Opinion
No. 4273.
Submitted January 6, 1954.
Decided February 18, 1954.
The right of a liability insurance company under the terms of its policy to "defend any suit against the insured" and to negotiate settlements does not authorize the attorney for the company to enter into a stipulation which will in effect dispose of a cross action by the insured as plaintiff. Hence, where the attorney for the company in an action against the insured agreed with counsel for the plaintiff in that action to a docket marking "Judgment for plaintiff . . . Judgment satisfied" without authority from the insured to negotiate settlement of her cross action as plaintiff and without her knowledge or that of her own counsel in such cross action the judgment may be amended to permit the maintenance of the cross action.
CASE, to recover for personal injuries caused to the plaintiff, Laura A. Perry, when an automobile owned by the plaintiff's husband and operated by her collided with one driven by the defendant, Thomas W. Faulkner. The defendant moved to dismiss on the grounds that an action arising out of the same accident brought by Faulkner against Mrs. Perry had been marked "Judgment for the plaintiff" by agreement of counsel for Faulkner and counsel for the Globe Indemnity Company which covered the car driven by Mrs. Perry. The Court transferred without a ruling the question whether this motion should be granted.
The parties have agreed on the following facts. The accident happened on or about April 6, 1950, and thereafter, on July 11, 1950, Faulkner sued Mrs. Perry to recover for personal injuries and property damage. Oscar Neukom, a practicing lawyer in Portsmouth was retained as counsel by the insurance company to defend this action. At the single conference held between Mrs. Perry and Attorney Neukom, she was advised to procure other counsel as the damages demanded in the Faulkner writ exceeded the coverage, and this was confirmed by a letter to her dated August 24, 1950, from the insurance company. As a result Mrs. Perry engaged William H. Sleeper of Exeter as her counsel and he entered an appearance for her as the defendant in the case of Faulkner v. Perry and mailed a copy thereof to Neukom and to Samuel Levy who represented Faulkner in the suit in which he was plaintiff. Sleeper also brought suit for her against Faulkner by a writ dated September 29, 1950. On September 27, 1950, Mrs. Perry wrote Neukom that she had retained Sleeper. Later, on March 22, 1951, the case of Faulkner v. Perry was settled and marked as "Judgment for the plaintiff . . . Judgment satisfied" being signed by Attorneys Levy and Neukom for their respective clients. Sleeper was not aware of this docket marking until about October, 1952, nor was he ever consulted about it. Neukom intended by this settlement to dispose only of the case of Faulkner v. Perry, but Levy intended to dispose of both this and the case of Perry v. Faulkner. Other facts appear in the opinion. Transferred by Griffith, J.
William H. Sleeper and Wayne J. Mullavey, for the plaintiff.
Sewall, Varney Levy, for the defendant, furnished no brief.
The single issue before us is whether in the circumstances here counsel for the insurance company defending in behalf of Mrs. Perry had authority to settle the suit so as to bar the cross action against Faulkner in which she was plaintiff. Hubley v. Goodwin, 91 N.H. 200. In its policy the insurance company agreed to "(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof . . . but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient." (Emphasis supplied). We do not believe this clause or anything in the agreed facts gave authority express or implied to the attorney for the company in effect to dispose of Mrs. Perry's suit as plaintiff. His authority was limited to defending actions against her in accordance with the stipulation in the policy. See 8 Appleman, Insurance Law and Practice, s. 4714, p. 87; 5 Couch, Cyc. of Insurance Law, s. 1175f, p. 4194. She had given neither him nor counsel for Faulkner any reason to believe that they could directly or indirectly dispose of her plaintiff's suit. Counsel for the insurance company was not even aware of this action although he knew that her lawyer Sleeper had entered an appearance in the case where she was the defendant. Counsel for Faulkner knew this and he also knew that Sleeper alone represented her in her cross action. Notwithstanding this, and the fact that Sleeper was easily available, they never consulted him in regard to the docket marking, nor was he aware of it until over a year and a half after it was made. In these circumstances it seems clear that the disputed marking should not be allowed to stand as a bar to the plaintiff's action here, since this settlement was made without the knowledge, consent or participation of Mrs. Perry. Fillhardt v. Schmidt, 291 Ky. 668, 677; U.S.A.C. Transport v. Corley, 202 F.2d 8. See also, Haluka v. Baker, 66 Ohio App. 308; 13-14 Huddy on Automobiles, s. 304. In order that the plaintiff here may be free to maintain her action she should first proceed by motion in the Superior Court to vacate the judgment against her in Faulkner v. Perry. Lamarre v. Lamarre, 84 N.H. 441. No reason appears why the docket marking cannot be so amended as to leave the settlement in Faulkner v. Perry undisturbed without barring the plaintiff's suit here. See Lancaster Nat. Bank v. Whitefield c. Trust Co., 92 N.H. 337, 339. Upon the agreed facts before us it seems the judgment entered in the Superior Court must be amended. Lamarre v. Lamarre, supra, 445. Until this is done, however, the order in this action will be
Motion granted nisi.
All concurred.