Opinion
No. 31892.
November 11, 1935.
1. INSURANCE.
Complaint, in action by injured automobile guest against insurer of host, which failed to allege that host had complied with conditions of policy requiring assured to promptly notify insurer of accidents and to aid insurer in securing evidence and locating witnesses, held insufficient, since injured person stands in place of insured and has no greater rights than insured.
2. INSURANCE.
Automobile liability insurer, by defending insured in action brought against him by injured party, held not to have waived rights under policy to timely notice of accident and assistance of insured in ascertaining facts, where insurer in entering upon defense had reserved such rights, and all of the facts in the case had not been learned by insurer prior to action.
3. INSURANCE.
In action by injured automobile guest against liability insurer of host, refusal to permit insurer to introduce evidence as to conversations had between injured person and insured tending to prove an agreement between them that any amount recovered by injured person should be split with insured held prejudicial error.
APPEAL from the circuit court of Montgomery county; HON. JNO. F. ALLEN, Judge.
W.T. Knox, of Winona, and Emmett W. Braden, and Armstrong, McCadden, Allen, Braden Goodman, of Memphis, Tenn., for appellant.
Before appellee is entitled to any proceeds of the policy sued on, he must show a compliance with its terms and conditions. He stands in the shoes of the insured, R.C. Wilson.
Downing v. Home Indemnity Co. of N.Y., 169 Miss. 13; Adams v. Maryland Casualty Co., 162 Miss. 237; 13-14 Huddy Cyc. Auto Law (9 Ed.), sec. 325, p. 432.
Where no written notice is given in compliance with Condition "H" of the policy, the appellant company is deprived of a valuable right and there can be no recovery by appellee.
Downing v. Home Indemnity Co. of N.Y., 169 Miss. 13.
The provision in the policy of liability insurance requiring written notice of an accident as soon as is reasonable thereafter, and especially where the provision is preceded by words expressly declaring the insurance "subject to the following conditions," among which is mentioned the provision in question, is of the essence of the contract.
Downing v. Home Indemnity Co. of N.Y., 169 Miss. 13; 76 A.L.R. Ann., pages 182-201.
Notwithstanding the insured's breach of condition requiring him to give written notice as soon as reasonably possible thereafter of an accident, the insurer may, with the insured's actual or implied consent, assume the defense of the action brought against the insured with the express reservation to itself of its rights under the terms and conditions of the policy in which case the assumption of the defense of the action does not amount to a waiver of the breach of the condition.
76 A.L.R. Ann., page 169; 13-14 Huddy Cyc. Auto. Law (9 Ed.),
Where a policy of insurance provides for written notice as soon as reasonably possible after the occurrence of an accident, a delay of eighty-five days in giving the notice is not a compliance therewith and as a matter of law the appellant should be relieved of liability.
Jones v. Shehee Ford Wagon Harness Co., Inc., 160 So. 161; Howard v. Rowan, 154 So. 382; 76 A.L.R. Ann., page 66.
An insurance company in an action by the injured person may set up any defense which it might have against the insured. In such a case the injured person stands in the shoes of the insured and forfeits the insurance if there has been a breach of the policy conditions. Thus the insurer may defend on the ground that the insured had violated the clause of the policy requiring him to cooperate with the company. This being true, evidence of collusion or fraud on the part of the insured is admissible.
13-14, Huddy Cyc. Auto Law (9 Ed.), sec. 325, page 433; 72 A.L.R. Ann., pages 1499-1515.
A delay of eighty-five days in giving notice of an accident where the insured had full knowledge on the date the accident occurred, cannot be said, as a matter of law, to be a compliance with the conditions by the insured.
76 A.L.R. Ann., pages 61-66.
V.D. Rowe and J.W. Conger, both of Winona, for appellee.
We submit that the conduct of appellant in defending the original case of Holiman v. Watson in the circuit court and then prosecuting the appeal from the judgment therein to the Supreme Court, after Watson wrote the letter, amounted to a waiver of notice. Watson told appellant in that letter that he was unable to employ an attorney to defend him in the suit of Holiman, and stated emphatically his objection and protest or dissent to the proposition of the Indemnity Company's defending that case with proposed reservations, and thereafter the Indemnity Company took charge of the case and conducted Watson's defense without any attorney's aid for Watson, because Watson did not employ an attorney.
76 A.L.R., pages 172, 174 and 175; Miller v. Union Indemnity Co., 209 App. Div. 455, 204 N.Y. Supp. 730; Di Francesco v. Zurich Gen. Acc. Lia. Ins. Co., 105 Conn. 162, 134 A. 789; Farrell v. Merchants Mutual Auto Liability Ins. Co., 203 App. Div. 118, 196 N.Y. Supp. 383; Canal Street Corp. v. Zurich Gen. Acc. Lia. Ins. Co., 226 App. Div. 516, 235 N.Y. Supp. 63; Vanderbilt v. Schreger, 91 N.Y. 392; 72 A.L.R. 1498 and 1506.
If there was any collusion in this case, that is, the original negligence case, it appears to be between Watson and appellant. The judgment in that case was rendered by the circuit court and affirmed by the Supreme Court.
Watson v. Holiman, 169 Miss. 585, 153 So. 669.
The Indemnity Company had a right to take over and control and conduct the defense therein, and it did this. Thereby it became a party to that cause, and it was concluded by the judgment therein just as much so as was Watson.
The rule forbidding the collateral impeachment of judgments applies to all persons who were parties to the action in which the judgment was rendered, and to all those who are in privity with them. The term "parties," in the sense of one who is concluded by a judgment, includes all those who had the right to control or defend the proceedings and appeal.
34 C.J. 525, sec. 831.
The judgment sued on is a judgment against Watson and the Indemnity Company, appellant, stands in the shoes of Watson as to such judgment.
34 C.J. 566, sec. 867.
The peremptory instruction for plaintiff was properly given by the trial court.
13-14 Huddy Cyc. of Auto Law (9 Ed.), 433-4.
The appellant issued to R.C. Watson an automobile liability policy on December 12, 1931, for a period of one year, which policy, among other things, provided as follows: "In consideration of the payment of the premiums and of the statements contained in the declaration and subject to the limits of liability, exclusions and other terms of this policy, . . . to pay on behalf of the assured all sums which the assured shall become obligated to pay by reason of the liability imposed upon him by law for damages because of bodily injury, including death at any time resulting therefrom, accidentally sustained by any person or persons, and caused by the ownership, maintenance or use of the automobile." And it further provided that the "Company further agrees (a) To serve the Assured upon notice of such injury or destruction by such investigation, or by such negotiation or settlement of any resulting claims, as may be deemed expedient by the Company; (b) To defend in his name and behalf any suit against the assured seeking damages on account of such injury or destruction, even if such suit is groundless, false or fraudulent." The policy also contained the following: "This agreement is subject to the following conditions: B. Assistance and Cooperation of the Assured. The Assured shall cooperate with the Company, and upon the Company's request, shall assist in effecting settlement, securing evidence, and obtaining the attendance of witnesses. The Assured shall not voluntarily make any payment, assume any obligation or incur any expense other than for immediate surgical relief, except at his own cost. . . . H. Notice of accident. In the event of accident written notice shall be (Coverage A and B) given by or on behalf of the Assured to the Company or any of its authorized agents as soon as is reasonable thereafter. Such notice should contain information respecting the time, place and circumstances of the accident, with the name and address of the injured and any available witnesses. If such information is not reasonably obtainable, particulars to identify the Assured shall constitute notice. The Assured shall keep the Company advised respecting further developments in the nature of claims or suits when and as they come to his knowledge." The limit of the policy for injuries to any one person was five thousand dollars.
The appellee, Holiman, a resident of Winona, Montgomery county, Mississippi, was injured in an automobile accident occurring between Winona and Vaiden on September 29, 1931. The automobile in which he was riding was owned by R.C. Watson, and was being driven by Otis Brister. Watson, the assured, was notified immediately after the accident, and was present in the physician's office when Holiman was receiving first aid medical attention. Some time thereafter, Watson became involved financially, and employed an attorney to make settlement with his creditors. The appellee, Holiman, employed said attorney to represent him in a suit against Watson for damages. This attorney discovered that Watson's car had been injured in the accident, and requested him to bring the policy of insurance to his office. In about three weeks thereafter, the policy was turned over to this attorney, who, on December 20, 1932, wrote a letter to the appellant stating that he represented the appellee, Holiman, in his claim against Watson, and demanding four thousand dollars in settlement. The first notice received by the appellant of this accident from Watson was a letter dated December 19, 1932, which was received at the appellant's home office on December 23, 1932. Immediately on receipt of this letter by the adjuster for this district, a registered letter was sent to Watson, in which attention was called to the delayed notice, and in which the appellant accepted the notice for the purpose of investigation, under full reservation of its rights in accordance with the terms of the policy.
On April 4, 1933, Holiman filed his declaration against R.C. Watson for personal injuries, and on the same day, Watson notified the appellant that the suit had been filed. On April 6, 1933, the appellant wrote to Watson referring to certain violations of his policy, and stating that it would proceed with the defense of the claim under full reservation of rights to rely upon any defenses under its policy, and advising Watson that he was at liberty to obtain his own counsel. The insured, Watson, replied to the appellant's letter of April 6th, stating that he was not familiar with the notice clause in the policy.
The suit against Watson proceeded to trial, and judgment was rendered against Watson in favor of Holiman for one thousand dollars, from which an appeal was prosecuted to this court, where the judgment was affirmed. See Watson v. Holeman, 169 Miss. 585, 153 So. 669. After the affirmance of this judgment, execution was issued against R.C. Watson which was returned "nulla bona."
On September 7, 1934, the present suit was instituted by declaration in which the former suit and judgment were referred to, and containing allegations that the appellant was, by reason of the insurance contract which was made an exhibit to the declaration, liable to the appellee, plaintiff in the court below, for the amount of the judgment. This declaration did not state that Watson had complied with all the terms of the policy, either generally or specially, and a demurrer was filed thereto because of the failure to make such allegations, which demurrer was overruled, and appellant filed a plea of the general issue, with notice thereunder that it would show the failure of Watson to give the notice and to comply with the provisions of the policy.
On the trial of the cause, the appellant sought to show that there was an agreement between Holiman and Watson that any amount Holiman should recover on the judgment would be split between them. This was objected to, and the objection was sustained. The appellant also offered two witnesses to testify to the same effect, and this was also objected to and the objection sustained, but the evidence was taken for the purpose of perfecting the record. The first of these witnesses testified as follows:
"Q. Did you hear Mr. Watson and Mr. Holiman have a conversation prior to the bringing of this law suit in which Mr. Watson stated to Mr. Holiman that he expected to get something out of any recovery that Mr. Holiman might get against him? (Objection. Sustained. Exceptions.)
"By Mr. Knox. In order that this may get in the record, what would have been testified to, we ask that the jury be retired so we can get it in the record.
"By the Court. All right, retire gentlemen. (The jury here retired.)
"Q. Did you understand the question? You can answer it since the gentlemen have retired. Did you ever hear Mr. Watson ask Mr. Holiman about what he would get out of this suit if he got a recovery? A. Mr. Watson asked him one day what was he going to get out of it.
"Q. Mr. Watson asked Mr. Holiman that? A. Yes sir. He was laughing and just asked him what was he going to give him or something to that effect. . . .
"Q. Approximately how long after the accident was it that you overheard the conversation? A. It was a good little bit.
"Q. Was it as much as a month? A. Yes sir."
The other witness testified that he had refused to give any statement up to this time, stating that he would tell all about it when he was put upon the witness stand. He was asked and answered as follows:
"Q. What did Mr. Watson say about it? A. He told me one time that there was an agreement that he was to get something out of it, and later on he told me there was nothing to it, that he was just joking about it.
"Q. But at first he told you there was an agreement? A. Yes sir."
In this suit, Watson, the insured in the policy, testified as follows:
"Q. You talked to Allen Holiman about this suit and wanted to know how much you were going to get out of it, telling him that you could make it a whole lot lighter for him if he would give you something, didn't you? (Objection. Sustained. Exceptions.)
"Counsel. If the court please, we want to put this testimony in the record in the absence of the jury.
"Court. All right, gentlemen, go in that room over there. (The jury here retired and the following testimony taken in their absence):
"Q. Answer the question. A. Will you ask the question again, please.
"Q. (Last question above read to witness.) A. It is true that I talked to Allen, and asked him how much I would get out of it, but I didn't mention that I could make it a lot lighter on him.
"Q. What was it that was said? A. Shall I go into detail?
"Q. As near as you can tell us what was said. A. The only time I remember that could have been considered serious, and really it was more or less in a jesting way, I picked Allen up in my car one afternoon down here, and his car was parked around the Times Office about a block up the street, and on the way up there we discussed it, and I says, `Allen, what am I going to get out of this thing,' and he said, `Well, I don't know, don't make any special effort to keep me from winning the case and I won't forget it,' or something to that effect, and I says, `That is very indefinite, I would like to know what I would get out of it, about five hundred dollars if you win the suit,' and he says, `You are as crazy as hell, Clif,' and got out of the car."
On the trial a representative of the company testified that since the trial of the first case he had found out something of material value that probably would have settled this suit.
It will be seen that there were no allegations made that the assured had complied with the conditions of his policy when knowledge of the accident came to him, or that he aided or assisted the company in securing evidence and finding out facts and locating witnesses, as provided in the policy, and that also it was not alleged that he promptly notified the insurer when the accident happened.
Under the doctrine announced in the case of Downing v. Home Indemnity Co., 169 Miss. 13, 152 So. 841, it was held that the injured person stands in the place of the insured, and has no greater rights than the insured. See, also, Adams v. Maryland Cas. Co., 162 Miss. 237, 139 So. 453.
The demurrer should have been sustained, but, had it been sustained, the plaintiff could have amended his declaration, and, perhaps, might have done so. After the demurrer was overruled, the appellant set up affirmative matter, a breach of its conditions by the plaintiff, appellee, and offered to show by several witnesses that there was some understanding between Watson and Holiman, or facts from which such understanding could be inferred by the jury.
It is argued that the appellant waived its right to such notice by entering and defending the suit against Watson, but it will be noted that the appellant reserved its rights under the policy accruing to it from the failure of the insured to give prompt notice and assist in ascertaining the facts. Of course, if it learned all the essential facts prior to the trial of the former suit against Watson, it might be that a waiver would apply; but there is nothing in the record that would show that all the facts were learned by the appellant prior to that suit. On the contrary, the testimony shows that material facts bearing on said matters were learned for the first time since the trial of that suit.
The appellee, Holiman, stands in the shoes of Watson, and has no greater rights than he has. Clearly, the evidence offered by witnesses as to conversations between them would tend to prove, and from them the jury might infer, that there was an agreement, and if so, of course, there could be no recovery.
We think the court below erred in refusing to permit the appellant to prove the facts which were offered and rejected by the court. We are satisfied that the case should be reversed, and that the errors were prejudicial.
We do not know what force would be given to the testimony of these witnesses by the jury, but certainly the court should have permitted it to go to the jury. From this record, we are not willing to hold that the court should have given the peremptory instruction for the appellant.
In order to develop more fully all the pertinent facts so as to show clearly the result that ought to be reached, this case is reversed and remanded.