General Acc. F. & L. Assur. Corp. v. Butler's Ice Cream Factory

• Decision Date: 09 May 1928
• Docket Number: (No. 1071-4815.)
• Parties: GENERAL ACC. FIRE & LIFE ASSUR. CORPORATION, Limited, v. BUTLER'S ICE CREAM FACTORY, Inc., et al.
• Court: Texas Supreme Court

Page 976

5 S.W.2d 976

GENERAL ACC. FIRE & LIFE ASSUR. CORPORATION, Limited, v. BUTLER'S ICE CREAM FACTORY, Inc., et al.

(No. 1071-4815.)

Commission of Appeals of Texas, Section A.

May 9, 1928.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Action by Butler's Ice Cream Factory, Inc., against the General Accident Fire & Life Assurance Corporation, Limited, in which the United States Fidelity & Guaranty Company and Mrs. Ruth Hays, individually and as guardian, intervened. To review a judgment of the Court of Civil Appeals (291 S. W. 674), affirming a judgment for the plaintiff and the interveners, the defendant brings error. Affirmed.

Lea, McGrady, Thomason & Edwards, of El Paso, for plaintiff in error.

A. W. Norcop, C. W. Croom, and R. A. D. Morton, all of El Paso, for defendants in error.

NICKELS, J.

We refer to the opinion of the Court of Civil Appeals (291 S. W. 674) for a general statement of the case.

1. The policy included this stipulation:

"The assured shall give immediate written notice of any accident, irrespective of whether any personal injury * * * is apparent at the time," etc.

It is claimed that "written notice" was first given 53 days subsequent to the accident.

Presence of the stipulation and absence of "written notice `given immediately'" formed a predicate for the insurer's request for a favorable verdict peremptorily instructed. Denial of that request is assigned for error.

While doubting such nature in the stipulation (Spoke Co. v. Md. Cas. Co., 102 Ark. 1, 143 S. W. 85, 38 L. R. A. [N. S.] 62, Ann. Cas. 1914A, 268), we assume its observance (absent waiver) to be a condition precedent to liability. We merely assume, too, its validity when given that character.

Literalism of the terms employed, if mere words control, import obligation to do the impossible, for "immediate" (in that way) means "instant," and, perforce, "without any delay whatever." Manifestly, the parties did not contract for that extreme. They did not define the term "immediate," but the law supplies what was omitted by the general phrase "within a reasonable time." Dallas Opera House Ass'n v. Dallas Enterprises, Inc. (Tex. Com. App.) 298 S. W. 397; Fidelity, etc., Co. v. Courtney, 186 U. S. 342, 22 S. Ct. 833, 46 L. Ed. 1193, 14 R. C. L. 1329. What is a "reasonable time" may be a question of law; usually it is a fact issue. Ibid.

The collision which started the controversy happened November 22, 1924. One car (driven by Alvarez) belonged to Butler's Ice Cream Factory, Inc. — the doings of its driver being covered by the policy in question; the other belonged to Gnauck. Hays, the victim, was employed by a third person and was covered by insurance taken out by his employer and written by the United States Fidelity & Guaranty Company, represented by Saunders. In November and December, 1924, and January, 1925, Conley was "adjuster" at El Paso for plaintiff in error.

Saunders heard of the accident "about" November 23, 1924. "Some short time after that" (i. e., "some time during December, before the 23d," 1924) Saunders informed Conley of the accident. Saunders provoked the interview because his company was supposed to have rights in subrogation. On the next day, Conley communicated with Butler's Ice Cream Factory, Inc., and with the aid of an employee of that company began to prepare a "written" and somewhat detailed report of the accident to be sent in to headquarters of his company. In this joint effort, it developed that the insurer (or Conley for it) desired a statement from and signed by Alvarez (driver of the Butler's Ice Cream Factory, Inc., car), and that he (having resigned on the night of the day of the accident) was not then available. Inferably, that report was to be and was being made on forms of the insurer furnished for the purpose, and it would have been completed and made that day except for the desire and request for Alvarez's statement. In this immediate connection, it will be noted, the policy stipulation merely calls for "written notice of any accident," and does not call for detailed information about an accident. Thereafter, search was made for Alvarez; he was located and his statement procured January 15, 1925. An employee of Butler's Ice Cream Factory, Inc., found him and took him to Conley's office and Conley reduced the statement to writing, procured its signature and on that day forwarded the report by mail to the company's representatives at Houston. After the preliminary effort at making the report, Conley said:

"They waited [something more than two weeks] until he [Conley] could get hold of Alvarez, then they finished it January 15, 1925."

Conley pursued independent investigations throughout a period intervening dates, respectively, (before) the first effort at making the written report and subsequent to January 15, 1925.

The "written" report thus made was received at the Houston office January 19, 1925. January 20, 1925, a letter from that office was mailed to Butler's Ice Cream Factory, Inc., in which it was said:

"Your writen report of this accident, which occurred on November 22, 1924, was received by us on January 19, 1925.

"We hasten to advise you that this notice is accepted for investigation only under a full reservation of all parties' rights due to delayed notice, as notice is required by the policy contract of the above number. Said contract requires immediate written notice of any and all accidents, regardless of whether injury to person or damage to property is apparent at the time of the accident. Considerable delay was occasioned in this instance thereby preventing the company's representatives from making immediate investigation, which we feel has prejudiced the company's rights.

"We are referring this report to the company's attorneys, Messrs. Lea, McGrady, Thomason & Edwards, First Nat. Bank building, in your city, for such investigation as is necessary, and we trust you will co-operate with them toward completing same as soon as possible.

"The purpose of this notice is to fully reserve the rights accruing to all parties under the policy contract, above number, while the accident can be fully investigated without delay, and you will be advised concerning the final attitude of the company toward their liability under the contract on completion of this investigation. This procedure has been forced on us by your action, and we trust you will understand our position, which is to try to protect you as contracted, and still protect the company."

February 4, 1925, a representative or member of the firm of lawyers mentioned in the letter came to the "president and general manager" of Butler's Ice Cream Factory, Inc., and said that he was "representing the insurance company" and "wanted to know the facts of the case." Thereupon the two got in the president's car and went to the scene of the accident, where the president "showed him how it happened and all about it"; thence they "went and talked with some people that saw the accident." The president said that he gave "all the assistance he could." Nothing appears in the record to suggest lack of co-operation or disclosure by the "president." February 5, 1925, Butler's Ice Cream Factory, Inc., through its president and general manager, received a letter from that representative of the lawyers and the "insurance company." Exact contents of the letter are not shown, but in a permissible view of the evidence with it was inclosed the original or a copy of a letter in these words:

                                       "February 2, 1925
                

"Re G. A. Auto A-660884. Butler Ice Cream Factory, Inc., Geo. Hays, injured; accident, Nov. 22, 1924.

"Mr. J. R. Butler, and/or Butler Ice Cream Factory, Inc., 2222 Texas Avenue, El Paso, Texas. — Gentlemen: Referring to letter of date January 20, 1925, from Cravens, Dargan & Co. to you in reference to the above matter, this is to now advise you that the General Accident, Fire & Life Assurance Corporation, Limited, cannot accept any responsibility under its policy for the above accident on account of your failure to give the company immediate notice of the accident, as required by the terms of the policy. * * *

"The company feels that its rights have been prejudiced by reason of this delay, and therefore will neither make defense of this suit nor assume any liability therefor under the terms of this policy. Yours very truly, General Accident, Fire & Life Assurance Corporation, Limited, by Andy C. Wood, Attorney."

The policy stipulations include one requiring the insured, "whenever requested," to "aid" the insurer in "securing information and evidence," etc.

The requirement of "immediate written notice of any accident" obviously was made primarily for the benefit of the insurer, and plainly the insurer had, at the time the report of January 15, 1925, was made, a superior position from which to judge of the reasonableness or not of the period intervening the accident and making of the report — this is emphasized by the fact of previous knowledge of the accident and investigations made. If reasonable minds could not operate a dispute on the matter of reasonableness and if giving of "immediate written notice" was a condition precedent to liability, the insurer knew that situation when it received the report of January 15, 1925. In that view, it was the right, if not the duty, of the insurer to assert nonliability in unmistakable terms. That, however, was not done. The course adopted and...