Western Casualty & Surety Co. v. Coleman
| Decision Date | 29 December 1950 |
| Docket Number | No. 14195.,14195. |
| Citation | 186 F.2d 40 |
| Parties | WESTERN CASUALTY & SURETY CO. v. COLEMAN. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Warren D. Welliver, Columbia, Mo. (Ralph L. Alexander and Alexander, Ausmus & Harris, all of Columbia, Mo., on the brief), for appellant.
Ralph T. Finley, St. Louis, Mo. (William H. Sapp, Columbia, Mo., and Sullivan, Finley & Lucas, St. Louis, Mo., on the brief), for appellee.
Before SANBORN, JOHNSEN, and RIDDICK, Circuit Judges.
This is an appeal from a judgment for the plaintiff (appellee) in an action upon a policy of automobile liability insurance issued to him by the defendant, The Western Casualty and Surety Company (appellant). The insured sought recovery of the amounts which he had paid in defending, and satisfying the judgment in, a personal injury suit resulting from an accident in which the motor vehicle covered by the policy was involved. The Casualty Company denied liability upon the ground that the insured had failed to give it notice of the accident as required by the policy.
This action was brought in a State court of Missouri and was removed by the Casualty Company to the federal District Court. The facts were stipulated, and the issues were tried to the court without a jury. The District Court determined that the failure of the insured to notify the Casualty Company of the accident until suit was brought against the insured by the injured person some seven months after the accident, did not, under the stipulated facts and the applicable law of Missouri, relieve the Casualty Company of its policy liability to the insured. Judgment was entered accordingly, and this appeal followed.
It is not necessary to state the facts in detail. The policy in suit was issued December 19, 1943, for the term of one year. The limits of liability were $10,000 for each person and $20,000 for each accident. The insured vehicle was a Ford truck. The policy contained the following provisions:
* * * * * *
On November 14, 1944, the truck was being used for the hauling of rock from a quarry for a contractor. Thomas Matthews, an employee of the insured, was driving. He was accompanied by Homer Lawson, also an employee of the insured, and by Ben Pankey and Ben Blaser, employees of the contractor. After the truck had left the quarry with a load of rock and was proceeding up a steep hill, the rear axle broke. The brakes did not hold the truck. All of the occupants jumped. Blaser, who was in the back of the truck, broke one of his legs when he hit the ground, and was so severely injured that the leg was later amputated below the knee.
The insured learned of the accident the day that it occurred, but was informed by Matthews that Blaser was riding in the truck without his (Matthews') knowledge or permission, that the axle broke (due to a latent defect), that Matthews did all he could do to stop the truck but could not hold it on the hill, that Blaser jumped from the truck as it was moving backward and injured his ankle but was not struck by the truck. Homer Lawson and Ben Pankey corroborated Matthews. They told the insured that they did not know that Blaser had remounted the truck after it had left the scale-house at the quarry. The insured, from his investigation of the accident, believed that neither he nor his truck driver was to blame for Blaser's injuries. The insured did not notify the Casualty Company of the accident. Until June 19, 1945, when the insured was served with process in an action brought against him by Blaser to recover for his injuries, the insured did not know of Blaser's claim against him or the seriousness of Blaser's injuries or that the accident had been investigated by Blaser's attorneys.
The insured on June 19, 1945, upon receipt of a copy of Blaser's petition or complaint and the summons issued thereon, delivered these papers to the Casualty Company's agent at Columbia, Missouri, who forwarded them to the Home Office of the Casualty Company at Kansas City. All witnesses who knew about the accident and Blaser's injuries were then available.
The Casualty Company, under a nonwaiver notice, assumed the insured's defense. Since Blaser was seeking a judgment exceeding the limits of liability fixed by the policy, the insured also employed counsel, whose participation in the defense was without prejudice to the insured's rights under the policy.
The trial of Blaser's suit resulted in a verdict and judgment in his favor for $12,500. Counsel employed by the insured took an appeal and secured a reversal of the judgment and a new trial. The insured, through his own counsel, finally agreed to a settlement of $8,000 and costs. The State court approved the settlement, and, after a hearing and the taking of testimony, judgment was entered accordingly in favor of Blaser and against the insured. He paid the judgment and thereafter brought the instant action against the Casualty Company.
The applicable substantive law is that of Missouri.
The District Court concluded that the insured was entitled to judgment, for the following reasons: (1) that, under Missouri law, the failure of an insured to give notice of an accident does not defeat recovery on the policy unless it expressly provides for a forfeiture; (2) that, in order to sustain the defense of delayed notice, an insurer must allege and prove that prejudice resulted from the delay; that prejudice was neither alleged nor proven in the instant case; (3) that the insured was not required to give notice of the accident "until such time as facts were made known to him, as a reasonably prudent person, that a liability existed therefor, and that he might be required to respond in damages as a consequence of the happening of such event," and that the insured acted with reasonable prudence in the giving of notice.
The District Court also determined that the Casualty Company had no right to withdraw from the defense of the insured after the judgment of $12,500 was entered and a new trial denied by the trial court, that the Casualty Company's refusal to pay the $8,000 judgment entered in the suit of Blaser against the insured was vexatious, and that the insured was, under the law of Missouri, entitled to a ten per cent penalty and reasonable attorney's fees.
The Casualty Company asserts that the District Court erred (1) in ruling that, in the absence of a forfeiture provision, the the insured's failure to give notice was not a defense; (2) in holding that the Casualty Company was required to prove that it was prejudiced by the insured's failure to give notice; (3)...
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