Hartford Acc. & Indem. Co. v. Creasy

• Decision Date: 01 December 1975
• Citation: 530 S.W.2d 778
• Parties: HARTFORD ACCIDENT AND INDEMNITY COMPANY, Petitioner, v. Johnny CREASY, Respondent.
• Court: Tennessee Supreme Court

Page 778

530 S.W.2d 778

HARTFORD ACCIDENT AND INDEMNITY COMPANY, Petitioner, v. Johnny CREASY, Respondent.

Supreme Court of Tennessee.

Dec. 1, 1975.

Joe M. Duncan, Burch, Porter & Johnson, Memphis, for petitioner.

Walter Buford, Buford & Deal, Memphis, for respondent.

Joseph A. Heffington, Watson, Lewis & Knolton, Memphis, amicus curiae.

OPINION

HENRY, Justice.

This appeal stems from an uninsured motorist provision of an automobile liability insurance policy, and presents the single question of the necessity for strict compliance with a closed-end time limitation governing notice to the insurer.

The trial judge sustained Hartford's motion for a summary judgment, in effect holding that there must be strict compliance. The Court of Appeals (W.S.) held that respondent was a third party donee beneficiary and that his lack of knowledge of the existence of the insurance coverage excused delay in compliance with the notice provisions of the policy so long as those requirements are met within a reasonable time after the discovery of the contract.

We granted certiorari in order to clarify and up-date the law.

I.

The respondent was injured on 8 July 1971 when the truck that he was driving was struck by a hit-and-run driver. The police authorities were immediately notified. Neither respondent nor his employer, the named insured, gave any notice to the Company. The record shows that respondent had no knowledge of the existence of the policy and, for that matter, had never even heard of uninsured motorist coverage. He employed an experienced attorney at the Memphis Bar on 15 July 1971, seven days after the accident, to assist him in the pursuit of his Workmen's Compensation claim. Petitioner, in brief and oral argument, insists that its first notice of the loss was when suit was filed on 26 June 1972, eleven months and eighteen days after the accident, and eleven months and eleven days after the employment of counsel. Technically, the record does not support this insistence; however the respondent, in oral argument, concedes that he did not discover the existence of uninsured motorist coverage until 'shortly before the statute ran', and he then filed suit. This opinion, therefore, proceeds upon the assumption that no notice was ever given except to the extent of the institution of the lawsuit.

II.

The pertinent provision of the policy reads as follows:

'. . . 'hit-and-run vehicle' means a highway vehicle which causes bodily injury to an insured arising out of a physical contact of such vehicle with the insured or with a vehicle which the insured is occupying at the time of the accident, provided:

(a) * * *

(b) the insured or someone on his behalf shall have reported the accident within 24 hours to a police, peace or judicial officer or to the Commissioner of Motor Vehicles, and shall have filed with the company within 30 days thereafter a statement under oath that the insured or his legal representative has a cause or causes of action arising out of such accident for damages against a person or persons whose identity is unascertainable, and setting forth the facts in support thereof.'

At the very outset we make it clear that we are dealing with the notice requirement in the context of an 'additional insured', or 'permissive user', or any other covered individual except the named insured, or a member of his household or such other individuals whose relationship to or connection with the named insured is such as to require that his knowledge be imputable to them. The rigidity of the notice requirement necessarily peaks in cases involving the named insured and diminishes as the relationship or connection with him widens.

It should also be noted that it is only the Delay in giving notice that, in appropriate cases, may be excused or tolerated and not the Notice itself. Notice is a vital and indispensable condition precedent to recovery under the policy. We are cited to no case wherein failure to give notice has been excused--only the Delay.

Moreover, we recognize that the notice requirement of an insurance policy providing uninsured motorist coverage based on hit-and-run incidents, while founded in contract, also are deeply rooted in public policy considerations. Not only is the insuror entitled to notice in order that it may make prompt investigation and prepare for the defense of the claim, it is entitled to protect its interests in an area susceptible to the presentation of spurious claims. Also, it is in the public interest that litigation be minimized and, to this end, it is essential that the insurance company be in a position to settle claims on a knowledgeable basis.

Perhaps the leading case in Tennessee on the general subject of the necessity of notice and the effect of delay in Phoenix Cotton Oil Co. v. Royal Indemnity Co., 140 Tenn. 438, 205 S.W. 128 (1918). Cited consistently during the ensuing years this case stands as authority for the general propositions that (1) notice is a condition precedent to recovery under the policy and (2) there need not be any showing or prejudice. The opinion quotes with approval from a Massachusetts case holding that 'notice is one of the essentials of the cause of action.' 140 Tenn. at 444, 205 S.W. at 130. We reaffirm Phoenix as a correct statement of the general rules relating to notice. However, it should be noted that in Phoenix, the Court was dealing with a named...