Huff v. Harbaugh

Thompson, J., delivered the opinion of the Court. This is an appeal from the judgment entered by the Circuit Court for Washington County in favor of the appellees, James W. Harbaugh, et al., against the appellant, William L. Huff, in the amount of $25,550. Judgment was also entered in favor of Nationwide Insurance Co., co-defendant below. Harbaugh did not appeal.

I Facts William Huff and Charles Harbaugh had known each other for thirty-five years. When Huff became an insurance agent twenty-four years ago, Harbaugh transferred all of his personal and business insurance to him. Almost all of the transactions between the two parties were conducted by telephone. The general mode of these transactions consisted of Harbaugh calling Huff to inform him that he had bought, or was buying, a building and required insurance.

Huff would then advise Harbaugh that he would "take care of it.” Some time thereafter, Harbaugh would receive a policy in the mail. On at least one occasion when Huff was not able to place insurance with his company, he arranged for insurance coverage elsewhere. In the twenty years in which Huff served as Harbaugh’s agent, no request for the procurement of insurance had been refused. In February 1973, Charles W. Harbaugh and his two sons purchased property in the City of Hagerstown, Maryland, ⁶⁶³ located at 25-29 South Potomac Street, for the sum of $30,000.

In order to finance the purchase of this property, Harbaugh, then retired, arranged for a mortgage loan through the Hagerstown Trust Company, such mortgage including two other properties owned by him on South Mulberry Street. Settlement was held on February 28,1973. As Harbaugh was a customer of long-standing, the loan officer of the bank proceeded with settlement even though Harbaugh did not have a written policy or binder showing his or the bank’s interest as was generally required. Harbaugh testified that he telephoned Huff on the day of settlement, asked for $30,000 coverage against fire loss, and was told by the appellant, "O.K., I got it — I’ll take care of it as usual.” Thereafter, Hagerstown Trust received insurance policies from Huff covering the buildings on South Mulberry Street, but no policy was received with respect to the South Potomac Street property.

On December 7, 1973, the appellees obtained a second mortgage from the Hagerstown Trust Company secured on the same properties encumbered by the mortgage dated February 28,1973. During this settlement, the bank’s mortgage loan officer noticed that the Bank had not received an insurance policy on Harbaughs’ South Potomac Street property. She thereupon placed a telephone call to the appellant, Huff, and handed the phone to the settlement attorney who advised Huff that the settlement could not be concluded without the required insurance. After this telephone conversation, the settlement was completed.

On several occasions following the December 7 settlement, the mortgage loan officer telephoned Huff to inquire as to the insurance on the South Potomac Street property. In each instance, she was informed by Huff that there was insurance coverage and that the policy would be forthcoming. On February 7 and 8, 1974, the Harbaugh property at 25-29 South Potomac Street was extensively damaged by fire. Glen Miller, Vice President of the Hagerstown Trust Company, upon learning of the fire, called Huff and was again assured that the building was covered and that the ⁶⁶⁴ Hagerstown Trust Company was the loss payee.

The building was not, in fact, insured. Damage to the building was from two sources — the fire, which had spread from the adjoining property, and the negligent demolition of such neighboring property. A real estate appraiser valued the structure prior to the fire to have been between $37,000 and $40,000. Mr. Norman Earley, Jr., a commercial contractor who also appeared at trial, placed the cost of repairs to put the building in substantially the same condition as it was prior to the fire to be in excess of $63,000.

This estimate did not include cost to repair the hole in the wall caused by the adjoining property’s demolition crew. The appellees instituted suit on December 1,1976, against RKO Theaters, Inc., owners of the adjoining property, and Victor C. Ditto, the contractor who undertook the demolition of the RKO property, for damages resulting from the fire of February 7 and 8, 1974, and the subsequent demolition of the RKO property. RKO and Ditto subsequently settled their case by the payment of $25,250 and obtained a release from the appellees which provided in pertinent part: "5. The Releasors are willing to and hereby do, release the Releasees only for all past or present claims for all damages arising from said occurrence and specifically including those amounts of damage claimed by Releasors for the loss by Releasors of rental income, loss and damage to the personal property owned by the Releasors in the tavern portion of the building, damage to the concrete sidewalk, repair and relocation of the air conditioning in the tavern portion, the puncturing of the north wall, the time, expense and inconvenience in connection with the processing of the claim, certain items of cost and fees, excluding attorney’s fees, in connection therewith, in the total compromised amount of TWENTY FIVE THOUSAND TWO HUNDRED FIFTY DOLLARS ($25,250.00).” "6.

It is the express understanding therein that Releasors are releasing their claims against the ⁶⁶⁵ Releasees, only, and this release and compromised amount is not intended to be, nor shall it be construed to be, a release of any insurer, insurance company or insurance agent or broker, for any failure to place or provide insurance coverage for the property, which cause of action, if any, is expressly reserved to the Releasors.” RKO subsequently contributed $23,000 and Victor C. Ditto paid $2,250.00 for a full release of all claims against them by the Harbaughs based upon their alleged negligence. The trial judge found that the moneys paid under this release were based upon Harbaughs' claimed losses of rental income and personal property and damages to the sidewalk and north wall of the building. II Joint Tortfeasors The appellant sets forth a two-prong attack on the trial court’s verdict in favor of the appellees, based upon the Uniform Contribution Among Tort-Feasors Act, Md. Ann. Code (1957) art. 50, §§ 16-24 (The Act). Appellant begins with the assertion that the trial court was clearly erroneous in finding that RKO, Ditto and Huff were not joint tortfeasors.

He then proceeds to argue, in the alternative, that: A. The release of RKO and Ditto, by the appellee, also releases appellant, or; B. Appellant should be credited, pro-tanto, for the amount paid by RKO and Ditto for their release. The Act, § 16 (a) defines joint tortfeasors as: "[T]wo or more persons jointly or severally liable in tort for the same injury to person or property, whether or not judgment has been recovered against all or some of them.” 1 (Emphasis ⁶⁶⁶ supplied). Thus, reduced to a more basic concern, the issue becomes whether Huffs actions were "in tort” and whether they can be said to have resulted in the "same injury” to the Harbaughs as did the acts of RKO and Ditto. The Act provides little guidance as to what the "same injury” would entail.

Generally, when two parties have united to cause tortious harm to another the "same injury” to the individual is obvious, as for example when the negligence of the driver of one car and the negligence of the driver of a second car combine to injure a passenger. In such classic situation there can be no doubt as to the existence of the "same injury.” The problem becomes more difficult in situations where, for example, an individual is injured as the result of the negligence of another and in subsequently receiving medical treatment the individual receives additional injuries. Can it be said that the original and subsequent tortfeasors are responsible for the "same” injuries so as to render them joint tortfeasors under § 16 of the Act? Logically, it would depend upon the nature of the injury sustained from each of the various tortfeasors, and thus would be a question of fact.

In the present case the appellant alleges that the "same injury” test is met because RKO, Ditto and the appellant were all sued in negligence based upon fire damage to the appellees’ building. A closer look at the cause of action against the appellant reveals that its premise is not the fire damage to the building, but rather a breach of promise to secure fire insurance. Appellant’s actions are related to RKO’s only by the fact that were it not for the negligence of RKO and the resultant fire, the appellant’s failure to procure the insurance would not have been brought to issue. Thus, it would be more accurate to categorize the injuries caused by appellant and RKO as "related” rather than the "same.” Additionally, it appears that the appellant’s liability was not based on tort law, per se, but on the product of the union ⁶⁶⁷ of tort and contract law.

Couch, Insurance 2d, § 25:46 provides that: "An agent or broker is liable to his principal if by his fault or neglect he fails to procure or renew insurance as he contracted to do, and as a result of the want of insurance the principal suffers a loss. Such liability exists as one for breach of contract or as a tort in negligently failing to perform a duty imposed by contract.” (emphasis added), (footnotes omitted). The appellees initially brought suit alleging counts in both contract and tort. The trial judge combined the two theories and characterized the union as a "tortious breach of contract.” In determining whether such category is to be viewed as being essentially tortious or contractual in nature for purposes of the applicability of the Act, the observation of this Court in Bogley v. Middleton Tavern, 42 Md. App. 314 , 400 A.2d 15 (1979), rev’d. on other grounds, 288 Md. 645 , 421 A.2d 571 (1980), is helpful.

There it was stated: "Appellant correctly recognized that where questions of contract and negligence causing a breach of that contract arise, the better analysis focuses on the contract question, i.e., whether an agency relationship existed, whether the principal was disclosed, partially disclosed or undisclosed in the questioned transaction, and what authority was vested in the agent. When these elements are addressed in the cause of action, the breach of contract commands our attention once the causal negligence of the agent is ascertained.” Id. at 324. Cf., Canatella v. Davis, 264 Md. 190 , 286 A.2d 122 (1972) (contractual act negligently performed). Compare Loh v. Safeway Stores, Inc., 47 Md. App. 110 , 422 A.2d 16 (1980), where this Court dealt with the issue of whether a suit for breach of implied warranty could be a "claim in tort” for purposes of the Act.

There it was concluded that "the warranty action, albeit a 'freak hybrid,’ [of a cause of action ⁶⁶⁸ sounding in tort and contract] differs little in fact in products cases from 'causes of action sounding in tort.’ ” Id. at 121 . Thus the warranty action was held to sound sufficiently in tort as to fall within the confines of the Act. Despite the various views propounded as to whether an action containing elements of both tort and contract should be viewed as essentially tortious in nature or contractual, the determining factor is based on a factual predicate. The appellant had been asked to procure $30,000 worth of insurance protection for the appellees’ building.

He agreed to take care of the matter just as he had done on numerous other occasions. When the discussed policy, or other evidence of coverage failed to arrive through the mail, the appellees as well as representatives of the Hagerstown Trust Bank were assured by the appellant that the agreed coverage had been obtained. It had not. The trial judge concluded on the basis of all the evidence that "Bill Huff [appellant] is liable to Charles Harbaugh and sons [appellees] by breach of his agreement with Harbaugh to provide $30,000 insurance coverage against loss by fire by negligently failing to procure that insurance to protect his principal.” We agree with this conclusion.

The appellant was clearly negligent in the manner in which he behaved with respect to the agreement; however, the essential nature of his behavior remains the breach of contract with the appellees. In summary, the setting forth of the § 16 definition of joint tortfeasors reveals an intent to