Hawkeye-Security Insurance Company v. Davis

• Citation: 277 F.2d 765
• Decision Date: 06 May 1960
• Docket Number: No. 16391.,16391.
• Parties: HAWKEYE-SECURITY INSURANCE COMPANY, Appellant, v. Mary Lee Rogers DAVIS and Norman E. Davis, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

277 F.2d 765 (1960)

HAWKEYE-SECURITY INSURANCE COMPANY, Appellant, v. Mary Lee Rogers DAVIS and Norman E. Davis, Appellees.

No. 16391.

United States Court of Appeals Eighth Circuit.

May 6, 1960.

COPYRIGHT MATERIAL OMITTED

Jack A. Powell, Springfield, Mo., filed brief and made argument in behalf of appellant.

M. J. Huffman, Hartville, Mo., filed brief in behalf of appellee, without argument.

Before SANBORN, VAN OOSTERHOUT and MATTHES, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

Plaintiff insurer brought this declaratory judgment action to obtain an adjudication that it was not legally liable under its automobile liability insurance policy issued to defendant Nancy Lee Rogers, now Mrs. Davis, to defend and indemnify her and Norman E. Davis, now her husband, who was driving the insured automobile with the owner's consent, against claims for damages asserted and judgments that might be obtained thereon as the result of the alleged negligent operation of the insured automobile by Mr. Davis on July 16, 1958.

It is admitted that plaintiff's policy covering the automobile involved in this action was in full force and effect at the time of the accident and that such policy provided coverage for both Mr. and Mrs. Davis as to liability flowing from the accident herein involved.

Diversity of citizenship exists. It is alleged and admitted that the amount in controversy exceeds $10,000. The policy provides for a maximum liability of $10,000 for personal injury and $5,000 for property damage. Personal injury and property damage resulted from the accident. Jurisdiction is established.

Plaintiff contends that it is not liable for the injuries caused by the accident because the defendants failed to give written notice of the accident as soon as practicable, as required by the policy; that the policy provides that such notice is a condition precedent to insurer's liability; that no reasonable excuse has been given for the delay in giving notice and that the Davis' right to coverage as to this particular accident was forfeited.

Plaintiff makes the further allegation that the Davis' failure to make the required accident report resulted in prejudice to plaintiff and for this additional reason plaintiff asserts it is under no obligation under its insurance contract as to this particular accident.

Mr. and Mrs. Davis denied that they failed to report the accident, denied any breach of the insurance contract, denied that the plaintiff had suffered any prejudice and denied all contentions of nonliability made by the plaintiff.

This case was tried to the court without a jury. Final judgment was entered dismissing plaintiff's complaint, and this appeal followed.

The trial court filed no formal opinion or written findings of fact or conclusions of law, but expressed his views in an oral statement made from the bench at the close of the evidence. It fairly appears from such statement that the trial court's decision was primarily based upon his conclusion that under Missouri law plaintiff could not escape liability under its policy by reason of delay in giving notice of the accident unless the insurer proved the failure to give timely notice resulted in prejudice to it. The court further stated that the evidence would not support a finding of substantial prejudice.

The insurance policy is a Missouri contract. Consequently, Missouri law controls. The policy under the heading of "Conditions" includes the following provisions:

"Notice. In the event of an accident, occurrence or loss, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. * * *"

"Action Against Company — Part I. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy. * * *"

Thus it is apparent that the policy makes giving reasonable notice of the accident a condition precedent to insurer's liability.

It is established that the first knowledge the insurer received of the accident was a notice received from the Safety Responsibility Unit, State of Missouri, on September 20, 1958, some 65 days after the accident. Insurer then wrote the insured inquiring about the accident and requesting a report thereof, which report was furnished on October 3, 1958.

The record conclusively shows that both Mr. and Mrs. Davis knew of the accident and the existence of the insurance coverage no later than a few days following the accident. The only excuse offered for not reporting the accident is that Mrs. Davis had asked her mother to report it and thought that she would do so. There is also some indication that Mrs. Davis thought her attorney might report the accident, but Mrs. Davis admits that she told her attorney that her mother was making the report. Both the mother and the attorney were agents of the insured and any neglect on the part of the agents would be imputed to the insured. Appleman, Insurance Law and Practice, § 4741, note 7; compare Campbell v. Continental Casualty Co., 8 Cir., 170 F.2d 669, 673, 6 A.L.R.2d 655. There is no evidence that either the mother or the attorney reported the accident.

While the court made no express finding on the timeliness of the notice of accident or the validity of the excuses offered for delay, it proceeded upon the basis that defendants had failed to comply with the policy provisions as to notice. For the purposes of this appeal, we shall assume without so deciding that both defendants breached the policy provision relating to giving notice of the accident.

We now reach the decisive issue in this case. Plaintiff contends that when, as here, notice of the accident has not been given in the manner required by the policy, and where the policy contains a specific provision as this one does, that compliance with policy conditions is a condition precedent to coverage, no liability attaches under the policy for damages occasioned by an accident not reported in the manner required by the policy.

Northwestern Mutual Ins. Co. v. Independence Mutual Ins. Co., 319 S.W.2d 898, decided by the St. Louis Court of Appeals in 1959, strongly supports the plaintiff's position. The court in that case deals with breach of policy conditions requiring forwarding of suit papers and cooperation by insured after suit was filed. The performance of such conditions was expressly made a condition precedent to insurer's liability. The court, at page 902, holds:

"Where the condition is expressly made a condition precedent, the insurer is relieved of liability whether or not the insurer has been injured or prejudiced by the breach of condition."

The court, in support of the foregoing conclusion, cites and relies upon respectable authority in the form of cases from other jurisdictions and text books, including State Farm Mut. Automobile Ins. Co. v. Cassinelli, 67 Nev. 227, 216 P.2d 606, 18 A.L.R.2d 431 and Annotations in 18 A.L.R.2d 443. Plaintiff in its brief places great reliance on the Cassinelli decision.

In diversity cases it is our duty to apply state law as determined by state appellate courts. This court is not a state appellate court and has no right to determine what the state law should be. No purpose would be served by expressing our views upon the validity or persuasiveness of the reasoning upon which the view adopted by the court in the Northwestern case is based. If it may fairly be said that the Northwestern Mutual case correctly states the prevailing law in Missouri, we must follow the rule of law there announced. Since an intermediate court of appeals is not the final appellate court in Missouri, an examination of all relevant Missouri decisions is required in order to determine the status of Missouri law upon the issue we are considering.

In Western Casualty & Surety Co. v. Coleman, 8 Cir., 186 F.2d 40, 44, decided in 1950, this court was confronted with substantially the same legal problem as is here presented. There, as here, the policy contained an express condition precedent that there be a full compliance with all terms of the policy. After a full consideration of the Missouri cases, many of which are cited and discussed, this court stated:

"The Missouri cases cited have established the rule that failure of an insured to give notice of an accident will not defeat his rights under a liability policy unless it contains a provision for a forfeiture in that event or unless the insurer proves that the failure resulted in prejudice to it.

"In the instant case there was no forfeiture provision in the policy. * * *"

We quoted from James v. United States Casualty Co., 113 Mo.App. 622, 88 S.W. 125, 127, the following:

"There was no provision of forfeiture in case notice was not given. There was, however, at another part of the policy, a provision that a claim should not be valid `unless the provisions and conditions of the contract of insurance are complied with by the insured.\' We do not regard this as an express provision that the policy would be forfeited for want of notice. There should be a clear and an express statement for forfeiture before the courts will enforce it."

It is true, as asserted by plaintiff, that this court in St. Louis Architectural Iron Co. v. New Amsterdam Cas. Co., 8 Cir., 40 F.2d 344, held that under Missouri law when the giving of a notice is a condition precedent to liability and such notice has not been given, a showing of prejudice to the insurer is not necessary to establish its defense of non-liability. As a basis for such decision, the court relied upon National Paper Box Co. v. Aetna Life Ins. Co., 170 Mo.App. 361, 156 S.W. 740, and United States...