Anderson & Ireland Co. v. Maryland Casualty Co.

Urner, J., delivered the opinion of the Court. A policy issued by the appellee casualty company’insured the appellant corporation to the amount of $10,000 against loss from liability for damages on account of bodily injuries accidentally suffered by persons using the elevator in the appellant’s building in Baltimore City. It was provided in the policy that the appellee should at its own cost “investigate all accidents and defend all suits (even if groundless),” of which notice was given as stipulated. There was a provision that the Casualty Company should, not be responsible for any expenses incurred by the insured unless they were first specifically authorized by the former company in writing.

While the policy was in force a person was injured in ⁶⁹ the use of the elevator and sued the appellant company for damages- The Casualty Company prepared to defend the suit, but a.short time before the trial its general attorney complained in writing to tbe appellant company that it seemed to be in sympathy with the plaintiff in the case, and stated: “From the facts I now have before me in reference to this and other phases of the case, I desire to respectfully suggest that it will be advisable for you to. have your own counsel present at the trial of this suit for the reason that matters may develop in the course of the trial which will compel me to withdraw from the case in order to protect the interests of the Maryland Casualty Company. Will you kindly give me the name of your counsel at once so that I can give him all the facts in my possession.and enable him to get ready for trial in the shortest possible space of time.” In pursuance of this letter the appellant employed counsel, who participated with the general attorney of the Casualty 'Company in the further conduct and trial of the case. The suit resulted in a judgment for the plaintiff, which the Casualty Company paid in accordance with the terms! of the policy, but it has declined to reimburse the appellant company for its expense incurred in the employment of counsel to defend tbe suit. It is the object of the present action to.gobtain such reimbursement..

In the trial below a verdict was entered for the defendant under an instruction based upon tbe theory that the policy did not obligate the Casualty Company to pay the assured for any expenses except such as were first specifically authorized in writing, and that, there was no evidence tending to show such authorization as to the expenditure for counsel fees to which the suit relates. An exception to the granting o£ the instruction presents the main question to he considered on this appeal. The contract of insurance imposed upon the Casualty Company the distinct obligation to defend at its own cost the suit on account of which the appellant made the expenditure for which it now seeks recovery. It was the clear intent of the agreement to- relieve the assured of the expense of defending ⁷⁰ the actions against which the policy was to furnish- indemnity.

If the insurer had altogether failed or refused to defend, the suit brought against the appellant, there would have been an undoubted °breach of contractual duty for which the latter could recover to the extent of the loss thereby occasioned. South Knoxville Brick Co. v. Empire State Surety Co. (Tenn.), 150 S. W. 192 ; Butler v. American Fidelity Co., 120 Minn. 157 , 139 N. W. 355 ; 44 L. R. A. (N. S.) 609. In the case as presented the Casualty Company did not definitely decline to- defend the suit in question, 'but it assume'd a position which left the appellant no alternative but to make independent provision for the defense.

The letter from which we have quoted indicated in effect the purpose of the Casualty -Company to withdraw from the case if the developments at the trial should, in the opinion of its general attorney, require such action. As the appellant could not be certain that such an emergency would not arise, it could not do otherwise than act in pursuance of the formal advice of the insurer to employ separate counsel. It appears from the context of the letter that the Casualty Company was under the impression that the appellant was in sympathy with the plaintiff in the damage suit and that this attitude might be apparent and embarrassing to the defense at the trial. The record does not show to what extent, if at all, this view was supported by the facts.

It is admitted that the conduct of the appellant at the trial was entirely satisfactory. The defense was fully and carefully developed and the suit, which was for $25,000.00 damages, resulted in a verdict for only $Y50. The Casualty Company had offered to compromise the ease for