to look to the Casualty Company for the payment of any damages in which it might be mulcted for accidents occurring in the course of its construction work, provided that accident was not the result of the violation of the law of the land or of a city ordinance on the part of the Construction Company. We find neither a bad nor an illegal motive here. But, the Casualty Company having abandoned the defense of the case, was it entitled to notice of any further steps that might be taken in it, such as changing the pleadings or effecting a compromise? We think not.

Our Supreme Court, in Strong v. Phoenix Insurance Co., 62 Mo. 289, the rule repeated in Garrison v. The Baggage Trans. Co., 94 Mo. 130, 6 S. W. 701, and in City of St. Joseph v. Union Ry. Co., 116 Mo. 636, 22 S. W. 794, as well as in Kansas City, M. & B. R. R. Co. v. Southern Ry. News Co., 151 Mo. 373, 52 S. W. (the latter at page 390) has announced the rule to be deduced from the current of authorities on the right of a defendant having a surety to compromise the claim without first having the assent of the surety, that “where one is bound to protect another from a liability, he is bound by the result of the litigation to which such other is a party, provided he had notice of the litigation, and opportunity to control and manage it. ’ ’

In Showers v. Wadsworth, 81 Calif. 270, which was an action by a sheriff upon a contract to indemnify him against liability arising from the claims of certain parties upon property which was in his custody, it appears that the attorneys who had been representing the surety of the sheriff were discharged by the sheriff after judgments had been rendered and thereby prevented from taking appeals which might have resulted in a reversal of the judgment, the sheriff discharging them because they, on behalf of the surety, had refused to give a stay bond upon the proposed appeals from those judgments. Says the Supreme Court of California (l. c. 274): “We think that the refusal justified the sheriff in refusing to proceed further with the litigation. Wadsworth (who had executed the bond to the sheriff), through his attorneys, had control of the suits. It was for his interest ultimately that they should be prosecuted. . . . The contract of indemnity bound Wadsworth to answer this liability..... For these reasons we think that the discharge of Wads-worth’s attorneys after judgment does not do away with, the conclusiveness of the judgments as against him. ’ ’

In St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U. S. 173, in a case with many features similar to the one before us, it is held (l. c. 182) that the defendant, a casualty company there as here, by its abdication of the defense of the action “put the plaintiff in its place with all its rights. To limit its liability as if its only promise was to pay a loss paid upon a judgment is to neglect the meaning and purpose of the reference to a judgment, and even the words of the promise. The promise in form is to indemnify against loss by certain kinds of liability. The judgment contemplated in the condition is a judgment in a suit defended by the defendant in case it elects not to settle. The substance of the promise is to pay a loss which the plaintiff shall have been compelled to pay, after such precautions and with such safeguards as the defendant may insist upon. It saw fit to insist upon none.” At page 181 it is said that the defendant there, by its refusal to defend the case, ‘‘ cut at the very root of the mutual obligation and put an end to its right to demand further compliance with the supposed terms of the contract on the other side.” We shall refer to this case later on another point here involved.

The Casualty Company chose to withdraw from the defense of the case, two causes or classes of negligence present in the pleadings, before there had been any final determination of liability in either, that is liability under the ordinance or at common law. While it was not liable if a violation of the former was found to be the cause of the accident, it was liable if the cause of action turned out to be common law negligence, failure to afford a reasonably safe place to work. When the Casualty Company withdrew it left the Construction Company free to make its defense as best it could, and to make the best compromise it could.

As before here said, the issue of common law negligence was for the first time submitted at this last trial. This Casualty Company was heard on that. If such negligence was the cause of the accident, the Casualty Company was liable on its contract.

In St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., supra, in passing upon the effect of the judgment entered in compromise of a claim by the defendant, it is said by Mr. Justice Holmes, who wrote the opinion, that the court assumes that the settlement was reasonable and that the plaintiff could not expect to escape at less cost by defending the suit, and that a sum paid in the prudent settlement of a suit is paid under the compulsion of the suit as truly as if it were paid upon execution. It is further said by that justice (l. c. 183) and referring to the action before the court as for money alleged to be due under the policy: “Contracts rarely provide in detail for their nonperformance. It would be stretching the words quoted to a significance equally hurtful to both parties, and probably equally absent from the minds of both, to read them as having within their scope an initial repudiation of liability by the defendant and a requirement that in that event the plaintiff should he bound to try the case against itself, although it should be plain that by a compromise it could reduce its claim on the defendant as well as its own loss.”

Our own Supreme Court in City of St. Joseph v. Union Ry. Co., supra, Judge Black delivering the opinion, has said (l. c. 643 and following, and referring to the effect of a judgment as establishing the obligation of a surety): ‘ ‘ But the judgment in the prior suit is not conclusive evidence of all matters necessary to be proved by the plaintiff in his suit against the indemnitor. Thus the question whether the relation exists which gives a remedy over is, of course, open to inquiry. Again, the judgment in the first suit is conclusive only as to the facts thereby established; for the scope of the estoppel created by the first judgment cannot be extended beyond the points and issues necessarily determined by it. 2 Black on Judgments, sec. 574.”

In Strong v. Insurance Co., supra, it is said (l. c. 298): “If notice of a suit threatened, or pending upon the original policy, be given to the re-assurers, they have a fair opportunity to exercise an election, whether to contest or admit the claim. It is their duty to act ■upon such notice, when given, within a reasonable time. (If they do not disapprove of the contestation of the suit, or authorize the party re-assured to compromise or settle it, they must be deemed to require that it should be carried on, and then, by just implication, they are held to indemnify the party re-assured against the costs and expenses necessarily and reasonably incurred in defending the suit. If they decline to interfere at all, or are silent, they have no right afterwards to insist that the costs and expenses of the suit ought not to be borne by them, as they are exclusively, under such circumstances, incurred for the benefit of the reassurers, and are indispensable for the protection of the party re-assured.”

The case at bar was tried by the learned trial judge on this theory. It was submitted as a question of fact to the jury to determine whether or not the original plaintiff Butz had been injured in consequence of the Construction Company failing to furnish him a safe place in which to do his work That issue was tried out in this case. This present defendant, appellant here, was heard on that here, or had an opportunity to be heard on it. But it introduced no evidence tending to contradict the fact that the accident occurred from negligence to furnish a safe place to work, while the testimony introduced here by respondent tended to show that the accident did not occur in consequence of a violation of the ordinance. The learned trial court submitted to the jury in the present ease the question of the reasonableness of the compromise amount, and the jury found it was reasonable. This defendant, appellant here, was heard on that, or had an opportunity to be heard on it; it introduced no evidence tending to show that it was unreasonable, but stood on the naked fact that it was entitled to notice of the steps taken in the case after it had withdrawn. We do not think this is the law.

When the Casualty Company abandoned the defense with the issues in it, one for which it was liable, the other not, it took the chance of judgment being rendered on either. The verdict here establishes the reasonableness of the amount at which the cause was compromised. It also established that the accident involved was one arising out of a cause for which the Casualty Company was liable.

Briefly, the fact that the ordinance violation was taken out of the case is not very material. The Construction Company had a right, the Casualty Company having abandoned the defense, to make the best compromise it could. Making one, it was open to the Casualty Company to show that it was of a cause of action for which it was not liable. If the case had been compromised and settled with that cause still in, the Casualty Company would have been entitled to show that the settlement was of a cause of negligence other than for which the Casualty Company was responsible. It was always open to the Casualty Company to show that the real cause was from violation of the ordinance. That question was present and open to inquiry in this action; was in issue and was tried. The finding of liability here is for common law negligence and for that the Casualty Company is liable. The Casualty Company has had its “day in court” on that issue and that issue has been found against it.

Upon consideration of the whole case, the evidence, and the instructions, we find no error to the prejudice of the appellant. The judgment of the circuit court is affirmed.

Nortoni and Allen, JJconcur; Nortoni, J., in result only.