Hartford Acc. & Indem. Co. v. Partridge

• Citation: 192 S.W.2d 701,183 Tenn. 310
• Parties: HARTFORD ACCIDENT & INDEMNITY CO. v. PARTRIDGE.
• Decision Date: 05 January 1946
• Court: Supreme Court of Tennessee

192 S.W.2d 701

183 Tenn. 310

HARTFORD ACCIDENT & INDEMNITY CO. v. PARTRIDGE.

Supreme Court of Tennessee.

January 5, 1946

Rehearing Denied March 2, 1946.

Appeal from Chancery Court, Shelby County; John E. Swepston Chancellor.

Suit by Sadie G. Partridge against the Hartford Accident & Indemnity Company to recover on an insurance policy in accordance with terms of policy which provided that any person who has secured judgment shall thereafter be entitled to recover under the terms of the policy in the same manner and to the same extent as insured. Decree of dismissal was reversed by the Court of Appeals and judgment rendered in favor of plaintiff, and defendant brings certiorari.

Reversed and suit dismissed.

W. C. Rodgers, of Memphis, for complainant.

Thomas C. Farnsworth and King, King & Laughlin all of Memphis, for defendant.

CHAMBLISS Justice.

While riding as a guest in an automobile driven and owned by Luther E. Hampton, Sadie Partridge suffered injuries for which she sued to recover damages from Hampton, charging him with negligence. Hampton carried insurance in the Hartford Accident & Indemnity Company. The policy included a standard provision which provided, as a condition precedent to suit that the insured should co-operate with the render all reasonable assistance in the defense of any such action.

Hampton reported the accident and the bringing of the action to the insurance company, which assumed the defense, being advised by the insured that the accident was caused by the blowing out of a tire and that he had been guilty of no negligence. He conferred and co-operated with the attorneys representing the insurance company in the preparation of the case for trial and agreed to attend the trial. However, although fully informed of the day set for the trial, the insured did not appear. The court refused to grant a continuance because of the absence of the defendant-insured, alleged to be a material witness, but postponed the hearing of the case when called for trial at 10:00 A. M. on the morning of the day set until 2 o'clock that day. Counsel made diligent effort to locate the insured, but were unable to reach him, or learn his whereabouts. The attorneys for the insurance company thereupon, with the consent of the court, relying upon the absence of the insured as a breach of his obligation to co-operate, withdrew from the defense.

The case was proceeded with and resulted in a judgment for $15,000 against the defendant Hampton. This was on Monday, October 5, 1942. Several days later the insured, Hampton, was reached and interviewed by the attorneys for the insurance Company, who obtained from him a statement in explanation of his absence on the day of the trial. Satisfied that this explanation did not disclose a reasonable excuse for his absence and failure to perform his obligation to attend and co-operate, he was advised that the insurance company would not reassume the defense of the action, and further advised to secure other attorneys to represent him. This he did not do, and the time for the presentation of a motion for new trial elapsed and the judgment became final.

The instant suit was brought by Sadie Partridge to recover from the Indemnity Company on this judgment the sum of $5,000, in accordance with the terms of the policy which provide that any person who 'has secured such judgment * * * shall thereafter be entitled to recover under the terms of this policy in the same manner and to the same extent as the insured.' The bill alleged the recovery of the judgment as aforesaid and the insolvency of the insured. Hampton.

The Indemnity Company denied liability and defended on the ground that the following condition precedent of the contract of insurance had been breached by the insured, without reasonable excuse:

'7. Assistance and Cooperation of the Insured.

'The insured shall cooperate with the company and, upon the company's request, shall attend hearings and trials and shall assist in effecting settlements, recovering the propoerty described herein, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits; * * *.

'8. Action Against Company.

'No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all of the terms of this policy; * * *.'

The chancellor heard proof and the fact that the insured had failed to attend the trial, as hereinbefore related, being admitted, and finding that the complainant had not overcome the burden therefore upon her to show that the insured had a reasonable excuse for such failure, dismissed the bill. The Court of Appeals reversed and gave judgment, being apparently of opinion that the explanation offered on the trial by the testimony of the insured of his absence amounted to an excuse reasonable in law. We granted certiorari.

There can be no question that the condition of the contract of insurance above recited is valid and binding upon both the insured and the complainant below, whose rights are derivative, rising no higher than those of the named insured under the policy contract, she being entitled to recover only 'in the same manner and to the same extent as the insured.'

In the recent case of Horton v. Employers' Liability Assurance Corporation, Limited, 179 Tenn. 220, 224, 225, 164 S.W.2d 1016, 1017, this Court, citing annotations from A.L.R. and other authorities, said:

'The provision of the policy requiring the assistance and cooperation of the insured in the defense of any suit brought by a third party to recover under the policy is valid, in the absence of any statute to the contrary. Annotation, 72 A.L.R. 1448; annotation 98 A.L.R. 1465. The provision is a condition procedent, failure to perform which, in the absence of waiver or estoppel, constitutes a defense to liability on the policy. Bachhuber v. Boosalis, 200 Wis. 574, 229 N.W. 117; Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 160 N.E. 367, 72 A.L.R. 1443. In Watkins v. Watkins, 210 Wis. 606, 245 N.W. 695, 698, the court said: 'Policies containing covenants the same as or similar to those contained in this policy have been so often sustained that the question should be considered at rest,' and added that 'if insurers may not contract for fair treatment and helpful co-operation by the insured, they are practically at the mercy of the participants in an automobile collision.'

'Violation by the insured of the co-operative provisions of a liability policy is available as a defense to an action by a third person injured in an accident. By the great weight of authority, although there is some conflict on the point, breach of contractual provisions relating to acts of omission subsequent to the accident is, in the absence of collusion between the insurer and the insured, available to the insurer as against the injured person, if, in the circumstances, it would have been available against the insured. Annotation, 85 A.L.R. 70. In Royal Indemnity Co. v. Watson, 5 Cir., 61 F.2d 614, the court observed that it is held by the overwhelming weight of authority that the rights of a third person can rise no higher than, and are dependent upon, the rights of the insured.'

The issue before us narrows to the sole question whether or not the complainant has met and overcome the clear proof of a breach by the insurer of this condition precedent by proof of a reasonable excuse for the failure of the insured to attend the trial. This is largely a question of fact, or of the proper deductions to be drawn from undisputed facts.

The facts apparent at the time and on the day of the trial are not in dispute and are as have been above recited. Thus far the breach was complete. However, shortly thereafter, and within the time limit for the filing of a motion for a new trial, the defendant-insured was located and interviewed by the legal representatives of the insurance company; and we understand it to be conceded that if, at this time, an explanation of his absence so reasonable as to justify the taking of these remedial steps had been given, it would have become the duty and obligation of the insurance company to so proceed, and thus perform the spirit of its contract in protection of the rights of the parties.

The issue, therefore, further narrows to the consideration and appraisal of the statements, explanation and excuses at that time presented by the insurer for his failure to attend the trial. Here was an opportunity, afforded by the diligence of counsel for the insurer, for the insured to re-instate his protective rights under his policy. What use did he make of it? What did he say on that occasion and what was the natural deduction to be made therefrom?

After stating that he knew that the case had finally been set for Monday, October 5th, and that it would be necessary for him to be present at that time, Mr. Hampton thus stated his reason for absenting himself:

'A. Well, I don't know just how to word it, other than I just got our on a drinking party and got hell whipped out of me is all I can say, and was not able to appear in court on Monday. That is the nearest I can say.

'Q. When did you start on this party, Mr. Hampton? A. Well, on Saturday afternoon. I drank a little bit on Friday night, and I got my change Saturday afternoon--I worked seven and a half hours on Saturday, and drew my time in full, and I left there and went, I don't know where, the other side of Millington, I know that.

'Q. How long did you stay at this place the other side of Millington? A. Oh, I guess twelve or one o'clock that night.

'Q. When after that Mr. Hampton, was the first time you returned home? A. Thursday, about ten thirty.'

After then saying that neither his wife, others at his...