Central Law Journal.

ST. LOUIS, MO., JUNE 15, 1917.

SUIT AGAINST INDEMNITY COMPANY FOR NEGLIGENCE IN TAKING CHARGE OF AND DEFENDING ACTION AGAINST

INDEMNITEE.

In Attleboro Manufacturing Company v. Frankfort Marine, Accident & Plate Glass Insurance Company, 240 Fed. 573, decided by First Circuit Court of Appeals, there is an interesting discussion of the relations of the attorney employed by an indemnity company in an employers' liability policy to the indemnitee and whether his conduct

in and about a claim of an employe for damages gave an action in tort or upon contract.

The facts show, that an employer was sued by his employe; that an attorney for an indemnity company under provisions of its policy to indemnify took charge of all negotiations to bring about a settlement, and, failing to bring about such settlement, took charge of the trial of the suit. There was a verdict for over three times the amount of the policy, which employer paid. Then the company paid to the employer the full face of the policy.

Afterwards the employer brought suit against the indemnity company for damages for its negligence in and about negotiations for compromise and the management of the defense and with not exercising a reasonable degree of care, skill and diligence for the protection of indemnitee's interest, especially in not giving indemnitee any opportunity to act upon offers for the settlement of the claim sued upon.

As to relation of the attorney employed to take charge of the suit by the employe, it was said the indemnity company did not become indemnitee's agent, and therefore the attorney it employed was not indemni

tee's attorney. The company, said the court, "stood rather in the position of an independent contractor, for it was given the control of the defense and settlement of the suit and was in no wise subject to the plaintiff's direction. Furthermore, Mr. Spring, who was employed by the company to prepare and present the defense in the employe's suit was not the indemnitee's agent or his sub-agent. ***The indemnitee did not select him and had no authority over him. The company had the exclusive control of the defense, which carried with it the right to employ whomsoever it chose as its attorney and to direct him in the management of the case as it saw fit. *** Apart from its duty to exercise due care, the company was not required to employ an attorney at law to act for it out of court in preparing the defense or in court to present the defense. It was no doubt a prudent thing to employ a skilled agent, as it usually is when dealing with a matter calling for special knowledge and skill."

Apart from the fact that the court impliedly announces, in effect, that if A sues B, B has full right to employ an independent contractor to maintain a case in court despite the wish of either A or B to settle same and thus to prevent the end expressed in the maxim interest reipublicae sit finis litium, this statement is lucid and strong, and the question whether the right of action should be in tort or contract is comparatively unimportant, at least in code states.

But why, if the indemnitor could do as it pleased about negotiation and settlement should it be under any obligation to report anything to indemnitee about offers of settlement? And yet indemnitee had judgment against indemnitor, because, as we gather the facts, he was not given opportunity to consider offers of settlement, and, as he had judgment for only a part of what he sued for, the case was reversed

on his cross-writ of error for wrongful exclusion of evidence offered by him.

It was said: "Certain declarations bearing upon the negligence charged purporting to be declarations made by indemnitor's attorney while taking part in negotiations for a settlement of the suit and explanatory of his action at that time, were offered in evidence by indemnitee and excluded." This was held to be error.

Evidently the court's statement in the excerpt first above made has an exception to it, and that is that fairly the general power in these forms of contract should be reasonably construed. Take for example this case, where there must have been damages claimed in several times the amount of the indemnity, which was paid. If the indemnitor is absolutely to control in such a suit, its liability ought to be measured by the amount of the entire recovery and not by what is fixed in its bond.

But, if the bond is the measure of damages, leaving out all barratrous aspects of such contracts, is it all right for indemnitor to control the litigation, the negotiation and everything else?

Is it reasonable, considering that the indemnitor is a paid surety, that he should have any right of absolute control of any litigation that may involve indemnitee beyond the limit of indemnitor's expressed liability? Suppose indemnitee is sued for ten times the amount of bond, shall the indemnitor stand or be allowed to stand in the way of an acceptable compromise on some possibility that there may be a judgment for a sum less than the bond or for nothing? An answer in the affirmative to this question puts a temptation in the indemnitee to cut loose from the bond and settle on his own account. This is not presumably intended, because no forfeiture ought to be brought about by the indemnitee reasonably caring for his interests after the condition of liability upon the bond has supervened.

NOTES OF IMPORTANT DECISIONS.

MASTER AND SERVANT-ASSUMPTION OF RISK IN "STRAIN CASES."-Under this title we considered a decision of Montana Supreme Court in 84 Cent. L. J. 320. We there took the position that the rule adopted by some state courts that it is an obvious danger for one to attempt to lift a heavy object which brings injury from "strain" was not well based. The Montana court was not in accord with that rule, and here we find a case under federal Employers' Liability Act in which the federal Supreme Court may be thought to be in agree ment with the Montana court and against the rule spoken of. Seaboard A. L. Ry. v. Lorick, 37 Sup. Ct. 440.

The facts show that a car inspector undertook to make repairs to a car coupler, as it was his duty to. To do this a jack was needed, and for this he had repeatedly asked to have furnished him, and one had been promised him a few weeks before, but it had not been furnished. He sat down by the car coup ler, raised it with his shoulder and was thereby seriously strained. Request for instruction that there had been assumption of risk being overruled, the case was submitted to the jury, which gave a verdict for plaintiff. It was said there was "no clear and palpable error which would justify us in disturbing that ruling."

But it was very clear that the court must have thought the danger of suffering a strain was not obvious, for even on a promise by the master to remedy a defect, a servant has no right to incur an obvious danger. Therefore, to lift a heavy object is not an obvious dan ger "to any person of common understanding," as the rule we are speaking of says.

WORKMEN'S COMPENSATION ACT-DISTINCT INJURIES FOR WHICH COMPENSA TION IS CLAIMED.-In State ex rel. v. District Court, 162 N. W. 527, decided by Supreme Court of Minnesota, the facts show, that relator received two distinct injuries and claimed compensation therefor to run concurrently, one for 35 and the other for 60 weeks, each respectively entitling relator to 50 per cent of his weekly wage. The lower court accordingly rendered judgment for 100 per cent for 35 weeks, and 50 per cent for the remaining 25 weeks. This holding was held error and that payments should be made for the separate injuries for

95 weeks, at 50 per cent of his weekly wage; that is to say, one period should follow the other.

This change of judgment was made because the statute also provided that maximum compensation for injuries of the character of those here involved shall not exceed $10 per week for a period not exceeding 300 weeks.

This provision evidently intends to combine several injuries in one weekly payment but the limit of the number of weeks appears to be open. Suppose, as in this case, it were fig ured as the Supreme Court did figure, that there should be 95 weeks at $7.50 per week. If a maximum of $10 per week were allowed, the same aggregate would be paid, but in less than 95 weeks. If one received a dozen distinct injuries, his compensation would come to no more than if a less number were suffered, provided the aggregate of weeks reached 300. Furthermore, it is not the same thing to postpone weekly payments on an injury, unless under the statutory rule provided, as it is to begin payments immediately.

Another thought is suggested by this statute, and that is, suppose the injuries are successive and not contemporaneous? If the employe

asks for his allowance on the first in order of occurrence, and then for the other, may not his second allowance bring him up to his limit per week and make what remains to be paid follow in a reduced amount afterwards for enough weeks to pay the entire award?

IN

CHATTEL MORTGAGE-CROPPER'S TEREST SUBJECT BEFORE DIVISION AND AFTER, THOUGH REPRESENTED BY ELEVATOR TICKETS.-North Dakota Supreme Court takes for granted, without discussion, that where grain is stored in a public elevator by lessors of the land on which it is raised and tickets issued therefor, according to the respective interests of lessors and tenant, this is a division of the grain and nothing more. In other words, though the mass stored loses its identity in storage with other grain, there is not a confusion of goods in the ordinary sense of the term, as if the lessors had sold to another and then settled with the tenant for his share of the proceeds. Minneapolis Grain Store Co. v. Branum, 162 N. W. 543.

This feature is merely adverted to, without the court having considered it, and probably very rightly, though the answer of the garnishing creditor of the tenant seems, by general language, at least, to have raised the question, that an antecedent chattel mortgage attached to the grain before the mingling and not to the

grain represented by storage tickets. It easily may be understood, that public policy in the great Northwest grain country, which abounds in great elevators, along with judicial cognizance of a method of doing business and regarding these elevators as public service companies, would deem storage tickets as standing for the identical grain that has been stored. The court ruling this case appears, at least, thus to assume.

On this assumption it discusses the question of priority between a chattel mortgage given by a tenant before the crop of grain was raised and harvested on the land where it was to be grown and a plaintiff creditor garnishing the grain after its storage in an elevator, the elevator company being the garnishee. In the case there is considered a covenant that the title and possession of all the crop to be raised and grown shall remain in the landlord until division thereof between the landlord and the cropper.

After elaborate consideration, involving overruling of prior decision, the court held, that the chattel mortgage attached to the grain as soon as it came into existence, the covenant to the contrary notwithstanding. This was said to represent intention in the lease and the covenant was merely by way of security to the landlord.

What the court says as to coming into existence is interesting and we excerpt it from the opinion: "We think that our very senses understand that when we see a field of grain standing in its green condition, where from the time it just appears above ground until the same attains its full growth, that there is something in actual and potential existence. If, for instance, we see a field of wheat, luxuriant in growth standing 10 or 15 inches high, we cannot say that there is not something in actual and potential existence; neither can we say it is of no value. Up to this point it probably cost the tiller of the soil from $5 to $8 per acre to prepare the ground, plant the seed, and nurture this crop to its present state. Can it be said then that such crop, though immature, is not in existence and of some value? When a field of wheat has reached this stage of maturity, and at any time before this stage, it could and often is the subject of sale. Therefore, such growing crops before maturity are in existence and have value, and are personal property, and are sufficient to support a lien of a chattel mortgage."

This is not so poetical as to derogate from passionless principle, and it stands for justice and contractual intent.

exceptions, it is not perceived that there is any limit to the questions which can be adjusted touching any matter which is properly the subject of negotiation with a foreign country."

These statements of Prof. Story and Justice Field appear to have been pretty generally accepted as correctly defining generally the limitations of the treatymaking power. And it would probably not now be seriously disputed, except by extreme broad constructionists, that if a treaty ever should be made attempting

to bind the Government of the United States to change its government or that of any state to a monarchical form, or to enter into a war, or to keep a standing army of a certain size, or grant a title of nobility, or do many other things suggested by the remarks of Story and Field as an improper exercise of this power, such a treaty would be void.

But are there any limitations on the treaty-making power arising out of the powers reserved to the states by the Tenth Amendment? If so, what are they and where do they begin? These are questions that have been much debated but remain unsettled. No treaty has ever been declared void by any United States court and only indirectly by any state court. On the other hand, both federal and state courts have repeatedly held state laws conflicting with treaty provisions to be void and the treaty to be the supreme law of the land.

The Supreme Court of the United States passed upon the question of a conflict between a treaty and a state law before the close of Washington's second term, in the celebrated case of Ware v. Hylton. In this case certain British creditors sued certain American debtors on a debt contracted before the Revolution. The defendants pleaded in bar a payment of part of the debt sued on into the loan office of the State of Virginia

under a law of that state enacted in 1777, which provided that any citizen of Virginia owing a debt to a British subject might pay the same, or any part thereof, into the loan office of the commonwealth, receive a certificate therefor, and be discharged from the debt to the extent of the payment, and the money paid to the state to be subject to the future action of the legislature. It was contended by plaintiffs that this plea was no bar because of the fourth article of the Definitive Treaty of Peace of 1783, with Great Britain which provides: "It is agreed that creditors on either side shall meet with no lawful impediment to the recovery of the full value in sterling money of all bona fide debts heretofore contracted;" and the sixth article of the Constitution of the United States making treaties the supreme law of the land.

Coming, as it did, so soon after the Revolution, considerable feeling was aroused over this case, and it created great interest everywhere. Patrick Henry was one of the counsel for the American debtors in the case in the circuit court and John Marshall appeared as one of their counsel in the Supreme Court. Chief Justice Jay did not sit in this case. Justices Wilson and Paterson had been members of the Federal Constitutional Convention and Justice Iredell a member of the Convention of North Carolina, ratifying the Constitution. It appears that Marshall did not argue the question of conflict between the treaty and state law, but based his case on the proposition that at the time the treaty was made there was no "debt" for the reason that it had theretofore been legally confiscated and hence the treaty did. not apply. The Supreme Court reversed the circuit court and gave judgment for the British creditors for the full amount. Separate opinions were delivered by the five judges sitting in the case, Iredell dissent on any limitation of the treatyalone dissenting, and he did not base his making power. The longest and most