complaint; that it thereupon undertook to defend the action for the plaintiff under the terms and conditions of the policy; that after issue was joined, at the request of the defendant, the assured procured the services of an attorney to be associated with the attorney of the insurance company at the trial; that during the progress of the trial the counsel for the plaintiff in that action made an offer to the assured to settle the same on payment of $7,500, which offer the assured immediately communicated to the insurance company, at the same time signifying his willingness to settle at that sum, and if the settlement be had to pay one-half thereof, or $3,750, provided the insurance company would pay the other half; that the insurance company refused to permit the plaintiff to settle the action, and the assured thereupon notified it he would hold the company responsible for any sum he might be called upon to pay by reason of such refusal; that, thereafter, and while the trial was still in progress, the plaintiff in that action offered to accept from the assured $3,750 in full settlement and satisfaction of any damage that might be recovered in excess of 5,000, that the trial would be continued, and, in case a verdict. were rendered in excess of $5,000 that the same might be reduced to that sum, in consideration of such payment; that this offer was immediately communicated to the insurance company, and the assured at the same time stated to it his willingness to accept. such proposition of settlement and pay the plaintiff in that action. the sum of $3,750 in consideration of her agreement to reduce any verdict that might be recovered to the sum of $5,000; that the insurance company declined to permit such settlement, and stated to the assured, if he made the same, it would immediately deny all liability to him under the policy, on the ground that such settlement would be in violation of its terms and conditions; that the plaintiff protested against such refusal, and notified the insurance company he would hold it responsible for the whole of any judgment that might be recovered in the action; that the trial proceeded, and resulted in a verdict in favor of the plaintiff in that action in the sum of $12,550, upon which judgment was entered; that the assured subsequently demanded that the insurance company pay the judgment, which it declined to do, and, after the time to appeal therefrom had expired, the assured, to prevent the issuance of an execution, and under protest, paid $7,826.58, which, together with the sum of $5,386.38 paid by the insurance company, satisfied the judgment; that by reason of the acts of the insurance company plaintiff was damaged to the extent of the amount paid by him, together with interest thereon from the date of payment.

In the second cause of action substantially the same facts are set forth, and in addition thereto it is alleged that after the entry of the judgment referred to the insurance company advised this plaintiff that reversible errors of law had been committed upon

the trial of the action; that the verdict was against the evidence, and it would therefore appeal from said judgment on behalf of the plaintiff, and from time to time thereafter assured the plaintiff that such appeal had been taken in his behalf; that there were reversible errors of law and the verdict was against the evidence; that, relying upon these statements, the plaintiff took no further steps with reference to an appeal; that, after the time to appeal had expired, the plaintiff ascertained that the insurance company, without his knowledge or consent, had neglected to take an appeal; that thereafter, to prevent the issuance of an execution upon the judgment, the assured paid $7,826.58, having previously demanded that the insurance company pay the whole judgment, which it refused to do; that by reason of the insurance company having failed to take and prosecute the appeal plaintiff was damaged to the extent of the amount paid, viz., $7,826.58, for which judgment was demanded, with interest.

The insurance company demurred to each cause of action on the ground that facts were not stated sufficient to constitute a cause of action. After the demurrer was interposed, both parties moved for judgment on the pleadings. The plaintiff's motion. was granted, the insurance company's denied, and it appeals.

I am of the opinion that the facts alleged in the second cause of action, which were admitted by the demurrer, clearly state a liability on the part of the defendant. After the recovery of the judgment the insurance company notified this plaintiff that reversible errors had been committed; that the verdict was against the evidence, and it would appeal from the judgment. It subsequently stated to him that it had appealed, and by reason of that fact he permitted the time within which an appeal might have been taken by himself to expire. This, coupled with the allegation that there were reversible errors committed at the trial, and that the verdict was against the evidence, stated a cause of action.

The facts here pleaded bring the case within the rule laid down in Rosenbloom vs. Maryland Casualty Co., 153 App. Div. 23, 137 N. Y. Supp. 1064, Brassil vs. Maryland Casualty Co., 147 App. Div. 815, 133 N. Y. Supp. 187, affirmed 210 N. Y. 235, 104 N. E. 622, L. R. A. 1915A, 629, and Attleboro Manufacturing Co. vs. Frankfort Marine Accident & Plate Glass Ins. Co. (C. C.) 171 Fed. 495. The insurer, having elected and undertaken to defend the action brought against the assured, had no right, when it saw fit to do so, to abandon the defense. It was obligated to take into consideration the interest which the insured had, and especially so after judgment had been rendered which subjected him to a large liability. Having told him it would appeal from the judgment, there was an obligation resting upon it to do so, or else to have notified him, before the time to appeal had expired, that it would not take such appeal. It would be unreasonable to hold that the assured could be lulled into security by the assurance

that an appeal would be taken and thereby be deprived of the right to himself appeal, without liability attaching.

As to the first cause of action, I am of the opinion that it does not state facts sufficient to predicate liability. The most that can be said of the facts stated is that the insurance company would not permit this plaintiff to settle the action brought against him, or permit him to compromise any liability to which he might be subjected in that action, over and above the amount stipulated in the policy. This is precisely what he agreed in the policy issued to him he would not do. The policy is the contract between the parties. It definitely fixes their rights and obligations. The plaintiff expressly agreed that he would not, without the written. consent of the insurance company, settle any claim or interfere in any legal proceeding. The fact that the proposed payment or settlement by him would not have increased the insurance company's liability is beside the question. It would have been a violation of his agreement, and it was for the insurance company to say whether or not it would permit him to do as he wished. Having deliberately entered into the contract, he had to abide by its terms.

The order appealed from, therefore, in so far as it grants plaintiff judgment on the first cause of action, is reversed, and defendant's motion for judgment in its favor granted, with leave to plaintiff to serve an amended complaint, and in so far as it grants plaintiff judgment on the second cause of action is affirmed, with leave to the defendant to withdraw its demurrer and answer. Settle order on notice.

Dowling, J., concurs.

SCOTT, J.

[1,2] I concur in the result arrived at by Justice McLaughlin, but as to the first cause of action I place my concurrence upon the fact that plaintiff did not pay the $3,750, which the injured person offered to accept. I do not understand that clause K of the contract would have stood in the way of such a payment. It does not absolutely forbid the insured to incur expenses or settle a claim without the written consent of the company, but merely provides that he may not so incur or settle, "except at his own cost." In other words, if he did incur expense or pay a sum in partial settlement, without the consent of the company, he could not recover the amount from the insurer. But if such payment would not increase the company's liability, or enhance its difficulties in defending the action, it would not amount to a breach of the contract.

Clarke, P. J., and Laughlin, J., concur.

AMERICAN MUT. LIABILITY INS. CO vs. COMMON

WEALTH.*

(Supreme Judicial Court of Massachusetts. Suffolk.)

TAXATION-EXCISE TAX-INSURANCE CORPORATIONSTATUTE.

Under St. 1909, c. 490, pt. 3 § 28, providing that insurance companies except life insurance companies and companies liable to taxation on their corporate franchises, shall pay an excise tax on all premiums received, and section 33, providing for certain deductions, but that dividends shall not be considered return premiums, "a tax or excise on all premiums received,” in view of the express provisions of section 33 being interpreted as meaning gross premiums and in view of the history of the statute (St. 1862, c. 224, §§ 1, 6, 9, allowing no deductions from the gross premiums, St. 1868, 165, § 1, providing for certain deductions, but that dividends shall not be construed to be return premiums, no substantial change having since been made, a domestic mutual insurance company was not entitled to deduct from its taxable amount a dividend of 30 per cent paid to its policyholders when their policies expired.

(For other cases, see Taxation, Cent. Dig. § 248; Dec. Dig. § 140.)

Case reserved from Supreme Judicial Court, Suffolk County.

Petition by the American Mutual Liability Insurance Company against the Commonwealth of Massachusetts for abatement of a corporation tax. Reserved for the full court on pleadings and agreed facts. Petition dismissed.

Sawyer, Hardy, Stone & Morrison, of Boston (Edward C. Stone, of Boston, of counsel), for Petitioner.

Henry C. Attwill, Atty. Gen., and Wm. Harold Hitchcock, Asst. Atty. Gen., for the Commonwealth.

* Decision rendered, May 19, 1916. 112 N. E. Rep. 868.

BAYER vs. BAYER ET AL. (No. 145.)*

(Supreme Court of Michigan.)

1. INSURANCE-EMPLOYERS'

LIABILITY INSURANCE-AC

CIDENTS ARISING OUT OF EMPLOYMENT-"OPERATION OF AND CONNECTION WITH BUSINESS."

A liability insurance policy, pursuant to Workmen's Compensation Act (Pub. Acts [Ex Sess.] 1912, No. 10), and limiting liability to accidents occurring in the operation of and in connection with the contracting and building business of the employer, does not cover the death of an employee, occurring while, at the direction of the employer, such employee was engaged in moving material for a third person, which work was in no way connected with the building business of the employer.

(For other cases, see Insurance, Cent. Dig. § 1144; Dec. Dig. § 435.)

Certiorari to Industrial Accident Board.

Action by Mary Bayer against Charles F. Bayer and others for compensation under the Workmen's Compensation Act. From an order of the Industrial Accident Board awarding compensation, defendants bring certiorari. Reversed, and order vacated.

Edward S. Grece, of Detroit, for Claimant.

Walters & Hicks, of Detroit, for Defendants.

* Decision rendered, June 1, 1916. 158 N. W. Rep. 109.

AMERICAN SAV. BANK & TRUST CO. vs. NATIONAL SURETY CO. (No. 12976.)*

(Supreme Court of Washington.)

INSURANCE-FIDELITY

BOND.

INSURANCE — CONSTRUCTION

OF

A bond, indemnifying a bank against the dishonesty of its employees, separately stating the limit of liability growing out of the acts of each, giving the indemnitor the right to defend upon the ground of the previously known dishonesty of an employee, providing that the bank should render every assistance to aid in bringing such an employee to justice, and that the surety's liability should immediately terminate as to the subsequent acts of any employee, was in legal effect a separate bond as to each employee named in the schedule attached to it, so that the bank could not recover for a theft of which some one of three of its employees must have been guilty, the particular guilty one being undetermined.

(For other cases, see Insurance, Cent. Dig. §§ 384-390; Dec. Dig. 179.) * Decision rendered, May 23, 1916. 157 Pac. Rep. 877.