Allen v. Ross

• Decision Date: 27 February 1968
• Citation: 38 Wis.2d 209,156 N.W.2d 434
• Parties: Edna ALLEN, Respondent, v. Alfred T. ROSS et al., Defendants, Hardware Mutual Insurance Co., a corporation, Appellant. MUTUAL SERVICE CASUALTY INS. CO., a corporation, Respondent, v. Alfred T. ROSS, Defendant, Hardware Mutual Insurance Co., a corporation, Appellant. John H. MAYFIELD, Respondent, v. Alfred T. ROSS, Defendant, Hardware Mutual Insurance Co., a corporation, Appellant.
• Court: Wisconsin Supreme Court

Page 434

156 N.W.2d 434

38 Wis.2d 209

Edna ALLEN, Respondent, v. Alfred T. ROSS et al., Defendants, Hardware Mutual Insurance Co., a corporation, Appellant.

MUTUAL SERVICE CASUALTY INS. CO., a corporation, Respondent, v. Alfred T. ROSS, Defendant, Hardware Mutual Insurance Co., a corporation, Appellant.

John H. MAYFIELD, Respondent, v. Alfred T. ROSS, Defendant, Hardware Mutual Insurance Co., a corporation, Appellant.

Supreme Court of Wisconsin.

Feb. 27, 1968.

Rehearing Denied May 7, 1968.

Foley, Capwell & Foley, Racine, for appellant.

Heide, Sheldon, Hartley & Thom, Kenosha, for respondent Allen.

Whaley & Whaley, Racine, for respondents, Mayfield and Mut. Service Cas. Inc. Co.

HALLOWS, Chief Justice.

On July 27, 1963, Ross obtained a 1956 Ford from Hetland-Cook, a Ford agency in Lake Geneva, on a trial-or-purchase basis. Up to the time of the accident Ross had not paid for or returned the auto. Hardware alleges as one of its defenses that Ross did not give notice of the accident as required by the policy. But this rather limited pleading is based upon the theory that Ross was the insured under the policy for notice purposes. The policy provided:

'4. Notice In the event of an accident or loss, written notice * * * shall by given by or for the insured to the company or any of its authorized agents as soon as practicable.'

'6. Action Against Company Parts I and III No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy * * *.'

The record does not disclose when Hardware first learned of the accident. Apparently some days before September 30, 1963, it received a letter from the attorney for the plaintiff relating to the accident and on September 30th, 43 days after the accident, an adjuster for Hardware met with Ross at his home and had him execute a 'Reservation of Rights Agreement.' Ross according to his testimony never notified Hardware or Hetland-Cook of the accident. However, the son and daughter of Edna Allen on the day following the accident informed Hetland-Cook of it but there is nothing in the record which shows the agency notified Hardware.

We do not construe the policy to require as the answer implies that only Ross, an insured, can give notice to the insurer. The phrase 'by or for the insured' for this purpose cannot be so narrowly read. If Hetland-Cook gave notice, that would be compliance. It may well be if the insurer had notice of the accident from a third party upon which it acted or reasonably should have acted that such requirement of the policy would have been complied with. Normally, only the owner of the car, the person who takes the insurance and pays the premiums, knows who his insurer is. Drivers with permission normally do not know who insures the car they drive and the requirement of an auto liability policy cannot be construed to mean that only he to whom coverage is extended in a given case can give the notice of the accident. Such a construction would be strained and unreasonable and we must reject it.

The requirement of notice 'as soon as practicable' is modified by secs. 204.34(3) and 204.29(1), Stats. ¹ The first section proscribes limiting in a policy the giving of notice of an accident to a period less than that prescribed in the second section which sets the limitation at 20 days. But sec. 204.34(3) does two more things. It provides in effect that the failure to give timely notice creates a presumption of prejudice and puts the burden of proof of showing no prejudice or overcoming the presumption upon the person claiming liability. This change modifies the usual rules of pleading and burden of proof in respect to notice of accident involving causes of action under auto liability policies.

Although timely notice or lack of prejudice is a condition precedent to the insurer's liability as provided in its policy, it does not necessarily follow the plaintiff must plead and prove timely notice as a part of its cause of action. Of course, in fire policies and in indemnity policies where the loss is direct to the insured and he is suing his own insurer to recover for his loss, the requirement of pleading and proving timely notice of loss as a condition precedent, when so provided in the policy, is understandable. Such requirement is necessary to prevent fraud or unnecessary hardship upon the insurer. But in third-party suits, where members of the public are suing insurers directly for injuries suffered in automobile accidents, a requirement of pleading and proving the notice was given by the insured would be unrealistic because the fact is unknown to the third party and the giving of such a notice is a condition beyond his control. In many cases the injured person does not know who the other person's insurer is. True, in Bachhuber v. Boosalis (1930), 200 Wis. 574, 229 N.W. 117, we held that the giving of a timely notice of accident was, as provided in the policy, a condition precedent and had to be pleaded and proved by the plaintiff. A year later sec. 204.34(3), Stats., was enacted and the problem of timely notice controlled thereby. We think for this section to apply in respect to the burden of proof, it created that the insurer must plead and prove it did not receive notice as soon as practicable.

This exception to the rule of pleading and practice was pointed out in Heimlich v Kees Appliance Co. (1950), 256 Wis. 356, 41 N.W.2d 359, and applied to a notice of accident but not to the requirement in the policy involving a notice of claim or suit. The history of sec. 204.34(3), Stats., and its purpose in automobile liability policies were discussed in Britz v. American Ins. Co. (1957), 2 Wis.2d 192, 86 N.W.2d 18, 66 A.L.R.2d 1271, and the court held the section did not apply to a theft policy. For the difference in policy requirements relating to a notice of accident and a notice of injury, see Sheafor v. Standard Accident Ins. Co. (1918), 166 Wis. 498, 166 N.W. 4.

There is some extraneous language in Peterson v. Warren (1966), 31 Wis.2d 547, 143 N.W.2d 560, to the effect the Wisconsin law is the same as the Minnesota law in respect to the burden of proof relating to conditions precedent as applied to notice of accident. This language rested upon Bachhuber and Heimlich which were cited in a footnote. Peterson v. Warren, supra, at 564, n. 29, 143 N.W.2d 560. The distinction here made was not noticed. Such language as applied to a notice of accident or casualty covered by a policy, insurance agreement, indemnity or bond as provided in sec. 204.34(1), Stats., is erroneous and is hereby withdrawn. Such cases as Al Shallock, Inc. v. Zurich General Accident & Liability Ins. Co. (1954), 266 Wis. 265, 63 N.W.2d 89, wherein the policy required immediate forwarding of the notice of claim or suit papers are distinguishable. In Shallock a notice of accident was given, but there was a failure four 23 months to forward a notice of the suit and the court held there was no liability. Likewise, in American Ins. Co. v. Rural Mutual Cas. Ins. Co. (1960), 11 Wis.2d 405, 105 N.W.2d 798, it was held that a timely notice of a claim or of suit was a condition precedent and breach thereof excused liability although a notice of accident was given.

As stated in Buss v. Clements (1963), 18 Wis.2d 407, 412, 118 N.W.2d 928, the purpose of timely notice of an automobile accident to a insurer is to...