Evans v. Continental Cas. Co.

• Decision Date: 10 June 1952
• Docket Number: No. 31897,31897
• Citation: 245 P.2d 470,40 Wn.2d 614
• Court: Washington Supreme Court
• Parties: EVANS, v. CONTINENTAL CAS. CO.

Page 614

40 Wn.2d 614

245 P.2d 470

EVANS, v.CONTINENTAL CAS. CO.

No. 31897.

Supreme Court of Washington, Department 1.

June 10, 1952.

Rehearing Denied Aug. 6, 1952.

Skeel, McKelvy, Henke, Evenson & Uhlmann, Altha P. Curry, Seattle, for appellant.

Lycette, Diamond & Sylvester, Earle W. Zinn, Seattle, for respondent.

DONWORTH, Justice.

This action was brought by plaintiff, who was an insured under a public liability insurance policy issued by defendant, to recover the sum of $9,250 paid by him in compromise of two damage actions brought against him, together with his expenses and attorney fees incurred in connection with compromise of the two suits.

The case was tried before the court sitting with a jury but, at the close of the testimony the court, with the consent of the parties, withdrew the case from the jury and entered findings of fact and conclusions of law upon which it rendered judgment for plaintiff in the total sum of $10,080.11.Defendant has appealed from this judgment.

The factual background of this controversy is somewhat complex, although there is little dispute between the parties as to the controlling facts.At the trial and in their briefs in this court both parties argued only questions of law.

Appellant is a casualty insurance company authorized to do business in this state, having its home office in Chicago.Respondent has for many years operated a drive-yourself automobile rental business in Seattle as a licensee of the Hertz Drivurself system.

Appellant, prior to the time this controversy arose, had issued a policy of liability insurance designated 'Hertz Special Automobile Policy (Licensee form)' under which respondent was an insured licensee.This policy, which was in force when the events hereinafter described took place, provided in part as follows:

'Coverage A--Bodily Injury Liability.To pay on behalf of the Assured all sums which the Assured shall become obligated to pay by reason of the liability imposed upon the Assured by law for damages, including damages for care and for loss of services, because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons, caused by accident during the policy period and arising out of the ownership, maintenance or use, including loading or unloading, of any of the automobiles described in the Schedule.

'[Here follow similar provisions relating to liability for property damage.]

'Service.The Company agrees to investigate all reported accidents covered hereby; to defend for the Assured any suits, even if groundless, brought against the Assured to recover damages for which indemnity is payable under this policy, unless the Company shall elect to effect settlement thereof; to pay irrespective of the limits of liability hereinafter mentioned all expenses incurred by the Company for investigation and defense, including all costs taxed against the Assured in such suits, and all interest accruing after entry of judgment until the Company shall have paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon, all expense necessarily paid in money by the Assured at the time of the accident in removing injured person to a suitable place, and such expense so paid for such immediate medical and surgical aid as the Assured may then deem imperative.

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'This insurance is subject to the following conditions and failure on the part of the Assured to comply therewith shall forfeit the right of said Assured or of any judgment creditor of said Assured to recover hereunder.* * *

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'2.Upon the occurrence of any accident covered by this policy, the Renter or Driver shall give immediate notice to the Licensee from which such automobile was rented and immediately thereafter the Licensee shall give written notice to the Company at its General Office, 910 South Michigan Avenue, Chicago, Illinois, or to an authorized agent or Branch Office of the Company within the state wherein such accident occurred, with the fullest details possessed at the time by the Licensee, and each Assured shall immediately forward to the Company or to such authorized agent or Branch Office as soon as practicable every process, pleading or paper of any kind relating to any and all claims, suits and proceedings received by such Assured.The Company shall have the exclusive right to contest or settle any of said claims or suits.The Assured shall not, except at its own cost, voluntarily make any payment, assume any obligation or incur any expense other than as herein elsewhere provided for without the written consent of the Company.The Assured shall not interfere in any way respecting any negotiations for the settlement of any claim or suit nor in the conduct of any legal proceeding nor in any manner aid or abet any claimant, but shall co-operate fully with the Company in the defenses of said claim or suit and shall, upon the Company's request, attend hearings and trials and addist in effecting settlement securing and giving evidence and obtaining the attendance of witnesses and the Company shall reimburse the Assured for any expense, other than for loss of time, incurred at the Company's request.'

The clauses in the policy upon which appellant relies as relieving it of liability under the circumstances later related herein, were stated as follows:

'3.This policy does not cover:

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'(d) Any liability of the Licensee:

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'(3) as to any automobile leased or rented by a Licensee to any person (a) in violation of law as to age or under the age of sixteen years in any event; (b) under the influence of intoxicating liquors or narcotics; * * *

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'6.No action shall be maintained against the Company under this policy unless brought after the amount of loss shall have been finally determined either by judgment against the Assured, after actual trial or by written agreement of the Assured, the Claimant and the Company. * * *'

The limits of appellant's liability as set forth in the policy were $5,000 for personal injuries sustained by each person and $10,000 for such injuries sustained by more than one person in any one accident and $1,000 for property damage.

On August 28, 1947, one of respondent's employees rented an automobile to one De Marco, a merchant seaman then seventeen years old (who represented himself as being twenty-one).He was accompanied by a young man (later identified as James Hubert) who appeared to be about the same age.When De Marco first applied for an automobile, respondent's wife refused to rent to him because, as she testified, she didn't like his appearance and thought she detected a faint odor of beer.She told De Marco that they had no car available.She testified positively that he was not under the influence of intoxicating liquor at that time.Appellant at the trial took the position that it was immaterial in this case whether De Marco was under the influence of liquor at that time.

About half an hour after being turned down by Mrs. Evans, De Marco reappeared and obtained a car from an employee of respondent who did not know of the previous refusal.The latter testified that there was no indication then that De Marco had been drinking.

On the following day, between six and seven o'clock p. m., De Marco brought the car into another place of business operated by respondent to obtain gasoline and oil and pick up a tire that was being repaired.The employee who saw him at that time testified that De Marco did not appear to have been drinking.

About 2:30 a. m., August 30, De Marco, accompanied by James Hubert, while driving west down a steep hill on Madison street in Seattle at a high rate of speed, disregarded a stop light at the corner of 4th and Madison streets and collided violently with an automobile owned and driven by Arthur Alton Smith, who was traveling south on 4th avenue.As a result of this collision, Smith was killed and Miss Iladen Filer, a passenger in his car, sustained extremely serious personal injuries.

De Marco and Hubert ran away from the scene but later surrendered themselves at the police station.De Marco subsequently pleaded guilty to the crime of negligent homicide by means of a motor vehicle and Hubert pleaded guilty to aiding and abetting him.

When the accident was reported to respondent on August 30, he immediately notified appellant thereof and it began an investigation of the accident and the facts relating thereto.An adjuster for appellant, who interviewed witnesses and parties involved in the accident and took statements from them and from respondent's employees, found evidence indicating that De Marco was under the influence of intoxicants at the time of the accident.Shortly after the accident appellant gave De Marco notice that it asserted a reservation of its right to disclaim coverage as to him.This was done pursuant to a provision in the policy that it did not cover a renter who operated the automobile while under the influence of intoxicants.

No suit was filed against respondent or De Marco as a result of the accident until December 29, 1948, when respondent was served with summons and complaint in an action brought against him and De Marco in the superior court for King county by the administrator of the Estate of Arthur Alton Smith, the deceased owner and operator of the other car involved in the accident.The plaintiff in that action prayed for judgment in the sum of $25,976.29 (later amended to $32,176.29) for the wrongful death of Smith and damages to his automobile.The complaint contained the following allegations in reference to respondent's negligence:

'That the negligence of the defendant, R. H. Evans, and/or his agents or employees, consisted of failure to exercise due care in the rental of a vehicle; renting a vehicle to the said Donald De Marco who was in an obviously intoxicated condition; continuing said rental...