Brown v. State Farm Mut. Auto. Liability Ins. Co.

• Decision Date: 21 August 1958
• Docket Number: No. 17461,17461
• Citation: 104 S.E.2d 673,233 S.C. 376
• Parties: Robert E. BROWN and Jerome O'Keefe, Respondents, v. STATE FARM MUTUAL AUTOMOBILE LIABILITY INSURANCE COMPANY, Appellant.
• Court: South Carolina Supreme Court

Page 673

104 S.E.2d 673

233 S.C. 376

Robert E. BROWN and Jerome O'Keefe, Respondents, v. STATE FARM MUTUAL AUTOMOBILE LIABILITY INSURANCE COMPANY, Appellant.

No. 17461.

Supreme Court of South Carolina.

Aug. 21, 1958.

Henderson, Salley & Cushman, Aiken, for appellant.

Blatt & Fales, Barnwell, Bell & Bell, George L. Dawson, Augusta, Ga., for respondents.

MOSS, Justice.

Robert E. Brown, one of the respondents herein, did on April 13, 1957, in the United States District Court for the Eastern District of South Carolina, obtain a judgment against one George H. Lloyd, in the amount of $10,000 actual damages and $200 punitive damages. The judgment rendered in the United States District Court was upon a cause of action for personal injuries sustained by Robert E. Brown while riding as a passenger in an automobile owned and being operated by George H. Lloyd, when said automobile was involved in an accident which occurred on June 23, 1956. It appears that Robert E. Brown assigned an undivided interest in this judgment to Jerome O'Keefe.

It appears that State Farm Mutual Automobile Liability Insurance Company, the appellant herein, had issued a liability policy of insurance covering the automobile of George H. Lloyd, which applied to the liability of Lloyd to Robert E. Brown, if any such liability existed.

The present action was instituted by Robert E. Brown and Jerome O'Keefe, the respondents herein, against State Farm Mutual Automobile Liability Insurance Company, appellant, to recover the sum of $10,000 based on the judgment obtained by Brown against Lloyd. We will, in this opinion, disregard the fact that Jerome O'Keefe is a respondent, and when reference is made to the respondent it will refer to Robert E. Brown. George H. Lloyd will be referred to as the insured. The State Farm Mutual Automobile Liability Insurance Company will be referred to as the insurer, or appellant.

The insurer, by way of answer to the complaint, alleged that it did issue to the insured a standard form automobile liability insurance policy, covering the operation of a 1953 Oldsmobile automobile, and insuring the said insured against liability and damages arising out of an accident occurring during the operation of said automobile in an amount not to exceed $10,000 for injuries to any one person. The insurer admitted that on June 23, 1956, the insured was involved in an automobile accident in which the respondent was injured, and as a result of an action tried in the United States District Court a judgment was rendered in favor of the respondent for such injuries and damages sustained by him in said accident. The appellant denied liability on the grounds that the insured had failed to comply with the terms of the policy and that full compliance was a condition precedent to any action against the appellant.

The appellant set up two affirmative defenses. It alleged that the policy of insurance issued to the insured provided as conditions precedent to appellant's liability thereunder, that the insured would give written notice to the insurer when an accident or loss occurs. The policy also provided that the insured would co-operate with the insurer. The policy provisions applicable to these defenses are as follows:

'1. Notice of Accident or Loss. When an accident or loss occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured, and also reasonably obtainable information respecting the time, place, circumstances of the accident, names and addresses of injured persons and available witnesses. In the event of theft, larceny, robbery or pilferage prompt notice shall also be given to the police.

'2. Notice of Claim or Suit--Coverage A and B. The insured shall immediately forward to the company every demand, notice summons or other process received by him or his representative.

'5. Action against company. No action shall lie against the company:

'(a) Unless as a condition precedent thereto there shall have been full compliance with all terms of the policy.'

The assistance and co-operation clause is as follows:

'6. Assistance and co-operation of the insured. The insured shall co-operate with the company and upon its request, attend hearings, and trials, assist in effecting settlement, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits.'

The answer alleged that the insured did not give written notice of the accident or loss to the applicant for more than four months after said accident. It was also alleged that the insured did, on October 25, 1956, give to the appellant a written statement of the facts involved in the accident in question, in which he exculpated himself from liability. Thereafter, at the trial of the case, he testified that he could not and did not remember how the accident occurred. Appellant asserts that the failure to give notice of the accident or loss, and the failure to co-operate, constituted a direct violation of the explicit conditions contained in said policy of insurance and relieved the appellant of any liability thereunder. The appellant also alleged that the insured authorized it to investigate, negotiate, settle, deny or defend the action in the United States District Court and that in so doing the Company did not waive any of its rights under the contract of insurance.

At the trial of this case in the lower Court, there was admitted, over the objection of the appellant, evidence tending to show waiver of the policy conditions respecting written notice of the accident, and also evidence showing the giving of oral notice of the happening of the accident. The trial Judge charged the jury as follows:

'If you find that the notice was given as soon as practicable, why then, of course, the defendant will have failed to make out that defense. If you find the notice was not given by Lloyd as soon as practicable, why then, the plaintiffs in this case would not be permitted to recover, unless you find that the defendant has waived that requirement. An insurer may waive a provision in a policy of insurance made for its benefit. Waiver is to give up a right one has intentionally. It is a voluntary intentional relinquishment of a known right, therefore, if you find that a written notice was not given in writing as soon as it was practicable to have been done you then decide whether or not the company, through its agents, has given up, or waived, or relinquished a right it originally had to insist upon written notice as soon as practicable.'

The appellant made timely motions for a nonsuit, for a directed verdict and for judgment non obstante veredicto, or in the alternative, for a new trial, upon the grounds that the evidence is susceptible of no other reasonable inference but that the insured did not give written notice as soon as it was practicable to do so, and that the insured failed to co-operate in the defense of the action in the United States District Court. All of such motions were denied by the trial Judge and this appeal followed.

Three questions arise upon this appeal. (1) Did it constitute prejudicial error for the trial Judge to admit, over objection, evidence tending to show waiver by the insurer of the policy requirements respecting the giving of written notice to the insurer as soon as practicable by the insured or someone in his behalf of the happening on an accident; and in connection therewith, to admit, over objection, testimony showing the giving of oral notice over the telephone of the happening of the accident to the insurer by a person acting on behalf of the insured; and, thereafter, to submit for the consideration of the jury the issue of such waiver and the evidence with respect thereto in the giving of verbal notice? In connection with this question the issue is raised as to whether evidence of waiver could be introduced under the pleadings. (2) Did the Circuit Judge err in failing to hold as a matter of law that the insured did not give the appellant written notice of the accident as soon as practicable as required by the terms of the insurance policy? (3) Did the Circuit Judge err in failing to hold as a matter of law that the insured did not co-operate with the appellant as required by the terms of the insurance policy?

The appellant asserts that the respondent had no right to introduce any evidence of waiver of the conditions contained in the policy for the reason waiver was not pleaded in the complaint.

The complaint alleges that 'the said George H. Lloyd at all times completely and fully complied with and performed all of the terms and conditions set forth in the aforesaid policy of liability insurance. * * *' This is an allegation of the performance of all conditions precedent. The appellant specifically denies this allegation of the complaint. It also asserts that the insured did not give to it written notice of the accident as soon as practicable, which failure constituted a violation of the explicit condition contained in said policy, thereby relieving the appellant of liability thereunder.

Section 10-673 of the 1952 Code of Laws provides:

'In pleading the performance of conditions precedent in a contract it shall not be necessary to state the facts showing such performance but it may be stated generally that the party duly performed all the conditions on his part. If such allegation be controverted the party pleading shall be bound to establish on the trial the facts showing such performance.'

The complaint of the respondent has complied with the requirements of the above quoted section of the Code. The answer of the appellant, following proper practice, set up affirmatively, in its second defense, that there was no liability under the contract of insurance for the reason that no written notice of the accident or loss was given by the insured. If the appellant desired a...