Central Law Journal

St. Louis, May 20, 1923

LIABILITY UNDER AUTOMOBILE INSURANCE POLICY WHEN CAR OPERATED UNLAWFULLY

Insurance, instead of prejudicing the victim of an accident, often supplies the only fund from which the victim can be paid. Those who have argued against the validity of insurance covering negligence. and other unlawful acts, should use their oratory in securing compulsory insurance of some kind-insurance policy or bondcovering automobiles as their operation may affect third persons injuriously.

Public policy, it is held, does not forbid. the enforcement of a policy covering liability for injury caused by the use on the highway of an automobile by an infant under the age permitted by statute (Messersmith v. American Fidelity Co., 232 N. Y. 161, 133 N. E. 432, 19 A. L. R. 876.) Touching on the question of public policy in this respect, it was said in the case just cited: "In too many ways to be misread the state, through its legislature, has manifested recognition and approval of the business of insurance against the consequences of negligence, whether personal or vicarious. Even without the aid of legislation, courts of high authority have reached a like conclusion. Courts are slow to substitute their own varying views of policy for those which have found embodiment in settled institutions, in every day beliefs and practices, which have taken root and flourished."

The defendant in this case did not urgently dispute that there may be indemnity against the consequences of negligence, but it argued that the plaintiff's liability was the product, not of negligence, but of wilfulness, in permitting the infant to have sole charge of the machine. The court held, however, that the extension of the policy to this case is no de

parture from its restriction to injuries that are the product of accident or negligence. "The plaintiff, in intrusting his car to a youth under eighteen, did not desire or intend that there should be any injury to travelers. The act of so intrusting it was wilful, but not the ensuing conduct of the custodian, through which injury resulted. Indeed, the violation of the statute would have been the same, though the driver's age had been unknown. What was wilful was not actionable, except as it became so in the sequel, through what was unintended or fortuitous."

As has been declared, the law is not always logical, and everyone concerned with the administration of the law knows this. If the law is not logical, public policy is even less logical, for, by common consent, these third-party indemnity insurances have been treated as valid and effective."

A policy insuring an owner against sums which he should become legally liable to pay other persons as compensation for accidental personal injury sustained through the driving of his automobile was held to cover accidents due to gross as well as ordinary negligence, and to include a case where two persons were injured and another killed by reason of the insured's criminal negligence in driving his automobile at an excessive speed. It was held that the policy so construed was not against public policy (Tinline v. White Cross Ins. Assn. (1921), 3 K. B. 327, 19 A. L. R. 879n.) In this case the court said that, speaking generally it is true that it is against public policy to indemnify a man against the consequence of a crime which he knowingly commits, the word "crime" in this connection including the breach of any statutory duty which renders a man liable to fine or imprisonment. And further: "In motor accidents where the assured is the driver of the motor car, I suppose in the great majority of cases the accident is due to the breach by the driver of some enactment. Many of these accidents are due

to driving at excessive speed. That was the case here. Driving at an excessive speed-exceeding the speed limit is the breach of an enactment which subjects the person guilty of it to fine or imprisonment; and if the ordinary law were to be applied to cases of this kind it would be a defense to say that the assured, although he did not intend to commit manslaughter, committed it by violating an enactmentnamely, by driving in excess of the speed limit, or by driving to the danger of the public. But it is notorious that that defense is never raised. There can be no doubt that if none of the three persons who were knocked down had been killed, but all have been injured, there would have been no defense to this action. In my opinion, the fact that one of the persons was killed makes no difference for this purpose. Precisely the same negligence which injured the two persons killed the third, but to hold that there is any difference in the liability to indemnify would be to hold that the indemnity depends upon the nature and result of the injury sustained by the person who is knocked down, or, to put it in another way, that it depends in some degree upon the amount of the assured's negligence.'

The kind of act that is not covered by a policy insuring against the consequences of an accident is mentioned in the Tinline case. It is an intentional act. If the insured intentionally runs down and kills. a person with his machine, the result is not manslaughter, that is, is not an accident, but is murder. Murder does not result from an accident; manslaughter does.

It is well established that insurance is valid that covers loss and damage inflicted when the insured is violating speed laws, although the law is penal (Firemen's Fund Ins. Co. v. Haley, Miss., 92 So. 635, 96 C. L. J. 30): And although one may not insure himself against damages. resulting to him because of his violation of a criminal statute, he may insure against the consequences of criminal acts

by his employees. Otherwise, bonds taken to insure against misappropriation or embezzlement of funds by employees would be void (Taxicab Motor Co. v. Pacific Coast Cas. Co., 73 Wash. 631, 132 Pac. 393).

It seems to be equally well settled that a policy covering the operation of an automobile by an infant under the age permitted by statute, is valid (Messersmith v. American Fidelity Co., 187 App. Div. 35, 175 N. Y. Supp. 169; Royal Indemnity Co. v. Schwartz, Tex. Civ. App., 172 S. W. 581; Brock v. Travelers Ins. Co., 8 Conn. 308, 91 Atl. 279; Morrison v. Royal Indemnity Co., 180 App. Div. 709, 167 N. Y. Supp. 732). Nor is insurance invalidated by the fact that the automobile was being operated in violation of a statute requir ing it to be registered (Messersmith v. American Fidelity Co., 187 App. Div. 35, 175 N. Y. Supp. 169).

NOTES OF IMPORTANT DECISIONS

RIGHT OF CLIENT TO RECOVER MONEY PAID TO ATTORNEY FOR COMPOUNDING A FELONY.-The general and well-known rule is that the law will not aid either party to an illegal agreement and will leave them where it finds them. This rule is subject to the exception that when the parties are not equally guilty, or not in pari delicto, and where pub lic policy will be advanced, the one more excusable will be given relief against the transaction (Duval v. Wellman, 124 N. Y. 156). Thus, where the plaintiff has been induced to enter into the illegal scheme or contract by reason of duress, imposition or hardship, when ever the court deems it in the interest of public policy it will give the plaintiff relief against the transaction.

In the case of Berman v. Coakley, 137 N. E. 667, decided by the Supreme Judicial Court of Massachusetts, it appeared that the defendant, an attorney, informed the plaintiff that a certain complaint had been made against him to the district attorney of the county in which he resided. Plaintiff thereupon retained defendant to act as his attorney, and defendant informed plaintiff that the person who had made the complaint would withdraw it upon the payment of a certain sum. The plaintiff paid

the sum of money asked, and later discovered that the representations which had been made by defendant as to à complaint having been made against him were fraudulent. He then brought an action to recover back the money he had paid to defendant for the purpose of stifling the prosecution. The court held, on the authority of the New York rule laid down in Ford v. Harrington, 16 N. Y. 285, that an attorney being one in whom confidence is reposed by reason of his relationship to his client, and, furthermore, he being an officer of the court, sworn to aid in the administration of justice, the parties were not in pari delicto, and the attorney would not be allowed to take any advantage of his client. The plaintiff, therefore, although he had paid over the money for the purpose of furthering an illegal scheme, was entitled to recover it back.

We quote a portion of the Court's opinion, written by Chief Justice Rugg, as follows:

"An attorney at law has been said to be a public officer. He is an officer of the court, sworn to aid in the administration of justice and to act with all good fidelity both to his clients and to the court. The public have a deep and vital interest in his integrity. . . . It is a matter of profound importance from every point of view that members of the bar be men of probity and rectitude, jealous to maintain relations of utmost honesty with their clients and solicitous to protect them against legal wrong. Unflinching fidelity to their genuine interests is the duty of every attorney to his clients. Public policy hardly can touch matters of more general concern than the maintenance of an untarnished standard of conduct by the attorney at law toward his client. The attorney and client do not deal with each other at arm's length. The client often is in many respects powerless to resist the influence of his attorney. If that influence be vicious, untoward, criminal, the relation of trust is abused and becomes the source of wrong. It requires no discussion to demonstrate that upon the allegations of the present bill the defendant failed to conform to the obligation resting upon him as attorney for the plaintiff. These allegations, taken at their face value, as is necessary on demurrer, show that the conduct of the defendant was far more reprehensible than that of the plaintiff. The plaintiff and the defendant were not in pari delicto. Whatever may be justly said in condemnation of the acts of the plaintiff is less than is necessary touching the acts of the defendant."

ATTEMPT OF BYSTANDER ΤΟ STOP RUNAWAY AUTOMOBILE DOES NOT PREVENT RECOVERY FOR NEGLIGENT PARKING.-Where one negligently parked an automobile on a steep grade, as a result of which the car started down hill of its own accord, and struck plaintiff, it is held by the Supreme Court of Missouri, in Vaughn v. Meier, 246 S. W. 279, that recovery is not defeated by the intervening negligence of a third person who attempted to stop the car, but failed to do so, and who deflected its course so that it struck plaintiff. We quote from the Court's opinion as follows:

"But it is said that Karf might have steered the car, had he not abandoned it, across the street, and it would have stopped at the curb before reaching the plaintiff, or, if he had not interfered at all, the car would not have veered out from the curb into the street, but would have gone along down the curb and lodged against the other cars parked there, and not have injured the plaintiff; that his jumping off and letting the car go down the hill unchecked was the sole proximate cause of the accident. We must rule this point against defendant. If defendant was negligent in leaving his car insecurely parked, which caused it to start down the hill, the fact that its course may have been changed by the negligence of Karf in attempting to stop it, whereby it struck plaintiff when it otherwise woud not have done so, does not prevent defendant's negligence in parking his car from being a proximate cause of the accident, nor relieve defendant from his negligence in parking his

CORPORATIONS AS PLAINTIFFS IN ACTIONS FOR DEFAMATION

By Charles J. Dolan

Prior to the decision in the case of City of Chicago, a municipal corporation, v. The Chicago Tribune Company, a corporation, which was handed down by the Supreme Court of Illinois sitting en bane on April 18, 1923, there had been no adjudication of the question whether a municipal corporation can maintain an action for defamation. The nearest approach to an expression of judicial opinion on this subject was the obiter dictum of a judge of the Court of Queen's Bench, in the case of the City of Manchester v. Williams, decided in the year 1891 and reported in 1 Queen's Bench at page 94. In that case the plaintiff was non-suited, for the reason that the libel complained of attributed corruption to the officials of Manchester, but did not directly relate to the city's property or credit. The opinion, however, states the general rule to be, that a city can maintain a suit for defamatory statements, injurious to its property and credit.

As far as private corporations are concerned, there has never been any doubt about the rule of law. In the leading case of Metropolitan Saloon Omnibus Co. v. Hawkins, 4 Hurlst. & N. 87, 28 L. J. Exch. N. S. 201, 5 Jur. N. S. 226, Pollock, C. B., said:

"That a corporation at common law can sue in respect of a libel there is no doubt. It would be monstrous if a corporation could maintain no action for slander of title through which they lost a great deal of money. It could not sue in respect of an imputation of murder, or incest, or adultery, because it could not commit those crimes. Nor could it sue in respect of a charge of corruption, for a corporation cannot be guilty of corruption, although the individuals composing it may. But it would be very odd if a corporation had no means of protecting itself against wrong, and if its

property is injured by slander it has no means of redress except by action. Therefore, it appears to me clear that a corporation at common law may maintain an action for a libel by which its property is injured.”

The American cases are to the same effect. Thus, in the case of St. James Military Academy v. Gaiser, 125 Mo., 517, it was held that a corporation operating a dancing school was entitled to bring suit on account of the publication of a charge of immorality in the conduct of the school, and in another Missouri case, that of Peoples United States Bank v. Goodwin, 148 Mo. App. 364, it was held that a corporation may maintain an action for damages caused by a libel affecting its pecuniary interests by reflecting on its solvency, the honesty of its management, or the quality of its products. The law on this subject is stated as follows by the Supreme Court of Ohio in the case of Brayton v. Cleveland Special Police (52 L. R. A. 525):

"An action of libel may be maintained by a corporation where the character or condition of its marketable products is misrepresented, or where the libel relates to its business so as to affect the confidence of the public and drive away its customers, or where the libel affects its credit in the community and weakens the public confidence so that it is more difficult to obtain credit or borrow money. It seems that in none of these cases is it necessary to allege special damage where the obvious effect of the libel would be to ruin the business. If the publication of the libel would not naturally tend to affect the marketable value of the corporation goods, or its financial standing, or its relations with its customers, or its obtaining business, special damages should be alleged and proved."

The same reasons that sustain the right of a private corporation to maintain an action for defamation seem applicable in the case of quasi-public corporations operating large public utilities, such as those

that furnish light, water and transportation facilities to municipalities. It seems but a step from the case of a quasi-public corporation to that of a municipality that itself operates its public utilities. Since a municipal corporation is empowered to sue and to be sued, the conclusion seems to follow that it can maintain an action for defamation, unless there is some special objection applicable to its case which is not applicable to the case of a private corporation.

The theory on which the City of Chicago proceeded in its suit against the Tribune Company was that a modern municipality has a twofold aspect. On the one hand, it is an arm of the state, charged with the performance of governmental functions. On the other hand, it may be to a greater or less extent engaged in manifold enterprises of a quasi-public and non-governmental character; and, to the extent to which it is engaged in business, it is a property owner vested with the rights and subject to the liabilities of other owners of property. While admitting that neither the state itself nor any of its subdivisions could maintain an action for defamation, the city contended that, in its proprietary capacity, it should have the same right of redress as a private corporation or a citizen, in the event that its credit had been injured by the publication of defamatory statements.

The suit for civil libel was brought by the city on September 17, 1920. It was based on articles appearing at that time in the Chicago Tribune, in which it was saiu that the city was "broke"; that "bankruptcy is just around the corner from the City of Chicago"; that its "credit is shot to pieces"; that the city administration. "having busted the city, and having reduced it to such insolvency that it is issuing Villa script to pay its bills, is reaching out for the state"; that the city "is bankrupt, and the banks of the city have refused it credit." No special damages were

alleged, the city holding that these statements were libelous per se.

To this declaration, the defendant filed a demurrer, based on two propositions, the first being, that to permit a recovery in such case would be to violate the constitutional guarantee of freedom of speech and of the press, and the second, that the statements complained of were not libelous.

The Supreme Court of Illinois affirmed the decision of the Court, nisi, in sustaining defendant's demurrer. An analysis of its decision shows that it is based on two fundamental principles. The first is, that a municipality, when it enters a suit of this kind, does not divest itself of its governmental character so as to proceed under its purely proprietary aspect. The other is that there is no essential difference between a civil suit and a criminal suit, so far as a proceding on behalf of a municipality, suiting ex delicto, is concerned.

In laying down the first principle above referred to, the Court said:

"While for certain limited purposes it is often said that a municipality owns. and operates its public utilities in its capacity as a private corporation and not in the exercise of its powers of local sovereignity, yet because of its proprietary rights it does not lose its governmental character. Its property is not subject to execution (City of Chicago v. Hasley, 25 Ill. 485), nor to federal taxation (Pollock v. Farmers' Loan and Trust Co., 157 N. S. 429, 584), nor is the city subject to garnishment (Merwin v. City of Chicago, 45 Ill. 133), and its so-called private property may, with exceptions, be taken from it by the state (Ward v. Field Museum, 241 Ill. 496), it is manifest that the more so-called private property the people permit their governments to own and operate, the more important is the right to freely criticize the administration of the gov-. ernment. As the amount of property owned by the city and the amount of public business to be transacted by the