Summary
holding delayed-notice cases must balance equities, including prejudice and discovery of injury, in case where injured party was ordinary consumer
Summary of this case from Settoon Towing, L.L.C. v. St. Paul Surplus Lines Ins. Co.Opinion
No. 38110.
December 13, 1946. Rehearing Denied December 31, 1946.
Certiorari to Court of Appeal, First Circuit.
Action by Wallace R. Jackson and wife against State Farm Mutual Automobile Insurance Company, as liability insurer of Carl E. Toler, to recover for death of plaintiffs' minor son as a result of alleged negligence of Carl E. Toler in the operation of an automobile. The Court of Appeal affirmed a judgment of dismissal, 23 So.2d 765, and plaintiffs bring certiorari.
Judgment reversed and case remanded to District Court for trial upon the merits.
Watson, Blanche, Fridge Wilson and Fred G. Benton Carlos G. Spaht, all of Baton Rouge, for applicants.
Brumfield, Hebert Rush, of Baton Rouge, for respondent.
HAWTHORNE, J., dissenting.
On March 31, 1943, an automobile being backed out of his home garage by Carl E. Toler fatally injured plaintiffs' minor son. Alleging negligence of the driver and that the defendant had issued a public liability policy covering the car, plaintiffs brought this suit directly against that company under Act 55 of 1930. After the district court and a majority of the Court of Appeal denied recovery on the ground that the company received no notice of the accident until eighty-two days after its occurrence, plaintiffs' application for writs of review to this Court were granted.
Mrs. Jackson is Toler's niece. At the time of the accident she, her husband and little son lived in a house owned by Toler, a bachelor, furnishing him room and board, as rent. On the afternoon of the funeral, Mr. Jackson told Toler that he did not intend to sue. Later, Mrs. Jackson told Toler they did not expect to claim damages. Toler, under these circumstances, gave no notice to the company. In June, the Jacksons informed Toler that they expected to press a claim for the death of their child. Toler then gave notice to his insurer and a few days later, plaintiffs' attorneys made written demand upon that company. Further facts in the case and citation of Louisiana cases in point are in the opinion of the Court of Appeal reported in 23 So.2d 765.
Here, we are concerned with the single proposition as to whether the insurance company is relieved from liability to the parents because of the delay of eighty-two days in its receipt of notice that the accident had occurred.
The record supports the finding of the Court of Appeal that Toler was led to believe in March that no action would be taken by the plaintiff for the death of their son and that upon ascertaining in June that they had changed their minds, he gave notice and full information to his insurer and co-operated in the defense; that on June 25, plaintiffs themselves, through their attorneys, gave notice to the defendant; and that there was no fraud or collusion between the insured and the plaintiffs and the delay caused no substantial prejudice to the company.
In the case of Jones v. Shehee-Ford Wagon Harness Co., Inc., et al., 183 La. 293, 163 So. 129, 131, this Court described as the main question in the case "* * * whether the Shehee-Ford Company (the insured) breached the contract of insurance by failing to report the accident immediately * * *," finding as a fact that "* * * As soon as the insured, in this case, was informed that the accident had caused a loss covered by the policy, the insured gave notice to the insurer * * *" and concluded that, when the insured gives notice to the insurance company as soon as he has reason to believe that the accident has caused loss covered by the policy, there is a substantial compliance with the clause requiring immediate notice. In that case there was a lapse of some twenty-six days between the accident and the day the insured found out that a claim was being made and made the first report of the accident to the insurer. The Supreme Court in holding that this was a substantial compliance with the contract of insurance, stated: "Under policy contracts similar to the one before us, the law does not require the insured to give notice to the insurance company of an accident unless the insured has reason to believe that the accident has caused or will cause loss covered by the policy. See Blashfield's Cyclopedia of Automobile Law, vol. 3, p. 2663, and the decisions cited."
The above quoted decision recognizes the fact that the average citizen who purchases a public liability policy seldom, if ever, becomes familiar with its detailed provisions but simply puts it away against the day when a claim may be made against him. Toler's action under the circumstances of the present case was not unusual or careless but rather what the average policyholder, inexperienced in law or claims, might have done in the same situation. There is no charge of fraud or collusion or showing of substantial prejudice to the insurance company by virtue of the delay in notice. Therefore, in view of the holding in the Shehee case, it would be just to hold that Toler's delay was not such as to justify the release of the defendant from liability under its contract of insurance.
The claim of the plaintiffs in this case is further strengthened by the fact that this is a direct action by them, as injured parties, under Act 55 of 1930. If the facts and circumstances were such as to make Toler's delay in giving notice a violation of the policy provisions, the plaintiffs here would still be entitled to have the Court consider the question specifically not passed upon in the Shehee case as to "* * * whether a breach of a contract of public liability insurance, by a failure of the insured to give the insurer immediate notice of an accident, should defeat the right of action of the injured person, as well as the right of action of the insured, under the provisions of Act No. 55 of 1930." When the injured party is in good faith, the rights given him against the insurer by Act 55 of 1930 are not, except in a very clear case, to be lost through the indifference or lack of diligence of the party who has already injured him. However, prompt notice often places the insurer in a better position to ascertain the facts relating to the accident, and if the delay is deliberate or notice is withheld with ulterior motive, then courts should not hesitate to divest the guilty party of the benefits of the policy protection.
Each case involving delayed notices must stand upon its own facts and circumstances. The Court may consider in balancing the equities, not only the time intervening between the accident and the date of notice to the insured, and whether or not the claim is a direct one by the injured persons, under Act 55 of 1930, but also when the parties first discovered that substantial injury had been done or that a claim would be made; the time when the injured party discovered that insurance existed and knew the identity of the insurer; what prejudice to the insurance company's defense has been caused by the delay; the good faith of the insured and injured party; and the existence of any special circumstances, especially those indicating fraud or collusion.
Having found in the case before us that the insured Toler had reasonable grounds to believe that no claim would be made until the June demand was made upon him; that there was no substantial prejudice to defendants; and that no element of fraud, collusion, or bad faith existed, we conclude that plaintiffs' right of action under the policy issued by the defendant has not been lost.
For the reasons assigned, the judgment sustaining the special defense is hereby overruled and the case is remanded to the district court for trial upon the merits; costs of appeal and of writs to this Court to be paid by defendant; other costs to await final outcome of the litigation.
In my opinion, the case of Jones v. Shehee-Ford Wagon Harness Co., Inc., et al., 183 La. 293, 163 So. 129, is not authority for the majority holding in this case that the notice given was sufficient to comply with the conditions and terms of the policy, for the terms and conditions as to the requirement of notice in the policy in that case are entirely different from the terms and conditions in the policy as to notice in the instant case.
In that case the policy contained the condition that "The Assured shall give to the Company, or its authorized agent, immediate written notice of any accident causing loss covered hereby and shall also give like notice of claims for damages on account of such accidents." (All italics ours.) There the insured gave notice to the insurer some 26 days after the accident, as soon as he had knowledge that the accident had caused loss covered by the policy. We held that this was a substantial compliance with the provisions of the policy with reference to the giving of notice of the accident.
In the case here under consideration, the pertinent provisions of the policy of insurance are as follows: "Upon the occurrence of an accident written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable."
Act 55 of 1930 provides that "the injured person or his or her heirs, at their option, shall have a right of direct action against the insurer company within the terms, and limits of the policy * * *," and further provides that it is "the intent of this act that any action brought hereunder shall be subject to all of the lawful conditions of the policy contract and the defenses which could be urged by the insurer to a direct action brought by the insured; provided the term and conditions of such policy contract are not in violation of the laws of this State."
The majority opinion holds that the plaintiffs' right of action under the act has not been lost by the failure of the insured to give notice of the accident until some 82 days after it occurred (1) because the insured had reasonable ground to believe that no claim would be made until he was informed to the contrary some time in June, the accident having occurred on March 31; (2) because there was no substantial prejudice to the defendant, and (3) because no element of fraud, collusion, or bad faith existed.
Conceding all of these things to be true, I cannot agree with this conclusion, for in my opinion, under the facts in this case notice of the accident was not given as soon as practicable, or within the terms and limits of the policy.
To me, under the facts of this case, the reasons given in the majority opinion for the decision that the plaintiffs have not lost their right to sue the defendant would be just as applicable to, and full authority for, the same decision if no notice of the accident had been given whatsoever, which certainly would be contrary to the plain terms and conditions of the policy.
One of the main objects and purposes of Act 55 of 1930 is to give to the injured person a right of direct action against the insurer, and it may be that the enforcement of a provision in a policy requiring notice by the insured of the accident as a prerequisite of suit under Act 55 of 1930 would have the effect of depriving the injured third person of such direct action, thereby defeating the very purpose, object, and intent of the legislature in adopting the act. But, to allow recovery in a case where notice has not been given, it would be necessary to hold that the words in the statute "within the terms, and limits of the policy" and "lawful conditions of the policy," as used therein, do not refer or have application to a provision in a policy of insurance requiring the giving of notice of an accident by the insured; or, in other words, that the provisions of the policy requiring notice are not within the meaning of the words "terms, and limits" and "lawful conditions" as used in the act. However, on this point, I express no opinion, for, as I interpret the jurisprudence of this state and the holding in this case, the giving of notice as provided for in the policy of insurance here under consideration is a prerequisite of suit under Act 55 of 1930, and therefore, under such interpretation, there must be compliance with the terms and provisions of the policy with reference to such notice.
In my opinion, therefore, the decision of the Court of Appeal, First Circuit, reported in 23 So.2d 765, is correct and should be reinstated and made the judgment of this court.
I respectfully dissent.