Source: https://casetext.com/case/peeler-v-casualty-company
Timestamp: 2019-04-19 20:35:03+00:00

Document:
1. Insurance J d — Condition in accident policy requiring notice to company of accident and claim for damages is material.
Where a policy of automobile accident insurance contains the condition that the insured shall give immediate notice to the insurer of accidents and claims for damages, the condition is material, affording the insurer opportunity to gather the facts for its protection when fresh in the minds of witnesses, etc., and is a condition precedent to the right of recovery by the insured.
2. Same — Breach of condition requiring notice forfeits policy.
The failure by the insured to give the insurer notice of an accident and claim for damages by the person injured required by a condition in the automobile accident policy will make the policy void without an express forfeiture clause in the policy to that effect.
3. Insurance R b — Person injured by insured is in same position in regard to insurer's liability as insured.
One who is injured by the insured in an automobile accident covered by the policy of accident insurance, and sues the insurer under the provisions of the policy providing therefor upon return of execution against the insured unsatisfied, the injured person is in the same position with reference to the insurer's liability as the person insured, and is bound by a provision of the policy requiring the insured to give notice of accidents and claims for damages, and where the insured has forfeited the policy by a breach of this condition, the person injured may not recover thereon.
APPEAL by defendant from Stack, J., at February Term, 1929, of MECKLENBURG. Reversed.
J. D. McCall for plaintiff.
J. Lawrence Jones for defendant.
In 1926 a collision occurred between the plaintiff's car and one owned by F. K. Graham. Graham brought suit against the plaintiff and the plaintiff answered, denying liability and setting up a cross-action against Graham. At the December Term, 1927, of the Superior Court of Mecklenburg County the plaintiff recovered a judgment against F. K. Graham in the sum of $525 as damages to the plaintiff's automobile caused by the collision. An execution was issued on this judgment and was returned unsatisfied. At the time of the collision Graham had a policy or contract of insurance issued by the defendant, known as "The Automobile Public Liability and Property Damage Insurance Policy." The plaintiff was not a party to the contract. It is admitted that the defendant never had written notice of the collision and knew nothing about it until the trial between the plaintiff and Graham had begun, and then disclaimed liability for the reason that Graham had failed to give the notice required by the policy. The amount of the policy is in excess of the plaintiff's judgment against Graham. The collision of the plaintiff's car with Graham's occurred on 1 May, 1926. Graham brought suit against the plaintiff on 25 September, 1926, and the plaintiff set up a cross-action and recovered judgment against him at December Term, 1927, as above stated. The present action was brought 16 April, 1928.
What amount, if any, is the plaintiff entitled to recover against the defendant? Answer: $525, with interest thereon from 15 December, 1927, and the further sum of $57.25 costs in action of "Graham v. Peeler."
Judgment for plaintiff and appeal by the defendant upon error assigned.
"Item 3. The company will defend, in the name and on behalf of the assured, all claims or suits for damages for which the assured is alleged to be legally liable and will pay within the limits covered by this policy, any final judgment rendered against said assured for damages, together with the taxed court costs and accrued interest and such other expenses as may have been incurred with the company's written consent.
"Condition C. Upon the occurrence of an accident for which insurance is provided herein written notice must be given to the company by the assured as soon as practicable with the fullest particulars available. If a claim is made on account of such accident or if a suit is brought thereon, all information and every summons, process or pleading must be immediately transmitted to the company. The assured shall not voluntarily assume any liability nor incur any expense other than for immediate surgical relief nor settle any claim except at the assured's own cost, nor interfere in any negotiation for settlement nor in any legal proceedings, but whenever requested by the company and at the company's expense the assured shall aid in information and evidence and the attendance of witnesses and shall cooperate with the company (excepting in a pecuniary way) in all matters which the company deems necessary in any investigation, defense or appeal under this policy.
"Condition D. In the event of the bankruptcy or insolvency of the assured, the company shall not be released from the payment of such indemnity hereunder as would have been payable but for such bankruptcy or insolvency. If, because of such bankruptcy or insolvency an execution against this assured is returned unsatisfied in an action brought by the injured, or by another person claiming by, through or under the injured, then an action may be maintained by the injured or by such other person against the company under the terms of this policy for the amount of the judgment in said action, not exceeding the amount of this policy."
The trial judge held as a matter of law that Graham's failure to give the defendant written notice of the accident could not affect the plaintiff's right of recovery, and instructed the jury if they believed the evidence to answer the issue for the plaintiff. To this instruction the defendant excepted.
The appeal presents two questions: (1) Under the terms of the policy could F. K. Graham, the assured, have maintained an action against the defendant for damages caused by the collision without giving the written notice provided for in Condition C? (2) If not, can an action against the defendant be maintained by the plaintiff for damages to his car resulting from the collision?
"This decision as to the construction of such a provision in a policy of liability insurance was followed in Employers' Liability Assurance Corp. v. Roehm, 99 Ohio St. 343, 124 N.E. 223, 7 A.L.R., 182, where the condition was pronounced to be of the essence of the contract. In the face of these direct holdings of the Supreme Court, we do not feel at liberty to give any other construction to the terms of Condition B in the policy in the case at bar. A similar decision was rendered in the case of Jefferson Realty Co. v. Employers' Liability Assurance Corp., 149 Ky. 741, the Court saying: "In the course of the opinion, on pages 747 and 748 (149 S.W. 1011), that it was wholly immaterial whether or not the company was prejudiced by the delay, and that a reasonable compliance with the conditions of the contract relating to notice was indispensable to fix liability. To the same effect is Phoenix Cotton Oil Co. v. Royal Indemnity Co., 140 Tenn. 438, 205 S.W. 128. The Supreme Judicial Court of Massachusetts, in Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, 1 A.L.R., 1374, reached a similar conclusion."
In a case subsequently considered the Court of Appeals of Ohio adhered to the principle stated in Breese's case (Stacey v. Fidelity and Casualty Co., 152 N.E. 794), and the decision was affirmed on appeal to the Supreme Court. S. c., 151 N.E. 718.
The same conclusion was announced in London, etc., Accident Co. v. Siwy, 35 Ind. Appellate Court, 340; Travelers' Ins. Co. v. Scott, 218 S.W. (Tex.), 53; McCarthy v. Rendle, 230 Mass. 35; Dennis Sheen Transfer v. Ga. Cas. Co., 113 So. 165.
In Weatherwax v. Royal Indemnity Co., 165 N.E. 293, the Court of Appeals of New York said that the rule is settled that a judgment creditor enforcing the policy of a right to recover damages against an insurance company after the return of an unsatisfied execution against the insured debtor, stands in the shoes of the insured, and forfeits the insurance if there has been a breach of its conditions, citing Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367.
The provision requiring written notice is a condition precedent to the assured's right to recover damages, although it contains no express forfeiture clause. London, etc., Accident Co. v. Siwy, supra. So in Foster v. The Fidelity Cas. Co. of New York, 99 Wis. 447, it is said: "The policy provides that immediate written notice must be given to the company of any accident and injury for which a claim is to be made, with full particulars thereof. This was a condition precedent to a recovery." And in Underwood Veneer Co. v. London Guaranty Accident Co., 100 Wis. 378, the reason is given as follows: "The reason for requiring such notice is obvious. It was to enable the defendant to investigate the facts and circumstances of the accident while they were fresh in mind, with the view of settling the loss in case it should be so advised, and, in case of a contest, to be prepared to defend the same as stipulated in the policy. Accordingly the plaintiff was thereby expressly precluded from settling any claim or incurring any expense, without the consent of the defendant, except in case of absolute necessity. These things made it important for the defendant to be notified immediately, not only of the occurrence of the accident, but also that a claim for damages had been made by the injured person on account of the accident. The words "and also," in the conditions quoted, pretty clearly indicate that such notice of the occurrence of the accident was to be followed by a further or additional notice of any claim made for damages, and each such notice was to be given immediately as therein required." See, also, McCarthy v. Rendle, supra, 38.

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