Opinion
No. 20584
Decided March 14, 1928.
Insurance — Automobile indemnity — Immediate notice of claim requires action within reasonable time under circumstances — Delay not justified for want of knolwledge of claim, when — Failure by insured to diligently ascertain claim or suit — Burden of proving impossibility or exercise of diligence upon insured.
1. A policy of indemnity against liability to others resulting from accident contained a condition requiring the assured to give immediate written notice of any claim made on account thereof, and, in case of suit brought, to "immediately forward to the company every summons or other process served on him." Suit for recovery of damages was instituted and summons served at the assured's residence on December 26, 1922. As an excuse for non-compliance with the condition of his policy requiring the immediate forwarding of the process, the assured claimed want of and the impossibility of knowledge of the claim and suit until the latter part of April, 1923, because of his absence from home and subsequent illness confining him to his house until that time. Held: The term "immediate," contained in the policy, means action taken on the part of the assured within a reasonable time under the circumstances of the case. ( Travelers Ins. Co. v. Myers, 62 Ohio St. 529, 57 N.E. 458, 49 L.R.A., 760, approved and followed.)
2. The assured cannot justify his delay in failing to comply with the policy condition, by claiming want of and impossibility of knowledge of such claim or suit, if he has failed to use due diligence in ascertaining their existence.
3. Upon the issue of his impossibility of performance, or of his exercise of due diligence in complying with the policy condition, the burden of proof rests upon the assured.
ERROR to the Court of Appeals of Cuyahoga county.
The parties stand in the same relation here as in the courts below and will be alluded to as plaintiff and defendant.
Plaintiff, Meyer Heller, instituted an action in the Common Pleas Court, alleging in his petition that, on March 20, 1921, the defendant issued to him its policy of insurance, agreeing to indemnify him against loss on account of bodily injuries, accidentally sustained by reason of the ownership, maintenance and use of his automobile, and to defend any lawsuit which might be brought against him on account of such injuries. While this policy was in force he alleges that an accident occurred to one Yudelevitz, who suffered injuries in a collision with plaintiff's automobile; that Yudelevitz filed a petition in the Court of Common Pleas against the plaintiff for damages and recovered a judgment in the sum of $300 against him; that the defendant neglected and refused to defend the lawsuit; that by reason thereof the plaintiff was required to employ legal counsel to defend it, which was done at a reasonable counsel fee of $400.
In this case plaintiff seeks to recover from the defendant the amount of the judgment and the counsel fee. The defendant admitted the issuance of the policy, the injury to Yudelevitz, the recovery of a judgment, and the reasonableness of the fee. As a special and second defense in its answer the defendant pleaded a violation of the policy contract by Heller, in that it contained the following stipulation:
"F. The assured, upon the occurrence of any accident shall give immediate written notice thereof, with the fullest information obtainable, to the company at its office, Detroit, Michigan, or its duly authorized agent. He shall give like notice, with full particulars, of any claim made on account of such accident. If, thereafter, any suit is brought against the assured he shall immediately forward to the company every summons or other process served on him."
The insurance company, in this connection, pleaded that the suit of Yudelevitz for personal in. juries was begun on December 26, 1922, and that copies of the summons and petition were served on the plaintiff a day or so thereafter; that the plaintiff did not immediately forward to the defendant these copies, and gave no notice of the pendency of Yudelevitz's action against him until May 14, 1923. Because of this breach in the policy contract by the plaintiff, the defendant denied any right of recovery.
The case was submitted to the court without the intervention of a jury and was heard upon an agreed statement of facts incorporated in a bill. On the issues joined, the trial court found for the insurance company, defendant, and rendered judgment in its favor. This was affirmed by the Court of Appeals, whereupon error was prosecuted to this court, leave therefor having been granted.
In the agreed statement the following additional facts appear: The accident of Yudelevitz happened on June 22, 1921, at night, and the following morning the plaintiff reported it and gave to the insurance company his written statement about it. The insurance company did not know of any claim made by Yudelevitz by reason of the accident until May 15, 1923, when its agent was first apprised of the lawsuit brought by him on December 26, 1922. Copies of the summons and petition were left at Heller's residence while he was absent from the city. Heller's daughter, not knowing their purport, took these papers to Mr. Heller's attorney, a Mr. Glick, defending the lawsuit, and told him to file an answer therein. This attorney knew nothing concerning the policy issued to Heller. Heller returned home in the following February and was advised that papers were left at his house and that Glick was looking after it. About that time Heller was taken sick and was confined to his house until the latter part of April, "and for one reason or another it did not come to his attention or Mr. Glick's attention that there was a lawsuit growing out of the accident for which he was insured for some time, so it was not until May 14, 1923, that Mr. Glick and Mr. Heller woke up to the realization that this was the case which was already in the hands" of the adjuster for the insurance company. In the meantime Glick, because of Heller's absence from home or illness, had obtained several leaves to answer, the last expiring May 26, 1923. The notice of the lawsuit which the agents of the insurance company had received on May 15, 1923, was referred to the home office of the insurance company, and on May 23 it advised Heller's attorney that it disclaimed liability on the ground that no immediate notice of the claim or suit had been given it pursuant to the requirement of the policy contract.
Mr. M.C. Harrison, for plaintiff in error.
Messrs. Dustin, McKeehan, Merrick, Arter Stewart, and Mr. Neil P. Beall, for defendant in error.
In the trial court the plaintiff attached to his petition a copy of the policy, but did not allege performance of "all the conditions on his part to be performed." The petition was therefore demurrable; but since the cause proceeded to trial, upon the issue of performance, error cannot be predicated upon such defective pleading. Union Ins. Co. of Dayton v. McGookey, 33 Ohio St. 555.
The real issue in the case, that of giving immediate notice by the assured, was specifically pleaded in the second defense of the insurance company's answer. It set forth the condition in the policy which required the assured, in case suit was brought against him, immediately to forward to the company the summons or other process served upon the assured. And it alleged that, although the suit for personal injuries was begun on December 26, 1922, no notice of the action was served upon it, or copies of the process forwarded to it, until May 14, 1923. No reply to this defense was filed. Had there been, the defendant would have been entitled to a judgment on the pleadings. However, since the cause proceeded to trial without objection, as if such reply were filed, judgment on the pleadings was not thereafter available to the defendant. Woodward v. Sloan, 27 Ohio St. 592; Lovell v. Wentworth, 39 Ohio St. 614; Franc v. Nirdlinger, 41 Ohio St. 298; Cincinnati Gas Elec. Co. v. Johnston, 76 Ohio St. 123, 81 N.E. 155.
This cause must therefore be determined upon the facts conceded and agreed to by the parties upon the trial. The policy contained, for the benefit of the insurer, a clause which required the assured to give immediate written notice (a) of the occurrence of the accident, (b) a like notice of any claim made, and (c) in case suit were brought against him the assured was required to "immediately forward to the company every summons or other process served on him."
Notice of the accident was given, but the second and third requirements were not implicitly complied with, since notice of the claim or the process was not forwarded to and received by the company until May 15, 1923, about four months and twenty days after the institution of the suit and service of summons.
The stipulation as to notice was of the essence of the contract, and, as in other contracts, is to be construed so as to give effect to the intention and language used by the parties thereto. Travelers' Ins. Co. v. Myers Co., 62 Ohio St. 529, 57 N.E. 458, 49 L.R.A. 760. It is extremely important to an insurance company, which assumes liability in case of accident, and reserves the right to defend or settle claims arising therefrom, that notice of such claim or suits instituted thereon should be served upon the company, in order that it may examine into the cause of the accident that it may determine whether liability exists on the part of the assured.
This policy required that the assured should immediately forward to the company every summons or process served on him. This court has already held that a stipulation of this character means that the action of the assured must be taken "within a reasonable time under the circumstances of the case." Ins. Co. v. Myers Co., supra. Had the pleadings and proof disclosed merely that the process had been forwarded approximately five months after the institution of the suit, and nothing more, undoubtedly the court could conclude, as a matter of law, that immediate action under the clause of the policy had not been complied with. 'When it is developed, as in this case, that the assured seeks to exonerate himself by a justifiable excuse for failing to give such notice, a case is developed where the determination of such a claim becomes a question of fact, rather than of law, and is triable to a jury. Employers' Liability Assurance Corp. v. Roehm, 99 Ohio St. 343, 124 N.E. 223, 7 A. L. R., 182. Here the cause was submitted to the trial court without the intervention of a jury.
The contention of the plaintiff in error has been and is now that the assured could not be expected to give notice to the company, or to forward to it the process served in the suit against him, until he actually knew that such suit was brought; that by reason of his absence from home from December until February, and his subsequent confinement to his home by illness from February until the latter part of April, he gained no knowledge of the pending lawsuit until the latter date. Whether such excuses, as a matter of law, are sufficient to avoid the explicit contract between the parties relating to immediate notice is a question upon which the decisions of the courts of this country are not in accord. The various citations touching that question may be found in 33 Corpus Juris, p. 15. The weight of authority, and we think the better reasoning, supports the principle announced in the text, viz.:
"A default in serving notice * * * as required by the policy may be excused, where the circumstances are such as to render strict compliance with the requirement impossible or unreasonable, and insured has not failed to use due diligence."
The feature of the "impossibility" of giving notice has been frequently discussed in the reported cases. Even if it be conceded that the assured need not give notice of that which he does not know, still, if by the use of due diligence on his part, he should have ascertained that a suit had been brought against him, and the failure to do so was caused by his neglect, he should not charge his default in that regard upon the insurance company. An authority more frequently cited than any other, perhaps, is that of Woodmen's Accident Assn. v. Pratt, 62 Neb. 673, 87 N.W. 546, 55 L.R.A., 291, 89 Am. St. Rep., 777, where a great many cases upon the phase under discussion have been considered. In considering what obstacles or causes render the performance of notice impossible within the time stipulated, the court, in its syllabus, holds as we do, that:
"The question of the sufficiency of the excuse offered and the reasonableness of the time in which the act is performed [is] to be determined according to the nature and circumstances of each individual case; the beneficiary in all cases being required to act with diligence, and without laches on his part." (Italics ours.)
Discussing policy provisions whereby notice must be given "forthwith" or "immediately," Holcomb, J., conceding that the authorities are not entirely harmonious, states that:
"The great weight of authority is to the effect that the exercise of due diligence and reasonable effort on the part of the insured to meet the requirements thus imposed [is] to be determined under all the circumstances as disclosed in each individual case.)"
That due diligence is necessary on the part of the assured when he sets up the claim of "impossibility" of obtaining knowledge of that which, under the terms of his policy, he is required to give immediate notice to the company, is also discussed in Parker v. Middlesex Mut. Assurance Co., 179 Mass. 528, 61 N.E. 215.
Applying the facts developed on the trial of the instant case, we find that the accident happened on June 22, 1921, and that suit was not brought against Heller until December 26, 1922, a year and a half after its occurrence. It is very probable that Heller in the meantime had either forgotten about the accident or expected no suit to result therefrom. However, such suit was brought against him, but notice of the claim made or of process served was not received by the company until approximately five months thereafter. He was absent from home when the suit was instituted and summons served at his residence, and returned some time in February, when he learned that papers were left at his house and that his attorney was looking after them. It also appears that from February until the latter part of April he was sick and confined to his house and that he did not realize that the lawsuit grew out of the accident until May 14, 1923. He did know that a suit had been brought, but he apparently made no effort to ascertain its character. No reason appears why, during his sickness, he failed to act in this respect, and the court may well have found that, under the circumstances, he failed to exercise due diligence in ascertaining the nature of the lawsuit against him and in giving notice thereof by forwarding the process served to the insurance company, as required by the condition in his policy. Upon the issue of his impossibility of performance, or of his exercise of due diligence in complying with the policy condition requiring immediate written notice of the claim and the immediate forwarding of the process to the defendant, the burden of proof was cast upon the plaintiff. A jury having been waived, the issue of due diligence must have been found by the court in favor of the defendant below, and we cannot say there was error on the part of the trial court in so finding.
The judgments of the lower courts are affirmed.
Judgments affirmed.
DAY, ALLEN, KINKADE, ROBINSON and MATTHIAS, JJ., concur.