Grain Dealers Mut. Ins. Co. v. Van Buskirk

• Decision Date: 27 December 1965
• Docket Number: No. 39,39
• Parties: GRAIN DEALERS MUTUAL INSURANCE CO. v. Victoria B. VAN BUSKIRK.
• Court: Maryland Court of Appeals

Page 58

241 Md. 58

215 A.2d 467

GRAIN DEALERS MUTUAL INSURANCE CO. v. Victoria B. VAN BUSKIRK.

No. 39.

Court of Appeals of Maryland.

Dec. 27, 1965.

Leonard E. Cohen, Baltimore (Frank, Bernstein, Gutberlet & Conaway, Baltimore, on the brief), for appellant.

James E. Hogan, Rockville (Arthur J. Hilland and Ferdinand J. Mack, Rockville, on the brief), for appellee.

Before PRESCOTT, C. J., and HAMMOND, MARBURY, BARNES and McWILLIAMS, JJ.

BARNES, Judge.

The appellant, Grain Dealers Mutual Insurance Company (Grain Dealers), through an insurance broker, Finney Realty, Inc. of Martinsville, Virginia, issued an automobile policy, with a Virginia uninsured motorist endorsement effective September 30, 1961, to Earle K. Van Buskirk (Earle) who then lived at Ferrum, Franklin County, Virginia with his wife, Victoria B. Van Buskirk (Victoria) and their minor child, a girl seven years of age. The Van Buskirks had lived in Ferrum for about one year, Earle being employed as an electrician by the General Electric Company in Salem, Virginia.

The automobile policy was effective for one year--from September 30, 1961 to September 30, 1962--and contained an endorsement entitled 'Family Protection Against Uninsured Motorists' which obligated Grain Dealers to pay all sums to which the insured became legally entitled to recover as damages because of bodily injury or property damage caused by accident and arising out of the ownership, maintenance or use of the uninsured automobile, subject to the limits of liability, exclusions, conditions and other items of the policy. The limits of liability were for bodily injury, $15,000 for each person and $30,000 for each accident; and for property damage, $5,000 for each accident. The word 'insured', if unqualified, was defined in relavant part to mean 'The named insured and, while residents in the same household, his spouse and the relatives of either; * * *.' The term 'insured automobile' was defined in relevant part as 'an automobile which is registered in Virginia and which is owned by the named insured or by his spouse if a resident of the same household; * * *.' Other provisions of the endorsement will later be mentioned.

The insured automobile was owned by Earle and registered in Virginia.

In May of 1962, the Van Buskirk family moved to East Riverdale, Prince George's County, Maryland because Earle had obtained employment as a technical writer with ACF Industries, located near East Riverdale. The infant girl was enrolled in a nursery school in Hyattsville. Earle brought the insured automobile with him to East Riverdale.

On August 27, 1962, Earle was killed in an accident while driving his automobile in East Riverdale, as a result of a head-on collision with an automobile driven by Daisy Marie Paris, who, with her husband, was insured under a policy having limits of $10,000 for one person. The automobile driven by Earle was on the right side of the highway. The automobile driven by Mrs. Paris crossed over on the wrong side of the road where the head-on collision occurred.

On November 30, 1962, Ferdinand J. Mack, attorney for Victoria, wrote to Grain Dealers in Indianapolis, Indiana, and inquired whether that company would discuss Victoria's claim under the uninsured motorist endorsement. Mr. Mack enclosed Earle's death certificate and advised Grain Dealers that Mrs. Paris had been charged with manslaughter by automobile, that her trial was set for December 17, 1962 and that the company might wish to have one of its representatives attend the trial. Receipt of the letter of November 30 was acknowledged by Grain Dealers on December 11.

On November 4, 1963, Mr. Mack, who theretofore had communicated with counsel for Grain Dealers in the District of Columbia, wrote Grain Dealers and enclosed a copy of the declaration in the wrongful death action of State of Maryland, to the use of Victoria, et al, against Mr. and Mrs. Paris. In the letter of November 4, Mr. Mack informed Grain Dealers that the insurance carrier for Mr. and Mrs. Paris had indicated that the Paris only had $10,000/$20,000 coverage and that the plaintiffs looked to Grain Dealers for payment of the excess under the uninsured motorist endorsement. Mr. Mack also advised the company of service upon Mr. and Mrs. Paris, the time within which those defendants had to plead, and the granting of additional time to plead, at the request of the representative of Nationwide Insurance Company (Nationwide), the insurance carrier for those defendants. Mr. Mack also stated:

'To my knowledge, this is all the information that is required to be provided you under the above-mentioned. If there is any further information you desire, which we can legitimately furnish to you, please let me know immediately.'

On November 20, 1963, Grain Dealers acknowledged Mr. Mack's letter of November 4, enclosed drafts for $1,811 in payment of the collision claim and for $500 in payment of the Medical Payments claim, and stated:

'We do not believe we are obligated to pay anything on the Uninsured Motorists claim until the adverse party has been found to be legally liable and the amount of the judgment has been established. Furthermore, we are not entirely satisfied that the adverse party was an uninsured motorist since he did have liability insurance coverage in the amount of $10,000 for each person and $20,000 for each accident. We have referred this claim to our Attorneys Brault and Lewis of Fairfax, Virginia. By copy of this letter, we are asking them to contact you for all further negotiations on the Uninsured Motorists claim.'

Mr. Mack, in a letter of December 27 to Grain Dealers informed the company of prior settlement negotiations with its representative, the failure of those negotiations and that 'appropriate action will be instituted against you at the conclusion of the pending action, to recover that portion of the judgment which is not recoverable from the defendants in the Prince George's County proceeding.'

Before the wrongful death case was tried, Mr. Mack after investigating the financial position of Mr. and Mrs. Paris, concluded that any judgment obtained over the amounts covered by insurance would be uncollectable. On June 2, 1964, he told Jerrold V. Powers, counsel for Nationwide and for Mr. and Mrs. Paris, that the plaintiffs would be willing to reduce the ad damnuim in the declaration against the wife to $15,000. Mr. Powers then stated that Mr. and Mrs. Paris would offer no evidence in defense and that Nationwide would pay up to $10,000 on whatever judgment would be entered. Mr. Powers testified that in his opinion there was no defense available to the question of the liability of Mrs. Paris and the best service he could render Mr. and Mrs. Paris was to protect them against any judgment in excess of the amounts of insurance coverage. There was no agreement between counsel in regard to the amount of the judgment, so that the judgment rendered by the court could have been any amount up to $15,000, the amount of the ad damnum. The trial court rendered judgment for the plaintiffs for $15,000 and Mr. Mack advised counsel for Grain Dealers of this judgment in his letter of July 10, 1964, enclosed the docket entries, explained the lack of financial resources of Mr. and Mrs. Paris and indicated that suit would be instituted against Grain Dealers unless prompt action resulted from the company. Grain Dealers referred the matter to Maryland counsel and the case at bar was thereafter instituted by Victoria in the Circuit Court for Prince George's County against Grain Dealers. Before Judge Bowen and in this Court, Grain Dealers raised the following questions:

1. Was the appellee, Victoria, precluded from recovery because she failed to have Grain Dealers served with process in the wrongful death action, when the law of Commonwealth of Virginia requires such service?

2. Was the precluded from recovery because she settled the wrongful death action in breach of a condition of the endorsement?

3. Was she precluded from recovery because she failed to notify Grain Dealers that she had changed her residence from the Commonwealth of Virginia to the State of Maryland, in breach of a condition of the endorsement?

Judge Bowen, sitting without a jury, in an able oral opinion, answered all of these questions in the negative and entered a verdict for the appellee Victoria for $5,000 with interest from date. Judgment absolute was entered on this verdict on February 17, 1965 and from this judgment this appeal was taken.

We have concluded that Judge Bowen answered all these questions correctly and the judgment will be affirmed.

I.

Under the statutory law of Virginia, Section 38.1-381(b) of the Virginia Code (1964 Cum.Supp.), automobile policies issued in Virginia are required to contain an uninsured motorist endorsement. Section 38.1-381(e)(1) of that Code then provides as follows:

'Any insured intending to rely on the coverage required by paragraph (b) of this section shall, if any action is instituted against the owner or operator of an uninsured motor vehicle, serve a copy of the process upon the insurance company issuing the policy in the manner prescribed by law, as though such insurance company were a party defendant; such company shall thereafter have the right to file pleadings and take other action allowable by law in the name of the owner or operator of the uninsured motor vehicle or in its own name; provided, however, that nothing in this paragraph shall prevent such owner or operator from employing counsel of his own choice and taking any action in his own interest in connection with such proceeding.'

The Supreme Court of Appeals of Virginia has held that the requirement of service of process is a condition precedent to recovery under the uninsured motorist endorsement and that the giving of notice of the pending action by the plaintiff did not take the place of the required service of process. State Farm Mutual Automobile...