Case Title: Southern Guaranty Insurance Co. v. Thomas

Citation: 334 So. 2d 879

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1976-07-09T00:00:00Z

Document:
334 So. 2d 879 (1976)
SOUTHERN GUARANTY INSURANCE COMPANY, a corp.
v.
Melvin THOMAS et al.
SC 1638.

Supreme Court of Alabama.
July 9, 1976.
*881 Bryan, Nelson, Nettles & Cox and J. F. Janecky, Mobile, for appellant.
Lee B. Williams, Grove Hill, for appellees.
BLOODWORTH, Justice.
This is an appeal from a declaratory judgment requiring the insurer, Southern Guaranty Insurance Company, to defend its insured, Melvin Thomas, in a damage suit pending against him and to save him harmless in that action up to the policy limits. We reverse and render.
On December 5, 1973, the insured strung a cable across a trail on property owned by his aunt to discourage trespassers from dumping trash on that property and on adjoining property which he owned. The following day the insured was visited by two deputy sheriffs and Billy Daugherty. They asked whether he had strung the cable. When the insured admitted that he had, they informed him that Daugherty's son had been knocked off his motorcycle by the cable, resulting in his being seriously injured.
Approximately two weeks later, the insured received a letter from Daugherty's attorney advising him that he intended to proceed with the case to recover damages for the injuries sustained by Daugherty's son in the accident. [See the letter, post.] The letter specifically suggested that the insured notify his insurance carrier if he had homeowner's insurance. A day or so later, the insured read over the policy briefly. [At trial, he testified that he did not understand that the policy would cover him under these circumstances.]
Shortly after receiving the letter, the insured took it to his lawyer, who asked him to check into whether his homeowner's policy would cover the accident. The insured stated that he never got around to checking with his agent. The insured's lawyer also asked the insured to bring the policy to him for examination. The insured stated that he looked the policy over but did not see anything that appeared to cover this accident and that he subsequently forgot to take the policy to his lawyer, in spite of repeated reminders. The insured did not take the policy to his lawyer until after suit was filed in June 1974, approximately six months after the accident occurred.
The policy in question provides the following:
"COVERAGE EPERSONAL LIABILITY
The policy further provides that medical payments will be made to persons who sustain
Another provision of the policy states,
"No suit or action shall lie against this Company, unless: (1) as a condition precedent thereto there has been full compliance with all the provisions and stipulations of this policy . . . ."
The insured did not notify the insurer of the accident or of the demand letter from Daugherty's attorney until after suit was actually filed, some six months after the accident. Because of this delay, the insurer denied coverage and filed suit seeking a declaratory judgment that there was no duty on its part to defend the insured or to pay any judgment against him.
At trial, the jury, in response to special interrogatories, answered that the insured had given the insurer "reasonably timely notice" of the accident and of the demand letter. Judgment was entered for the insured. Having been denied a directed verdict at the close of the evidence, the insurer moved for judgment notwithstanding the verdict or, in the alternative, for a new trial on the grounds that the insured failed to give "reasonably timely notice" of the accident and of the demand. The motion was denied.
On appeal, the insurer contends that, where the facts are undisputed and the evidence warrants but one inference, whether notice was given within a reasonable time is a question of law for the judge, not a question of fact for the jury, and that under the circumstances of this case the trial court should have ruled that as a matter of law the insured failed to give reasonably timely notice.
The insured contends: that reasonableness is a question for the jury since it must be determined on the basis of all the facts and circumstances of each case; and, that his delay was reasonable because he believed that the policy did not provide coverage, that he was not liable, and that suit would not be filed. The insured further contends that the insurer must show that its position has been prejudiced by the delay and that the insurer here has not done so.
The terms "as soon as practicable" and "immediately" (as they are used in the suit policy) have been generally construed to mean that notice must be given "within a reasonable time" in view of all the facts and circumstances of the case. See, e.g., American Liberty Ins. Co. v. Soules, 288 Ala. 163, 171, 258 So. 2d 872, 879 (1972); Pan American Fire & Casualty Co. v. DeKalb-Cherokee Counties Gas District, 289 Ala. 206, 214, 266 So. 2d 763, 771 (1972); Annot., 18 A.L.R.2d 443, 462ff.
Thus, the fundamental issue on this appeal is whether notice of the accident and of the demand letter were given to the insurer within a reasonable time as a matter of law.
Where facts are disputed or where conflicting inferences may reasonably be drawn from the evidence, the question of the reasonableness of a delay in giving notice is a question of fact for the jury. Provident Life & Accident Insurance Co. v. Heidelberg, 228 Ala. 682, 154 So. 809 (1934). Conflicting inferences concerning the reasonableness of a delay may sometimes be drawn where the insured offers evidence of mitigating circumstances.
Zurich General Accident & Liability Insurance Co. v. Harbil Restaurant, Inc., 7 A.D.2d 433, 184 N.Y.S.2d 51, 53 (1959). Accord, Provident Life & Accident Insurance Co. v. Heidelberg, supra; Annot, 18 A.L.R.2d 443, 504 ff. See also Lennon v. American Farmers Mutual Insurance Co., 208 Md. 424, 118 A.2d 500 (1955), where it was held that
In this case, the insured offers excuses for his delay in giving notice to the insurer. If those excuses may reasonably be said to justify the delay, the trial court did not err in submitting the issue of the reasonableness of the delay to the jury.
It is implicit in what has been said up to this point that under Alabama law there are only two factors to be considered in determining the reasonableness of a delay in giving notice to an insurer: the length of the delay and the reasons for the delay. The insured has argued that another factor should be considered, viz, the absence of prejudice to the insurer from the delay. But, under our cases, whether the insurer was prejudiced by the delay is immaterial to a determination of the reasonableness of the delay where the giving of reasonably timely notice is expressly made a condition precedent to any action against the insurer, as in this case.
American Fire & Casualty Co. v. Tankersley, 270 Ala. 126, 130, 116 So. 2d 579 (1959).
As this Court stated in Soules, supra,
Thus, dispositive of the issue in this case is whether the insured's excuses, offered for his six-month delay in giving notice to his insurer, are reasonable.
First, the insured argues that his delay was reasonable because he "believed" that the policy did not provide coverage. He cites American Liberty Insurance Co. v. Soules, 288 Ala. 163, 258 So. 2d 872 (1972), where it was held that a delay of eleven months was not unreasonable on the part of a claimant who was an unnamed additional insured in a homeowner's policy owned by his parents but who did not even know that his parents had such a policy. The Soules case itself contains language which clearly distinguishes it from the present case:
Id. at 172, 258 So. 2d  at 880. In the present case, we are confronted with a named insured who not only had possession of the policy and ample opportunity to read it but also was advised by the injured party's attorney to notify his homeowner's insurance carrier. Moreover, he was repeatedly advised by his own attorney to bring the policy to him and of the need to determine whether the accident was covered under his homeowner's policy. This excuse is clearly unreasonable and affords no basis for submitting the reasonableness of the delay to the jury.
Second, the insured argues that the delay was reasonable because of his "belief" that he was not liable for the accident. He cites Pan American Fire & Casualty Co. v. DeKalb-Cherokee Counties Gas District, 289 Ala. 206, 266 So. 2d 763 (1972). There, a general liability insurer was seeking a declaratory judgment that it had no duty to defend the insured gas company in a suit arising out of the explosion of a gas heater. The insured knew nothing of the explosion until its manager was interviewed by the adjuster for the homeowner's insurer, who indicated only that a claim was being made under a homeowner's policy. Notice of the explosion was not given the gas company's insurer until after suit was filed eleven months after the explosion. This Court held that notice was given as soon as practicable under the circumstances, citing 44 Am.Jur.2d Insurance § 1474:
Id. at 216, 266 So. 2d  at 773. In the Pan American case, the gas company had no reason to believe that "any act or omission by it, or any act of its employees was the cause of an injury . . . ." In the present case, the insured knew the day after the accident that it was claimed that the cable, which he admitted putting up, had caused the accident. Any belief that he may have had that his actions had not caused the accident cannot be regarded as reasonable. That purported belief provides no basis for submitting the reasonableness of the delay to the jury.
This conclusion is supported by the case of Jeannette Glass Co. v. Indemnity Insurance Co., 370 Pa. 409, 88 A.2d 407 (1952). There, the Supreme Court of Pennsylvania held that the fact that the insured had investigated the accident and had determined that it was not liable did not excuse the insured from giving notice "as soon as practicable." A directed verdict for the insurer was affirmed, the only question being one of law for the court.
Third, the insured argues that his delay was reasonable because he did not "believe" that suit would be filed. The insured makes this argument in spite of the plain language of the letter which he received from the injured party's attorney approximately two weeks after the accident:
It was not the insured's duty under the terms of the policy to determine the probability of suit's being filed; it was his duty to give the insurer notice of any accident or occurrence and to forward to the insurer every demand within a reasonable time.
We hold, therefore, that no reasonable excuse has been shown for the insured's failure to give the insurer reasonably timely notice of the accident and of the demand and consequently that the delay was unreasonable as a matter of law.
REVERSED AND RENDERED.
HEFLIN, C.J., and FAULKNER, ALMON and EMBRY, JJ., concur.