Defendant further alleged that he had not been paid the allowances specified in the written contract, and that the new business written by Fenn, of which he was to receive 10 per cent., amounted to more than $20,000, and that he had not received his compensation for transferring the business of the Security Life Assurance Association, for both of which he was to receive compensation up to the amount of $2,000, and further that the plaintiff had failed to render any account of premiums earned by Fenn, or to account to the defendant for them as stipulated in the written contract. He asked for an accounting, and a judgment in his favor for $2,000, with the interest thereon since January 5, 1913. the basis of the written agreement, and only referred to it in his cross-petition as an incident to his agreement with plaintiff and its execution as something to be accomplished before plaintiff would contract with the defendant, and that the parol agreement relied on by defendant does not vary or add to the written contract set out herein. We are of the opinion that the pleading and written contract do not admit of the interpretation placed upon them by the defendant and which the trial court appears to have adopted. The cross-petition treats the written contract as a three-party agreement. It alleges that "the defendant herein entered into a certain written contract with one F. R. Fenn and the plaintiff." The written contract opens with a statement that Fenn is the party of the first part and Whitney party of the second part; but in the body of the agreement it is provided that the allowances to be made by Fenn out of the commissions on new business, and the compensation for transferring the business from one company to another, shall be paid first to the Farmers' & Bankers' Life In account of defendant with such payments. It stipulates that these payments when made shall be in full of all claims that Whitney may have, not only against Fenn, but against the plaintiff. Over the objection of the plaintiff, evi-surance Company, and it was to credit the dence was admitted to the effect that, under a parol agreement with the plaintiff as to the surrender of his general agency to Fenn and as to his services in the transfer of the Security Company to the plaintiff company, his notes were to be fully satisfied and discharged. This, it is contended, was not within the issues formed by the pleadings, and that agreement constituted an alteration of and an addition to the written contract pleaded. The theory of defendant is that the written contract was between defendant and Fenn, and not between the defendant and the plaintiff; that he had held a general agency with the plaintiff which it desired should be surrendered to Fenn, who had assisted in securing the merger of the plaintiff with the other insurance company; and that there fore a parol agreement was made between defendant and plaintiff that, if defendant should make a satisfactory agreement with Fenn as to commissions on new business and renewal commissions, the plaintiff would accept such arrangement and contract as a settlement of all business affairs which it had with the defendant, including the release of the notes in suit. The contention is that the written contract did not undertake to express the agreement made between plaintiff and defendant, but that the agreement between Fenn and the defendant, when accomplished, would clear the way to a settlement with plaintiff and would be accepted by plaintiff as it might have accepted a deed or lease in fulfillment of the parol agreement between the plaintiff and defendant including the discharge of defendant's notes. It is further said that defendant is not asking for a recovery from plaintiff on It further provides that, in consideration of payments so made, the defendant shall release all his rights as general agent of plaintiff within certain described territory and shall cease writing Insurance business there. The plaintiff's signature was regarded to be necessary, and its written approval and agreement was added to the writing. It is agreed that allowances which defendants receive shall operate as a discharge of all the claims made as against the plaintiff, but omits to insert any agreement or provision that the claims which the company holds against him shall be discharged. Following the provision for the release of his claims against the company was an appropriate place for inserting the release of his notes as alleged in his answer and cross-petition, and, so framed, the writing would have covered completely all the claims of the defendant in support of which the questioned evidence was offered. Some of the language used in the cross-petition tends to sustain the theory of a parol contract, but a fair interpretation of it leads to the view that the agreement referred to by the defendant in its pleading was the written one entered into by three parties who signed it. The evidence in behalf of the defendant upon which verdict was based supports the theory now advanced by defendant, that he had a distinct agreement with plaintiff, and that the acceptance of the written agreement between Fenn and the defendant was in fulfillment of the parol agreement, which it (182 P.) and the rule that privilege may not be urged retion of fraud is limited, ordinarily, to cases of specting communications relating to perpetraactual fraud involving moral turpitude. is testified provided for the release of de- | 5. WITNESSES 201(1, 2)-PRIVILEGE-ATfendant's notes. If this was the only diffi- TORNEY AND CLIENT-FRAUD. culty, the pleading might be treated as Good-faith communications between attoramended in order to conform to defendant's ney and client, relating to the best method of testimony. However, as the case is present-protecting the client's interests, are privileged; ed, the parol agreement to release the notes sued on by plaintiff is deemed to be a variance of the written agreement and an addition to it, and hence the evidence of the parol agreement should have been excluded. Because of this error, the judgment is reversed, and the cause remanded for further proceedings. All the Justices concurring. (105 Kan. 242) EMERSON v. WESTERN AUTOMOBILE (Syllabus by the Court.) 1. INSURANCE 2, 618-"INSURANCE COMPANY"-ACTION IN INDEMNITY CONTRACT VENUE. An incorporated association whose business is that of indemnifying its members against loss resulting from damages inflicted by automobiles upon person or property of others is an insurance company, and by virtue of the provisions of section 51 of the Civil Code (Gen. St. 1915, § 6941), an action on the contract of indemnity may be brought in the county in which the plaintiff resides. Appeal from District Court, Wyandotte County. Action by J. O. Emerson, trustee in bankruptcy of Preston Sterrett against the Western Automobile Indemnity Association. Judgment for plaintiff, and defendant appeals. Reversed and remanded for a new trial. Keplinger & Trickett, of Kansas City, Kan., and A. M. Keene, of Ft. Scott, for appellant. David F. Carson, of Kansas City, Kan., and Milton J. Oldham, of Kansas City, Mo., for appellee. BURCH, J. The action was one by the trustee in bankruptcy of a member of a mutual association which indemnifies its members against loss on account of injury by automobile to the person or property of others, to recover the sum specified in the contract of indemnity. The plaintiff recovered, and the defendant appeals. The contract was made with W. P. Ster rett, and insured him in the sum of $2,500. Sterrett inflicted an automobile injury upon Carl A. Anderson, for which Anderson recovered judgment in the sum of $2,500. Pro [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Insurance | ceedings in aid of execution were instituted Company.] against Sterrett, with barren results. After- If the insurer, by wrongful conduct, unjustifiably prevent payment of loss in money [1] The defendant had its office and place after trial of the issue, it will be precluded of business at Ft. Scott, in Bourbon county. from asserting, in an action on the policy, that the policy did not mature by reason of nonpay-dotte county, and the summons which was It was sued in the district court of Wyan ment. 4. INSURANCE 514-DAMAGES FROM AUTOMOBILES ESTOPPEL. In such an action, certainty that payment served issued from that court. The plaintiff resides in Wyandotte county. Section 51 of the Civil Code provides that an insurance company may be sued in the county where meddled is not essential to estoppel. Reasona- the cause of action arose, or where the plainble assurance, under all the circumstances, that tiff resides (Gen. Stat. 1915, § 6941). The depayment would have been made, is sufficient. fendant was chartered under subdivision 52 would have been made if the insurer had not For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes agent because he could do so more cheaply than the employer, who would charge the expenses to him, and because he could be more certain of the good faith of that defense. He, accordingwhile a defender in fact. ly, wished to become a mere reimburser in law, of section 2099 of the General Statutes of [ The insurer desired to defend through his own 1915, providing for organization of accident, casualty, or liability companies. The defendant calls itself an indemnity association. An inspection of its by-laws and indemnity contract discloses that its business is simply that of insuring its members against loss resulting from damages inflicted by automobiles upon person or property of others, and it is an insurance company; therefore the defendant was suable in Wyandotte county. [2-4] The by-laws of the association contain the following section: "No action shall lie against this association to recover for any loss sustained by a member, unless it shall be brought by any such member for loss or expense actually paid in money by him, after actual trial of the issue, nor unless such action is brought within 18 months after payment of such loss or expense." The plaintiff argues that various expressions in the defendant's by-laws and policy indicate that the defendant insured against liability rather than loss. The quoted by law was evidently adopted for the purpose of definitely settling that question. Its terms are unequivocal and unmistakable, and payment in money by a policy holder of his loss and expense, after trial of the issue, is a condition precedent to action on his policy. The by-laws contain the following provision: "But in taking over the defense the insurer assumes a feature of a liability contract as distinguished from an indemnifying contract. When an accident occurs, he hurries to protect the assured and himself from liability by de feating the claimant in advance. But when the claimant has been successful, the insurer, falling back on the other theory, argues that he is not a liability insurer, only a reimbursement insurer. This shifting subjects him to the familiar doctrine of estoppel by election in inconsistent positions. The law does permit him to have the exemptions of a reimbursement engagement, but he cannot have the benefits of a liability engagement at the same time. If he wishes to rely upon the former, he may continue to do so under the words of his contract, and leave the defense to the assured. When he takes over the defense himself, he will not be heard to say that he has not assumed the posiPac. 1117. tion of a liability insurer." 89 Wash. 575, 154 This argument admits facts which refute it. After accident, an automobile owner is not grievously concerned about either legal liability or expenses, so long as an insurance company must pay the bills. To protect itself against indifference, improvidence, and even collusion and downright fraud, the insurer is obliged to undertake defense, and make its own outlays for expenses. Under these circumstances the insurer is not put to any election to forego these protective measures, or give up writing indemnity poli "If suit is brought against a member of this association to enforce a claim for damages indemnity for which is provided for by his certificate of membership, such member shall immediately forward to the secretary of this association every summons or other legal process as soon as same shall have been served on him, and this association will, at its own cost, de-cies. Until the state interferes, an indemnity fend such suit in the name and on behalf of such member." It is contended that this by-law is a characteristic feature of a liability policy; that the insurer cannot be defender against liability until judgment has been entered, and then take the position of an indemnity insurer; that the two attitudes are inconsistent; and consequently that the insurer may not defend and then insist on prepayment of loss as a condition to its own liability to pay. The case of Davies v. Maryland Casualty Co., 89 Wash. 571, 154 Pac. 1116, 155 Pac. 1035, L. R. A. 1916D, 395, supports this view. In the opinion it was said: "Tracing, now, the growth of the indemnity policy up to its present phraseology, its basic principle was that the assured would not only first pay the loss, but that he would attend to his own defense. The indemnifier, standing aloof, would pay the final bill, providing the defense had been honestly conducted by the employer. Generally speaking, the practice, as well as the contract of the indemnifier to take over the defense, came later. To do that under the old liability policy was natural, but under the pure indemnity policy was not natural. policy may lawfully be written which permits the insurer to guard against rendition of a judgment when there was no liability, and against rendition of a collusive or unjust judgment when there was liability. An automobile owner may take or leave such a policy; but when such a contract has been made the insurer is not required to give up one feature in order to enjoy the benefit of the other. The plaintiff was unable to plead payment in money, by himself or by the bankrupt, of the Anderson judgment. When the trustee in bankruptcy was appointed, the policy became assets in his hands. It was a valid contract, enforceable by him, but it was immature. It had not matured because the loss had not been paid. Except for the condition paid "in money," Sterrett's surrender of his property to the trustee in bankruptcy for benefit of creditors would have constituted payment which would have matured the policy, whatever the measure of liability might have been; but the policy required payment in money, and no money has been paid. what theory, then, is it proposed to hold the defendant liable? On (182 P.) "Surely it would seem that the recital of these facts would carry with it an assurance that there was some remedy which the law would give to Angle and the Portage Company for the losses they had sustained, and that such remedy would reach to the party, the Omaha Company, by whose acts these losses were The judgment of Anderson against Sterrett It is indispensable to the plaintiff's cause created an obligation on the part of Sterrett of action that Sterrett probably would have of the highest order. While he did not have, paid the judgment in money, voluntarily or at the time, sufficient property to pay the involuntarily, if the defendant had not corjudgment, he had earning capacity and a good rupted him and substituted itself for him, bepractice, which constituted capital and fur-cause the defendant's conduct was without nished a basis for credit; and the law did harmful effect unless it defeated probable not impute to him an intention to evade or payment. No matter how reprehensible it to defeat the obligation of the judgment. In may be, conduct is of no legal consequence case he did pay, the defendant's obligation | whatever, unless it occasion damage to someto pay became mature. The allegations of body. The principle is that which underlies the petition were that the defendant assumed liability for all torts. A good statement of complete domination and control of Ster- the principle appears in the case of Angle rett and his affairs, in order to prevent pay- v. Chicago, St. Paul, etc., Ry., 151 U. S. 1, 14 ment. It virtually substituted itself for Ster- Sup. Ct. 240, 38 L. Ed. 55, a leading case on rett in the various court proceedings, not to the subject of unjustifiable interference with subserve his interests, but to defeat liability contract relations. After reciting the facts, on its own contract. Even the bankruptcy which need not be restated here, Mr. Justice proceeding was only nominally voluntary on Brewer said: Sterrett's part. Acting according to the defendant's will rather than his own, he filed the petition, not to be discharged from his debts, but to prevent the defendant from ever becoming indebted. The result was the defendant destroyed Sterrett's obligation, and destroyed possibility of the policy becoming mature. The wrong thus committed was quite like unjustifiably inducing breach of contract between others. Anderson had a property right in the legal obligation of the judgment against Sterrett of the same virtue as if the obligation arose upon contract. To defeat that right was to injure Anderson, as certainly as if he had been deprived of tangible property. Express malice on the part of the defendant was not necessary to make its conduct tortious. Malice implied from the intentional doing of a wrongful act without justification was sufficient, and was inferable from the facts pleaded. The ultimate interest of the defendant was not enough to justify it in coming between Sterrett and Anderson, and it makes no difference that Sterrett's situation was such it would have been perfectly legitimate for him, acting voluntarily, to take advantage of the bankruptcy act. The ground of the action is not the tort of the defendant. The suit is on the policy, and the defendant is precluded from taking advantage of its own wrong by saying an event has not taken place the occurrence of which it has prevented. The theory of liability just proposed is not as plainly presented in the petition as might be. There is no clearer-cut statement that the defendant's misconduct did, in fact, prevent payment of Sterrett's loss in money. It is only by inference, from allegations that the defendant's purpose was to prevent payment, that the judgment was not paid, and that the defendant made itself liable by what it did, that such a charge may be discovered. It will be assumed that the true intent of the pleading was that nonpayment of the judgment resulted from accomplishment of the defendant's purpose by the means employed to that end. caused. "That there were both wrong and loss is beyond doubt. • "It has been repeatedly held that, if one maliciously interferes in a contract between two parties, and induces one of them to break that contract to the injury of the other, the party injured can maintain an action against the wrongdoer. * Bowen v. Hall, 6 Q. B. D. 333, 337, in which it was held that an acinduces another to break his contract of exclution lies against a third person who maliciously sive personal service with an employer, which thereby would naturally cause, and did in fact cause, an injury to such employer. In the opinion of Brett, L. J., it was said: "That wherever a man does an act which in law and in fact is a wrongful act, and such an act as may. as a natural and probable consequence of it, produce injury to another, and which in the particular case does produce such an injury, an action on the case will lie.'" 151 U. S. 10, 13, 14, 14 Sup. Ct. 243, 245, 38 L. Ed. 55. The necessary element of the plaintiff's cause of action just considered was ignored in the instructions given the jury. Absolute certainty that Sterrett would have paid the judgment if the defendant had not meddled is not essential. A fair and reasonable probability is all that need be established. In the opinion in the case just referred to this subject was discussed as follows: "That this was a wrongful interference on the part of the Omaha Company, and that it resulted directly in loss to the contractor and It is to the Portage Company, is apparent. not an answer to say that there was no certainty that the contractor would have completed his contract, and so earned these lands for the Portage Company. If such a defense were tolerated, it would always be an answer in case of any wrongful interference with the performance of a contract, for there is always that lack of certainty. It is enough that there should be, as there was here, a reasonable assurance, considering all the surroundings, that the contract would be performed in the manner and within the time stipulated, and so performed as to secure the land to the company. "It certainly does not lie in the mouth of a wrongdoer, in the face of such probabilities as attend this case, to say that perhaps the contract would not have been completed even if no interference had been had, and that, therefore, there being no certainty of the loss, there is no liability." 151 U. S. 12, 14 Sup. Ct. 244, 38 L. Ed. 55. 127-CONDUCT OF ATTORNEYREFERENCE TO CASUALTY COMPANY. Certain references to a casualty company having been withdrawn, and the jury properly instructed thereupon, no material error appears in respect thereto. 3. PLEADING 290(3)-ALLEGATIONS-DE NIAL UNDER OATH. The amended petition examined, and held not to allege agency of the defendant's daughter so as to require a denial under oath, even if the point were not raised here for the first time. TAL. [5] The court erred in admitting improper evidence over objection. A number of written communications between the defendant and its attorneys were read to the jury, which were privileged. Admission of the communications was followed by examination of witnesses upon their contents, and in this way the plaintiff virtually made his 4. WITNESSES 228-EXAMINATION-REBUTcase. Authorities are cited to the effect that privilege may not be urged respecting communications relating to perpetration of fraud. That is true in the case of actual fraud involving moral turpitude. Professor Wigmore is of the opinion the line should not be drawn so closely. He may be correct, although the weight of authority seems to be otherwise. 4 Wigmore on Evidence, § 2298, p. 3218. It is difficult to draw any hard and fast line; but there would be little left of the privilege if, in a doubtful case, communications between attorney and client, relating to the best way to protect the client's interests, could be inquired into, although the final conclusion, perhaps on appeal to this court, might be that fraud in law was involved. At the next trial the testimony elicited by the examination of witnesses respecting the contents of the privileged communications will be unavailable, as well as the communications themselves. The judgment of the district court is reversed, and the cause is remanded for a new trial. All the Justices concurring. (105 Kan. 219) STAFFORD v. NOBLE. (No. 22071.) (Supreme Court of Kansas. July 5, 1919.) (Syllabus by the Court.) 301(1)-TORT OF 1. MASTER AND SERVANT On the day of a certain election a campaign committee requested the use of the defendant's car for the afternoon. The defendant, who had purchased it for the use of his family, consented that such car, driven by his 16 year old daughter, be used as requested. The daughter reported with the car to the committee, who Physicians who examined the plaintiff testified as to the examination and the results thereof, some of such testimony being to the effect that she was not injured. On rebuttal the plaintiff described the method of the examination and the effects thereof. Held, that such evidence was competent; the alleged manner of giving such evidence being beyond our control. 5. MASTER AND SERVANT 332(5)—INJURIES TO THIRD PERSON-FINDINGS-JungMENT. The claims of error in refusing judgment on the findings and for excess of verdict held insufficient to require a reversal. Appeal from District Court, Sedgwick County. Action by Minnie Stafford against S. S. Noble. Verdict for plaintiff was reduced by the court with judgment thereon, and defendant appeals. Reversed and remanded. David Smyth and J. W. Smyth, both of Wichita, for appellant. John Madden, C. E. Cooper, and John Madden, Jr., all of Wichita, for appellee. WEST, J. The plaintiff sued for damages caused by a collision with the defendant's car, driven by his daughter. The jury returned a verdict for $2,500, which was by the court reduced to $1,800. The defendant appeals. The petition alleged that the daughter, Dorothy, a young lady of 16, was authorized by the defendant to use the car at any time suiting her convenience for her own pleasure and for her friends and the members of the family; that on the day of the accident the car was in charge and under the control and management of the daughter, who was oper ating the same under this authority of the defendant for her pleasure and comfort, and that of her young lady friend with her, for For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |