Smith v. American Surety Co.

WARNE, J. pro tem.* This action was brought to establish and enforce an oral contract of truck liability insurance. The case was tried before a jury and resulted in a verdict against the appellant. The appeal is from the judgment.

Plaintiffs Stanley and Jesse Quayle were engaged in the trout farming business under the name of Garden Valley Trout Farm, a copartnership. An agreement was made between them and plaintiffs Hildebrand and Thornton to purchase a truck for the purpose of hauling live trout between Idaho and California, and it was so purchased in the early part of March, 1952. After the truck had been taken to Garden Valley, Stanley Quayle contacted defendant Cleveland for the purpose of procuring public liability insurance on it. On March 13, 1952, Mr. Cleveland wrote to the American Surety Company to inquire as to whether it would insure the truck and to determine what the rates would be for bodily injury insurance in the amounts of five- and ten-thousand-dollar limits. The appellant, by letter, replied to this request, quoted the rates and stated that it would handle the insurance. On March 18, 1952, Mr. Cleveland wrote to Stanley Quayle that he could procure the insurance. Stanley Quayle testified that on March 18th or 19th he called on Cleveland and requested that the policy be issued. He further testified that at this meeting it was agreed that a policy for ten and twenty thousand be written, and that Mr. Cleveland stated that they (the plaintiffs) were covered, and that they could begin using the truck.

On April 14, 1952, while the truck was being operated by plaintiff Parley Max Smith in the conduct of the business, it struck and injured Charles Howe, a minor. Pursuant to a stipulated judgment, the injured boy was awarded $5,000 against Hildebrand and Thornton and $10,000 against the truck driver and the Quayle brothers. After the accident Hildebrand communicated with the appellant insurance eom[133]pany and asked if it would investigate and defend the action. The appellant denied liability and refused to defend. It denied that an oral contract of insurance was ever made.

Stanley Quayle testified that on the day after the accident he went to Mr. Cleveland’s office to notify him of the accident, and at that time Cleveland said that he had neglected to get the insurance placed, but that he would issue a policy now. A policy was issued by the appellant dated April 15, 1952, with a maximum liability of five and ten thousand dollars on plaintiffs’ truck.