Davenport v. Travelers Indem. Co.

• Decision Date: 11 April 1973
• Docket Number: No. 29,29
• Citation: 195 S.E.2d 529,283 N.C. 234
• Parties: Catherine H. DAVENPORT v. The TRAVELERS INDEMNITY COMPANY.
• Court: North Carolina Supreme Court

Page 529

195 S.E.2d 529

283 N.C. 234

Catherine H. DAVENPORT v. The TRAVELERS INDEMNITY COMPANY.

No. 29.

Supreme Court of North Carolina.

April 11, 1973.

Don Davis, Charlotte, for plaintiff appellee.

Boyle, Alexander & Hord, by Robert C. Hord, Jr., Charlotte, for defendant appellant.

BRANCH, Justice.

The Court of Appeals held that defendant's 'broadside exceptions to the findings of fact, conclusions of law and judgment entered thereon' would not bring up for review the findings of fact or the evidence on which they were based, but presented the record proper for review upon the question of whether error of law appears on the face of the record. We agree. Such a review presents the question of whether the facts found support the judgment and whether the judgment is regular in form. Fishing Pier v. Town of Carolina Beach, 274 N.C. 362, 163 S.E.2d 363; In Re Appeal of Broadcasting Corp., 273 N.C. 571, 160 S.E.2d 728.

The pleadings, issues and judgment are necessary parts of the record proper. Williams v. Contracting Company, 259 N.C. 232, 130 S.E.2d 340; Campbell v. Campbell, 226 N.C. 653, 39 S.E.2d 812; 1 Strong's N.C. Index 2d Appeal and Error § 40.

The judgment here is regular in form; we must, therefore, consider whether the Court of Appeals erred in holding that the 'facts found by the court support the conclusions of law in the judgment.' The crucial question is whether the facts found support the conclusion that defendant waived the contract provision pleaded by defendant.

The policy provision that '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' is a valid stipulation, and unless the insured or his judgment creditor can show compliance with the requirement, the insurer is relieved of liability. Moreover, an injured party who obtains judgment against the insured has no greater rights against the insurer than the insured. Clemmons v. Insurance Co., 267 N.C. 495, 148 S.E.2d 640; Woodruff v. Insurance Co., 260 N.C. 723, 133 S.E.2d 704; Henderson v. Insurance Co., 254 N.C. 329, 118 S.E.2d 885; Muncie v. Insurance Co., 253 N.C. 74, 116 S.E.2d 474.

However, failure to give notice or immediately forward summons or other process received by the insured may be waived by denial of liability on other grounds. The rationale of this rule is that denial of liability on other grounds is generally regarded as saying that payment would not have been made had the policy provisions been complied with, and that the law will not require a vain thing. Gardner v. Insurance Co., 230 N.C. 750, 55 S.E.2d 694; Felts v. Insurance Co., 221 N.C. 148, 19 S.E.2d 259; Gorham v. Insurance Co., 214 N.C. 526, 200 S.E. 5; Gerringer v. Insurance Co., 133 N.C. 407, 45 S.E. 773.

Consistent with this rule is the rule recognized in most jurisdictions that the unjustified refusal of the insurer to defend an action against the insured on the ground that the claim on which the action is based is outside the policy coverage deprives the insurer of its right to insist upon compliance with a policy provision requiring forwarding of summons or other process received by the insured. Clemmons v. Insurance Co., supra; Lowe v. Fidelity and Casualty Co., 170 N.C. 445, 87 S.E. 250; Annot., 49 A.L.R.2d 694; § 30; 8 Appleman, Insurance Law and Practice § 4731 et seq. See Nixon v. Insurance Co., 255 N.C. 106, 120 S.E.2d 430.

The Sine qua non of the rule of waiver by denial of liability, however, is that the insurer has notice that a claim of loss is being asserted against it. Turpentine & Rosin Factors v. Travelers Ins. Co., 45 F.Supp. 310 (D.C.S.D.Ga.1942); Peeler v. Casualty Company, 197 N.C. 286, 148 S.E. 261; Annot., 6 A.L.R.2d 661; 8 Appleman, Insurance Law and Practice §§ 4732, 4740.

The courts have noted different rules in determining liability between insurers who refuse to defend and those who commence a defense and abandon it. See 14 Couch on Insurance 2d §§ 51, 124; 44 Am.Jur.2d Insurance §§ 1544--1546, 1557--1559. However, the facts of this case do not require consideration of this question.

In Clemmons v. Insurance Co., supra, Bobbitt, J. (now C.J.), in discussing waiver of an insurance contract provision, stated:

'Ordinarily, waiver is defined as a voluntary and intentional relinquishment of a known right. In Hospital v. Stancil, supra, waiver is defined as 'the intentional surrender of a known right or privilege, which surrender modifies other existing rights or privileges or varies the terms of a contract.' In Fetner v. Granite Works, 251 N.C. 296, 302, 111 S.E.2d 324, Moore, J., in accord with 56 Am.Jur., Waiver § 12, stated: 'The essential elements of a waiver are: (1) the existence, at the time of the alleged waiver, of a right, advantage or benefit; (2) the knowledge, actual or constructive, of the existence thereof; and (3) an intention to relinquish such right, advantage or benefit.'

We think that Campbell v. Continental Casualty Co. of Chicago, 170 F.2d 669, 6 A.L.R.2d 655 (8th Cir. 1948), sheds light upon the question before us. We quote from the decision of the 8th Circuit Court of Appeals:

'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 policy 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 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...