Court Opinion

ID: 9768210
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:49:54.607431+00
Date Added: 2024-06-11T07:30:37.636838
License: Public Domain

MeGEE, Justice,
dissenting.
I respectfully dissent.
Hartford Accident & Indemnity Co., hereinafter referred to as Hartford, advanced two basic arguments to avoid liability on the insurance contract to the judgment creditor Weaver. First, Hartford argued that Busch’s failure as an omnibus insured to comply with a condition in the policy that required the forwarding of any suit papers received relieved it of any liability to Weaver. It was of no consequence, Hartford reasoned, that the same set of suit papers were timely forwarded to it by the named insured. Secondly, Hartford urged that the default judgment obtained against Busch, which formed the basis of the present action, was void because the record reveals that Busch was not served with citation of the amended petition.
*371In reaching its decision, the majority expressly adopted the first argument and, by implication, adopted the second argument. I am compelled to dissent because a manifest injustice has occurred to an innocent injured third party as a result of the majority’s holding in this ease. In reversing the judgment of the court of civil appeals and affirming that of the trial court, I would hold that the policy provision concerning the forwarding of suit papers was substantially complied with when the named insured forwarded the papers to Hartford. Additionally, I would hold that the default judgment against Busch was not void because the judgment recitals therein declared that Busch had been duly served with process but failed to answer or appear; consequently, absolute verity was imparted to the judgment thereby precluding resort to the record to show otherwise.
The majority holds that Hartford had no duty to voluntarily undertake a defense for Busch because, as an omnibus insured, he failed to also forward the suit papers to Hartford. I do not share the majority’s concept of the purpose of the provision in question here and this leads me to view the primary issue somewhat differently. In my opinion, the question to be resolved is simply whether or not there has been compliance with a contract provision, taking into account the purpose to be served by such a provision, sufficient to obligate the insurer to an injured third party.
The Hartford policy in question, similar to other liability policies of this type, contains provisions concerning an insured’s duties in the event of an accident, claim or suit. The pertinent provisions are as follows:
“(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damage from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy.
“(b) If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative. . ” [Emphasis theirs].
The policy makes satisfaction of these provisions a condition precedent to the insurer’s liability on the policy to the insured.1 Not surprisingly, the courts of this state have consistently held that, as between the named insured and the insurer, the failure of the named insured to comply with the conditions of the policy requiring notice of accident or notice of suit will relieve the insurer of liability to an injured third party. See Members Mutual Insurance Co. v. Cutaia, 476 S.W.2d 278 (Tex.1972); Womack v. Allstate Insurance Co., 156 Tex. 467, 296 S.W.2d 233 (1957); Klein v. Century Lloyds, 154 Tex. 160, 275 S.W.2d 95 (1955); New Amsterdam Casualty Co. v. Hamblen, 144 Tex. 306, 190 S.W.2d 56 (1945); Lane v. Anchor Casualty Co., 355 S.W.2d 90 (Tex.Civ.App.—Houston 1962, no writ). It is essential to reiterate that the above cases concerned themselves with situations in which the only parties involved were the insurers and the named insureds. Therefore, when the named insured failed to ei*372ther give notice of the accident or forward the suit papers, there was a complete failure to meet the terms of the policy; the insurer was, therefore, substantially prejudiced because the purpose of including the provisions in the policy was totally thwarted.
The same rule should not apply, however, when either the named insured or the omnibus insured gives notice of the accident or forwards the suit papers. With respect to the notice of accident provision, this Court held in Employers Casualty Co. v. Glens Falls Insurance Co., 484 S.W.2d 570 (Tex.1972), that timely written notice of an accident from the named insured to the insurer substantially complied with the contract provision of the policy and the purpose to be served by such a provision, and that another notice was not required of the omnibus insureds. The purpose of that clause, we stated, was to “enable an insurer to investigate the circumstances of an accident while the matter is fresh in the minds of the witnesses so that it may adequately prepare to adjust or defend any claims that may be then or thereafter asserted against persons covered by its policy.” Id. at 575.
By its present holding, the majority formulates a different rule with respect to the provision concerning suit papers. In order to be in compliance with the policy’s provisions and invoke the liability of the insurer, the named insured and the omnibus insured must both forward the suit papers. The majority states that the basic purpose of the provision is to advise the insurer that an insured has been served with process and that the insurer is expected to timely file an answer; consequently, it is reasoned that this purpose requires strict compliance with the terms of the policy in order to meet this purpose. I disagree.
I would hold that the main purpose of the provision in question is to enable the insurer to control the litigation and interpose a defense against any claims on the merits of the case. See Brown v. State Farm Mutual Automobile Casualty Insurance Co., 506 F.2d 976 (5th Cir. 1975); M.F.A. Mutual Insurance Co. v. White, 232 Ark. 28, 334 S.W.2d 686 (1960); Wendel v. Swanberg, 384 Mich. 468, 185 N.W.2d 348 (1971). I believe that this purpose was satisfied in the instant case when Thomas Enterprises, the named insured, forwarded the suit papers to Hartford. Under the provisions of the contract, Hartford initially had the duty to defend both Thomas Enterprises and Busch. See generally Heyden Newport Chemical Corp. v. Southern General Insurance Co., 387 S.W.2d 22 (Tex.1965); Kahla v. Travelers Insurance Co., 482 S.W.2d 928 (Tex.Civ.App.—Houston [14th Dist.] 1972, writ ref’d n. r. e.). Upon receipt of the pleadings, Hartford was given notice of both the nature of the suit and the fact that an action was being asserted against the named and omnibus insureds, both of whom were clearly identified. This notice gave the insurer ample time in which to determine the possible liability of any of the insured parties involved and whether it would settle, defend, or even refuse to defend, the action. See M. Woodruff, J. Fonseca, A. Squillante, Automobile Insurance and No-Fault Law § 8:20 (1974). Forwarding of another set of the same suit papers would accomplish nothing.
There is a present day tendency to interpret automobile liability insurance not only as a contract between the insurer and the insured, but also as a contract for the benefit of the injured party. See R. Keeton, Insurance Law § 4.7(a) (1971); 2 R. Long, The Law of Liability Insurance §§ 13.06, 13.18 (1976). The majority’s holding frustrates this interpretation as it elevates form over substance by permitting the insurer to avoid liability on a ground which, in my opinion, is unrelated to its ability to control the litigation.
The majority mentions the case of Lummus v. Western Fire Insurance Co., 443 S.W.2d 767 (Tex.Civ.App.—El Paso 1969, no writ) as additional support for its position. Apparently that is the only prior Texas appellate court decision on point; however, I do not consider it to be persuasive authority. The relevant facts there were very similar to those in the present case. The single point of error before the court was *373that it was unnecessary for an omnibus insured to give notice of an accident if the named insured had already done so. The court stated that it did not need to reach that point because the judgment creditor failed to prove that the driver of the vehicle was an omnibus insured under the terms of that particular policy. It then noted that even if the driver had been an omnibus insured, he never forwarded the suit papers to the insurer and this was a condition precedent to the insurer’s liability, citing Klein v. Century Lloyds, supra, and New Amsterdam Casualty Co. v. Hamblen, supra. First, the statement by the court relied on by Hartford was dictum. Secondly, the authority cited by the court was not factually pertinent as there were no omnibus insureds involved in those cases, only named insureds who failed to comply with the conditions of the policy.
Consistent with our reasoning in Employers Casualty Co. v. Glens Falls Insurance Co., supra, I would hold that the forwarding of suit papers to the insurer by the named insured accrued to the benefit of the omnibus insured and that it was unnecessary for the omnibus insured to forward the same set of suit papers in order to obligate the insurer to the judgment creditor in this case. Moreover, such a holding would be in accord with the weight of authority. Royal Indemnity Co. v. Pearson, 246 So.2d 652 (Ala.1971); Kidwell v. Chuck Olson Oldsmobile, Inc., 481 P.2d 908 (Wash.Ct.App.1971); Carter v. Aetna Casualty & Surety Co., 473 F.2d 1071 (8th Cir. 1973); Indemnity Insurance Co. of North America v. Forrest, 44 F.2d 465 (9th Cir. 1930); Annot., 18 A.L.R.2d 443, 458 (1951).
By examining the conduct of the insurer and the named insured in this case, the harshness of denying Weaver’s recovery on the basis of an asserted noncompliance with a contract provision is apparent. From my review of the record, neither Hartford nor Thomas Enterprises ever indicated to Busch that he might be covered by the policy or provided him with any instructions of what to do in the event that he was served. Shortly after the accident Busch was interviewed several times by the Hartford adjusters. It is undisputed that he gave them conflicting statements as to whether or not he was a permissive user of the vehicle at the time of the accident. Busch testified at trial that his employer had instructed him to inform Hartford that he was not a permissive user. The jury resolved the conflict with a finding that Busch was indeed a permissive user, and there was adequate evidence adduced to support such a finding.
Hartford’s witness in the present action could not recall whether any of its adjusters had informed Busch to forward any suit papers that he might have received. Busch testified that he received no guidance whatsoever from Hartford in this regard, despite the fact that he was a totally cooperative witness for Hartford in all respects. Moreover, there is nothing in the record on the part of Hartford or Thomas Enterprises that would have led Busch to believe that there was a possibility of him being covered under the policy. At oral argument, Hartford took the stance that it was under no duty to inform Busch that he might be covered by the policy, although Hartford was apparently aware that Busch possessed a somewhat minimal education and might not have comprehended the extent of the coverage of an insurance agreement between his employer and the insurer. In conclusion, the party most harmed in this case is Weaver, who, ironically, is the most innocent of all the actors involved.
In its second argument, Hartford urged that the default judgment obtained against Busch was void because the record reveals that Busch was not served with the amended petition on which the default judgment was taken. This constitutes a collateral attack on that judgment by Hartford. See generally Akers v. Simpson, 445 S.W.2d 957 (Tex.1969); Hodges, Collateral Attacks on Judgment, 41 Texas L.Rev. 163, 164 (1962). The default judgment secured against Busch contained recitations that Busch was duly served with process, failed to appear and wholly made default. It is well settled in Texas that in a collateral attack, absolute verity is imported to the judgment by the jurisdictional recitals contained therein. *374See Treadway v. Eastburn, 57 Tex. 209 (1882); Crawford v. McDonald, 88 Tex. 626, 33 S.W. 325 (1895); Levy v. Roper, 113 Tex. 356, 256 S.W. 251 (1923); Akers v. Simpson, supra; Williams v. Coleman-Fulton Pasture Co., 157 S.W.2d 995 (Tex.Civ.App.—San Antonio 1941, writ ref’d w.o.m.); Jordan v. Texas Pacific Coal & Oil Co., 152 S.W.2d 875 (Tex.Civ.App.—Amarillo 1941, writ ref’d); Watson v. Rochmill, 134 S.W.2d 710 (Tex.Civ.App.—Eastland 1939), rev’d on other grounds, 155 S.W.2d 783 (Tex.1941). Consequently, I would hold that the default judgment obtained against Busch is not subject to collateral attack because, under the circumstances, the judgment recitals preclude a resort to the remainder of the record to attack the judgment.
Accordingly, I would reverse the judgment of the court of civil appeals and affirm the judgment of the trial court.

. Action Against Company. No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.
Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. . . . [Emphasis theirs].