HOME INDEMNITY CO. ET AL.

v.

WILLIAMSON ET AL.

“We are not concerned here with the question whether appellee could have recovered on the ground of mere negligence since recovery is now sought only on the ground that appellant did not act in good faith toward him. In our opinion the insurer cannot escape liability by acting upon what it considers to be for its own interest alone, but it must also appear that it acted in good faith and dealt fairly with the insured. The insurer, as it had a right to do under the policy, assumed exclusive control of the claim against the insured, and took unto itself the power to determine for the insured all questions of liability, settlement, of defense and management before and during trial, and of appeal after final judgment. We are of opinion that this relationship imposes upon the insurer the duty, not under the terms of the contract strictly speaking, but because of and flowing from it, to act honestly and in good faith toward the insured. It was open to the jury to find that the insurer did not perform this duty. The insurer failed to' interview the witnesses, or to make any effort to determine whether there was any liability upon the claim asserted against the insured for damages. It did not attempt to acquaint itself with the extent of Mrs. Auman’s injuries. It was not in position to act intelligently, or in fairness to the insured in considering the offer of settlement made before suit was brought. It ignored the advice of its counsel to settle before the case came on for trial. During the trial it offered to settle for $3,500, thus apparently admitting the liability of the insured for substantial damages; but it failed to have a representative at the trial with authority to settle within the limit of liability named in the policy. It finally rejected a reasonable offer of settlement within that limit because the insured would not assume a part of its contractual liability.

The jury were therefore warranted in finding that the insurer did not act in, good faith toward the insured in considering Mrs. Auman’s claim for damages, in refusing to settle, and in demanding that the insured contribute to the settlement which it could and should have made at its own expense.” See also Noshey v. American Automobile Ins. Co., 68 F. 2d 808, a Tennessee case by the Sixth Circuit. On the question of invoking the declaratory judgment procedure, see Pacific Indemnity Co. v. McDonald, 9 Cir., 107 F. 2d 446, 448, 131 A.L.R. 208; Hargrove v. American Central Insurance Company, 10 Cir., 125 F. 2d 225, 228.

The judgment appealed from should be affirmed in part and reversed in part, and remanded for a jury trial on the issue herein as to damages resulting to the insured from the company’s alleged bad faith or unfair dealing in its transactions with him under the policy. Affirmed in part and reversed in part, and remanded for further proceedings not inconsistent with this, opinion.

Judge WALLER, took no part in the final decision of this case.

PER CURIAM.

The petition for rehearing evidently overlooked or disregarded the first part of the sentence at the beginning of the court’s opinion. The facts, as stated in the opinion, were not considered to be undisputed but only the facts that a fair jury might reasonably infer from the evidence to exist. We realize that there was hot only a conflict between different witnesses, but that in some instances the witnesses contradicted themselves, not corruptly but in an honest effort to tell the truth. Such conflicts present -issues as to credibility, which should be left to the determination of a jury. This is especially true with reference to the issue of bad faith or unfair dealing.

The petition for rehearing is denied.