MATEER T/A SUMMIT HILL RADIO & TV v. Reliance Ins. Co.

Rutl®dge, J., delivered the opinion of the Court. The plaintiff appellant appeals from the granting of a di ⁶⁴⁵ rected verdict for the defendant at the close of the plaintiff’s case in a suit for damages under an insurance contract. On June 20, 1964, the plaintiff appellant entered into an insurance contract with the appellee for the term of one year (renewing an earlier policy). The policy insured against loss or damage by reason of a number of causes including loss or damage by flood.

On February 17, 1965, the Washington Suburban Sanitary Commission, while repairing a water main, turned off the water in the lines running to a coin operated laundry operated in leased space above appellant’s shop. When the water was turned back on, it blew a fitting off one of the pipes running to this laundry, and the resultant steam and water permeated and seeped into the appellant’s shop below and caused extensive damage to articles being repaired, as well as damage to the premises and equipment. Some of the damaged equipment and appliances were on shelves and tables, and some on the floor. In the course of the trial the appellant sought to introduce into evidence a letter written by an agent of the appellee dated June 11, 1965 to Mr. Feissner.

The letter reads as follows: “Gentlemen: This will acknowledge receipt of your June 8th letter regarding captioned assured’s loss of February 17, 1965. You state you have been advised by the Agency that the Company is declining coverage. This is not altogether correct. Based on the information developed by our Adjuster we offered to settle with Mr. Mateer for those items which were inundated on the floor of his store but not for those damaged on work benches, shelves and tables.

This apparently was not acceptable to Mr. Mateer. The policy, which you have undoubtedly reviewed insures against direct loss or damage by flood. It is our opinion that the items which were not on the floor were not damaged by flood which is the basis for our declination in respect to these particular items and while we also had certain reservations regarding those ⁶⁴⁶ on the floor we were prepared to resolve any doubt there may be on that question in favor- of the assured. Very truly yours, RELIANCE INSURANCE COMPANY /s/ Alex Baird Marine Claims Manager” The lower court refused to permit the introduction of the letter into evidence on the ground that it was merely an offer to compromise a controversy involved in litigation.

The appellant also made a proffer to show that under an earlier policy, before the renewal of the present one, that similar damage had occurred under similar circumstances and that the company had paid the claim for such damage. This proffer was refused by the lower court. The appellant contends that the lower court erred in excluding the letter of June 11 by the appellee’s agent, and cites as authority, the case of Federal Mutual Insurance Company v. Lewis, 231 Md. 587 , 191 A. 2d 437 (1963), where the Court held that an offer of settlement, as distinguished from an offer of compromise, is admissible to the extent that it admits liability in any amount. The Court finds no error in the exclusion of the letter.

It was purely an offer of compromise, admitted no liability, and the rule set out in Biggs v. Langhammer, 103 Md. 94, 102 , 63 Atl. 198 (1906) governs. There the Court said: “The rule is well settled that ‘offers by a party with a view to compromise, to pay or to accept a sum of money, or to make deductions, and in general to secure a settlement, are inadmissible,’ and though there are some cases which hold that such offer is admissible, unless stated to be without prejudice, yet the prevailing rule is that the offer will be presumed to have been made without prejudice.” The appellant also contends that the meaning of the word “flood” in the policy was ambiguous, and for that reason the lower court should have admitted into evidence the proffer to ⁶⁴⁷ show that under similar circumstances the appellee had paid a similar claim prior to the time the present policy was renewed. This contention requires consideration of the meaning of the word “flood,” the understanding and the intention of the parties, and