Frankfort Marine, Accident & Plate Glass Insurance v. Witty

Citations

• 208 Pa. 569
• 57 A. 990
• 1904 Pa. LEXIS 802

Syllabus

<p>Contract — Insurance against loss by negligence — Consideration—Fraud.</p> <p>An insurance company insured a firm of manufacturers against legal liability for negligence in their mills. The limit of the policy was $5,000. Subsequently an employee recovered from the insured a verdict of $9,000 for personal injuries. The verdict being thought excessive, the question of a reduction, or a new trial was considered by the parties, with the result that the insured undertook to pay four-ninths of whatever sum should be finally paid to the injured employee, either by way of compromise, or upon another verdict.. The litigation then proceeded, and finally resulted in á settlement for $3,500. The insurance company paid this amount, and brought suit against the insured to recover four-ninths thereof. Held, that the agreement was based upon sufficient consideration, and that the insurance company was entitled to recover.</p> <p>In the above case it appeared that on the day after the verdict the insured and an agent of the insurance company met to discuss the matter, and the latter after reporting that he was advised by counsel that the amount was excessive, volunteered the opinion that a new trial could only be had by the same counsel who had tried the case, and that a release of the company by the insured on the payment of the full amount of the policy would not protect the former from the claim of the injured employee on the verdict. The agent was not a lawyer, his statements were not made in the presence of counsel, nor were they represented as coming from counsel. The insured could have consulted their own counsel, but as he was out of town, they yielded to the urgency for a speedy decision of the matter, and made the agreement. Held, that there was nothing in the case which a jury could have been permitted to find was fraud which vitiates the contract.</p>