Opinion ID: 1791860
Heading Depth: 1
Heading Rank: 1

Heading: The Question Stated

Text: In sustaining the demurrer to the answer of appellant the lower court held, as a matter of law, that appellant could not rely on broken conditions subsequent contained in the policy as a defense to an action brought by the injured or damaged person which was produced by the negligent operation of the insured vehicle. That is the main question involved in this appeal. To state it more concretely, the question for decision here is this: Where the insured has breached the terms of his policy contract by failing to give written notice of the accident to his insurer as soon as practicable or by failing to co-operate with his insurer in the defense of the case, can these breaches be set up as a defense against an action by one who has obtained a judgment against the insured, in a direct action against the insurer? When this question first came before this court in the case of Metropolitan Casualty Co. v. Albritton, 214 Ky. 16, 282 S.W. 187, decided in 1926, it was answered in the negative. In the Albritton case there had been no failure to give notice, as required by the policy, but there was a failure to co-operate and assist in the defense, as required by another provision of the policy. It was held in that case that the failure of the insured to co-operate and assist in the defense of the original action was no defense to a subsequent suit brought by the damaged person against the insurer. Almost ten years later the question again came before this court in the case of Sun Indemnity Co. v. Dulaney, 264 Ky. 112, 89 S.W.2d 307, 310, the opposite conclusion was reached and the question presented was answered in the affirmative. In that case there had been a failure of the insured to give immediate written notice of the accident, as required by the policy, and this court held such notice was essential. Although the Albritton case, supra, was cited in the Dulaney case, it was not discussed nor was it expressly overruled. Both cases involved breaches of conditions subsequent by the insured, though each involved a different breach. Both of the conditions subsequent which were involved in those cases were involved in the instant case, i. e. failure to give notice and failure to co-operate. The whole question here involved has been the subject of two extensive annotations, one in 85 A.L.R. 20 and the other in 106 A.L.R. 516. These annotations show the great weight of authority to be in accord with the decision of this court in the Dulaney case. In discussing the conflict between this court's decisions in the Albritton and Dulaney cases, the latter annotation, supra, said (page 533): Although the defense which was allowed in the Dulaney Case was based on the failure to give notice, and the defense disallowed in the Albritton Case was based on the breach of the co-operation clause, and there are other differences between the provisions involved in the respective cases regarding the conditions of the insurer's liability to the injured person, the later case seems to overrule, in effect, the earlier case, and to put Kentucky in accord with the general rule on the subject. We think the reasoning in the Dulaney case is sound and is in line with the great weight of authority in other jurisdictions and as it is the last expression of this court on the subject involved, we adhere to it and hold that the breach of a condition subsequent by the insured may be relied on as a defense to an action brought by the injured person against the insurer. While the Albritton and Dulaney cases are not distinguishable on the broad ground that both represented breaches of conditions subsequent, they can be distinguished on the narrower ground that each involved a breach of a different condition. It might well be argued that the giving of notice, as was involved in the Dulaney case, is of the greater importance to the insurer in order that it may take such steps as are necessary for defense of the action. It might also be argued on the other side that failure of the insured to co-operate, while important to the insurer, might open the door to collusion between the insurer and insured to defeat the injured person since he has no way to compel this co-operation. Since the case at bar did involve the failure to give notice, as did the Dulaney case, it is here only necessary to follow the principles laid down in that case.