(13 Idaho, 558)

WHITNEY v. CLEVELAND. (Supreme Court of Idaho. July 9, 1907.) 1. EVIDENCE-ADMISSIONS-OFFER TO COM

PROMISE.

The rule is well established that an offer to compromise is not admissible in evidence, but that if an independent admission of a fact, such as the handwriting of a party, or hat a certain item of an account, was correct, such independent admission may be introduced.

[Ed. Note. For cases in point, see Cent. Dig. vol. 20, Evidence, § 745.]

2. SAME QUESTIONS FOR Court.

Held, that an offer to compromise was improperly admitted in evidence. and further held that the offer to compromise was not proper rebuttal. The question whether in the offer to compromise a collateral or independent fact has been admitted by one of the parties is a question for the court to determine, and not a question for the jury.

[Ed. Note. For cases in point, see Cent. Dig. vol. 20. Evidence. § 1014.]

3. WITNESSES-IMPEACHMENT.

Impeaching questions should not be permitted, unless a proper foundation is laid therefor. [Ed. Note.-For cases in point, see Cent. Dig. vol. 50, Witnesses, §§ 1087, 1150.]

4. TRIAL-INSTRUCTIONS-PREPONDERANCE OF

EVIDENCE.

Held, that the instructions properly detine the term "preponderance of the evidence." [Ed. Note.-For cases in point, see Cent. Dig. vol. 46, Trial, § 703.]

(Syllabus by the Court.)

Appeal from District Court, Elmore County; Lyttleton Price, Judge.

Action by Fred E. Whitney against W. C. Cleveland. Judgment for plaintiff, and defendant appeals. Reversed, and new granted.

Perky & Blaine and L. B. Green, for appellant. W. C. Howie, for respondent.

SULLIVAN, J. This action was commenced in the probate court of Elmore county to recover for damages alleged to have been sustained by reason of the defendant herding and grazing his sheep on the land of plaintiff and within two miles of his residence, under what is known as the two-mile limit law. Judgment was rendered in favor of the plaintiff, and an appeal was taken by the appellant to the district court of said county, where the cause was tried de novo. Upon the trial of the case in the district court, the jury returned a verdict in favor of the respondent for $125 and costs of suit. A motion for a new trial was overruled, and this appeal is from the judgment and the order overruling the motion for a new trial. The errors relied upon are the insufficiency of the evidence to justify the verdict, and in the admission and rejection of certain testimony, and in the giving of a certain instruction. One of the main contentions is that the evidence does not show that the sheep mentioned in the complaint belonged to the appellant.

We have examined all of the evidence con

tained in the record, and it is shown that the sheep which it is alleged did the damage bore two brands. About five-sixths of them were branded "V. T.," and about one-sixth with a blotch or dot "U.," or a horseshoe dot brand. The latter brand is designated in the evidence as the horseshoe dot by some of the witnesses, and by others as the dot U. brand. It was admitted by the appellant in his testimony that his sheep bore 'those brands, but his evidence tended to show that his sheep were not on or near plaintiff's ranch, and for that reason could not have been the cause of the damage sustained by plaintiff. The plaintiff introduced no direct evidence as to the fact that appellant owned said sheep. He only showed that the brands on the sheep were the same brands used by appellant.

It appears from the record that the attorney for the respondeut had some communication with the appellant in regard to the damage done by said sheep prior to the time this suit was brought, and that the appellant offered as a compromise to pay $25 in full settlement of said matter, which offer was refused by respondent. On cross-examination of the appellant, he was asked the following question: "Q. You offered him $25 for the damages suffered from your sheep, did you not?" Thereupon objection was interposed by counsel for appellant on the ground that that was not proper cross-examination and incompetent for any purpose, as it was an offer to compromise. The court thereupon stated as follows: "It is not competent to show that there was any damage sustained, but it would be directly in rebuttal of matters called out on cross-examination. The tendency of your testimony is to show that he had no sheep there. It would be competent to rebut that if nothing else"-and thereupon overruled the objection. The witness thereupon answered as follows: "I told him I would give him $25 to make him a present, but I did not consider my sheep had done him any damage." The witness on redirect examination testified that all he knew about the sheep having been there was what respondent's counsel had written him; that he had written him and threatened him with a suit. Witness further testified as follows: "I had not seen my men about it. My object was merely to save the trouble and expense of suit, regardless of any merits of the claim, on the theory that it was cheaper to give him a little something than to fight him in court. I never at any time admitted that my sheep had damaged him at all." Whereupon the court instructed the jury as follows: "You understand, gentlemen, in this controversy in regard to Mr. Cleveland's offer to pay $25, that the court does not admit that for the purpose of showing that the plaintiff suffered damage by reason of any sheep being there, but it is admitted for the purpose of rebutting, if it does rebut, in your

estimation. Mr. Cleveland's testimony as to the whereabouts of his sheep during the period mentioned."

It is contended by counsel for appellant that the offer to pay $25 was an unsuccessful offer to compromise, and under the well-established rules of law such offer cannot be legally admitted in evidence. The rule is well established that an offer made in an effort to compromise a cause of action cannot be legally admitted in evidence over the objection of the opposing party. 1 Ency. of Ev. 596; Chicago, B. & Q. R. Co. v. Roberts, 57 Pac. 1076, 26 Colo. 329; Seebree v. Smith, 2 Idaho (Hasb.) 359, 16 Pac. 915; Kroetch v. Empire Mill Co., 9 Idaho, 283, 74 Pac. 868; 1 Greenleaf on Ev. § 192; Smith v. Satterlee, 29 N. E. 225, 130 N. Y. 677. It is stated in 1 Rice on Evidence, at page 435, as follows: "It is never the intention of the law to shut out the truth, but to repel any inference which may arise from a proposition made, not with a design to admit the existence of a fact, but merely to buy one's peace. If an admission, however, is made because it is a fact, the evidence to prove is competent, whatever motive may have prompted to the declaration. But if the party admits a particular item in an account, or any other fact, meaning to make the admission as being true, this is good evidence, although the object of the conversation was to compromise an existing controversy." And it is stated in West v. Smith, 101 U. S. 273, 25 L. Ed. 809, that the rule both in England and in the United States is that the offer will be presumed to have been made without prejudice, if it was plainly an offer of compromise. While it is true that the evidence on the part of appellant tended to show that the appellant's sheep were not the ones that did the damage, it is also true that the appellant did not admit, so far as shown by the record, in his conversation with respondent, in which this offer of compromise was made, that his sheep were ever on the appellant's ranch or did the damage. Appellant testified that all he knew about his sheep being there was what the attorney for the respondent had written him about it; that he had not seen his own men in regard to the matter; and that his object in offering $25 was to save the trouble and expense of a suit, regardless of any merits of respondent's claim. If, during appellant's conversation with the respondent in regard to the compromise, he had admitted that his sheep had been upon the ranch of appellant, and thereafter denied that they were there, that admission might have been introduced in evidence under the well-established rules of law. From the record we have before us, that question as presented was one of law; that is, whether the offer to compromise contained the extrinsic statement of fact that the sheep were the sheep of appellant. Such statement should 91 P.-12

have been permitted to go to the jury on the question of whether the sheep did belong to the appellant or not. That question of law should have been determined by the court before permitting that evidence to go to the jury. It is true the court instructed the jury that appellant's offer to pay $25 was not admitted for the purpose of showing that plaintiff had suffered damage by reason of the sheep being there, but it was admitted for the purpose of rebutting appellant's testimony as to the whereabouts of his sheep during the period mentioned. This instruction was clearly erroneous, and it was the duty of the court to determine whether the offer of compromise was proper rebuttal or not, and not leave that question to the jury; or, in other words, whether it contained any matter of fact showing that the appellant admitted that his sheep were the ones that did the damage. If during that conversation the appellant had admitted that his sheep were the ones that were upon the ranch of the respondent, that fact might have been admitted; but, as he did not, so far as the record shows, it was error to admit said offer to compromise. And, as we view it, that instruction of the court only emphasized the matter of said compromise and assisted, in the minds of the jury, in helping out the very meager evidence upon the question of the ownership of the sheep. We do not believe from all of the evidence in the record that it appears from a preponderance thereof that said sheep were the sheep of the appellant, and it is easily perceived what effect an offer to compromise would have upon the minds of the jury under said state of facts. The action of the court in that regard was clearly erroneous. It seems to have been a question of the identity of the sheep that did the damage, and as to whether they belonged to the appellant.

Assignments of error Nos. 4, 5, 6, 7, 8, and 9 are based on the rulings of the court in sustaining respondent's objections to questions which were designed to impeach the respondent and one of his witnesses. As no proper foundation had been laid for such impeachment, it was not error for the court to sustain the objections to such questions.

It is contended that the court erred in giving its third instruction to the jury, for the reason that the element of preponderance of evidence was omitted from this instruction, as that instruction does not define what is meant by a "preponderance of the evidence." Instruction No. 7 clearly and fully defines that term, and there is nothing in that contention.

From the foregoing we arrive at the conclusion that the judgment must be reversed, and a new trial granted, and it is so ordered, with costs in favor of the appellant.

AILSHIE, C. J., concurs

(76 Kan. 275)

CARTER. ETNA LIFE INS. CO. (Supreme Court of Kansas. July 5, 1907.) 1. INSURANCE - INDEMNITY POLICY CONSTRUCTION.

A policy insuring an employer against loss from liability for injuries to employés of the assured, which contains the stipulation, "No action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within sixty days from the date of such judgment and after a trial of the issue," is a contract of indemnity for the benefit of the assured, and there is no right of action thereon against the insurance company until the assured sustains a loss by the payment of a liability.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28 Insurance, § 1298.] 2. JUDGMENT CONCLUSIVENESS PERSONS BOUND-PERSONS DEFENDING FOR ANOTHER. The policy provided that, if an action was brought against the assured by an injured employé, the insurance company might defend the action in behalf of the assured, and in an action brought by an employé to recover damages, in which a judgment was rendered against the assured, the insurance company assumed to and did make a defense against the employe's claim. Held, that the employé could not maintain an action upon the judgment against the insurance company, and the fact that the insurance company made a defense against the employé's claim did not estop it from denying liability to the employé.

(Syllabus by the Court.)

Error from District Court, Sedgwick County; Thos. C. Wilson, Judge.

Action by C. W. Carter against the Etna Life Insurance Company. Judgment for defendant, and plaintiff brings error. Affirmed.

Adams & Adams, M. C. Freerks, and Geo. W. Freerks, for plaintiff in error. Stanley & Vermilion & Evans and E. G. Anderson, for defendant in error.

JOHNSTON, C. J. The principal question involved in this litigation is the meaning and effect of an employer's liability policy. It arises on a demurrer to the plaintiff's petition, in which it was averred that the Etna Life Insurance Company issued a policy to the Wichita Bridge Company, agreeing to indemnify the bridge company "against loss from common-law or statutory liability for damages on account of bodily injuries, fatal or nonfatal, accidentally suffered within the period of this policy by any employé or employés of the assured." In its provisions there were stipulations that in case of accidents to employés the assured should notify the insurance company, and, if an action for damages was brought against the assured for injuries to employés, the summons and other processes served upon it should be sent at once to the insurance company; that company to defend against the proceeding in the name of the assured. In the policy it was also provided that: "No action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for

loss actually sustained and paid by him in satisfaction of a judgment within sixty days from the date of such judgment and after a trial of the issue." While the policy was in force, C. W. Carter, an employé of the bridge company, was injured, and within a few days he brought an action against that company to recover for the negligent injury. The in surance company was notified of the injury, and also of the commencement of the action, and it at once assumed control of the defense against the claim, and its attorneys tried the case in behalf of the bridge company; the result being a judgment in favor of Carter against the bridge company for $1,000. While the action was pending, and before judgment was rendered, the bridge company was adjudged a bankrupt, and its assets were seized and administered in that proceeding, with the result that the bridge company is now insolvent and without assets of any kind. Carter did not participate in the bankruptcy proceedings, and he alleges that the answer and defense made by the insurance company prevented him from securing payment of his claim and sharing in the distribution of that estate. He therefore prayed that the insurance company should be adjudged to pay his judgment against the bridge company, and for the further sum of $350 as attorney's fees expended in the prosecution of the action. The trial court rightly held that no cause of action was stated in his petition and gave judgment for the defendant.

The liability of the Insurance Company under the policy must be measured by its terms. It will be observed that the contract of the insurance company was with the bridge company, and not with the employés. The contract was indemnity against loss from liability, and not insurance against liability. In its general features, it provided for making good the loss suffered by the assured, or rather for reimbursing it to the extent of its loss. Until the assured had met with a loss, there was no occasion to pay indemnity: no reason to reimburse, until something had been paid by the assured. Aside from the fact that in its general characteristics the contract is one of indemnity, it contained the specific provision that no recovery could be had against the insurance company under the policy, unless the action was brought by the bridge company itself to reimburse it for the loss actually sustained and paid in satisfaction of a judgment. This provision leaves no doubt of the intention of the parties, which was that the insurance company was not required to pay anything, because of the policy, until losses had been paid by the assured in satisfaction of a judgment. It is a provision which the parties had a right to insert in their contract. The obligations of the policy did not extend beyond the two contracting parties. The bridge company, on one hand, was procuring indemnity to protect itself from loss, and the

insurance company, on the other, was undertaking to make good the losses which the bridge company should be compelled to pay; and, as an assurance that these losses should not be excessive, it reserved the right to go into court and resist the claims presented against the assured. Upon a similar contract, the Supreme Court of Maine decided that: "It does not inure to the benefit of the injured employé so that he can enforce payment of it in case the employer becomes insolvent and makes an assignment for creditors before he receives his judgment so that the judgment cannot be enforced,

especially where the contract provides that no action shall lie against the insurer as respects any loss under the policy, unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment after trial of the issue." See, also, Allen v. Gilman, McNeil & Co. (C. C.) 137 Fed. 136; Cushman v. Fuel Co., 122 Iowa, 656, 98 N. W. 509; Connolly v. Bolster, 187 Mass. 269, 72 N. E. 981; Allen v. Ætna Life Ins. Co., 145 Fed. 881, 76 C. C. A. 265; Texas Short Line Railway Co. v. Waymire (Tex. Civ. App.) 89 S. W. 452; Bain v. Atkins, 181 Mass. 240, 63 N. E. 414, 57 L. R. A. 791, 92 Am. St. Rep. 411; Finley v. Casualty Co., 113 Tenn. 592, 83 S. W. 2; Travelers' Insurance Co. v. Moses, 63 N. J. Eq. 260, 49 Atl. 720, 92 Am. St. Rep. 663.

This case is quite unlike those based on policies agreeing to pay damages for which the assured may become liable. The distinction is well stated in one of the cases cited by plaintiff in these words: "The difference between a contract of indemnity and one to pay legal liabilities is that, upon the former, an action cannot be brought and a recovery had until the liability is discharged; whereas, upon the latter, the cause of action is complete when the liability attaches." American, etc., Ins. Co. v. Fordyce, 62 Ark. 562, 36 S. W. 1051, 54 Am. St. Rep. 305. Most of the cases cited by plaintiff rest on contracts insuring against liability, some are affected to some extent by statutory provisions, and one (Sanders v. Frankfort, etc., Ins. Co., 72 N. H. 485, 57 Atl. 655, 101 Am. St. Rep. 688), appears to be out of line with the current of authority.

The fact that the insurance company made the defense for the bridge company against plaintiff's claim for damages did not estop it from denying liability under its contract. The right to defend was specifically given by the contract, and this burden was assumed for the reason that the award to be made in the proceeding might ultimately be the measure of its own liability. To defend the action in behalf of the assured was in no

an agreement to pay the plaintiff's judgment, and could not have misled the plaintiff. Connolly v. Bolster, supra.

Judgment affirmed. All the Justices concurring.

(76 Kan. 206)

EHRSAM et al. v. BROWN et al. (Supreme Court of Kansas. July 5, 1907.) 1. SALES-IMPLIED WARRANTY.

Where a known, described, and specified article is sold by a dealer under a contract to be executed by delivery of the specified article, which is actually supplied to the buyer, there is no implied warranty that it shall answer the particular purpose intended by the buyer, although such purpose is communicated to the dealer beforehand.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 43, Sales, § 774.]

2. SAME LATENT DEFECTS.

Where a dealer contracts to deliver to a purchaser, at an agreed price, a known, described, and specified article manufactured generally for the trade, there is no implied warranty against latent defects of which the dealer has no knowledge.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 43, Sales, § 765.] 3. SAME.

The defendant, owner of a flouring mill, gave a written order to plaintiffs for the purchase at an agreed price of certain machines for use in his mill, described and known as "Wolf Gyrators," which order was accepted in writing, and the machines were shipped direct from the manufacturers to defendant. Plaintiffs were not manufacturers of the machines, but dealers. They knew the particular purpose for which the machines were ordered, but had no opportunity to inspect them until after delivery, and had no knowledge of latent defects. Held, that there was no implied warranty that the machines would answer the particular purpose for which they were purchased, and no implied warranty against latent defects in their construction.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 43, Sales, §§ 772, 774.]

(Syllabus by the Court.)

Error from District Court, Logan County; J. H. Reeder, Judge.

Action by J. B. Ehrsam & Sons against Casper Brown, and on his death revived against Cordelia Brown and others. Judgment for defendants. Plaintiffs bring error. Reversed and remanded.

Hurd & Hurd, for plaintiffs in error. W. E. Saum, for defendants in error.

PORTER, J. By a contract in writing, Casper Brown purchased from J. B. Ehrsam & Sons for use in his flouring mill two Wolf gyrators. The gyrators were shipped direct from Wolf Bros., the manufacturers, at Chambersburg, Pa., to Brown, at Oakley, Kan. He received them, paid the freight charges from St. Louis to Oakley, and set them up in his flouring mill. A controversy arose over the quality of the machines, and he refused to pay the balance of the purchase price. The contract provided that the title to the machines should remain in the vendor until the purchase money was paid, and Ehrsam & Sons, having filed a mechanic's lien upon the mill property, brought this action against Casper Brown to foreclose the lien. Defendant filed his answer and cross-petition, alleging that the gyrators were purchas ed upon an express warranty, as follows:

That at the time of making said order, and in consideration of the promises and agreenents on the part of this defendant, and as a further inducement for placing said order with plaintiff, said plaintiff promised and agreed with defendant that said machines would be constructed of good material, of first-class workmanship, supplied with necessary and suitable fixtures, and in all respects suited for the work intended." He alleged a breach of this warranty and asked damages resulting therefrom. On the trial, the jury found that an express warranty had been made, and awarded damages caused by unseasoned materials used in the construction of the machines, and gave a small judgment for plaintiffs. Proceedings in error in this court followed, with the result that the judgment was reversed and the cause remanded for a new trial. Ehrsam v. Brown, 64 Kan. 466, 67 Pac. 867. The contract of purchase, which consisted of the written order and letter of acceptance, is set out in full in the former opinion and need not be recited here. The former judgment was versed for error in admitting parol evidence to show an express warranty; the contract being in writing and on its face complete. After the case was remanded to the district court, defendant filed an amended answer and counterclaim, and set up an implied, instead of an express, warranty. A second trial was had on the amended pleadings in April, 1902, in which the jury returned a verdict in favor of defendant for the sum of $43.50, and made special findings. On motion of plaintiffs, the verdict and findings were set aside, a new trial ordered, and the cause continued. Thereafter, the defendant, Casper Brown, died, and the action was revived against his administratrix and heirs at law, who are defendants herein. At the April, 1905, term of the district court, the cause was submitted to the court on a stipulation, providing, in substance, that the court should determine which party was entitled to and give judgment upon the pleadings, the evidence introduced upon the second trial, the special findings and verdict of the jury, reserving to each party the benefit of all objections and exceptions made during the progress of the cause.

The findings of the jury referred to in the stipulation were numbered from 1 to 54, among which were the following: "Q. Did the plaintiff contract and agree with Casper Brown to furnish him two gyrators for use in his mill at Oakley, Kan.? A. Yes. Q. Did plaintiffs, at the time of making such sale, know that the machines were to be used for a special purpose in and about defendant's mill? A. Yes. Q. Did plaintiffs, or their representatives, at the time of making said sale or taking the order from the defendant, examine the mill property of the defendant, and know what would be required in the way of changes in and about said

mill, in order to install said gyrators in said mill? A. Yes. Q. Did the said defendant, Casper Brown, have an opportunity to inspect said machines at the time of giving his order therefor? A. No. Q. Did the defendant, Brown, rely upon the representations of the plaintiffs as to the character and quality of said machines and their fitness for use in his mill. A. Yes. Q. Were the plaintiffs familiar with the construction and character of the machine described as 'Wolf gyrators,' which they sold to the defendant? A. Yes. Q. Were the machines ordered by the defendant from the plaintiffs constructed of good material, of good workmanship, and well suited for the purpose intended? A. No. Q. If you answer the last question 'No,' state what the defects were. A. Defects caused by unseasoned lumber. Q. What was the actual value of the machines. A. $375. Q. How much do you allow the defendant as general damages on account of plaintiff's failure to furnish the defendant with perfect machines? A. $500. Q. How much damage do you allow the defendant on account of loss of profits on the usual product of his mill? A. $200. Q. How much damage do you allow defendant for the injury to the grade of the flour referred to? A. $76. Q. Did the plaintiffs manufacture said gyrators? A. They did not. Q. Did the plaintiffs, or either of them, see said gyrators before they were delivered to the defendant? A. No. Q. Where were said gyrators manufactured? A. Chambersburg, Pa. Q. Where was the plaintiff's place of business at the time of the sale and delivery of said gyrators? A. Enterprise, Kan. Q. When the gyrators were delivered to the defendant, did he examine them for the purpose of ascertaining the quality of material of which they were constructed? A. No. Q. How much, if anything, do you allow the defendants for damages, resulting directly or proximately from the use of unseasoned lumber in the manufacture of said gyrators? A. $893.50. Q. When gyrators like those in controversy were put upon the market by the manufacturers, were they intended to be a complete machine ready to be attached by proper connections, and made a part of a flouring mill? A. Yes. Q. Leaving out all considerations of the quality of the machines, were said gyrators otherwise properly planned and constructed for the purposes for which they were sold? A. Yes. Q. At the time the plaintiffs sold the gyrators to the defendant, or at any time before the defendant commenced using said gyrators, did the plaintiffs, or either of them, know that said gyrators were made of green or unseasoned lumber? A. No. Q. Were said gyrators of the kind ordered by the defendant of the plaintiffs? A. No. Q. If you answer 'No' to the last question, state in what respect and wherein said gyrators failed to be of the kind ordered by the defendant from the plaintiffs. A. Because they were not per