Lead Opinion
Thе plaintiff-insurer sought a declaratory judgment to the effect that the provisions pertaining to notice to the insurer in the liability policy had not been complied with which resulted in no coverage and no duty to defend the defendant against any suit brought against him. Plaintiffs motion for summary judgment was granted. It is undisputed that the defendant was the owner and operator of an apartment building; that on May 10, 1971, the defendant was notified in writing by the rеsident manager of the apartment that a third person had reportedly fallen from a fire escape connected to the apartment building; that a short time thereafter an individual was observed in and about the apartment taking pictures of the fire escape. Defendant then consulted with his own lawyer and upon advice of his counsel made no report of this incident to the plaintiff. In October, 1971 the defendant then gave written notice of this accident to plaintiff. It was also shown that the individual who fell from the fire escape died within a few days.
The policy which was in effect at the time of the incident рrovided in substance that the insured had the duty in the event of an
1. The defendant argues that under the facts of this case the insured had no duty to commence an investigation or to make a report to the plaintiff until October 18, 1971 because the earlier information he had received was based on hearsay; that the reрort of this fall by this individual, who also was reportedly drunk, was of a trivial nature that did not require him to do anything further to ascertain whether there was any substance to the report he had received. It is unnecessary fоr us to decide whether an insured has no duty to report an accident if he does not know that an accident has occurred, or if he knows or has received some information of an occurrenсe that is so trivial in nature that no reasonable person would conclude that a claim would arise against him. That is not the case we have here. True, the source of the report to the defendant was hearsay in nature, however, the source of the information is not germane to the inquiry. We must consider the totality of the factual nature of these reports, i.e., that someone had fallen from the second floor from the fire escape and that shortly thereafter someone was observed on the premises taking photographs. Based upon this knowledge, it is obvious that a reasonable pеrson would be required to act and make positive inquiry as to the truthfulness of the report. This the defendant chose not to do. While ordinarily a jury issue would be present as to whether the report was trivial and whether it is reasonable or unreasonable for an insured to take some action, under the facts here defendant’s action was as a matter of law unreasonable for he had notice of a dangеrous occurrence and failed to give notice "as soon as practicable.” See State Farm Mut. Auto. Ins. Co. v. Coleman, 441 F2d 329 and Paris v. State Farm Mut. Auto. Ins. Co., 391 F2d 595. Norfolk &c. Fire Ins. Co. v. Cumbaa,
2. After the written notice was finally given to the insurer in October, 1971, the company referred the matter to its adjuster. The adjuster conducted a preliminary investigation on November 2, 1971. On the day following the insured was furnished a reservation of rights lеtter. It is argued that this
Judgment affirmed.
Dissenting Opinion
dissenting. I dissent from the first division of the opinion where the majority holds that as a matter of law the insurance company is relieved of all liability on a landlord and tenant liability policy because, although the insured absentee owner gave immediate notice on being contacted by the estate of the alleged victim, after consultation with his attorney he took no action on a third party report that a drunk man, not even known to be a tenant, had fallen off the fire escape of one of the buildings.
Under the policy terms the insured’s duties are three: (a) to give written notice of every "occurrence,” (b) to forward every demand, claim or suit and (c) to cooperate in the defense. The сompany relies here solely on failure to give notice of an "occurrence.” The insured replies that the knowledge was hearsay in the first place; in the second place it appeared that the person was trying to enter another person’s apartment by way of the fire escape, and in the third place there is testimony that the insured did not realize the extent of the injuries. As it apрeared to him at that time, no liability on his part toward the person on the fire escape was involved. Had the insurance company received the same information at that time, it does not aрpear that the situation would have changed, the insured’s position improved, any prejudice to the investigation avoided, or any other reason for
Further, the fact that this is a jury question has been decided in Norfolk &c. Fire Ins. Co. v. Cumbaa,
"An accident that an ordinarily prudent individual acting reasonably would consider, under all circumstances, as inconsequential, and which would not afford the basis of any claim, the insured was not bound to report. . . even though it may prove afterwards to result in serious injury.” Phoenix Indemnity Co. v. Anderson’s Groves, Inc., 176 F2d 246, 247.
"Generally the question of whether notiсe has been given without unnecessary and unreasonable delay is one of fact for the jury.” 8 Appleman, Insurance Law and Practice, § 4734, p. 26. Among other questions are: "If there was a delay, what was the reason for it — and was the excuse a matter which might justify an ordinary man, not one skilled in insurance matters or in the law, in such delay; and was the insurer still able reasonably to secure the facts available through a рrompt investigation, and was it not unreasonably hampered in efforts to settle, or at least any more than it would have been in the inception of the claim. As we have seen, the courts continue to lеan more to the view that no defense arises if there has been no prejudice, but place the burden upon the one seeking recovery to demonstrate this lack of prejudice. On the other hand, if the excuse is valid, or the notice in fact reasonable,
I respectfully dissent from the opinion holding the insurer entitled to summary judgment as a matter of law on its refusal to defend the case, particularly where the insured acted on advice of counsel and his position appears eminently reasonable as a matter of fact, simply on the ground that the policy written by the company and construed in its favor amounts in effect to a forfeiture of all rights. Forfeitures not being favored by the law, and matters of fact being involved, I would reach an opposite conclusion.
I am authorized to state that Judge Evans concurs in this dissent.
Evans, Judge, dissenting. I fully concur in the lucid and persuasive dissent written by Judge Been, and add the following:
1. No damage whatever resulted to the insurer by reason of not receiving the reрort of injury at an earlier time.
2. The language of the policy must, of course, be construed most strongly against the insurer. The "notice” provision does not require the insured to advise the insurer of each and every event that comes to the attention of the insured by hearsay. To the contrary, the insured is only required to give notice "in the event of an occurrence,” meaning the actuality of an occurrence, and not merely that the insured has heard second-hand that an event (of injury) may have occurred.
3. The report of injury is a part of the cooperation feature of the policy, which the insurer required of the insured. Recently this court considered this question, and a majоrity — the writer and 3 other Judges dissenting — erroneously held that a higher degree of cooperation is required than is actually required by law, thus failing to follow earlier precedents of this court. The Supreme Court of Georgia reversed, and held that failure to cooperate is not a valid defense unless it be shown that such failure is a wilful failure to cooperate. See Cotton States Mut. Ins. Co. v. Proudfoot,