Mercer Casualty Co. v. Lewis

Plaintiff sued for declaratory relief and to have cancelled a policy of insurance issued to defendant Lewis covering an automobile. Defendant Collins was the victim of an accident in the operation of the vehicle, and he had recovered a judgment for damages against Lewis. Judgment herein went for the defendants.

The material facts are undisputed. Lewis purchased the vehicle from McKenzie through a salesman on a conditional sales contract. The salesman suggested to Lewis that he should have the vehicle insured. With Lewis’s consent the salesman orally requested McKenzie to obtain a policy. McKenzie was also operating as an insurance broker. An application was prepared by an employee of McKenzie and

The case is simple because of the settled doctrine that a party must win or lose on the case made out by him in the trial court. Here the appellant has relied upon charges of misrepresentation in the inception of the contract which it claims to be void ab initio because of such “fraud.” The appellant’s proof is that there were no representations at all by the insured, or by anyone acting for him. The proof is that what is relied on as misrepresentations came into the contract wholly through the acts of appellant and its agents without proper, or any, investigation. In a similar case it was said in Davern v. American Mut. Liability Ins. Co., 241 N. Y. 318 [ 150 N. E. 129 , 131, 43 A. L. R. 522 ], “obviously there can be no misrepresentation where there was no representation, and there can be no breach of warranty without warranty. ’ ’

Appellant seeks to avoid this difficulty by the argument that the insured is estopped by his conduct in accepting the policy without objection to the misleading “warranties” inserted by Mercer. The evidence is that the policy was filed without reading. No evidence was offered to show that Lewis or his agents had any knowledge of what Mercer had inserted in the policy. In a similar ease this court held there was no estoppel under such circumstances. (Ames v. Employers Casualty Co., 16 Cal. App. (2d) 255 , 266 [ 60 Pac. (2d) 347 ].) We then quoted from McElroy v. British Am. Assur. Co., 94 Fed. 990 [ 36 C. C. A. 615 ], as follows: “An insured has the right to rely on the presumption that the policy he receives is in accordance with his application, and his failure to read it will not relieve the insurer or its agent from the duty of so writing it.” The reason for the rule is apparent. The insurer had the opportunity to follow the usual practice and require a written application signed by

Appellant argues that, by the conduct of Lewis, both respondents are estopped to assert that the warranties are not those of Lewis. Knowledge and intent are essential elements of estoppel and both are lacking here. (10 Cal. Jur., pp. 636, 637; 10 R. C. L., pp. 696, 697; Killian v. Conselho Supremo, etc., 31 Cal. App. (2d) 497 , 499 [ 88 Pac. (2d) 214 ].)

Criticism of the judgment is directed to the charges that respondent Lewis failed to comply with the terms of the policy relating to notice of the accident out of which the Collin’s judgment arose. The point is not available because appellant renounced the policy and denied liability thus waiving any claim that notice of the accident was insufficient or not within time. (Secs. 553, 554, Insurance Code; Grant v. Sun Indemnity Co. of N. Y., 11 Cal. (2d) 438 , 440 [ 80 Pac. (2d) 996 ].)

The point that the cross-complaint upon which Collins had judgment herein was prematurely filed is not tenable. The Collin’s judgment against Lewis for damages arising out of the accident was entered September 27, 1937. It became final on November 26, 1937. The cross-complaint of Collins was filed in this case on October 25, 1937. The trial herein was begun on December 14, 1937, and the judgment entered May 25, 1938. The cause was for declaratory relief and hence in equity. It is a settled rule that a court of equity having jurisdiction of the parties and of the subject matter will make a .final disposition of the litigation governed by the circumstances as they are shown to

On a separate cross-complaint respondent Lewis had judgment against appellant for attorney’s fees expended by him in defending the action of Collins v. Lewis. Appellant argues that this judgment was improper because Lewis failed to comply with its demands for cooperation. Both parties offered evidence on this issue, and the trial court found the facts in favor of Lewis. There is nothing here but a conflict upon a controversial issue of fact and appellant’s attack cannot be sustained. The charge that the award made by the trial court is excessive is met by the same answer— that substantial evidence was offered to support the judgment. (Stuart v. Preston, 2 Cal. App. (2d) 310 , 317 [ 38 Pac. (2d) 155 ].)

The final point raised by appellant that “as to defendant Collins the subject matter was res adjudicata” does not present a debatable question. It seems to have been thrown in at the end of the opening brief without any examination of the principles involved. Respondents’ answer to the point raised is of the same character. The doctrine of “res judicata” is not new, and its application to particular circumstances is well settled. In a case of this type it is not sufficient to say that a prior judgment is deemed to have adjudicated the subject matter and to have put an end to the litigation, nor that this principle applies to a prior judgment even though erroneous. Here the point is that since

For these reasons the judgment is affirmed.

Sturtevant, J., and Spence, J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on January 11, 1941, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on February 10, 1941. Edmonds, J., voted for a hearing.