Tennessee Farmers Mutual Insurance Company v. Therion Omer Wood
This text of 277 F.2d 21 (Tennessee Farmers Mutual Insurance Company v. Therion Omer Wood) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinions
McALLISTER, Chief Judge.
Appellant, Tennessee Farmers Mutual Insurance Company, executed a policy of insurance with Therion Omer Wood, appellee, insuring him against liability for damages arising out of injuries to third persons as a result of the operation of his automobile. The limits of liability of the insurance company to Wood were $5,000 for injuries to each person in an accident, with a maximum liability of $10,000 for each accident, including bodily injury and property damage.
On the evening of May 13, 1957, in Memphis, Tennessee, appellee Wood collided with an automobile driven by Mrs. Sewell Avery. The collision forced Mrs. Avery’s car off the road into an electric-light pole, resulting in injuries to her and to her husband, who was riding beside her, as well as considerable damage to her car. The Averys sued appellee Wood for negligence and appellant insurance company defended the suit. As a result of the trial, a jury returned a verdict in the amount of $15,000 for personal injuries to Sewell Avery; $1,000 for personal injuries to his wife, Alma Avery; and $693.32 for damages to the Avery automobile — or a total of $16,693.32, upon which judgment was entered.
Appellant insurance company, after the judgment in the suit brought by Avery, paid into court the total of its liability under the insurance policy, namely, $5,-000 on the judgment awarded Sewell Avery; $1,000 for the judgment awarded Alma Avery; and $693.32 for the judgment for damages to the Averys’ car — or an aggregate of $6,693.32. Payment of this amount into court after the judgment left Wood still indebted to Sewell Avery in the amount of $10,000, which was the amount of the judgment awarded, less the amount which the insurance company paid into court as the limit of its policy for the Averys’ injuries. In other words, although the judgment in favor of Avery was $15,000, the insurance company paid into court only $5,000, which was the policy limit for injuries to one person.
Wood then brought suit against the insurance company for $10,000, the amount of the judgment in favor of Avery over and above the amount paid by the insurance company for Avery’s injuries, inasmuch as Wood is presently a judgment debtor to Avery in the amount of $10,000. The case was tried before a jury in the District Court and Wood was awarded a verdict in the amount of $10,000 against the insurance company, upon which judgment was entered, after the District Court had overruled a motion for judgment notwithstanding the verdict. From the judgment, the insurance company has appealed.
On appeal, the insurance company contends that it defended the suit in good faith; that, in good faith, it refused to compromise or settle the Avery claims within the limits of liability of its policy ; that the insurance company resisted the suit of the Averys in good [24]*24faith and in the reasonable belief that its defense of the suit offered a fair prospect of escaping liability under its policy, or of getting off for less than the policy limits. The insurance company further contends that Wood, its insured, was guilty of collusion with the Averys, and that he failed to cooperate with the insurance company in defending the suit, thereby breaching the policy provisions and relieving the insurance company of its liability thereunder.
The insurance company, therefore, submits that the District Judge was guilty of reversible error in submitting to the jury the question of its good faith in refusing to settle the Avery claim; that the District Judge was guilty of reversible error in submitting to the jury the question whether appellee Wood was innocent of collusion, and also the question whether or not he cooperated with the insurance company in the defense of the suit; and that, accordingly, the District Judge was guilty of reversible error in not entering a judgment of no cause of action in favor of the insurance company.
Wood, the appellee, contends that the insurance company, having control of the defense of the suit which was brought against him by the Averys, was guilty of bad faith in failing and refusing to settle the case within the limits of the policy of insurance; that, because of its bad faith, he was subjected to a judgment of $10,000 in excess of the limits of the policy; that his indebtedness, as a judgment debtor, is due to the bad faith of the insurance company; that he cooperated with the company in the defense of the Avery suit; and that the judgment in the amount of $10,000 rendered in his favor by the District Court, which was awarded to him in order to save him harmless from the Avery judgment, should be affirmed.
The issue on appeal is whether the District Judge was guilty of reversible error in submitting the case to the jury. Much of the controversy before us depends upon questions of law; and, before discussing the facts, an outline of the applicable law may be helpful for an understanding of the case.
Automobile liability insurance policies usually reserve to the insurer the decision whether an offer to compromise a claim against the insured should be accepted. So a conflict in the interests of the insurer and the insured may arise where there is an action or claim against the insured for an amount in excess of the policy coverage and an offer to compromise this claim for the policy limit or for a figure slightly below such limit. An insurer, having assumed control of the right of settlement of claims against the insured, may become liable in excess of its undertaking under the policy provisions, if it fails to exercise good faith in considering offers to compromise the claim for an amount within the policy limits; and it is liable for an excess over the policy limit, where it has exclusive control over the investigation and settlement of claims, and its refusal to settle within the policy limit is in bad faith. Aycock Hosiery Mills v. Maryland Casualty Co., 157 Tenn. 559, 11 S.W.2d 889; Vanderbilt University v. Hartford Accident & Indemnity Co., D.C.Tenn., 109 F.Supp. 565, 6 Cir., 218 F.2d 818; Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785; Traders & General Ins. Co. v. Rudco Oil & Gas Co., 10 Cir., 129 F.2d 621, 142 A.L.R. 799; Roberts v. American Fire & Casualty Co., D.C.Tenn., 89 F.Supp. 827, affirmed 6 Cir., 186 F.2d 921; Noshey v. American Automobile Ins. Co., 6 Cir., 68 F.2d 808; Tennessee Farmers Mutual Ins. Co. v. Hammond, Tenn.App., 306 S.W.2d 13.
While an insurance company may, in determining whether to accept or reject an offer of compromise, properly give consideration to its own interests, it must, in good faith, give at least equal consideration to the interests of the insured and if it fails so to do, it acts in bad faith. American Fidelity and Casualty Co. v. G. A. Nichols Co., 10 Cir., 173 F.2d 830.
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McALLISTER, Chief Judge.
Appellant, Tennessee Farmers Mutual Insurance Company, executed a policy of insurance with Therion Omer Wood, appellee, insuring him against liability for damages arising out of injuries to third persons as a result of the operation of his automobile. The limits of liability of the insurance company to Wood were $5,000 for injuries to each person in an accident, with a maximum liability of $10,000 for each accident, including bodily injury and property damage.
On the evening of May 13, 1957, in Memphis, Tennessee, appellee Wood collided with an automobile driven by Mrs. Sewell Avery. The collision forced Mrs. Avery’s car off the road into an electric-light pole, resulting in injuries to her and to her husband, who was riding beside her, as well as considerable damage to her car. The Averys sued appellee Wood for negligence and appellant insurance company defended the suit. As a result of the trial, a jury returned a verdict in the amount of $15,000 for personal injuries to Sewell Avery; $1,000 for personal injuries to his wife, Alma Avery; and $693.32 for damages to the Avery automobile — or a total of $16,693.32, upon which judgment was entered.
Appellant insurance company, after the judgment in the suit brought by Avery, paid into court the total of its liability under the insurance policy, namely, $5,-000 on the judgment awarded Sewell Avery; $1,000 for the judgment awarded Alma Avery; and $693.32 for the judgment for damages to the Averys’ car — or an aggregate of $6,693.32. Payment of this amount into court after the judgment left Wood still indebted to Sewell Avery in the amount of $10,000, which was the amount of the judgment awarded, less the amount which the insurance company paid into court as the limit of its policy for the Averys’ injuries. In other words, although the judgment in favor of Avery was $15,000, the insurance company paid into court only $5,000, which was the policy limit for injuries to one person.
Wood then brought suit against the insurance company for $10,000, the amount of the judgment in favor of Avery over and above the amount paid by the insurance company for Avery’s injuries, inasmuch as Wood is presently a judgment debtor to Avery in the amount of $10,000. The case was tried before a jury in the District Court and Wood was awarded a verdict in the amount of $10,000 against the insurance company, upon which judgment was entered, after the District Court had overruled a motion for judgment notwithstanding the verdict. From the judgment, the insurance company has appealed.
On appeal, the insurance company contends that it defended the suit in good faith; that, in good faith, it refused to compromise or settle the Avery claims within the limits of liability of its policy ; that the insurance company resisted the suit of the Averys in good [24]*24faith and in the reasonable belief that its defense of the suit offered a fair prospect of escaping liability under its policy, or of getting off for less than the policy limits. The insurance company further contends that Wood, its insured, was guilty of collusion with the Averys, and that he failed to cooperate with the insurance company in defending the suit, thereby breaching the policy provisions and relieving the insurance company of its liability thereunder.
The insurance company, therefore, submits that the District Judge was guilty of reversible error in submitting to the jury the question of its good faith in refusing to settle the Avery claim; that the District Judge was guilty of reversible error in submitting to the jury the question whether appellee Wood was innocent of collusion, and also the question whether or not he cooperated with the insurance company in the defense of the suit; and that, accordingly, the District Judge was guilty of reversible error in not entering a judgment of no cause of action in favor of the insurance company.
Wood, the appellee, contends that the insurance company, having control of the defense of the suit which was brought against him by the Averys, was guilty of bad faith in failing and refusing to settle the case within the limits of the policy of insurance; that, because of its bad faith, he was subjected to a judgment of $10,000 in excess of the limits of the policy; that his indebtedness, as a judgment debtor, is due to the bad faith of the insurance company; that he cooperated with the company in the defense of the Avery suit; and that the judgment in the amount of $10,000 rendered in his favor by the District Court, which was awarded to him in order to save him harmless from the Avery judgment, should be affirmed.
The issue on appeal is whether the District Judge was guilty of reversible error in submitting the case to the jury. Much of the controversy before us depends upon questions of law; and, before discussing the facts, an outline of the applicable law may be helpful for an understanding of the case.
Automobile liability insurance policies usually reserve to the insurer the decision whether an offer to compromise a claim against the insured should be accepted. So a conflict in the interests of the insurer and the insured may arise where there is an action or claim against the insured for an amount in excess of the policy coverage and an offer to compromise this claim for the policy limit or for a figure slightly below such limit. An insurer, having assumed control of the right of settlement of claims against the insured, may become liable in excess of its undertaking under the policy provisions, if it fails to exercise good faith in considering offers to compromise the claim for an amount within the policy limits; and it is liable for an excess over the policy limit, where it has exclusive control over the investigation and settlement of claims, and its refusal to settle within the policy limit is in bad faith. Aycock Hosiery Mills v. Maryland Casualty Co., 157 Tenn. 559, 11 S.W.2d 889; Vanderbilt University v. Hartford Accident & Indemnity Co., D.C.Tenn., 109 F.Supp. 565, 6 Cir., 218 F.2d 818; Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785; Traders & General Ins. Co. v. Rudco Oil & Gas Co., 10 Cir., 129 F.2d 621, 142 A.L.R. 799; Roberts v. American Fire & Casualty Co., D.C.Tenn., 89 F.Supp. 827, affirmed 6 Cir., 186 F.2d 921; Noshey v. American Automobile Ins. Co., 6 Cir., 68 F.2d 808; Tennessee Farmers Mutual Ins. Co. v. Hammond, Tenn.App., 306 S.W.2d 13.
While an insurance company may, in determining whether to accept or reject an offer of compromise, properly give consideration to its own interests, it must, in good faith, give at least equal consideration to the interests of the insured and if it fails so to do, it acts in bad faith. American Fidelity and Casualty Co. v. G. A. Nichols Co., 10 Cir., 173 F.2d 830.
“The right to control the litigation in all of its aspects carries with it [25]*25the correlative duty to exercise diligence, intelligence, good faith, honest and conscientious fidelity to the common interest of the parties. * * * When the insurer undertakes the defense of the claim or suit, it acts as the agent of its assured in virtue of the contract of insurance between the parties, and when a conflict of interest arises between the insurer, as agent, and assured, as principal, the insurer’s conduct will be subject to closer scrutiny than that of the ordinary agent, because of his adverse interest.” Traders & General Ins. Co. v. Rudco Oil & Gas Co., 10 Cir., 129 F.2d 621, 627, 142 A.L.R. 799.
In Aycock Hosiery Mills v. Maryland Casualty Co., 157 Tenn. 559, 11 S.W.2d 889, 892, the Supreme Court of Tennessee held that an insurer assuming, under its policy, to control litigation against the insured, must act “in good faith and with reasonable diligence and caution.” “That obligation,” said the Supreme Court of Tennessee, “attended the contract, and liability for breach of the obligation arises out of the injurious conduct of the insurer who assumed to act under the contract.”
In Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785, 790, it was said:
“The courts seem to be unanimous in holding an insurer liable in tort for an excess over the policy limit where as here it has exclusive control over investigation and settlement of claims and its refusal to settle within the policy limit is fraudulent or in bad faith. * * *
“The cases * * * establish the prevailing rule that the right to control investigation, settlement and litigation of claims must be subordinated to the insurer’s contractual duty to indemnify the insured against loss; that the insurer cannot escape liability by considering only what appears to be for its own interest. It must consider also the impact of its decision upon its insured and deal fairly and in good faith. This duty arises not so much under the terms of the contract but is said to arise because of the contract and to flow from it.”
“‘[The] insurer must act honestly to effectively indemnify and save the insured harmless as it has contracted to do — to the extent, if necessary, that it must make whatever payment and settlement as honest judgment and discretion dictate, within the limits of the policy, and an abandonment of this duty to act subsequent to its assumption in part constituted bad faith’.” Traders & General Ins. Co. v. Rudco Oil & Gas Co., 10 Cir., 129 F.2d 621, 627, 142 A.L.R. 799.
In cases of this character involving automobile insurance, the element of bad faith which is required to be established to subject the insurance company to liability must often be proved by circumstantial evidence. Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785.
The authorities above cited, and the instructions of the trial court, hereinafter referred to, constitute the law in this case.
We turn, then, to the facts in the personal injury ease brought by the Averys against Wood, the insured, and to the defense of that suit by appellant insurer, in order to ascertain if the trial court properly submitted to the jury the question whether the insurance company acted in good faith — or was guilty of bad faith — in refusing to compromise or settle the claim of Sewell Avery against Wood, before letting the case go to judgment, as a result of which Wood was subjected to payment of $10,000 more than the suit could have been settled for within the limits of the insurance policy.
It was the claim of Avery in his suit against Wood, the insured, that Wood, who had been spending the evening of May 12, 1957, with the Averys in Memphis, requested them to lead and direct him from their home to U. S. Highway 70 in order that he might, in his own car, return to his home in Crockett County, Tennessee; that just after midnight, the Averys undertook to lead Wood out of the [26]*26city of Memphis to the Highway; and that Mrs. Avery was driving her automobile with Sewell Avery, her husband, seated beside her in the right front seat. Avery had his right arm in the window with his left arm resting on top of his right arm.
On a four-lane street, the Averys proceeded on the far right-hand lane. Wood was following, driving, however, in the lane to the left of the Averys but to the right of the center line of the four-lane highway. Wood was not only to the left of the Averys, but was also, according to Mrs. Avery, to the rear of the Avery car with his front bumper being even with the rear bumper of the Avery vehicle. An oncoming car allegedly caused Wood to turn to the right. As he turned, he bumped into the Avery car and forced it off the road into an electric light pole, which smashed the Avery car and caused Avery’s injuries.
In the suit brought by the Averys against Wood for his negligence, the insurance company defended on the ground that Wood acted in a sudden emergency, caused by the driver of the oncoming car crossing the center line of the highway over into the lane in which Wood was proceeding. The suit was also defended on the ground that Mrs. Avery was guilty of contributory negligence in the manner in which she drove, and that Mr. Avery was also guilty of contributory negligence in sitting with his arms resting on the open right front-hand window. In defending the suit on the plea of “sudden emergency,” the insurance company claimed that it relied upon various statements taken by the insurance company from Sewell Avery, from Wood, the insured, from Mrs. Avery, and from a police officer.
The first statement of the accident secured by the insurance company was a statement by Sewell Avery, the injured man, which was taken by Jones, an insurance adjuster, on the day after the accident. At the time Jones saw Avery and secured the statement from him, Avery was in the hospital and about to enter the operating room for surgery. He had already been administered narcotics preparatory to the operation. It is undisputed that Avery told Jones that he was in no condition to make a statement and that he requested Jones to write at the top of the statement that Avery was under the influence of narcotics — which Jones did not do. Avery did not read the statement that Jones wrote out, and cannot remember signing it. In any event, in the statement which Jones wrote out and Avery signed, it appears that Avery, at that time, stated that Wood said that he could have avoided the accident if he had slowed down and turned behind Avery “instead of speeding up”; and this is confirmed by Wood’s subsequent statement that “If I had fell behind I could have made it. * * * I was trying to get in front. * * * I was picking up speed when I hit him.” Jones did not contradict Avery’s testimony.
Three days after the accident, Wood’s first statement was secured by Theo Leathers, an adjuster for the insurance company, on May 16, 1957. Leathers wrote the statement out and Wood signed it. In the statement, Wood said that the oncoming car was “50-60 feet away when he started crossing the center line into my lane. It was dark and head lights were burning on all cars. I thought the car meeting us would pull back in his lane but he kept in my lane. I was forced to pull to my right or collide head on with the car meeting me. I pulled to my right. The right front fender and bumper collided with the left front fender and bumper of Avery’s car. Mrs. Avery swayed to her right and collided head on into a light pole. The car that crowded me over didn’t stop.”
One week after the above statement to the insurance company, and ten days after the accident, on May 23, 1957, Wood made a statement to Mr. James Leary, one of the lawyers acting on behalf of the Averys. The statement was in the form of questions asked by Mr. Leary and answered by Wood and was taken down in shorthand by a court stenographer employed for that purpose. [27]*27In this statement, Wood said that when he saw the oncoming car it was 150 to 200 feet away. He informed Mr. Leary that he had told the insurance adjuster it was 50-60 feet away when he first saw it; but, when he afterward went down to the scene of the accident in the daylight, a few days later, he came to the conclusion that the distance in question had been 150 to 200 feet, rather than 50 feet.
In a third statement which Wood signed for the insurance company, six months after the accident, and on the morning of the trial, there was considerable information given about the accident; but, although it was prepared by the attorney for the insurance company, strangely enough, there was no mention as to how far the oncoming car was from Wood when he first saw it on the wrong side of the center line. However, the speed at which Wood was traveling was put at 25-30 miles an hour, instead of 20-25 miles an hour, as in Wood’s first statement to the insurance adjuster — and, for the first time, the speed of the oncoming car was stated — as coming toward Wood at the rate of 50-70 miles an hour.
Much is made of this change in the statement of Wood that he first told the insurance company agent that the oncoming car was only 50 to 60 feet away when it crossed the center line of the highway directly into Wood’s path, and his subsequent statement to the attorney for the Averys that it was 150 to 200 feet away when he first saw it crossing the line. Because of the subsequent inconsistent statement by Wood to the Averys’ attorney, the insurance company seeks escape from liability on the ground that it had the right to rely on the statement made by Wood to its adjuster. But, on the trial, the attorney for the insurance company testified that such difference in the statements as to distance was of no account whatever. The attorney for the insurance company knew, before the trial, that Wood had made these statements to the Averys’ lawyer, contrary to those made to the insurance adjuster a few days before — and the insurance adjuster had been shown the subsequent statement by the attorney for the Averys; but the attorney for the insurance company testified, on the trial, with regard to the two differing statements:
“I don’t believe there are any material discrepancies. * * * I have read * * * the statements he gave me * * * and the statement he gave Mr. Leary (the attorney for the Averys).
“Q. It doesn’t vary ? A. No.
“Q. He tried to speed up and go around; that is what [Wood] testified to at the trial ? A. Part of it; he hedged on the drinking [on the part of Avery] and a few other things.
“Q. He hedged on the drinking?
A. That’s right.
* -x- * * * *
“Q. It is important in this lawsuit how far the eastbound vehicle was from Mr. Wood’s car; is that right ? A. I don’t think it was important, if it was close enough to cause him concern and put him in an emergency.
“Q. So, therefore, the distance does become important? A. I don’t know. Different distances may put different people in different frames of mind.
“Q. In the statement taken from Mrs. Avery, she said it was 200 yards away, is that correct? * *
A. You have the statement. * *
“Q. You don’t recall? A. You read it, and if it is in there, I will concede it.”
The insurance attorney was then asked, during the course of his testimony, whether, at any place in the statement which Wood had given to him, there was any mention of how far away the oncoming car had been when it crossed the center line of the highway into Wood’s path:
“Q. Is there anywhere in the statement you have there that you [28]*28took on November 13th, any place in that statement does it appear that you asked Mr. Wood here or indicated at all how far that car was away from them when it first came across the center line?
* * * * ■ * *
“A. I don’t see in here where he gave me a foot or yard unit.”
The testimony and the statement given by Wood disclosed that he never gave the attorney for the insurance company any measurement whatever as to how far the oncoming car was away from him when it crossed the center line.
Appellee’s counsel continued.
“Q. [As] a lawyer, you knew that was an important factor? A. I don’t believe it is important. I don’t believe you or your client could express an opinion as to how far any vehicle was from him meeting it at night. He was definitely under a sudden emergency.
“Q. You knew that distance would vary from 200 yards to 50 or 60 feet? A. Yes; I thought the proof as to yardage or distance would vary, but I also think that is to be expected. There would have been considerable suspicion if it didn’t vary, but the reason I thought it would not vary was the fact that the car was so close he had to do what he had to do.
******
“Q. All right, let me ask you, Mr. Owens, if you were not going to run out on the man [Wood] after you saw the man allegedly change his story, so far as you were concerned, did you get on the phone and call * * * anyone in the Home Office to make a settlement?
A. No, because even after he had varied from his original statement, he hedged and equivocated, but he still went down the line, and he has since we have been in this trial, on the theory I was operating on, a sudden emergency.
"Q. Then, in your opinion, he has varied his testimony substantially? A. I have told you the facts which he testified to this morning.”
The plain conclusion to be drawn from the foregoing is that Wood did not, even in the opinion of the attorney for the insurance company, vary his testimony substantially from the statements he had given the representatives of the insurance company, and that there were no “material discrepancies” in Wood’s various accounts of how the accident occurred.
Nevertheless, in spite of the foregoing, counsel for the insurance company, during the course of the trial of the personal injury case, told Wood, after he had testified, and while they were both returning to the attorney’s office: “You ought to have told them that the car was closer than what you did * *
After the trial of the personal injury case and the rendition of the judgments against Wood in favor of the Averys, the insurance company lawyer wrote the Claims Supervisor of the insurance company, outlining the results of the trial, and stated the following:
“Our insured’s testimony was not what we hoped it would be. He would only state that the opposing vehicle’s lights blinded him and appeared reluctant to estimate how close it was to him or indicate that it actually forced him into the Avery vehicle. Frankly, were it not for the other circumstances involved in this case, I would probably give our insured the benefit of the doubt and attribute his unwillingness as a witness to limited intelligence and education. However, his attitude on the stand, coupled with all of the circumstances preceding the trial of this ease, certainly justifies some suspicion in the matter.”
The nearest the insurance company could come to charging Wood with changing his testimony on the trial from his statements made to the insurance com[29]*29pany before the trial, is seen in the attorney’s statement that Wood “appeared reluctant to estimate how close [the approaching vehicle] was to him or indicate that it actually forced him into the Avery vehicle,” but the attorney had already testified on the trial that there was no “material discrepancy” between Wood’s testimony and his prior statements; that it was not important how far the oncoming car was from Wood when it crossed the center line; and, in effect, that no one could express an opinion “as to how far any vehicle was from him meeting it at night.”
What were the circumstances that justified “some suspicion” as to Wood’s testimony or cooperation? There were no circumstances justifying any reasonable suspicion. It amounted to nothing more than imagination. As soon as the insurance company heard of the accident, it started to “suspect” Wood. The insurance adjuster who first investigated the accident commenced his questions to Wood:
“You mean you were driving along by the side of a good-looking woman and wasn’t talking to her?”
To which Wood replied: “No, I was watching my driving.”
After the above episode, the Claims Supervisor wrote Adjuster Allen Jones:
“For some reason I am inclined to believe there might be more than a casual acquaintance between the insured and Mrs. Avery, that they were riding along courting and that actually our insured was not forced into her car by an oncoming car.” (Emphasis supplied.)
Later, the Claims Supervisor wrote Adjuster Allen:
“I agree there seems to be more than a casual relationship between our insured and the claimants. It would be expected that our insured would have followed Mrs. Avery as she was leading him out of town as they contended they were doing. It would be an awkward way of directing a person through town especially since the person being directed would have no way of knowing when and in what direction the directing party was going until the maneuver was completed.
“There is a possibility of the claimants not being willing to go to Court to press their claim if there was some unusual relationship between Mrs. Avery and our insured. If this were the case I assume Mrs. Avery would hesitate to get in the position of being cross-examined in Court.
“I am sure both of you will continue to follow any leads that come to your attention about the relationship between our insured and the claimants.”
On cross-examination, the attorney for the insurance company was asked:
“Q. Mr. Owens, in your file was some indication your company thought there was a love affair, or at least a flirtation, going on between Mr. Wood and Mrs. Avery.
A. I will say this, based on the file, the boy was suspicious.
“Q. What fact * * * in that trial tells you there was a flirtation or any kind of romance going on between Mr. Wood and Mrs. Avery?
A. Tell me, you said the boys in the Home Office.
“Q. Will you tell me what facts in the file-(interrupted). A. You have them.”
There were no facts in the file, or in the evidence, to show any romance or flirtation between Wood and Mrs. Avery. This was just imagination.
Although there was no evidence of such a flirtation or romance between Wood and Mrs. Avery, the insurance company seemed to be obsessed about the idea and thought that as a result of such a romance, Wood was driving his car beside the car of Mrs. A very and flirting with her, and that such conduct caused the accident. There was no evidence to warrant such a view. But the strange thing in this regard is that if such had [30]*30been the case, Wood would clearly have been guilty of negligence, and the insurance company would, without question, have been liable for the loss resulting from the collision. In attempting to rely upon a flirtation between Wood and Mrs. Avery, the company was really doing everything possible to subject itself to liability — yet this point seemed to be ovei-looked at the time.
Although appellant insurance company now claims that Wood was guilty of collusion with the Averys and did not cooperate with it in the defense of the case, that claim was denied by the attorney for the insurance company during the trial of the case before the jury. On cross-examination, the attorney for the insurance company was asked:
“Q. So this man [Wood] who was colluding with the Averys-
A. You said that.
“Q. Well, that is your defense in this lawsuit, colluding with the Averys to get money out of the insurance company. Mr. Wood made a statement important to your defense, a much more important statement on November 13th than he did on May 16th, yet he is not cooperating with the company? A. I don’t say that.”
At another point, the attorney for the insurance company, on cross-examination, testified:
“Q. If Mr. Wood was not cooperating with the company or stretching the truth, or telling a falsehood, then he told a pretty good story to set up a sudden emergency, did he not? A. Can’t fight over that.”
And later the attorney for the insurance •company testified:
“ * * * even after [Wood] had varied from his original statement, he hedged and equivocated, but he still went down the line, and he has since we have been in this trial, on the theory I was operating on, a sudden emergency.”
There seems no way of interpreting the above testimony of the attorney for the insurance company, except as a withdrawal of the claim — at least, before the jury — that Wood was not cooperating with the insurance company, and an admission that he was thoroughly cooperating with the company on their defense of “sudden emergency.” Yet the claim of Wood’s non-coopei’ation is advanced again on this appeal.
In determining whether a variance between statements made to the insurer and subsequent statements or testimony constitutes a failure to cooperate with the insurer, consideration should be given to the extent of such variation or discrepancy, since a mere discrepancy in minor detail or an honest mistake between the several statements of the facts surrounding the accident is not sufficient to avoid the policy. Ocean Accident & Guarantee Corp. v. Lucas, 6 Cir., 74 F.2d 115, 98 A.L.R. 1461.
“If lack of cooperation under such a policy is found to exist upon the sole ground of variance in statements, that variance must be not only material, but conscious. Otherwise, an unscrupulous claim adjuster taking a written statement prior to trial could derive great advantage from such variance, for the honest witness might unconsciously vary a repeated story.” Ocean Accident & Guarantee Corp. v. Lucas, 6 Cir., 74 F.2d 115, 117, 98 A.L.R. 1461.
Appellant insurance company attaches much importance to the statement taken by Insurance Adjuster Allen Jones, and signed by Mrs. Avery, a few days after the accident, in which she purports to say: “I seen this car meeting us about 200 yards away, driving east pull across the center line and was meeting Therion [Wood] head-on * * *. Therion did not have any place to go to keep from getting hit; * * * but Therion could not help hitting us.”
The foregoing statement would, almost in itself, prove appellant’s contention here, and require a reversal of the judgment, except for one circumstance: Mrs. [31]*31Avery denies she ever told the insurance company adjuster, Allen Jones, anything of the kind. She testified that he came to see her a few days after the accident just as she was leaving her home for the hospital to be with her husband; that she told him that the oncoming car was about half a city block away when it crossed the center line. She denied that she told Jones that “Therion did not have any place to go,” or “that the accident was unavoidable,” or “that Therion had to turn his car to the right, that he had nowhere else to go.”
In the light of Mrs. Avery’s denials that she told Allen Jones any of these things upon which the insurance company now relies, one naturally looks for some contradictory testimony from Mr. Jones. But no one contradicted Mrs. Avery’s testimony. Although Adjuster Jones was present in the courtroom during the entire trial, he never took the stand as a witness. Moreover, Mrs. Avery stated that Jones, himself, wrote out the statement; that she signed it without reading it, because Jones told her that he needed the statement so that he could settle the claim. This testimony of Mrs. Avery is also undisputed. She further testified that the approaching car had only crossed the center line momentarily ; that the lights did not blind her; that the oncoming car had passed before the wreck occurred; that, in her opinion, it was not speeding; and that Wood came from behind and cut into the front of her car forcing her into the telephone pole.
In the light of Mrs. Avery’s undisputed testimony, the statement prepared by Adjuster Jones and introduced in the case by the insurance company, is of no evidential value whatever.
The crucial facts with regard to the accident are the following: Wood, although being directed and “led” out of the city of Memphis toward U. S. Highway 70 by the Avery car with Mrs. Avery driving — -was not following her. He was driving to the left of the Avery car. It is worthy of note that when the Claims Supervisor of the insurance company first learned of this fact, he wrote the insurance investigator of the company that he believed “that actually our insured was not forced into her car by an oncoming car”; and that it would be expected that Wood would follow Mrs. Avery, and that it was an awkward way of directing a person through the town when he would have no way of knowing where the directing party was going until “the maneuver was completed.” But, not only was Wood to the left of the Avery car but his front bumper was either even with the rear bumper of the Avery car or even with the middle of it. The Avery car was going 25 miles an hour; the Wood car, at the same speed. Wood was a young man, 22 years old. He was an automobile racer. He participated in automobile, or “drag races.” His car was mechanically adjusted for great speed, or, as the saying is, “souped up.” While he was driving by the side and to the rear of the Avery car, he suddenly speed-ed his car up and turned to the right to get ahead of the Avery car. Wood had got from the rear of the Avery car to the front of it when he cut in ahead, but instead of getting over ahead of it, his front right bumper crashed into the front left bumper of the Averys, driving it into the telephone pole. All of this is undisputed. Wood testified that if he had had another second, he could have made it. Although Wood said he was blinded by the lights of the oncoming car and tried to get out of its path, actually, he did not succeed in getting out of its path, yet the oncoming car passed without touching him. It must, therefore, have barely crossed the center line, or have crossed it so far away from Wood that it was able to get back into its proper lane at a considerable distance away as it advanced toward him, and as he advanced toward it. Wood, however, stuck to his story, upon which the insurance company relied — that the lights of the oncoming car blinded him; and the insurance company, because of this statement, which he never changed, went to trial on the issue of sudden emergency.
[32]*32However, as Wood stated to Mr. Leary, the attorney for the Averys:
“I waited until [the oncoming car] got closer to see what he was going to do. If I had fell behind I could have made it.”
This statement was shown to the insurance company shortly after Wood made it, and the company also knew that at that time Wood was confused about the distance at which he had seen the oncoming car approaching and that he had finally stated that he did not know how far it was away. This statement would indicate that Wood was not blinded by the lights of the oncoming car, as he continued to watch it to see what it was going to do. Adjuster Jones wrote the company that he had seen the statement which Wood made to Mr. Leary and that, according to the statement, Wood was somewhat confused and finally stated he did not know how far the oncoming car was away, “when he pulled into the Avery vehicle.”
In the answers which Wood gave to Averys’ lawyer, it was stated:
“Q. At the time your ear and Mr. Avery’s car actually collided; in other words, came together, how far away at that time was that other car; that is, the car that was coming towards you ? A. I would be afraid to say because, to be honest, I just don’t know. I was just trying to get out of there.
“Q. This all happened pretty quick there and you saw him 150 to 200 feet away and at that time you cut in? A. I was trying to get in front; I would be afraid to say.
“Q. You think if you had got behind, you would have avoided the accident? A. Yes.
“Q. At that time, where was the front of your car, even with the front of the Avery car? A. When I saw the other car?
“Q. Yes. A. T would be afraid to say, but it seemed to me like I was a little behind. I was picking up speed when I hit him.”
The foregoing certainly does not, in itself, bear any marks of collusion. The insurance company saw this statement long before the trial, and it does not appear that, at that time, it claimed it was collusive.
The question whether the insurance company believed the case should have been settled or not, bears upon its good faith. Mrs. Avery’s testimony is undisputed that the adjuster told her that he needed her statement “so that he could settle the claims.” The Claims Supervisor also wrote the adjuster that Averys’ attorney realized “that you will want to settle both claims at the same time, and I would now press him for his demands for Mrs. Avery. * * * I am inclined to believe that we should get the demands of Attorney Molloy for both of his clients before we make an offer for Mr. Avery.” At that time, therefore, it appears that the insurance company was planning to make an offer of settlement. Furthermore, it continually asked Averys’ attorney for additional medical reports of Avery’s injuries, and a list of “special damages,” which were furnished. But no offer of settlement was ever made thereafter by the insurance company, and it rejected Avery’s offer for a settlement within the policy limits.
Was this reversal on the part of the insurance company to make an offer of settlement based upon its belief that it had a good defense to the suit for negligence and the claim for damages? The company admitted before the trial of the personal injury case that it had concluded that the damages would probably exceed the policy limits. Did it contest the case because it felt the insured was free from negligence? Or did it gamble with Wood’s money in the hope of escaping the full liability imposed upon it by the policy?
When Avery’s attorney requested that the insurance company settle his claim for a sum a little less than the policy limits, the adjuster for the insurance company replied that Avery’s attorney was not giving him “any incentive to settle” and that the insurance company [33]*33“might as well take their chances, that they hadn’t a thing in the world to lose, where [they] had to pay out the entire policy to settle it,” and “if we are going to have to pay that much, might as well take our chance.”
In Tennessee Farmers Mutual Insurance Company v. Hammond, Tenn.App., 306 S.W.2d 13, 21, where the facts disclosed that, among other circumstances, an insurer had stated to its insured: “There is no reason for us to settle this case with you, you are demanding the policy limits; we have nothing to lose by trying it”; and that, when, on another occasion, the insured asked his insurer, “Why don’t you settle these cases?”, and the insurer replied, “We can’t lose; you are asking all the coverage,” the Tennessee Court of Appeals held that “the evidence in this record is amply sufficient to have justified the jury in finding as a fact that Tennessee Farmers Mutual Insurance Company subordinated the rights of its insured to its own interests, and that this amounted to lack of good faith on the part of the insurance company.”
One of the strange circumstances in the case indicates why the insurance company may not have been interested in making any offer of settlement. Its representative, in talking to Wood, found that he was a poor man who owned no property except a horse and who earned only $55.00 a week. The insurance company representative testified that he would have been more concerned about a verdict in excess of the policy limits, if Wood had been solvent; and that he looked upon a poor man differently than upon a rich one.
Instead of making a reasonable offer of settlement of Avery’s claim, the insurance company never made any offer whatever.
In the light of the foregoing, was there, in the instant case, an issue of fact presented for determination of the jury, whether the insurance company was defending the case because it believed there was a fair and reasonable prospect of escaping liability under the policy, or getting off for less than the policy limits — or was it gambling with the insured’s rights, merely because the offer of settlement was not sufficiently less than the policy limits, and so was no inducement for it to settle ? In order to resolve this question, the following circumstances are pertinent: The insurance company knew, from the first statement it secured after the accident, that Avery told the adjuster that Wood had said he could have avoided the wreck “by backing up instead of speeding up.” Before the trial, the company knew that Wood had been driving to the left of the Avery car and behind it, and that he had suddenly speeded up to pass it and turned in front of it; that his right front bumper had struck the left front bumper of the Avery car crashing it into a telephone pole, and the company knew that Wood had said he could have avoided the accident “by dropping back.” As far as the oncoming car’s causing Wood to act in a “sudden emergency,” everything in the letters exchanged between the adjuster, the Claims Supervisor, and the attorney for the insurance company indicates that they were very doubtful of this being the cause of the accident, and that the only way they could figure out how it happened was that Wood was driving along by the side of the Avery car carrying on a conversation with Mrs. Avery and flirting with her. This would have made the insurance company clearly liable; but these representatives of the company could not avoid the conclusion, in their own minds, that Wood had been negligent in some way; and none of them seemed to have really believed that the accident was caused by Wood’s being blinded by the lights of an oncoming car, and, as a result, being forced to act in a sudden emergency' — although Wood, as the attorney for the insurance company testified, “went down the line” for him on the theory of a sudden emergency. There seems to be no explanation of the doubt, anxiety, and suspicion on the part of the insurance company representatives concerning the relation[34]*34ship between Wood and Mrs. Avery except that they believed that Wood was really guilty of negligence. Moreover, Wood was guilty of negligence if he did not slacken the speed of his car instead of increasing his speed and trying to pass over in front of the Avery car, when, as he says, he was blinded by the lights of an approaching car. Ruth v. Vroom, 245 Mich. 88, 222 N.W. 155, 62 A.L.R. 1528.
It appears also that the adjuster for the insurance company told Mrs. Avery he appreciated her signing the statement so that he could settle the claim; and the Claims Supervisor proceeded, at first, on the basis of settling the claim.
When the insurance company found that the actual damages were greatly in excess of the policy limits, it refused settlement on the ground that there was no incentive to settle and that the company might as well take its chances as it “hadn’t a thing in the world to lose.”
As the trial court properly charged the jury: “* * * ‘bad faith’ on the part of an insurance company in this type of case implies ‘the idea of willingness to gamble with the insured’s money, or an intentional disregard of the financial interests of its insured, in the hope of escaping full liability imposed upon it by its contract of insurance.’ * * * ‘good faith’ required the insurance company in this case to investigate the Avery claim to such an extent that it would be in position to exercise an honest judgment as to its merits and whether the claim should be settled.”
The court further charged the jury:
“[In], order to honestly discharge its duty to settle or compromise within the policy limits, an insurer must exercise ordinary care and diligence; that is, such care and diligence as would be exercised by the ordinarily prudent person in the same circumstances, among other things, in the investigation of the case and the extent of the injury and damage for which the insured may be held liable. The manner in which the insurer investigates a case, negotiates to settle, or prepares for trial, has an important bearing on the question of ‘bad faith’ in refusing or failing to settle a claim made against its insureds. In this connection, the Court instructs you that circumstantial evidence from which the existence of main facts may be deduced, as distinguished from direct and positive evidence or proof may be used to establish bad faith and that negligence in investigation, as the Court has already instructed you, is suggestive of indifference to the trust imposed by the policy and which, in turn, may raise an inference of ‘bad faith.’
“ * * * The insured surrenders to the insurer the right to investigate and compromise or contest claims knowing that, in the event of claim, the insurer will have its own interests to consider, but an insured also has a right to assume that his interests will not be abandoned merely because the insurer faces the prospect of a full loss under the policy. The relation is one of trust calling for reciprocity of action. The insured, you understand, under his policy owes the duty of full cooperation — the insurer the duty of exercising good faith and diligence in protecting the interests of its insured.
“ * * * [A] liability insurance carrier has the right and privilege under its policy, you understand, to elect to contend that its insured was free from negligence and in no wise liable, but it must assert such right in good faith and upon its honest belief and an arbitrary and capricious denial of payment of settlement may amount to bad faith.”
If the insurance company, then, was guilty of an intentional disregard of Wood’s interests, in hoping to escape full liability under the policy, it was guilty of bad faith; if it did not exercise an honest judgment as to the merits of the case, and whether it should be settled, it [35]*35was guilty of bad faith; if the circumstances suggested to the jury that the insurance company was indifferent to the trust imposed by the policy to guard Wood’s rights equally with its own, the jury might find bad faith; if the insurance company abandoned Wood’s interests merely because it faced the prospect of a full loss under the policy, it was guilty of bad faith; if the insurance company was guilty of arbitrary and capricious denial of settlement within the policy limits, its action might have been found to amount to bad faith.
Since the claim against the insured exceeded the policy limits, a conflict of interests arose between the insurer, as agent, and the insured, as principal; and the insurance company’s conduct in such a case is subject to closer scrutiny than that of the ordinary agent, because of its adverse interests. As stated by appellant insurance company, the applicable rule of law in this case is as follows:
“If the proof, in the light of all the relevant circumstances, and inferences to be drawn therefrom is such as to leave a reasonable basis for disagreement among reasonable minds, the question of good faith of the insurer in the handling of the claim and conducting compromise negotiations is for the jury.”
In view of the foregoing, and in the light of all the relevant circumstances and inferences to be drawn therefrom, it appears that the evidence in this case is such as to leave a reasonable basis for disagreement among reasonable minds as to the good faith of the insurance company in the handling of the claim, and, accordingly, the question of the insurance company’s good faith was for the jury.
In an effort to show that it acted in good faith in refusing to make an offer of settlement, and also that Wood failed to cooperate with it in the defense of the suit, the insurance company points to evidence which, it contends, shows Avery, the injured man, to have been intoxicated at the time of the accident, and Wood’s contradictory statements as to such intoxication. How this could possibly be relevant to Wood’s negligence, or to the claimed contributory negligence of Avery, is impossible to appreciate. Avery was not driving the car; Mrs. Avery was driving and in full control. Yet, it is maintained that Avery, because of his intoxication, was seated by her side, facing to the right, with his right elbow resting on the open sill of the right-hand window, and his left arm resting along the sill. This, says the insurance company, was contributory negligence on his part since, as the attorney for the insurance company testified, “the way he was sitting” — with his right elbow and his left arm resting on the ledge — “broke his arm and was the direct and proximate cause of his injury,” when the Avery car was struck by Wood and crashed into the telephone pole. This is such a far cry from contributory negligence or proximate cause of the injuries resulting from the crash, that it cannot be taken seriously as a defense. It is, however, to be noted that Avery and Mrs. Avery deny that he was intoxicated; that Lt. McCrary, who was the first police officer arriving at the scene and who squatted down on the pavement to talk to Avery as he was lying on his back, testified that he detected no odor of liquor or signs of intoxication, although he thought that if Avery had been intoxicated, he would have detected it. Another officer, Mr. Owen, of the Police Department, came on the scene later and was present when Lt. McCrary was talking to Avery. Owen testified that he afterward did detect the odor of liquor on Avery’s breath. Owen also said that as Avery lay on the ground suffering from the arm, “broken completely in two,” he thought from “the manner of his speech and the general overall appearance of Mr. Avery,” under his flashlight, he was intoxicated or “high" — although, as Owen said, “his arm apparently was broken and he was in considerable pain.” This latter statement would seem to require some further investigation as to Avery’s intoxication, if that question [36]*36was relevant; but no representative of the insurance company ever asked either Mr. Avery or his wife whether he had been intoxicated; it never ascertained that Lt. McCrary had been present at the scene; and it never asked any of the nurses or hospital attendants whether, in their opinion, Avery had been intoxicated, when he arrived at the hospital.
Wood had signed a statement prepared by the insurance adjuster in which it was set forth that Avery had been drinking before the accident. Several months later, just before the trial, in the statement which was prepared for Wood, which he signed, it was stated that Avery “got pretty well drunk. * * * Mrs. Avery was driving because Avery was drunk.” On the trial, Wood testified that Avery had been drinking something that looked like whiskey; that he didn’t actually know it was whiskey, but that it was probably whiskey or beer and that Avery acted “tight.” The first statement which Wood signed set forth that Avery had two or three shots of whiskey between 8:00 P. M. and midnight before the accident. On the trial, he testified that after 7:30 P. M., he did not see Avery drink anything more, but that when Wood left Avery’s home to be directed out of the city by Mrs. Avery, “Avery acted like he was kinda tight.” The insurance company contends that Wood thus changed his testimony from his prior statement to the company, and tried to carry water on both shoulders; but there was no substantial variation in Wood’s statement as to Avery’s intoxication. In any event, Avery’s intoxication was not material on the question of the liability of the insurance company.
Like Avery’s claimed contributory negligence based on his sitting with his arms on the ledge of the window of the car, Mrs. Avery’s claimed contributory negligence disappeared completely during the trial of the case. It was never mentioned after it was pleaded; and it was pleaded because of the assumption on the part of the insurance company that if Wood was guilty of negligence for not having avoided the collision, then Mrs. Avery was also guilty of contributory negligence for not having avoided it — a complete non-sequitur and so recognized by the insurance company afterward. But it was a plea that also assumed Wood’s negligence — which was the basis of the Avery suit.
As to the question of Wood’s cooperation with the insurance company after the accident and duiung the trial of the personal injury case, most of appellant’s contentions have already been disposed of in the foregoing discussion. As admitted on the trial by the attorney for the insurance company, the differences between Wood’s statements to the insurance company and his testimony on the trial were mere discrepancies that were not material. Wood “went down the line” for the company on the theory of its defense — sudden emergency.
It is said that Wood was cautioned by the insurance company against giving any statements regarding the accident and that, notwithstanding this, he later voluntarily gave a statement to Avery’s attorney. However, on the trial, this was not considered by the attorney for the insurance company as collusion with the Averys or non-cooperation with the company. As the attorney for the company testified, the investigation which was made by Avery’s attorney was proper; that if he had been Avery’s attorney, he would have done the same thing; that there was no policy provision which restrained Wood from talking to anybody, including the parties on the other side.
From the foregoing, we fail to find any ground for the conclusion that Wood was guilty of collusion or non-cooperation. As a matter of fact, Wood did not know he was giving a statement to Avery’s lawyer. The latter went to the place where Wood was working and the attorney’s questions and Wood’s answers were taken down in shorthand by a court stenographer. Wood did not notice her; he did not think he was making a statement; and he did not sign the statement.
[37]*37Subsequent to the conclusion of the personal injury trial and the rendition of the judgments, the lawyer for the insurance company, in writing to the Claims Supervisor, after saying that Wood’s testimony was not what he hoped it would be, stated he would give Wood the benefit of the doubt and attribute his unwillingness as a witness to limited intelligence and education, except for his attitude on the stand and all of the circumstances preceding the case, which justified some suspicion. We find nothing pointed out as to Wood’s attitude on the stand or any circumstances preceding the case which would detract from giving Wood the benefit of the doubt of his cooperation, and nothing to justify any suspicion of collusion. Wood was a friend of the Averys; but it is a well-known rule that a lack of good faith is not to be inferred merely from relationship between the insured and the person injured, and the fact that the insured had an inherent sympathy with those injured by his negligent operation of an automobile is not controlling on the issue whether the insured failed to cooperate with the insurer. To constitute a breach of a cooperation clause by the insured, there must be a lack of cooperation in some substantial and material respect, a technical or inconsequential lack of cooperation or a misstatement to the insurer being immaterial in such respect. State Farm Mutual Automobile Ins. Co. v. Palmer, 9 Cir., 237 F.2d 887, 60 A.L.R. 2d 1138.
The failure of the insured to meet the requirements imposed by the cooperation clause constitutes an affirmative defense which must be pleaded by the insurer and the burden is upon the insurer to prove such noncompliance and that prejudice to the insurer resulted therefrom. State Farm Mutual Automobile Ins. Co. v. Koval, 10 Cir., 146 F.2d 118, 120.
Whether an insured under an automobile indemnity policy has failed to cooperate with the insurer in the defense of suits against it, as required by the policy, and whether such failure to cooperate has operated to the substantial prejudice of the insurer in the particular ease, are questions for the jury. American Fire & Casualty Co. v. Vliet, 148 Fla. 568, 4 So.2d 862, 139 A.L.R. 767. The question whether Wood had cooperated was, viewing the case in the most favorable light for the insurance company, a question of fact for the jury.
In any event, the claim that Wood might have breached the insurance contract was waived by the insurance company. In spite of its present contention that the company is discharged from its obligation by reason of Wood’s conduct, it actually paid — after the entry of the judgments — the entire amount of its liability under the policy into court. If an automobile liability insurer assumes and conducts the defense of an action brought against the insured, with knowledge of facts taking the accident or injury outside the coverage of the policy, without disclaiming liability or giving notice of a reservation of its right to deny coverage, such insurer is thereafter precluded in an action upon the policy from setting up the defense of noncoverage. Schmidt v. National Automobile & Casualty Ins. Co., 8 Cir., 207 F.2d 301.
In the instant case, it seems obvious that the insurance company finally considered it was liable under the terms of the policy, as, otherwise, no reason appears why it should have paid the policy limits, after the trial and the entry of the judgments in the personal injury case brought by the Averys against Wood, the insured.
Where an insurer, with knowledge of the breach of a condition, pays the amount of a loss into court on an interpleader, or pays, or partially pays, any loss under the policy, it recognizes the policy as still in existence and must be considered to have waived its defense of a claimed breach.
The insurance company’s payment of the entire amount of its liability under the policy waived any breach of condi[38]*38tion by Wood; and the insurance company cannot now be heard to contend that it is not liable to Wood because of his failure to cooperate with the ’company. But it is not necessary in this case for Wood to rely upon a waiver of any breach. The evidence of the insurance company’s own witnesses is sufficient to show that Wood was not guilty of collusion and that he did not fail to cooperate; and that question was properly submitted to the jury as a question of fact.
This case was tried before an experienced trial judge, and was submitted in careful and comprehensive instructions to the jury. The only issue presented on appeal is whether the trial judge committed reversible error in submitting the question of the insurance company’s good faith and the question of the insurer’s cooperation to the jury for their determination as questions of fact.
I am of the opinion that the substantial evidence from which the good faith of the insurer and the cooperation of the insured might be deduced presented questions of fact properly determinable by the jury.
In accordance with the foregoing, the judgment of the District Court is affirmed.
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277 F.2d 21, 1960 U.S. App. LEXIS 4947, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tennessee-farmers-mutual-insurance-company-v-therion-omer-wood-ca6-1960.