Fireman's Fund Indemnity Co. v. Kennedy, 8625.

• Decision Date: 30 June 1938
• Docket Number: No. 8625.,8625.
• Citation: 97 F.2d 882
• Parties: FIREMAN'S FUND INDEMNITY CO. v. KENNEDY.
• Court: U.S. Court of Appeals — Ninth Circuit

97 F.2d 882 (1938)

FIREMAN'S FUND INDEMNITY CO. v. KENNEDY.

No. 8625.

Circuit Court of Appeals, Ninth Circuit.

June 30, 1938.

Bronson, Bronson & McKinnon, of San Francisco, Cal., and R. F. Gaines, of Butte, Mont., for appellant.

Harrison J. Freebourn and Enor K. Matson, both of Helena, Mont., for appellee.

Before GARRECHT, HANEY, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

This is an appeal from a judgment of the District Court for the District of Montana. The case was tried to a jury, and when it was announced that the plaintiff would offer no more testimony, the defendant by its attorney announced that it had no evidence to submit, and rested its case. Thereupon it interposed a motion for a directed verdict, which motion the court denied. The plaintiff then made a motion for a directed verdict, which motion was granted by the court, and under the direction of the court the jury returned its verdict for the plaintiff and against the defendant in the sum of $10,000.

This action is based upon what is commonly called a "blanket" automobile liability policy issued by the Fireman's Fund Indemnity Company, a corporation, to the City of Butte, Montana, as the assured and covers certain persons in that city's service, including motor patrol men. It is an action to recover on the policy after execution returned unsatisfied following a judgment for damages for personal injuries recovered by May Kennedy, appellee here, in her action against Harry E. Kinney, Jr., a motor patrol man, covered by the terms of the policy.

While on duty Kinney was driving a patrol car and was accompanied by another officer, Leroy McLeod. At about 11 A. M. on December 8, 1933, a car driven by John Holland, in which the appellee was riding as a passenger, struck the patrol car in the rear at a street intersection.

In her suit against Kinney appellee claimed that she was injured in the mishap. She recovered judgment in the sum of twenty thousand dollars in the District Court of the Second Judicial District of the State of Montana, in and for the County of Silver Bow, and this judgment has become final.

Failing to realize upon her judgment against Kinney, she now seeks to be paid by the insurance company up to the amount of the insurance of $10,000.

The specific section of the policy relied upon in this action by plaintiff below appellee here is as follows: "H. Bankruptcy or insolvency of the Assured shall not relieve the Company of any of its obligations hereunder. If any person or his legal representatives shall obtain final judgment against the Assured because of any such injuries, and execution thereon is returned unsatisfied by reason of bankruptcy, insolvency or any other cause, or if such judgment is not satisfied within thirty days after it is rendered, then such person or his legal representative may proceed against the Company to recover the amount of such judgment, either at law or in equity, but not exceeding the limit of this policy applicable thereto."

Practically all of the issues on this appeal relate to the subject of notice to the insurer. Paragraph "D" of the insurance policy provides for notice in the following terms: "D. Upon the occurrence of an accident, the Assured shall give prompt written notice thereof to the Company's Head Office at San Francisco, California, or to its Eastern Office in New York City, New York, or to any Authorized Agent. If any claim is made on account of such accident, the Assured shall give like notice thereof with full particulars. If thereafter, any suit or other proceeding is instituted against the Assured to enforce such claim, the Assured shall immediately forward to the Company at its Head Office or its Eastern Office every summons or other process served upon him. Notice given by or on behalf of the Assured to any Authorized Agent of the Company within the State in which this policy is issued, with particulars sufficient to identify the Assured, shall be deemed to be notice to the Company, it being understood that failure to give any notice required to be given by this policy, within the time specified therein, shall not invalidate any claim made by the Assured if it shall be shown not to have been reasonably possible to give such notice within the prescribed time and that notice was given as soon as was reasonably possible."

The parties have raised several questions pertinent to this section: Considering the rights of appellee as a third party beneficiary under paragraph "H" of the policy, does paragraph "D" effect her rights? In the circumstances of this case does notice of injury and claim of appellee given some forty odd days after the collision comply with the contractual requirement as a matter of law? Was earlier notice impossible?

While each of these several questions will be considered, their close relation prevents entirely separate treatment.

It is the contention of appellant that under this contract of insurance the failure to give the required notice to the insurance company defeats the right of recovery by the injured party (appellee) from the insurance company exactly as it defeats the right of the assured to be indemnified by the company after the payment of a judgment.

Upon the other hand, appellee claims that the conditions of the policy relating to her maintenance of a successful action against the insurance company are all contained in Paragraph "H" of the policy, herein quoted. Specifically, that failure of Kinney or the City to give the required notice does not affect her right to recover from the company.

Appellee's position is unsound. This court considered a question similar in principle in Royal Indemnity Company v. Morris, 9 Cir., 1929, 37 F.2d 90, a suit by a third party beneficiary as in the instant case. The insurance contract required the insured to furnish the insurer a copy of process if suit were brought on a policy of personal indemnity. The insured did not comply with this provision of his policy and the court said (page 92): "* * * it must be conceded, * * * that he insured violated a material condition of the policy, * * * it is not controverted that as a result of the default he forfeited his right to claim indemnity under the policy. That being true, the question remains whether the appellee is in any better position. * * * Upon consideration we feel constrained to answer it in the negative. Citing Metropolitan Casualty Ins. Co. v. Colthurst, 9 Cir., 36 F.2d 559, and referring to Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367, 369, 72 A. L.R. 1443."

We cite the following cases as sustaining the general principle elucidated in Royal Indemnity Co. v. Morris: Clements v. Preferred Acc. Ins. Co. of New York, 8 Cir., 1930, 41 F.2d 470, 76 A.L.R. 17; Ocean Accident & Guarantee Corporation v. Lucas, 6 Cir.,1934, 74 F.2d 115, 98 A. L.R. 1461; Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367, 369, 72 A.L.R. 1443; General Casualty & Surety Co. v. Kierstead, 8 Cir., 1933, 67 F. 2d 523.

In the latter case it is said (page 525): "The right of the injured party to proceed against the insurer is dependent upon the provisions of the insurance contract. He can acquire no greater right thereunder than that existing in favor of the insured. In other words, if the conduct of the insured has been such as to bar him from right of recovery under the contract, then the injured party is likewise precluded from recovery. Citing many cases."

We think the quotation clearly and accurately states the law.

Another and narrower distinction sought to be drawn by appellee is based upon the difference in wording of the so-called insolvency and bankruptcy clauses of insurance (paragraph "H") policies. The clause before the court in Royal Indemnity Co. v. Morris, supra, read: "An action may be maintained by the injured person * * * against the company under the terms of the policy * * *." (Italics ours.)

Whereas the comparable language in the policy here being considered is: "* * * then such person * * * may proceed against the company to recover the amount of such judgment * * *."

The point sought to be established is that the clause quoted from the Morris Case applies all of the terms of the policy to the right of the injured to sue, whereas the comparable clause in the instant case gives the right to proceed against the company (under paragraph "H" of the policy) independent of the rest of the policy. This reasoning is erroneous; the injured person in proceeding against the company must proceed upon the terms of the contract as a whole. The section specifically giving her the right to proceed at all makes numerous general references to the policy. Standing alone it would be meaningless. See, New Jersey Fidelity & Plate Glass Ins. Co. v. Clark, 9 Cir., 1929, 33 F.2d 235, where the principle just stated is applied to interest upon a judgment. See, also, Appleman on Automobile Liability Insurance, p. 91 et seq.

For a complete discussion of the principle involved and for a dissertation on the importance of "prompt" notice to insurer, which will be later considered, see Clements v. Preferred Acc. Ins. Co. of New York, supra. We conclude that appellee's judgment against the appellant cannot be sustained if there remained unfulfilled the assured's contractual duty to give notice of the mishap.

Neither Kinney nor any one else for Kinney or for the city ever gave any notice to the company of the accident or of appellee's injury until the expiration of more than forty days after its occurrence.

The collision occurred December 8, 1933; on January 22, 1934, appellee's claim for damages resulting from the collision was received by the City Clerk of Butte, Montana, and an employee of appellant's heard it read in City Council the next day. Formal notice thereof was given the insurance company February 2nd, and received by it February 5th, 1934.

The policy required "prompt" notice and as the word "prompt" is a comparative...