H. Y. Akers & Sons, Inc. v. St. Louis Fire & Marine Ins. Co.

• Decision Date: 03 November 1969
• Docket Number: No. 44816,No. 1,44816,1
• Citation: 120 Ga.App. 800,172 S.E.2d 355
• Court: Georgia Court of Appeals
• Parties: H. Y. AKERS & SONS, INC. v. ST. LOUIS FIRE & MARINE INSURANCE COMPANY

Page 355

172 S.E.2d 355

120 Ga.App. 800

H. Y. AKERS & SONS, INC. v. ST. LOUIS FIRE & MARINE INSURANCE COMPANY.

No. 44816.

Court of Appeals of Georgia, Division No. 1.

Nov. 3, 1969.

Rehearing Denied Dec. 11, 1969.

Syllabus by the Court

1. The co-operation clause in a liability insurance policy is a material condition of liability, and a breach of it by one who is insured or who claims the benefit of insurance under the policy relieves the insurer of any obligation to defend a damage action against the insured, which it is otherwise required to defend, or to pay any claim or judgment against him.

2. A judgment creditor who sues on a policy indemnifying the insured against claims for damages stands in the shoes of the insured, and a breach of the co-operation clause by the insured relieves the insurer of any obligation to pay the judgment.

3. Usually, whether there has been a breach of the co-operation clause is a fact question. The insurer has the burden of showing, prima facie, a violation of the agreement by the insured and that it has been diligent and acted in good faith in seeking to obtain the insured's co-operation. The breach, once prima facie shown, shifts the burden to him who seeks to enforce a claim under the policy to show justification or excuse therefor. The insurer is not required to anticipate or negate all excuses or reasons that might justify it.

4. A breach of the clause is prima facie shown when it appears that counsel employed to defend on behalf of the insured made reasonable effort to obtain the insured's co-operation. If the asserted breach is the insured's failure to attend the trial of a case, a showing of reasonable effort to notify him of the time and place of the trial, as scheduled by the court, and a request for his attendance is sufficient.

5. If the facts as stipulated, or as shown by evidence, demand a finding of a breach of the clause by the insured, a verdict should be directed or judgment entered for the defendant, absent a countershowing of justification for the breach.

St. Louis Fire & Marine Insurance Company issued to Jack Shelby a policy of public liability and property damage insurance for his protection against claims of injury and damage arising from his operation of a described automobile. He was involved in a collision with a vehicle owned by H. Y. Akers & Sons, Inc., as a result of which suit was filed against Shelby, and the company employed counsel to defend the action in his behalf. At the first trial term of the court the case was continued because of defendant Shelby's illness. When the next term at which the case was scheduled for trial approached, counsel attempted to get in touch with him and have him come in and go over the case and the evidence which would be offered in defense of the action, but they could not. A letter was addressed and mailed to him with proper address and postage, asking him to come in for preparation for trial and notifying him of the date when the case would be placed on trial, and was sent by certified mail, but he refused to accept it. Another similar letter was sent by ordinary mail, which was not returned, but he did not respond to it. Several efforts were made to reach him by telephone, but these were unavailing. He was sent a telegram similarly informing him, which was apparently delivered, but there was no response to it. He never appeared at counsel's office or at the court, and when the case was called counsel informed the court of the efforts which had been made to obtain Shelby's attendance and announced that because of his failure to cooperate with them in preparing and presenting a defense, he being the chief witness upon whom they could rely, they were withdrawing as his counsel. The names of counsel were thereupon stricken and the case went to trial, resulting in a verdict for the plaintiff.

Plaintiff then filed suit seeking to enforce the judgment against Shelby's insurer, St. Louis Fire & Marine Insurance Company, and it defend on the ground that Shelby had failed to meet the obligation imposed upon him by the co- operation agreement in the policy, in that he had failed and refused to assist counsel in their preparation for trial and had failed to appear when the case was called for trial, he being a key and material witness for the defense; indeed the only witness the defense had as to the facts of the collision, and under a statement he had made the company his testimony would show a lack of liability.

The facts were stipulated by counsel and the case was submitted for trial thereon by the judge without a jury. Judgment was entered for the defendant and plaintiff appeals.

Hudson & Stula, Jim Hudson, Athens, for appellant.

Erwin, Epting, Gibson & Chilivis, Nickolas P. Chilivis, Athens, for appellee.

EBERHARDT, Judge.

1. We have recognized the obligation of an insured to co-operate under this or similar provisions in liability policies, and the insurer's right to decline to make a defense and to claim its relief of obligation to make payment when the insured fails to cooperate in Sims T.V., Inc. v. Fireman's Fund Ins. Co., 108 Ga.App. 41, 131 S.E.2d 790; Cotton States Mutual Ins. Co. v. Martin, 110 Ga.App. 309, 138 S.E.2d 433; State Farm Mutual Automobile Ins. Co. v. Wendler, 115 Ga.App. 452, 154 S.E.2d 772; State Farm Mutual Automobile Ins. Co. v. Burden, 115 Ga.App. 611, 155 S.E.2d 426; Hardware Mutual Casualty Co. v. Scott, 116 Ga.App. 637, 158 S.E.2d 375; St. Paul Fire & Marine Ins. Co. v. Gordon, 116 Ga.App. 658, 158 S.E.2d 278; State Farm Mutual Automobile Ins. Co. v. Wendler, 117 Ga.App. 227, 160 S.E.2d 256, and perhaps in others. The nonco-operation must, of course, have been material-not merely technical or inconsequential in nature.

Whether there has been a breach of the co-operation clause is sometimes a question of fact for resolution by the jury and at others a question of law. If there was a factual issue here the judge sitting as judge and jury has resolved it. It is, then, a question of whether there was any evidence to authorize the judgment. We conclude that there was ample evidence.

The co-operation clause is a material condition of a liability policy and a breach of it in any material respect relieves the insurer of liability. The voluntary and unexcused failure of an insured to attend a trial, after notice or request to do so, upon a claim covered by his policy of insurance is such a breach of the clause. ¹ It has been held that his failure to attend the trial, after notice or request to attend, and aid in the defense is, per se prejudicial, and one who would seek to enforce the contract for his benefit must show that he has performed all conditions on his part required to be performed as a condition precedent to his right. Hynding v. Home Accident Ins. Co., 214 Cal. 743, 7 P.2d 999, 85 A.L.R. 13; Potomac Ins. Co. v. Stanley (7 Cir.), 281 F.2d 775; Royal Indemnity Co. v. Rexford, (5 Cir.), 197 F.2d 83.

'Every person familiar with the trial of cases by jury knows that the case of an individual defendant is seriously, if not hopelessly, prejudiced by his absence...