Bowen v. Merchants Mut. Cas. Co.

• Decision Date: 24 August 1954
• Citation: 107 A.2d 379,99 N.H. 107
• Parties: BOWEN v. MERCHANTS MUT. CAS. CO. et al.
• Court: New Hampshire Supreme Court

Page 379

107 A.2d 379

99 N.H. 107

BOWEN v. MERCHANTS MUT. CAS. CO. et al.

Supreme Court of New Hampshire.

Argued March 3, 1954.

Decided June 23, 1954.

Rehearing Denied Aug. 24, 1954.

Upton, Sanders & Upton, Concord, Richard F. Upton, Concord, for plaintiff.

Burns, Calderwood & Bryant, Dover, Donald R. Bryant, Dover, for defendant Merchants Mut. Cas. Co.

McLane, Davis, Carleton & Graf, Robert A. Raulerson, Manchester, Robert A. Raulerson, Manchester, orally, for defendant Milton Makris

GOODNOW, Justice.

Clause V of the basic policy issued by the Merchants Mutual Casualty Co. to Milton Makris is concerned with 'Use of Other Automobiles' and is stipulated by section 13 of the policy to provide 'excess insurance over any other valid and collectible insurance available to the insured'. Before considering the validity of the specific grounds advanced by the company in avoidance of liability under the provisions of this clause, however, it is first necessary to determine which of them may now be advanced by the company in the light of the claims of waiver and estoppel raised by the plaintiff.

Prior to and at the time of the accident, Milton Makris was the proprietor of an ice delivery business in Manchester and his brother Socrates was an independent contractor engaged in the trucking of gravel. A few days previous to August 31, 1949, Milton had injured himself while delivering ice and the two brothers had agreed to exchange positions temporarily until Milton's injury had healed. Milton agreed to drive Socrates' truck and make deliveries of gravel for him and Socrates agreed to drive Milton's truck and deliver ice for him. Under their arrangement, the income from the gravel delivery business was to belong to Socrates and that from the ice delivery business was to belong to Milton and neither was to receive any monetary payment from the other while the temporary arrangement was in effect. At the time this agreement was made, the condition of Milton's injury was such that it would probably have healed sufficiently in about a week to permit the resumption by him of ice deliveries. The gravel truck was actually operated by Milton for half a day on August 29, all day on August 30, and was in the course of the fifth delivery of the day at about 2:30 p. m. on August 31 when the accident occurred. Subsequent to that date, the business of hauling gravel slackened and Milton drove the truck only part time until the returned to his ice delivery business on September 5, 1949.

The Makris brothers had each purchased and received delivery of their respective policies at the Landregan Insurance Agency in Manchester. This agency was a licensed insurance broker but was not an agent of the Merchants Mutual Casualty Co. Within three days after the accident, Milton went to the office of this Agency and reported the accident on a form furnished by it. The Agency notified Socrates' insurer, the American Mutual Liability Insurance Co., of the accident but did not notify the Merchants Mutual Casualty Co. Both brothers were served with process in the plaintiff's actions seeking damages on December 2, 1949, and then learned for the first time the amount of damages claimed by the plaintiff which were alleged to be $15,000. These writs were turned over to the American Mutual Liability Insurance Co. On the same day, Milton's personal attorney wrote to the Merchants Mutual Casualty Co. informing it that suit had been commenced on account of the accident of August 31, 1949, and that the damages claimed were in excess of the coverage afforded by Socrates' policy. The company acknowledged receipt of this letter on December 5, 1949, stating also that the representative of the American Mutual Liability Insurance Co. had been contacted for information and that as soon as it had been received and Milton's 'policy had been examined,' it would 'advise you relative to coverage.' By letter dated January 19, 1950, written from the company's home office by its vice-president in the legal department, Milton was informed that Merchants Mutual Casualty Co. disclaimed any and all liability under his policy.

This letter of disclaimer stated that the company received the letter from Milton's attorney on December 3, 1949; that 'the purpose of notifying us of the accident was because an action had been instituted in the Federal Court by the injured party demanding damages in excess of the coverage on the truck you were operating'; and that this letter from Milton's attorney was the first notice of the accident which it had received. The balance of the letter is as follows:

'Subsequent investigation carried on by the company revealed that on August 31, 1949, while you were operating a Diamond T truck loaded with stone, you struck a pedestrian named Faxon Bowen, in Hooksett, New Hampshire. The truck you were operating at the time was owned by your brother, Socrates. The company also learned that the reason you were operating your brother's truck at the time was because you had injured your chest a few days previously and it was agreed between your brother and yourself that it would be easier for you to operate his truck delivering stone and gravel than to operate your own truck and deliver ice because of the necessity of carrying the ice on your shoulder. The agreement became effective with your brother, Socrates, driving your truck and delivering the ice and you in turn driving Socrates' truck and delivering the sand and gravel. It was mutually agreed also that each one was to receive the income from his respective business. In other words, the money earned by you while operating Socrates' truck was to go to him and the money earned by Socrates while operating your truck and delivering the ice was to go to you.

'We draw your attention to Insuring Agreement V of your policy which is entitled 'Use of Other Automobiles', please refer particularily to sub-division b reading in part as follows:

"(b) This insuring agreement does not apply:

"(1) __________

"(2) to any automobile while used in the business or occupation of the named insured or spouse except a private passenger automobile operated or occupied by such named insured, spouse, chauffeur or servant:'

'In view of the fact you were operating a truck in your business or occupation at the time of the happening of the accident, this letter will serve to advise you that the company hereby disclaims any and all liability to you under the above numbered policy on account of any claims, demands, losses, suits or judgments which have resulted or which may hereafter result to you arising out of the accident mentioned above.'

On February 7, 1950, Milton's attorney took issue with the company's assertion that the automobile involved was being used in Milton's business or occupation at the time of the accident. On February 14, 1951, he again reviewed by letter the undisputed facts as to the circumstances under which Milton was operating his brother's truck, asserted that the specific exclusion clause relied on by the company did not apply and demanded that the company join in the defense of the action. The record indicates no reply to either of these letters from the company and no action on its part to either change its position in any way or participate in the defense. Thereafter, in April, 1951, the plaintiff's action at law was tried and resulted in a verdict for the plaintiff against both Socrates and Milton Makris. The defense was borne solely by the American Mutual Liability Insurance Co., and the personal attorney for Milton did not participate.

During the trial, exceptions were taken for the defendants but before the time for appeal had expired, Milton was advised that his brother's insurance company planned no appeal and would pay $5,000 on the verdict unless Milton and his brother desired to appeal at their own expense. The question of whether to appeal was left to Milton's attorney and he decided not to do so. 'The following factors figured in the decision: (a) his opinion that the ground of disclaimer by Merchants Mutual was not valid; (b) the opinion of counsel for the American Mutual that an appeal was not justified under all the circumstances; (c) his belief that the most that could be obtained on appeal was a new trial. All of these factors were of substantial weight in his decision not to appeal.' Until the filing of its answer in the present action on December 5, 1952, the sole ground for disclaimer given by Merchants was that which it stated in its letter of January 19, 1950 to Milton.

Under these circumstances, it seems clear to us that the company waived its right to now assert in avoidance of liability the insured's failure to give notice of the accident 'as soon as practicable' after its occurrence and to 'immediately forward to the company * * * every summons or other process', in violation of conditions No. 1 and No. 2 of the policy. Waiver and estoppel are not interchangeable in the law of insurance but a substantial difference exists between them. A. Perley Fitch Co. v. Continental Ins. Co., 99 N.H. ----, 104 A.2d 511. A waiver is the voluntary relinquishment of a known right. Therrien v. Maryland Casualty Co., 97 N.H. 180, 181, 84 A.2d 179. It is essentially unilateral in its character, no act of the insured being necessary, Id., 97 N.H. 182, 84 A.2d 179, and involves two principal considerations, actual knowledge of the existence of the right and an intention to relinquish it. 16 Appleman, Insurance Law and Practice 613.

It is not disputed by the company that on January 19, 1950 it was fully aware of the lapse of time between the date of the accident and the date upon which it first received notice of the accident's occurrence as...