Clemmons v. Nationwide Mut. Ins. Co., 696

• Decision Date: 16 June 1966
• Docket Number: No. 696,696
• Citation: 148 S.E.2d 640,267 N.C. 495
• Court: North Carolina Supreme Court
• Parties: Florence Jean CLEMMONS v. NATIONWIDE MUTUAL INSURANCE COMPANY.

Page 640

148 S.E.2d 640

267 N.C. 495

Florence Jean CLEMMONS v. NATIONWIDE MUTUAL INSURANCE COMPANY.

No. 696.

Supreme Court of North Carolina.

June 16, 1966.

Herring, Walton, Parker & Powell, Southport, for plaintiff appellee.

W. G. Smith, Wilmington, for defendant appellant.

BOBBITT, Justice.

The policy issued by Nationwide to Mrs. King contained all provisions of an owner's policy of liability insurance required by G.S. § 20--279.21 as proof of the financial responsibility required by G.S. § 20--309 et seq. The distinction between an owner's policy of liability insurance and an operator's policy of liability insurance, the required provisions of each being set forth in G.S. § 20--279.21, is pointed out in Howell v. Travelers Indemnity Co., 237 N.C. 227, 74 S.E.2d 610, and Lofquist v. Allstate Insurance Co., 263 N.C. 615, 140 S.E.2d 12.

In Woodruff v. State Farm Mutual Automobile Insurance Co., 260 N.C. 723, 133 S.E.2d 704, the plaintiff had obtained judgment against the party to whom the defendant had issued an owner's assigned risk policy. Defendant based its defense on its policyholder's failure to give it notice of the accident as required by the policy. This Court, in opinion by Denny, C.J., said: 'Our Financial Responsibility Act does not require an owner's assigned risk policy to cover any liability except that growing out of the operation of the motor vehicle described in the policy. Consequently, the coverage in the policy issued by the defendant to Holbrook with respect to the use of other automobiles, was in addition to the coverage required by our Motor Vehicle Safety and Financial Responsibility Act. Therefore, with respect to such coverage, the policy makes the giving of notice a condition precedent to insurer's liability.' In this connection, see also Howell v. Travelers Indemnity Co., supra.

G.S. § 20--279.21(g) provides: 'Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy and such excess or additional coverage shall not be subject to the provisions of this article. With respect to a policy which grants such excess or additional coverage the term 'motor vehicle liability policy' shall apply only to that part of the coverage which is required by this section.'

Since Nationwide's liability, if any, if based on 'coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy,' decision herein is governed by Muncie v. Travelers Insurance Co., 253 N.C. 74, 116 S.E.2d 474, rather than by Swain v. Nationwide Mutual Insurance Co., 253 N.C. 120, 116 S.E.2d 482.

This Court has held binding and enforceable provisions requiring that an insured give notice of an accident, Muncie v. Travelers Insurance Co., supra, and Woodruff v. State Farm Mutual Automobile Insurance Co., supra, and requiring the insured's cooperation in defense of any action against him, Henderson v. Rochester American Insurance Co., 254 N.C. 329, 118 S.E.2d 885. Moreover, the cited cases establish that compliance with such policy provisions is a condition precedent to recovery, with the burden of proof on the insured to show compliance, where the policy, as in this case, provides, '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,' or words of like import. Moreover, with reference to an owner's policy of insurance unless the action be based on policy provisions required by G.S. § 20--279.21, as in Swain v. Nationwide Mutual Insurance Co., supra, an injured party who obtains a judgment against the insured has no greater rights against the insurer than those of the insured. Muncie v. Travelers Insurance Co., supra, and cases cited; Woodruff v. State Farm Mutual Automobile Insurance Co., supra.

While no decision of this Court involving a policy provision, 'If claim is made or suit is brought against the Insured, he shall immediately forward to the Company every demand, notice, summons or other process received by him or his representative,' has come to our attention, decisions in other jurisdictions hold this is an unambiguous, reasonable and valid stipulation, and that, unless the insured or his judgment creditor can show compliance by the insured with this policy requirement, the insurer is relieved of liability. Potter v. Great American Indemnity Co. of N.Y., 316 Mass. 155, 55 N.E.2d 198; Nevil v. Wahl, 228 Mo.App. 49, 65 S.W.2d 123; Boyle Road & Bridge Co. v. American E. Ins. Co., 195 S.C. 397, 11 S.E.2d 438; Donlon v. American Motorists Ins. Co., 147 S.W.2d 176 (Mo.App.), reh. den., 149 S.W.2d 378 (Mo.App.); Sims T.V., Inc. v. Fireman's Fund Insurance Company, 108 Ga.App. 41, 131 S.E.2d 790; Wilkerson v. Maryland Cas. Co., 119 F.Supp. 383 (E.D.Va.), aff. sub nom. Maryland Casualty Co. v. Wilkerson, 210 F.2d 245 (4 Cir.); De Vigil v. General Accident Fire & Life Assurance Co., 146 F.Supp. 729 (D.Hawaii); Annotation, 18 A.L.R.2d 443, 450; 7 Am.Jur.2d, Automobile Insurance § 185; 45 C.J.S. Insurance § 1047.

As stated by Frankum, J., in Employees Assurance Society v. Bush, 105 Ga.App. 190, 123 S.E.2d 908: 'In order to hold the insurer liable for damages under the policy, provisions of the policy place upon the insured the duty of complying with two conditions: first, to notify the company of the accident, and second, to forward to the insurer every demand, notice, summons, or process received by him or his representative. The purpose is to inform the insurer of the occurrence of the two events.' In Potter v. Great American Indemnity Co. of N.Y., supra, Wilkins, J., said: 'It is none the less a breach notwithstanding the fact that the company received prompt written notice of the accident under another condition of the policy. These were separate and distinct undertakings by the insured. (Citation) It is not for the plaintiff to assert that the company may not have been prejudiced by failure to receive the summons 'immediately' as stipulated.'

'An automobile liability insurer may, by waiver or estoppel, lose its right to defeat a recovery under a liability policy because of the insured's failure to comply with the policy provision as to the forwarding of suit papers.' 7 Am.Jur.2d, Automobile Insurance § 188; 45 C.J.S. Insurance § 1058; Annotation, 18 A.L.R.2d 443, 487. The subject of waiver will be discussed later with specific reference to the facts in evidence.

Defendant excepted to and assigns as error the denial of its motion at the conclusion of all the evidence for judgment of nonsuit. See G.S. § 1--183; Murray v. Wyatt, 245 N.C. 123, 128, 95 S.E.2d 541. Decision with reference thereto requires consideration of the evidence in the light of the foregoing legal principles.

Plaintiff's evidence, apart from the testimony of Ruby B. King, judgment debtor and Nationwide's policyholder, and of Sylvia P. Edwards, consists of the testimony, on adverse examination prior to trial, of Stanley J. Wiemer, H. F. Snevel and William J. Martin; and of the testimony, on adverse examination at trial, of Robert L. Triplett, James Edward Harrington and E. J. Sealey.

The testimony of Mrs. Edwards, a court reporter, related solely to features of the trial of the prior action, including identification of the attorneys who appeared therein.

The adverse examination of Wiemer, Resident Vice President of Nationwide, was exploratory in nature and resulted in no pertinent discovery. Hence, no further reference will be made to Wiemer's testimony. The testimony elicited on the other adverse examinations is summarized, except when quoted, as set out below.

After notice of the collision of February 6, 1964, investigation thereof was assigned by Nationwide to Sealey, its District Office Manager in Wilmington. On or about February 13, 1964, Sealey assigned the investigation to M. E. Gooch and Associates (Gooch), independent claims adjusters of Wilmington. Triplett, Claims Manager for Gooch, assigned the field investigation to Harrington, an employee of Gooch. Statements were obtained (recorded in Harrington's phraseology and handwriting) from Florence Jean Clemmons, Myrtle Clemmons Strickland, Eulene Lee, Rufus Vonnie King, Ruby Blanton King and Jimmy Lee Maggard.

Triplett's initial report dated February 25, 1964, advised Nationwide that Mrs. Clemmons 'had sustained very minor injuries' and, based on Gooch's evaluation of the claim, stated: 'Her injuries are such that settlement certainly can be made within the initial or primary coverage and we should not be involved, and therefore we are not suggesting a BI reserve.' (Note: 'BI' is the abbreviation for Bodily Injury.)

Gooch's said report also advised Nationwide that Mr. Ray Walton was representing Mrs. Clemmons. The report contained the following: 'Your insured and her family, which were the occupants of the insured unit at the time, are represented by Attorney Bunn Frink of Southport, North Carolina.'

Gooch closed its investigation on February 28, 1964. Thereafter, on March 2, 1964, Triplett sent to Nationwide a hospital bill relating to Mrs. King's injuries, and on March 20, 1964, a medical report relating to Mrs. Strickland's injuries. The Gooch reports were filed with Martin, a claims examiner for Nationwide in Raleigh. Until a suit is instituted, a 'claims examiner' or 'division claims manager' has supervision of claims.

Snevel was an assistant claims attorney. On the day of the trial of the plaintiff's action against Mrs. King and Mrs. Lee, and a short time prior to the commencement thereof, Mr. Frink advised the Raleigh office of Nationwide of the pending action and of the imminent trial thereof. Prior to receiving information of Mr. Frink's said message, Snevel had heard nothing of the suit or of the 'open claim,' the file with reference to the 'open claim' being under the supervision...