Svea Fire & Life Insurance v. Spokane, Portland & Seattle Railway Co.

MILLARD, TOLMAN, HOLCOMB, and STEINERT, JJ., dissent. During the month of August, 1928, Northwestern and Pacific Hypotheekbank was the owner of a farm in Adams county which was then under lease to C.C. Phillips, who had raised his year's crop of hay and grain. The railroad of defendant, Spokane, Portland Seattle Railway Company, runs approximately a mile and a half from the ranch and is separated therefrom by a high ridge. A state highway parallels the railroad right of way on the side farthest from the ranch property.

During the early afternoon of August 11, a considerable portion of the property occupied by Mr. Phillips was burned over. Plaintiff, Svea Fire Life Insurance Company, had written a policy of fire insurance covering the farm produce, and thereafter paid something over one thousand, five hundred dollars, the full amount due under its policy, on account of the property destroyed, taking an assignment of any claim which might exist in his favor against defendant. Thereafter, Mr. Phillips, claiming that his total loss amounted to over two thousand, four hundred dollars, presented to defendant a claim for approximately nine hundred dollars, being the balance which he claimed on account of the destruction of the crop after deducting from his total damage the amount paid by the insurance company. After some negotiation, the railroad company paid Mr. Phillips and the owner of the land six hundred dollars in full settlement of the claim.

Thereafter, plaintiff, under its assignment, instituted this action against defendant, claiming that one of defendant's engines had started the fire and that defendant was responsible therefor. Issues were made up, and the action tried to a jury, which returned a verdict in plaintiff's favor. Defendant's motion for judgment in its favor notwithstanding the verdict or in the alternative for a new trial having been denied, judgment was entered upon the verdict, from which judgment defendant appeals.

Appellant assigns error upon the denial of its motion for a nonsuit made at the close of respondent's case, upon the denial of its motion for a directed verdict, upon the overruling of its motion for judgment in its favor notwithstanding the verdict and its motion for a new trial, and upon the entry of judgment in respondent's favor. Appellant also contends that the trial court erred in admitting, over its objections, certain evidence offered by respondent, in giving to the jury one instruction to which appellant excepted, and in submitting to the jury a special interrogatory.

No one saw the fire start. On the afternoon of the fire, a high wind was blowing from the south or southwest, which would carry a fire from the right of way over the ridge toward the Phillips farm. There is testimony in the record that the burned area touched the railroad right of way at two points, from which it extended in a V shape in the direction of, and over, the farm in question. It appears that there was dry grass on the right of way several inches in height, and that the ground between the right of way and the farm was covered with dry grass which would burn very rapidly. It was stipulated that Mr. Phillips, who did not attend the trial, would, if present, testify that, at about two o'clock on the afternoon of the fire, he saw smoke coming from the direction of the tracks toward his farm, and that, about fifteen or twenty minutes later, the fire, driven by the high wind, appeared over the range of hills between the farm and the railroad and occasioned the damage which is the subject matter of this action.

Mr. Phillips made no survey of the burned area, did not see the fire start, nor did he know what occasioned the same. His ranch is so situated that he could not therefrom see anything between the railway track and the summit of the range of hills lying between himself and the railroad. He saw no train of appellant on the day of the fire.

From appellant's evidence, it appeared that one of its trains, hauled by an oil-burning engine, passed the farm at about fifteen minutes after two o'clock. Another train had passed at approximately eleven o'clock in the morning.

[1] Appellant argues that the record contains no evidence sufficient to take to the jury the primary question of its responsibility for the fire.

Respondent was not required to introduce direct evidence that the fire originated on the railroad right of way. McCann v.Chicago, M. P.S.R. Co., 91 Wash. 626, 158 P. 243;Overcracker v. Northern Pac. R. Co., 64 Wash. 491,117 P. 403.

Mr. Phillips' testimony as to the time of the fire did not purport to fix the exact minute when he first saw the smoke. He simply said he observed the smoke "about two o'clock." This testimony, under all the circumstances, brings the occurrence near enough in point of time to the passing of appellant's train to carry the question of appellant's responsibility to the jury. The cases of General Insurance Co. of America v. Northern Pac.R. Co., 280 U.S. 72, and Thorgrimson v. Northern Pac. R. Co.,64 Wash. 500, 117 P. 406, cited by appellant, are not authority for holding, as matter of law, that respondent failed to make a case upon which the jury should pass.

[2] The trial court, over appellant's objection, admitted evidence concerning the payment made by appellant to Mr. Phillips in settlement of his claim.

It appears that, a short time after the loss, the manager of Mr. Phillips' lessor wrote appellant, stating that, on "August 11th, one of your trains started a fire east of Washtucna which burned over section 29-15-37." The letter further stated that the burned property had been insured, but that a claim was presented against appellant as stated in the letter, and that "we are making a claim to you for the following loss." In a short time, appellant's claim agent, to whom the letter had been referred, called on the writer at his office. The representative of the owner of the land, who testified on the trial, stated that he did not recall that appellant's claim agent made any claim that the railroad had not started the fire or was not responsible for it. He further stated that there was some negotiation as to the amounts which appellant would pay on account of the different items of alleged damage, and that "the only disputes were about the amounts per item, per acre, or for posts or for anything else." It appears that the claim agent offered to settle for $557.85, but finally agreed to pay six hundred dollars, which offer was accepted. It does not appear that any agent of appellant ever, either in writing or by word of mouth, expressly admitted or denied appellant's liability.

The question of the admissibility of the evidence concerning the negotiations leading up to this settlement and the fact of settlement is a close one, but a scrutiny thereof convinces us that the testimony was not admissible. In the case of Moore v.Stetson Machine Works, 110 Wash. 649, 188 P. 769, we held that an offer to settle or compromise a claim, even if not made expressly without prejudice, is admissible in evidence in a subsequent suit on the claim only if it appears that in making the offer the party sought to be charged admitted the fact on which his liability is based, in whole or in part. A similar rule was laid down in the case of Eckhardt v. Harder, 160 Wash. 207,294 P. 981.

In the case of Poole's Seed Implement Co. v. Rudene,117 Wash. 150, 200 P. 1104, it appeared that an offer of compromise was contained in a series of letters which passed between the parties to the controversy and which are not quoted in the opinion. The court found that, in the course of the correspondence, it clearly appeared that the party sought to be charged impliedly admitted his responsibility.

The general rule is that offers of compromise are not admissible in evidence as admissions against the interest of the party making them. 22 C.J. 308. Compromises are favored in law, and the parties to a controversy who, in good faith, endeavor to adjust the same should not be penalized by having their praiseworthy efforts later used against them to their detriment. The rule is clearly stated in the case of Moore v. StetsonMachine Works, supra.

Respondent cites authorities which support its contention that the testimony concerning the compromise was admissible, but we are satisfied that, under the better considered authorities, and following the rule laid down by this court, the trial court erred in admitting the evidence complained of.

For this error, the judgment appealed from is reversed, with directions to the trial court to grant appellant's motion for a new trial.

BLAKE, GERAGHTY, MITCHELL, and MAIN, JJ., concur.