Campbell v. Continental Casualty Co. of Chicago

• Decision Date: 16 November 1948
• Docket Number: No. 13711.,13711.
• Citation: 170 F.2d 669
• Parties: CAMPBELL v. CONTINENTAL CASUALTY CO. OF CHICAGO.
• Court: U.S. Court of Appeals — Eighth Circuit

170 F.2d 669 (1948)

CAMPBELL v. CONTINENTAL CASUALTY CO. OF CHICAGO.

No. 13711.

United States Court of Appeals Eighth Circuit.

November 16, 1948.

Harry A. Hall and Anthony P. Nugent, both of Kansas City, Mo., for appellant.

Harry P. Thomson, Jr., and Henry M. Shughart, both of Kansas City, Mo., for appellee.

Before THOMAS, JOHNSEN, and COLLET, Circuit Judges.

JOHNSEN, Circuit Judge.

The suit is one on a policy of liability insurance, to recover from the insurer the amount which the insured had been obliged to pay in satisfaction of a default judgment against him, obtained by a third party in state court, for damages from an automobile collision. The insured also sought to recover a penalty for vexatious delay and attorney's fees. The District Court, on a trial without a jury, gave judgment for the insurer, and the insured has appealed. Jurisdiction rests on diversity of citizenship, and the case is governed by Missouri law.

The policy, under the head of "Conditions", contained a requirement that the insured should give written notice of accident as soon as practicable, and the following further provisions: "If claim is made or suit brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative." "The insured shall cooperate with the company * * *." "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 * * *."

No question of failure to give notice of accident or notice of claim against the insured is involved. The trial court rested its decision on the grounds that the insured had breached the conditions as to forwarding of summons and other process and as to cooperation, to the prejudice of the insurer, and so could not recover.

The court made findings that, in the action in which the default judgment was entered, summons and copy of petition had been left by the sheriff with the insured's mother, at what the return on the writ stated was the insured's usual place of abode; that these papers were turned over by the mother to the manager of the insured's business, who among other things had the duty of handling all insurance accident matters for the business; that the manager put the suit papers in the office insurance file, without forwarding them to the insurer; that several months later default judgment was entered against the insured and the driver of his truck, who had also been made a defendant, which judgment the state court refused to vacate; and that the insurer had no notice of the suit "as to John Campbell" (the insured), until after the entry of the default judgment.

The insured's principal contention here is that he was not required to forward his summons and copy of petition to the insurer, because, he says, his truck driver, who under the omnibus coverage clause in the policy¹ also was an insured, had previously delivered his summons and copy of petition to an employee in the insurer's office and this constituted a sufficient compliance as to both of them.

The evidence can not be said to establish unequivocally that the driver actually had delivered his summons and copy of petition to the insurer, and the court made no finding as to whether he had in fact done so or not. The driver testified that he had, but the record shows that in the proceeding in state court to have the judgment vacated he had not been quite so definite in his testimony. It is true that there are circumstances in the record which could be accepted as corroborative that the summons and copy of petition had been left at the insurer's office. Against this, the two secretaries in the insurer's office testified that they had no recollection of having received any such papers and, if they had received them, they would have turned them over to the claims manager in accordance with their duty and regular practice. And the claims manager stated that no such papers had been turned over to him by anyone and that he never had any notice of a suit having been brought by the third party until after the default judgment was entered.

But we need not further consider the evidence on this question. Assuming for purposes of the insured's contention that the driver did deliver his summons and copy of petition to the insurer, this still would not have informed the insurer whether the insured himself had been served with process and brought into court. The record shows that the insured was not in fact served until some days after the driver. On the evidence, neither the insured nor his manager nor his driver knew at the time that the driver claims to have delivered his suit papers to the insurer whether any service then had been or ever would be attempted to be made on the insured. None of them undertook to notify the insurer in any way thereafter that such service had been made. The driver's suit papers might have informed the insurer that the insured had been named as a defendant in the action, but as we have stated they would not advise it that the insured had been brought into court. And neither the language of the policy, nor the construction made by any court of such provisions as it contains, has imposed on the insurer, merely because it knows that an insured has been named as a defendant in an action, the sentry duty of tracking back and forth to the court house to keep a check on if or when he may be served with process.

Under the trial court's finding, which the evidence clearly sustains, the insurer never knew, until after the default judgment was entered, that the insured had been brought into court by the service of process. The prejudice to the insurer's right from the failure to have forwarded the summons, or otherwise to have given adequate notice that such service had been made, is in the situation indisputable. Indeed, even beyond the insurer's deprivation of the opportunity to defend the action, if the facts were as set out in the insured's accident report and in the police report, it would seem that there could have been no actual liability to the third party.

Whether the delivery by the driver of his suit papers to the insurer, if the insurer subsequently had been informed that process also had been served upon the insured, would have constituted under Missouri law a sufficient compliance with the provision of the policy as to forwarding of summons or other process, in the absence of a request for the forwarding of the additional summons at the time the insurer was notified of its service, it is not necessary for us to determine. There is no decision by the Missouri Supreme Court upon the specific...