Court Opinion

ID: 9856650
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:54:06.144472+00
Date Added: 2024-06-11T09:40:13.748682
License: Public Domain

RodmaN, J.
The provisions of liability insurance policies imposing as conditions to liability the duty of insured to give notice of accidents and cooperation in the defense of actions which might result in a judgment against insured are, except where otherwise provided by statute, binding on the parties. Properly interpreted, they will be enforced. Muncie v. Insurance Co., 253 N.C. 74; Peeler v. Casualty Co., 197 N.C. 286, 148 S.E. 261.
The provisions are to be given a reasonable interpretation to accomplish the purpose intended, that is, to put insurer on notice and afford it an opportunity to make such investigation as it may deem necessary to properly defend or settle claims which may be asserted, and to cooperate fairly and honestly with insurer in the defense of any action which may be brought against insured, and upon compliance with these provisions to protect and indemnify within the policy limits the insured from the result of his negligent acts. An insurer will not be relieved of its obligation because of an immaterial or mere technical failure to comply with the policy provisions. The failure must be material and prejudicial. Ball v. Assurance Corp., 206 N.C. 90, 172 S.E. 878; Mewborn v. Assurance Corporation, 198 N.C. 156, 150 S.E. 887; Hunt v. Fidelity Co., 174 N.C. 397, 93 S.E. 900; MacClure v. Casualty Co., 229 N.C. 305, 49 S.E. 2d 742, where it is said: “While there is some contrary authority, the better reasoned cases hold that the failure to co-operate in any instance alleged must be attended by prejudice to the insurer in conducting the defense. Blashfield, Automobile Law, Yol. 6, sec. 4059, p. 78.”
The criticism of MacClure v. Casualty Co., supra, in Muncie v. Insurance Co., supra, was not directed to the question now under consideration but to the question of who carried the burden of proving reasonable notice given to insurer of the accident and potential liability under its policy.
Circuit Judge Parker said, in State Automobile Ins. Co. v. York, 104 F 2d 730: “It is well settled that, to relieve the insurer of liability *333on the ground of lack of cooperation, discrepancies in statements by the insured must be made in bad faith and must be material in nature and prejudicial in effect. Medico v. Employers’ Liability Ins. Corp., 132 Me 422, 172 A 1; Ocean Accident Guarantee Corp. v. Lucas, 6 Cir., 74 F 2d 115, 98 A.L.R. 1461.”
In Griffin v. Fidelity & Casualty Company, New York, 273 F 2d 45, the insured notified the insurer that he was operating the car at the time of the collision which occurred in July 1957. Insured pleaded guilty to a charge of aggravated assault caused by the collision. In December 1957 action for damages was instituted. Not until 28 February 1958 did the insured give the insurer a correct statement of the facts. His position was that he was seeking to protect his nephew, who was actually driving, from criminal charges. The court disposed of the insurer’s contention that the policy had been breached by lack of cooperation by the false statement. It said: “. . .(U)nder the overwhelming weight of authority, including that of the courts of Texas, it is the law that it is essential to proof of breach of the cooperation clause, that actual, not merely suppositious or theoretical prejudice to the insurer therefrom be shown . . .”
These statements of the law find support in Norwich Union Indemnity Co. v. Haas, 179 F 2d 827; Juvland v. Plaisance, 96 N.W. 2d 537; General Acc. Fire & Life Assur. Corp. v. Rinnert, 170 F 2d 440; Rowoldt v. Cook County Farmers Mut. Ins. Co., 26 N.E. 2d 903; Bernadich v. Bernadich, 283 N.W. 5; Cowell v. Employers’ Indemnity Corporation, 34 S.W. 2d 705; 5A Am. Jur. 138-9.
What conduct suffices to relieve the insurer from liability for breach of the cooperation clause in policies similar to the one under consideration is the basis for annotations appearing in 34 A.L.R. 2d 266, 139 A.L.R. 780, 98 A.L.R. 1469, and 72 A.L.R. 1455.
As might be expected, courts have been called upon to decide cases based on many differing factual situations. Where there has been evidence tending to show collusion between the injured and the insured, courts have been careful to protect the insurer. Courts usually hold that misstatements persisted in until the trial or subsequent to the filing of pleadings by insured requiring a shifting of ground and a new and different defense suffice as a matter of law to establish a failure to cooperate. Except for these classes of cases, courts generally hold the question of materiality and prejudice is a question for the jury. This case falls in the latter category. There is nothing to suggest collusion. Judge Paul inquired of the parties if there was any evidence in addition to the stipulation on the question of insured’s noncooperation or on the effect of prejudice because of misstatements made *334prior to the institution of the civil action. He was informed no further evidence would be offered.
We are of the opinion and hold that the question of compliance with the cooperation clause was a question of fact to be determined by the court, acting by agreement of the parties as a jury.
Affirmed.