Evans v. American Home Assur. Co.
| Decision Date | 18 March 1969 |
| Docket Number | No. 18893,18893 |
| Citation | 166 S.E.2d 811,252 S.C. 417 |
| Parties | Virginia N. EVANS, Respondent, v. AMERICAN HOME ASSURANCE COMPANY, Appellant. |
| Court | South Carolina Supreme Court |
Clifford F. Gaddy, Jr., Mann, Foster, Johnston & Ashmore, Greenville, for appellant.
Abrams, Bowen & Townes, Greenville, for respondent.
Following involvement in an automobile collision with Charles W. Walton, who was driving an automobile rented from Econo-Car Rentals of Charleston, Inc., plaintiff recovered judgment against Walton. Plaintiff then sued Econo-Car's liability insurance carrier. The company disclaimed liability upon the ground that Walton had violated the cooperation clause of the policy. The circuit judge, who tried the case without a jury, found that the insurance company had failed to prove a violation of this policy provision, and, alternatively, that any such breach had been waived by the insurer. This appeal challenges the sufficiency of the evidence to sustain these findings.
Public liability insurance not only affords protection to insured motorists, it serves the public purpose of affording protection to innocent victims of motor vehicle accidents. In recognition of this important public purpose, the legislatures of some states have enacted compulsory liability insurance laws. Others, including our General Assembly, have sought protection for highway victims, short of compulsory insurance, by the enactment of financial responsibility and uninsured motorist statutes. Although these statutes do not by their terms require coverage for all drivers, their purpose and effect is to induce the purchase of liability insurance by a very high percentage of motorists.
As to liability insurance which is required by law, we have held that a breach of policy conditions by the insured after the injury will not bar recovery against the insurer by the victim of the insured's negligence. Ott v. American Fidelity & Cas. Co., 161 S.C. 314, 159 S.E. 635, 76 A.L.R. 4; 7 Am.Jur. (2d), Automobile Insurance, Sec. 226, p. 576. Our statute so provides as to a certified policy under the Motor Vehicle Responsibility Act, Sec. 46--750.20, Code of 1962; Sec. 46--702(7)(b), 1968 Supplement.
While the same rule does not apply to a 'voluntary' policy, it is settled law with us that a liability insurer may successfully defend upon the ground that the insured has violated the cooperation clause of the policy only when the breach has been material and has resulted in substantial prejudice to the insurer. Furthermore, the insurer must be reasonable in its demands and diligent in its efforts to secure the co-operation of the insured. Meehan v. Commercial Cas. Ins. Co., 166 S.C. 496, 165 S.E. 194; Pennsylvania Threshermen & F.M. Cas. Ins. Co. v. Owens, 238 F.2d 549 (4th Cir.); Pharr v. Canal Ins. Co., 233 S.C. 266, 104 S.E.2d 394; Crook v. State Farm Mut. Ins. Co., 235 S.C. 452, 112 S.E.2d 241. These are issues of fact for determination by the jury or by the trial judge where, as here, a jury trial has been waived, and the burden of proof rests squarely upon the insurer. Crook v. State Farm Mut. Ins. Co., Supra.
The only issue which we need to decide is whether the trial judge erred as a matter of law in holding that the insurer had failed to meet the burden of establishing a significant violation of the cooperation clause by Walton. We state the facts in the light of the rule that in resolving this issue the evidence must be viewed most favorably to plaintiff.
The collision between automobiles driven by plaintiff and Walton occurred in the City of Greenville over the weekend of February 18, 1967. Walton was a resident of Greenville but at the time of the collision was a seaman in the United States Navy stationed in Charleston. He was arrested and charged with reckless driving and leaving the scene of the collision. An adjuster for the insurer interviewed him at the city jail on February 20, and he signed a statement prepared by the adjuster.
The tort action was commenced against Walton and Econo-Car in late April, 1967. Walton was absent without leave from the Navy, and he was served through the Chief Highway Commissioner, pursuant to Section 10--431, Code of 1962. He did not receive actual notice of the pendency of the action until August 24, 1967.
In the meantime, Clifford Gaddy, Jr., Esq., a member of the Greenville Bar, had been retained by the insurer to represent...
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