148 S.E. 261 | N.C. | 1929
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.
The verdict was as follows:
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. The defendant issued its policy insuring F. K. Graham as respects legal liability arising or resulting from any claim made upon him for damages in consequence of an accident occurring by reason of his ownership, maintenance, or use of an automobile. The policy contains the following provisions:
"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 *289 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?
These questions have been considered and answered in a number of authoritative decisions. A policy issued by the defendant containing the provision under consideration in the present case was construed by the Court of Appeals of Ohio in U.S. Casualty Co. v. Breese, 153 N.E. (Ohio), 206. The material facts in that case and in this are substantially the same: a motor bus came into collision with an automobile driven by Martha Breese resulting in damage to her person and to her car. She recovered judgment against the operator of the bus (Zurawski) and issued an execution which was returned unsatisfied. Zurawski had previously secured liability insurance of the United States Casualty Company, which was in force at the time of the alleged injury. Not having secured satisfaction of her judgment she brought suit against the Casualty Company, who pleaded as a defense the failure of the assured to give the written notice required in the contract of insurance. On appeal from the lower court the defense was sustained, the Court saying: "Condition B (Condition C, supra) becomes, then, an important part, and, indeed, the essence of the contract existing between the Casualty Company and Zurawski, and whatever rights the injured party, Martha Breese, may have, can only exist under and by virtue of the obligations cast upon the company by that policy, and can only be enforced in accordance with its limitations. In the absence of the policy she would have, of course, no right of recovery as against the company, and in view of the existence of the policy she has such right, and such right only, against the company, as is provided by the policy. The policy, in unequivocal terms, provides, as an essential condition of recovery, that the assured shall give immediate written notice to the company of an accident and shall forward to the company every process, pleading, and paper relating to the suit. These requirements are averred not to have been complied with by the assured. Similar language in liability insurance policies has been construed in decisions of various courts. Our Supreme Court had such a policy under consideration in Traveler's Insurance Co. v.Myers Co.,
"In construing that provision, the Supreme Court, speaking throughDavis, J., used the following language: `It is obvious that this stipulation is of the essence of the contract in insurance of this kind. It is not merely a stipulation as to the form of bringing to the notice of the insurer the fact of a loss, as in policies of fire and life insurance.'
"The Court, in further consideration of the provision, gave the reasons for the necessity of such a requirement as follows: `In insurance of this character it is a matter of the first importance to the insurer, who may be forced to become the real defendant in a lawsuit against the insured employer, to be speedily informed of all the facts and witnesses concerning a possible litigation. In a very little time the facts may in a great measure fade out of memory, or become distorted, witnesses may go beyond reach, physical conditions may change, and, more dangerous than all, fraud and cupidity may have had opportunity to perfect their work. Therefore this stipulation is vital to the contract.'
"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,
In a case subsequently considered the Court of Appeals of Ohio adhered to the principle stated in Breese's case (Stacey v. Fidelity and CasualtyCo.,
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,
In Weatherwax v. Royal Indemnity Co.,
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 Fosterv. The Fidelity Cas. Co. of New York,
These decisions preclude the notion that the policy constitutes an independent contract between the plaintiff and the defendant, similar to contracts for fire insurance having the standard mortgage clause expressly authorized by statute for the protection of mortgagees. C. S., 6420; Bankv. Ins. Co.,
Reversed.