Iowa Mut. Ins. Co. of De Witt, Iowa v. Meckna

• Citation: 144 N.W.2d 73,180 Neb. 516,15 A.L.R.2d 698
• Decision Date: 08 July 1966
• Docket Number: No. 36199,36199
• Parties: , 15 A.L.R.3d 698 IOWA MUTUAL INSURANCE COMPANY OF DE WITT, IOWA, a Corporation, Appellant, Cross-Appellee, v. Jane MECKNA and Dean English (Cross-Appellant), Administrator of the Estate of Robert E. English, Deceased, Appellees, James Kolb, Intervenor-Appellee.
• Court: Supreme Court of Nebraska

Page 73

144 N.W.2d 73

180 Neb. 516, 15 A.L.R.3d 698

IOWA MUTUAL INSURANCE COMPANY OF DE WITT, IOWA, a Corporation, Appellant, Cross-Appellee, v. Jane MECKNA and Dean English (Cross-Appellant), Administrator of the Estate of Robert E. English, Deceased, Appellees, James Kolb, Intervenor-Appellee.

No. 36199.

Supreme Court of Nebraska.

July 8, 1966.

Syllabus by the Court

1. Although an insurance policy obligates the insurer to defend all suits brought against the insured, even though groundless, false, or fraudulent, the insurer is not bound to defend a suit based on a claim outside the coverage of the policy.

2. The purpose of the omnibus clause of an insurance policy is to fix the liability of additional insureds and to eliminate ambiguities and defenses with reference thereto as a matter of public policy.

3. The omnibus clause of an insurance policy imposes liability on the insurer for the negligence of any person using the insured's automobile with his permission.

4. The death of a named insured caused by one operating his automobile with his consent is within the coverage of the omnibus clause of his liability insurance policy.

5. Where an insurer has all the information the insured can give it, and has ample notice to permit it to take any and all necessary steps to protect its interest, it cannot avoid liability by alleging a breach of the notice provision of the policy.

6. An insurer cannot assert a breach of the cooperation clause as a policy defense in the absence of a showing of prejudice or detriment to the insurer.

7. An insurer does not have a right to insist on a reservation of rights agreement with its insured as a condition precedent to undertaking the defense it is obligated to take by the terms of the policy.

8. The burden of proving noncooperation is on the insurer who urges it as a policy defense.

9. A misstatement by an insured promptly or seasonably corrected or withdrawn prior to trial of the action against the insured does not constitute a breach of the cooperation clause.

10. The purpose of the cooperation clause is to prevent collusion between the injured and the insured, and to faciliate the handling of the claims by the insurer.

11. Where an insurer sees fit to gamble on its insistence on a reservation of rights agreement and to ignore the fact that an action against its insured is in default, it is in no position to complain about a default judgment entered against its insured.

Webb, Kelley, Green & Byam, Boland, Mullin, Walsh & Cooney, Omaha, for appellant.

Norman Denenberg, Omaha, for English et al.

Keith Howard, Omaha, for Kolb, intervenor-appellee.

Heard before CARTER, SPENCER, BOSLAUGH, BROWER, SMITH, and McCOWN, JJ., and COLWELL, District Judge.

SPENCER, Justice.

This is an action for a declaratory judgment brought by Iowa Mutual Insurance Company of De Witt, Iowa, hereinafter referred to as insurer, against Jane Meckna, hereinafter referred to as Meckna, and Dean English, administrator of the estate of Robert E. English, deceased, who will hereinafter be referred to as administrator.

Insurer, previous to June 11, 1962, issued an automobile liability policy with limits on liability of $10,000 for each person for personal injuries and $10,000 for property damage to Robert E. English, the deceased. This policy included omnibus insurance coverage and was in full force and effect at all times material herein. This action is to determine the rights and liabilities of the parties under said policy.

The factual situation out of which the present action arises, so far as material to an understanding of the issues involved, is substantially as follows: On June 11, 1962, Meckna, while operating the insured automobile, with the express permission of the named insured, who was riding therein as a passenger, collided with a parked automobile owned by James Kolb. Robert E. English died as a result of this collision. Kolb, who had filed a claim in the Robert E. English estate, and an action against Meckna for damages sustained to his automobile in the collision, filed a petition in intervention herein.

On June 12, 1962, Meckna gave a statement at the police station to a deputy county attorney in the presence of a court reporter that the deceased was driving the car at the time of the collision. The information secured by the police from other witnesses indicated that Meckna was the driver, and the original report listed the driver as unknown. On June 14, 1962, an attorney, Philip Abboud, hereinafter referred to as Abboud, wrote the insurer to advise that his client Meckna, whom he stated was a passenger in the car at the time of the collision and who was 4 1/2 months pregnant, had a claim for personal injuries.

On June 16, 1962, Meckna went to the police station and in the presence of a deputy county attorney and a court reporter changed her version of the accident and gave a statement admitting that she was the driver of the automobile at the time of the collision. She stated she had concealed this fact because of her five children. This new version was reported in a local newspaper and clippings of the story were placed in the insurer's file. After the newspaper story appeared, an agent of the insurer called Abboud and asked permission to talk to Meckna but Abboud refused to allow Meckna to be interviewed, and gave as the reason a pending motor vehicle homicide charge against Meckna.

On June 22, 1962, Abboud wrote to the insurer as follows: 'I have been retained to represent Mrs. Jane Meckna who, as you know was injured in an auto accident June 11, 1962, and is still under doctor's care.

'Please be advised that we shall cooperate fully with you in all respects and on account of the pending Motor Vehicle Homicide Charges I, of course, desire to investigate the matter thoroughly which investigation has not as yet been concluded.'

On August 6, and on September 17, 1962, the attorney for Kolb wrote insurer relative to the damage to the Kolb automobile. Insurer's resident vice president acknowledged receipt of the letters, but replied that insurer was not in a position to admit or deny liability, and stated that it was continuing its investigation. On August 29, 1962, the administrator filed suit in the district court against Meckna. Answer day for Meckna was October 1, 1962.

On September 19, 1962, the insurer wrote Abboud requesting information as to the exact status of the case. On September 20, 1962, Abboud wrote the insurer's resident vice president as follows: 'In reply to yours of the 17th inst. we beg to advise that Miss (Mrs.) Jane Meckna has, on various occasions, unsuccessfully attempted to contact you. We were told, in our effort to reach you by 'phone, that you were out of town and conveyed to other employees what our intentions and purposes were, and we were informed to call at a later time. In the interim we have received your letter already referred to.

'We want you to know and understand that Jane Meckna the defendant in the above captioned matter is available at any time, is willing and ready to work in conjunction with any efforts you may undertake in defending the lawsuit instituted against her and will wholeheartedly cooperate with you with every reasonable and legal way without jeopardizing her own rights or exposing herself in any manner in case of adverse judgment being rendered against her.

'We are enclosing herein copy of a summons and a petition involving the litigation in question, which is self-explanatory. This matter is being given our very early attention in the hope that you will have ample time and opportunity to consult with Jane Meckna and to protect both the rights of the insurance company and the rights of my client.

'Awaiting your further wishes and instructions relative to this subject matter, I am * * *.'

On September 24, 1962, insurer's attorney telephoned Abboud and stated that he questioned whether or not the policy extended coverage to Meckna, and suggested that there was also a serious question as to whether the insurer would owe any obligation to Meckna because of her failure to give notice and make reports to the company as well as the fact that she gave conflicting versions of the accident. He suggested, however, that he would be willing to recommend a defense under a reservation of rights agreement.

It is the testimony of insurer's attorney that Abboud indicated he would be glad of an opportunity to unload the defense under such an arrangement, and asked him to find out if the insurer would defend under a reservation of rights. On Octover 1, 1962, insurer's attorney called Abboud to state that the company had accepted his recommendation, and suggested that the English case be continued to permit the preparation of the agreement. Abboud authorized insurer's attorney to prepare a motion for a continuance in his name. Insurer's attorney then prepared and filed, under Abboud's name, a motion for extension of time to plead, until October 15, 1962.

On October 3, 1962, insurer's attorney wrote Abboud, enclosing a reservation of rights agreement and, among other things, stated: 'This procedure will enable me to undertake the defense of the above suit under the terms of the agreement and will reserve all rights which Jane Meckna and/or Iowa Mutual Insurance Company may have at this time.

'As you know, I have filed a Motion to extend our Answer Day to October 15, 1962. It is, therefore, vital that you return the executed document to me prior to that time.'

On November 6, 1962, insurer's attorney wrote Abboud that Kolb's attorney had sent him a copy of a petition filed by Kolb, and stated: 'My people have instructed me to walk away from further involvement in these suits unless and until Jane Meckna executes and returns the Reservation of Rights Agreement which I forwarded on October 3, 1962, over one month ago.'

On January 8, 1963, Norman Denenberg, the attorney for the administrator, served a motion for a...