Brakeman v. Potomac Ins. Co.
| Decision Date | 22 September 1975 |
| Citation | 344 A.2d 555,236 Pa.Super. 320 |
| Parties | Allan E. BRAKEMAN, Appellant, v. The POTOMAC INSURANCE COMPANY. |
| Court | Pennsylvania Superior Court |
Paul D. Shafer, Jr., Thomas, Shafer, Walker Dornhaffer & Swick, Meadville, for appellant.
James D. Cullen, Erie, for appellee.
Before WATKINS, P.J., and JACOBS, HOFFMAN, CERCONE, PRICE, VAN der VOORT and SPAETH, JJ.
VAN der VOORT, Judge.
On March 3 1970, the plaintiff-appellant, Allan E. Brakeman was involved in a motor vehicle accident with one David F. Baker, in Meadville, Pennsylvania. Baker, at the time a 17 year old was insured by The Potomac Insurance Company, the defendant-appellee. As a result of the accident, Brakeman suffered severe injuries which resulted in hospitalization loss of income and permanent disability; his out-of-pocket expenses were $6,545.50. Although the accident occurred in early March, the appellee insurance company did not receive written notice of the accident until October 6, 1970. [1]
Taking the position that the notice it received from its insured was unduly late, appellee refused to defend the claim against Baker. The appellant filed suit against Baker on February 24 1971 and on January 10, 1972, a verdict in the sum of Ten Thousand ($10,000.00) Dollars, the exact amount of the Baker's insurance coverage, was directed by the lower court, by agreement of the parties, and without actual trial. As noted earlier, the appellee did not participate in that action.
The instant action arose when appellant Brakeman brought suit directly against appellee to recover the amount of his verdict against the insured. A jury trial was held; the jury awarded appellant a general verdict of Ten Thousand ($10,000.00) Dollars and gave the following answers to specific interrogatories:
1. The first written notice to appellee was given October 6, 1970.
2. No oral (telephonc) notice had been given prior to that written notice.
3. There were sufficient extenuating circumstances to postpone the giving of the accident notice until October 6 or 7, 1970. [2]
Upon motion of the appellee however, the lower court granted judgment Non obstante veredicto. The lower court's action, supported by a well written opinion, essentially was made in reliance upon the circumstances of the late notice to the insurer, some seven months after the date of the accident. The lower court noted appellate cases in our Commonwealth which have held that if an insured gives notice of an accident to his insurance company as late as seven months after an accident, he has failed to comply with a 'reasonable notice' clause in his policy. [3] See Hachmeister, Inc. v. Employers Mutual Liability Insurance Company of Wisconsin, 403 Pa. 430, 169 A.2d 769 (1961); Edelson v. American Employers Insurance Company of Boston, Mass., 92 Pa.Super. 90 (1927).
On this appeal, appellant argues, Inter alia, that the presumption of prejudice which exists in Pennsylvania, concerning late notice to an insurance company by the insured, should be altered or eliminated. He maintains that the present rule is 'harsh' and suggests the substitution of a rule requiring the insurance company to show some prejudice it suffered through late notice before it is excused from performance on the insurance contract. While we do not adopt completely the appellant's suggested course of change, our review and comparison of case developments in our sister states concerning this issue, together with a reexamination of our present law and its underlying philosophy, compels us to conclude that some change and clarification is in order.
The present rule in our Commonwealth is that the satisfaction of the prompt notice clause in an insurance policy (emphasis supplied) Meierdierck v. Miller, supra, 394 Pa. at 486, 147 A.2d at 408. This rule is a severe one which has been tempered by the proviso that 'extenuating circumstances' may allow an otherwise untimely, delayed notice to suffice as complying with the notice provisions of an insurance policy. Hughes v. Central Accident Insurance Company, 222 Pa. 462, 71 A. 923 (1909).
The above quoted 'rule', and the 'extenuating circumstances' exception, while present in our law for many years, can be seen to cause confusion, lack of consistency, and possibly unconscionable results. The instant case is a good example. It has been recognized that the sufficiency of compliance with the notice provision in an insurance policy varies with the circumstances of each case. Unverzagt v. Prestera, 339 Pa. 141, 13 A.2d 46 (1940). Timeliness of notice is a Jury question where extenuating circumstances appear. Meierdierck v. Miller, supra; Hughes v. Central Accident Insurance Company, supera. Where the delay is unaccompanied by extenuating circumstances, the question of whether or not the insured has complied with the notice provision is one for the court. Jeannette Glass Co. v. Indemnity Insurance Company of North America, 370 Pa. 409, 88 A.2d 407 (1952). In the instant case the appellant's evidence disclosed some alleged extenuating circumstances to excuse the tortfeasor's delay in notice. The jury, in response to a special interrogatory, found that such factors sufficiently excused the delay in this case. The lower court, in granting judgment Non obstante veredicto, explained in its opinion that the extenuating circumstances in Its opinion were not sufficient As a matter of law to support the jury's finding. This resume of facts is not intended to imply criticism of the lower court's actions, which we find were based on sound reasoning and legal judgment. However, they do indicate the confusion which may arise in these cases.
It was also noted that inconsistencies can arise. It has been held that the following delays in notice after an accident would not result in the insurer escaping liability: almost five months (Wardle v. Miller, 375 Pa. 565, 101 A.2d 720 (1954)); 20 month delay (Hall v. Aetna Life Insurance Co., 79 P.L.J. 284 (1931)); 17 month delay (Ripepi v. American Insurance Companies, 349 F.2d 300 (C.A.3, 1965). On the other hand, the following delays in notice have precluded claimants from recoveries: 5 months (Hachmeister, Inc. v. Employers Mutual Liability Insurance Company of Wisconsin, supra); 3 1/2 months (Unverzagt v. Prestera, supra); 10 weeks (Edelson v. American Employers Insurance Company of Boston, Mass., supra).
Another area of confusion and inconsistency is apparent when one examines our law in closely related and analogous areas. Thus it is held that the Insurer must show prejudice to avoid liability under the policy on the ground that the notice was not received in the Proper manner. Bowman Steel Corporation v. Lumbermens Mutual Casualty Company, 364 F.2d 246 (C.A.3, 1966). Likewise, An insurer seeking to cut off responsibility, on the ground that its insured did not comply with a policy provision requiring prompt forwarding of suit papers, Must establish: that the provision was actually breached, and that the breach resulted in substantial prejudice to its position. Hargrove v. CNA Insurance Group, 228 Pa.Super. 336, 323 A.2d 785 (1974). While the differences in treatment of late receipt of notice, improper receipt of notice and late receipt of suit papers can be justified or explained in some ways, the appearance of inconsistency cannot be denied.
It was noted above that arguably unconscionable results may arise in the situation where the passage of time (between the injury and notice) creates a conclusive presumption of prejudice to relieve the insurer from liability. The present doctrine exalts form over substance; an insurer, who has collected full premiums for coverage, despite the absence of any prejudice, may deny the only available compensation to the completely innocent victim of a tortfeasor, merely by the passage of some time between the incident and the report to the insurer. Reasonable men, asked to design a 'fair rule' to cover this situation, would not adopt the conclusive presumption which exists in our law.
While criticizing the present rule, we certainly must recognize that it was not adopted in the absence of reason. Hachmeister, Inc. v. Employers Mutual Liability Insurance Co. of Wisconsin, supra, 403 Pa. at 433, 169 A.2d at 770.
With a recognition of those policy considerations underlying the present rule, but with the realization that some alteration of the rule is merited, we have examined, Inter alia, the practices in our sister states in this area. In 8 Appleman, Insurance Law and Practice § 4732, a well recognized treatise on insurance law, cases from all jurisdictions are collected. Our review of those cases cited reveals a modern trend in our country toward the elimination of forfeited coverage in the absence of any prejudice to the insurer by virtue of late notice of the incident from which the claim arose. [4] Some jurisdictions require the insurer to prove prejudice to escape responsibility; others require the claimant to show an absence of prejudice to the insurer (as a result of late notice) in order to maintain a recovery. We believe the latter policy is preferable. As is stated in Appleman, supra, § 4732:
Many courts have adopted the rule that it is unnecessary for the company to...
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