Federal Surety Company v. Guerrant

• Decision Date: 27 March 1931
• Parties: Federal Surety Company v. Guerrant.
• Court: United States State Supreme Court — District of Kentucky

Page 562

238 Ky. 562

Federal Surety Company v. Guerrant.

Court of Appeals of Kentucky.

Decided March 27, 1931.

1. Insurance. — Insurer's plea that insured was estopped from asserting claim for failure to give notice of accident, not alleging that insurer was deceived thereby, was demurrable.

Answer of insurer, in suit to recover on casualty policy for expenses in defending suit against insured, alleged that insured was estopped by reason of failure, as soon as practicable after he ascertained occurrence of accident, to give written notice to insurer or its authorized agents from asserting any claims of any character against insurer on account of accident.

2. Estoppel. — Asserter of estoppel must in pleading affirmatively show that adversary in previous dealings had induced asserter to believe certain things on which he acted and that adversary was seeking to take inconsistent position.

3. Estoppel. — Essential element of estoppel is that asserter of estoppel was deceived thereby.

4. Pleading. — Motion to strike is directed to surplusage or irrelevant matter in pleading, or to entire pleading if all be of that nature.

5. Pleading. — Sufficiency of pleading to state cause of action or defense cannot be raised by motion to strike.

6. Insurance. — Insured's plea of estoppel respecting right of insurer to rely on failure to give notice of accident in writing held not demurrable.

Insured's reply, in suit on casualty policy to recover expenses in defending suit, was to effect that authorized agent of insurer at time insured reported accident accepted same as full compliance with terms of contract of insurance sued on, and instructed insured to let him know in case anything more was heard from accident and that he would notify company, in addition to which it was alleged that insured relied upon such instruction and did report to insurer's authorized agent from time to time as he gained any information concerning accident or claim relating thereto.

7. Insurance. — Failure of insured under casualty policy to give written notice of accident, as required by policy, did not prevent recovery.

Although insured admittedly did not give required written notice to insurer, as provided for in policy, notice of accident was given orally to insurer's authorized agent, who instructed insured to inform him of further developments in relation to accident and that he would notify company thereof.

8. Insurance. — Conditions affecting risk itself are more strictly enforced than those relating to mode of establishing loss.

9. Trial. — Instructions, in suit to recover on casualty policy, failing to incorporate elements of estoppel of insurer to rely on insured's failure to give notice, held erroneous.

Instruction respecting right of insured to recover on policy, in case he notified insurer's agent within reasonable time after accident and gave him full information obtainable at the time, failed to include element as to whether insurer's agent by either his words or conduct induced insured to believe a written notice would not be required.

Appeal from Clark Circuit Court.

BENTON & DAVIS for appellant.

JOUETT & METCALF, D.L. PENDLETON, and V.W. BUSH for appellee.

OPINION OF THE COURT BY DRURY, COMMISSIONER.

Reversing.

The Federal Surety Company seeks the reversal of a judgment for $2,903.23 recovered against it by Dr. E. P. Guerrant.

On December 26, 1925, the Federal Surety Company issued to Dr. Guerrant a policy of liability insurance, covering the operation of a Hudson Super Six coach for the period of one year.

On August 19, 1926, this machine, while driven in Laurel county, by Dr. Guerrant's 20 year old son, collided with a car driven by one Lyman Carter, and the latter was killed. In July, 1927, Dr. Guerrant and his son were sued for $50,500 by the administratrix of Carter. The Federal Surety Company was notified of the suit, but denied liability and declined to have anything to do with it. Dr. Guerrant defended the suit, was successful, and after it was over, filed this suit on the policy, alleging elaborately the foregoing, and further:

That on the day following the accident he gave notice thereof to John H. Lacy, the defendant's authorized agent, and gave defendant through Lacy the fullest information then obtainable.

That under and by the terms and conditions of said policy and contract the defendant company agreed with the plaintiff to indemnify him.

"On account of . . . injury or death to . . . persons injured or killed, and to the extent of $1000.00 for property damage caused from accident or accidents by assured's automobile, a Hudson Super Six Coach, Factory Number 422996, Model 1923, while being driven by the assured or a member of his family who was at least sixteen years of age and of lawful age to drive an automobile under the laws of Kentucky, for which damage to persons or property the assured should be legally liable and agreed further to pay all costs and expense incident to the investigation and settlement of claims and all costs taxed against assured in any legal proceding. . . and that defendant company further agreed that if any suit, even if groundless should be brought against the assured to enforce a claim for damages on account of any accident covered by said policy, the Company would at its own cost defend or at its option settle said suit in the name and on behalf of the assured. . . ."

That he did make such investigations as were necessary and did prepare through his attorneys said suit for trial, and that said suit was tried before a jury in the Laurel Circuit Court at London, Kentucky, in October, 1927, and resulted in a judgment for the defendant and his said son. Plaintiff says that he had incurred as costs and expenses incident to the investigation and the trial for said suit the following sums:

                Attorneys' fees _______________________________ $2,500.00
                Court costs ___________________________________    118.50
                Expense in making investigation and in securing
                 the attendance of witnesses for traveling
                 and hotel expenses while making investigation
                 and at trial of case in London, Kentucky _____    284.73
                                                                _________
                   Total ______________________________________ $2,903.23
                

"That immediately after trial of said case he made and furnished to the defendant an itemized statement of the costs and expenses, of said case, and demanded of the defendant the payment thereof, but that the defendant failed and refused and now fails and refuses to pay same or any part thereof."

For these sums Dr. Guerrant prayed judgment. The surety company's demurrer to this petition was overruled, and it answered, denied the petition, alleged that any sum in excess of $1,000 for attorneys' fees and $100 for expenses was unreasonable, and further alleged:

"It says that on said occasion the plaintiff, at plaintiff's office in Winchester, Clark County, Kentucky, orally stated to said Lacy that he had met with an accident with his car while driven by his son, the Edward Guerrant mentioned the petition, in Laurel County, Kentucky, in which a man had been killed; that the coroner's jury and persons who were cognizant of the facts had exonerated the plaintiff's son; that upon receiving this information which it says was all the information the plaintiff gave its agent, Lacy, with reference to said accident, and did not include the name of any witness to the accident, nor give any information other than the bare fact that in the accident a man was killed, and that his son had been exonerated by the coroner's jury and persons who were cognizant of the facts, the said Lacy instructed the plaintiff to come to his office and make out a written report of the accident; that the plaintiff said he would do so, but defendant says that the plaintiff wholly failed to go to said Lacy's office and make out a written report of the accident, and this defendant says that it had no notice of said accident until sometime in the month of July, 1927, and the defendant says that by reason of the plaintiff's failure as soon as practicable after he ascertained the occurrence of the accident to give written notice thereof to this defendant's home office at Davenport, Iowa, or to this defendant's authorized agent the plaintiff is estopped from asserting any claim of any character against this defendant on account of said accident." (No part of this answer was italicized, but these are our italics used for purposes of illustration.)

Dr. Guerrant moved to strike almost the whole of this answer, but his motion was overruled except as to that part which we have italicized. As to that part it was sustained and that was stricken. The surety company's plea of estoppel was not good. To constitute a sufficient plea of estoppel, the asserter of the estoppel must in his pleading affirmatively show that his adversary in previous dealings with the asserter had induced the asserter to believe certain things to be true, that the asserter has acted on that belief, and that his adversary is now seeking to take a position, inconsistent with such former position, by asserting as true, matter he formerly denied, by denying matter he formerly asserted to be true, or otherwise be now making contentions or claims or taking positions inconsistent with claims made or denied or positions taken in his former dealings with the asserter of the estoppel. That the asserter of the estoppel was deceived thereby is an essential element of an estoppel, though it need not appear that the party sought to be estopped intended to deceive. That the estoppel asserter was deceived by some act or conduct of the party against whom the estoppel is asserted must appear. No such suggestion is in this answer; therefore this plea of estoppel was not good. The correct way to have reached this plea would have been to have had this answer paragraphed and then to have demurred to this paragraph. A motion to strike is directed to...