237 Ky. 43 | Ky. Ct. App. | 1931
Opinion op the Court by
Affirming.
In its final analysis the- important issue involved in this -case is the right of an indemnity company to revoke the waiver of a forfeiture -of the indemnity because of .a failure of the insured'to conform to a condition contained in the contract. An abridged statement of the facts will disclose how the question arose.
Dr. E. IT. Miller, of Vine G-rove, Ky., owned an automobile which was maintained for the use of his family. The United States Fidelity & Guaranty Company issued to him a liability insurance contract with omnibus coverage “to any person legally operating the automobile.” The contract contained a condition requiring “immediate written notice of any accident with the fullest information obtainable at the time.” During the life of the
Mrs. Miller then employed competent counsel, and conducted the defense of the case at her own expense. A trial resulted in a judgment against Mrs. Miller in favor of the Poteet child for $1,000 and costs, amounting to $35. The present action was then instituted by Mrs. Miller upon the indemnity contract to compel the guaranty company to pay the judgment, together with a reasonable sum to compensate her for counsel fees incurred in the Poteet case. The circuit court directed the jury to return a verdict for Mrs. Miller for the amount of the judgment in the Poteet case and for such further sum as the jury might find from the evidence would represent the reasonable value of the services of her attorneys in defending the action for damages instituted by Julia Poteet. The jury returned a verdict accordingly, and the guaranty company has prosecuted an appeal, insisting that the failure to give notice of the accident as required by the policy entitled it to a peremptory instruction, and that the pleadings were inadequate to present the issue of waiver by the company of the condition of the policy.
A condition in an indemnity contract requiring the insured to give immediate written notice of any serious accident is reasonable and valid, and unreasonable failure to observe it constitutes a good ground for the forfeiture of the indemnity. Jefferson Realty Co. v.
Forfeitures are not favored by the law, and the courts manifest a readiness to accept as sufficient to accomplish the purpose any circumstance that indicates an election or intent to waive a forfeiture. Knickerbocker Ins. Co. v. Norton, 96 U. S. 241, 24 L. Ed. 689. There can be no doubt that the acceptance of the summons in the Poteet case, and the assumption of responsibility for the defense of that action, was a recognition of the continued existence of the insurance, and a waiver of the right to forfeit the indemnity contract for failure of the insured to give notice of the accident. The action of the guaranty company in that respect was taken at a time when it had complete knowledge of the failure of the insured to give notice of the accident. Nevertheless, it elected to recognize the continidng validity of the insurance, and took charge of the litigation.
It is argued, however, that the doctrine of waiver is but another name for estoppel and, since Mrs. Miller was not prejudiced by the short delay occasioned by the action of the insurance company, the latter was free to change its position and return to her the defense of the case. Some courts have employed expressions indicating such a conception of the two doctrines, and have used the words as synonymous or as convertible terms. Globe Mutual Life Ins. Co. v. Wolff, 95 U. S. 326, 24 L. Ed. 387; Williams v. Neely (C. C. A.) 134 F. 1, 69 L. R. A. 232; Lewin v. Telluride Iron Co. (C. C. A.) 272 F. 590; Lyman v. Littleton, 50 N. H. 42. But a careful examination of the cases will disclose the inaccuracy of the assumption; and this court has expressly rejected that contention. Morgan v. Home Ins. Co., 216 Ky. 592, 288 S. W. 321; Limerick v. Home Ins. Co., 150 Ky. 827, 150 S. W. 978, 44 L. R. A. (N. S.) 371. The subject was quite fully considered by this court in Central Life Insurance Company v. Roberts, 165 Ky. 296, 176 S. W. 1139, where the distinctions between waiver and estoppel were compared and contrasted in an extensive quotation from a familiar textbook. 40 Cye. 255.
Although the doctrines are sometimes carelessly confused, the distinction between them is clear, and the rule is firmly established that to constitute a waiver of a forfeiture it is not necessary that the facts should present the essential elements of an estoppel.
It is equally settled that a waiver, once made, is irrevocable, even in the absence of any consideration therefor, or of any change of position by the party in whose
The waiver of a ground of forfeiture by treating the contract thereafter as a continuing obligation partakes of the principle of election and, like an election, cannot be retracted. Hemmings v. Home Mutual Ins. Ass’n, 199 Iowa 1311, 203 N. W. 818; Royle Mining Co. v. F. & C. Co., 126 Mo. App. 104, 103 S. W. 1098; Fairbanks Canning Co. v. L. G. & A. Co., 154 Mo. App. 327, 133 S. W. 664; Farrell v. Auto Liability Co., 203 App. Div. 118, 196 N. Y. S. 383; Mettner v. Ins. Co., 127 Iowa 205, 103 N. W. 112; Trippe v. Provident Fund Society, 140 N. Y. 23, 35 N. E. 316, 22 L. R. A. 432, 37 Am. St. Rep. 529; Limerick v. Home Ins. Co., 150 Ky. 827, 150 S. W. 978, 44 L. R. A. (N. S.) 371.
In Knickerbocker Ins. Co. v. Norton, 96 U. S. 234, 242, 24 L. Ed. 689, Mr. Justice Bradley, speaking for the Supreme Court of the United States, said: “Where the assent to waive a forfeiture is once given, the courts should be liberal in construing the transaction in favor of avoiding a forfeiture.” And, following a review of some relevant authorities, adds: ‘ ‘ These cases show the readiness with which courts seize hold of any circumstances that indicate an election or intent to waive a forfeiture. We think that the present case is within the reason of these authorities; and that the objection, that the note was already past due when the agreement to extend it was made, is not sufficient to prevent said agreement from operating as a waiver of the forfeiture. ’ ’ The point presented in the case of Fidelity & Casualty Co. v. Stewart Dry Goods Co., 208 Ky. 429, 271 S. W. 444, 43 A. L. R. 318, was materially different. In that case an action was pending, and the defense was being conducted
No estoppel to dispute coverage by tbe policy was involved in defending a suit based upon several grounds, some of wbicb admittedly were covered by tbe contract. But, in order to avoid a waiver even in such cases, tbe court held tbat notice must be given tbe assured to the end tbat its interests might be fully represented, especially in so far as they might be incompatible with tbe interests of tbe indemnity company.
It follows that tbe conduct of tbe insurance carrier in accepting tbe summons' and in taking control of tbe litigation, with knowledge of tbe existence of tbe very ground of forfeiture it later attempted to assert and without reservation, constituted an irrevocable waiver of tbe right to forfeit tbe indemnity contract upon tbat ground.
Tbe petition averred tbat notice of tbe accident bad been given and there was a failure to prove tbat allega-' tion. But it was further averred tbat summons served in the action instituted by Julia Potett was delivered to tbe guaranty company, and tbat it undertook tbe defense of that action, but afterwards notified Mrs. Miller tbat it disclaimed liability under tbat policy for failure of tbe tbe insured to give immediate written notice of tbe accident. Tbe condition of tbe policy and tbe failure of plaintiff to comply with it were set up by tbe answer. Tbe reply did not repeat tbe allegations of tbe petition respecting tbe waiver. It is now urged tbat tbe issue of waiver of tbe forfeiture should have been presented by tbe reply, and tbat tbe pleadings filed were insufficient to raise it. Tbe matter was entirely proper to be pleaded in a reply in avoidance of tbe defense asserted (Civil Code of Practice, sec. 98, subsec. 2); but tbe ultimate
Matters of avoidance are not available on a mere traverse (Ill. Canning Co. v. Livingston, 201 Ky. 756, 258 S. W. 308; Ins. Co. v. Gore, 215 Ky. 487, 284 S. W. 1107; Ætna Ins. Co. v. Hensley, 219 Ky. 817, 294 S. W. 470), but, where the essential facts appear in the petition and are treated on the trial as actually forming an issue this court will dispose of the case in the manner it was practiced by the parties in the trial court. Rosa v. Nava, 235 Ky. 574, 31 S. W. (2d) 910; Dixon v. Johnson, 202 Ky. 328, 259 S. W. 698; Ruffner v. Ridley, 81 Ky. 165.
It would be a vain and useless thing to reverse a correct judgment rendered upon a full development of the facts because the basis of it was alleged in the petition instead of being inserted in a reply. No surprise was manifested, and no suggestion made that any further facts affecting the matter could be produced. The facts concerning the conduct of the insurer which constituted a waiver of its right to invoke a forfeiture of the policy were alleged and fully established, and, in such situation, no prejudicial error could be predicated upon the mere fact that the waiver was prematurely pleaded, or appeared in the petition rather than in the reply. Lockhart v. Kentland Coal & Coke Co., 182 Ky. 673, 207 S. W. 18; Cf. Equitable Life Assur. Soc. v. Bailey, 214 Ky. 754, 284 S. W. 403, and Turner & Son v. Halstead, 236 Ky. 322, 33 S. W. (2d) 17.
The judgment is affirmed.