Henschel v. Hawkeye-Security Ins. Co.

• Citation: 178 N.W.2d 409
• Decision Date: 23 June 1970
• Docket Number: HAWKEYE-SECURITY,No. 53857,53857
• Parties: Richard C. HENSCHEL and Mildred L. Henschel, Appellants, v.INSURANCE COMPANY, Appellee.
• Court: Iowa Supreme Court

Page 409

178 N.W.2d 409

Richard C. HENSCHEL and Mildred L. Henschel, Appellants, v. HAWKEYE-SECURITY INSURANCE COMPANY, Appellee.

No. 53857.

Supreme Court of Iowa.

June 23, 1970.

Daniel P. Ernst, of Gilloon, Klauer, Stapleton & Ernst, Dubuque, for appellants.

Leo A. McCarthy, of Reynolds, Kenline, Roedell, Breitbach & McCarthy, Dubuque, for appellee.

MASON, Justice.

Richard C. and Mildred L. Henschel instituted this law action for damages resulting from an alleged breach of a comprehensive personal liability insurance contract issued to them by defendant Hawkeye-Security Insurance Company. Trial to the court resulted in dismissal of plaintiffs' petition at their costs based on a finding plaintiffs failed to give the insurance company timely notice of loss.

Plaintiffs appeal, assigning one error relied on for reversal challenging the sufficiency of the evidence to support this finding. Our review is not de novo but only on errors assigned. Rule 334, Rules of Civil Procedure.

The policy involved was issued through defendant's Dubuque agent, Lange's Insurance Agency, for the contract period commencing November 28, 1959, to November 28, 1962. It provides in part:

'I. Coverage L--Personal Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the company shall defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this endorsement, even if any of the allegations of the suit are groundless, false or fraudulent; but the company may make such investigation and settlement of any claim or suit as it deems expedient.'

An insured is defined as follows:

'III. Definition of Insured. The unqualified word 'insured' includes (a) the named insured and (b) if residents of his household, his spouse, the relatives of either, and any other person under the age of twenty-one in the care of an insured. * * *.'

It further required as policy conditions:

'3. Notice of Occurrence--Coverages L and M. When an occurrence takes place written notice shall be given by or on behalf of the insured to the company or any of its authorized agents As soon as practicable. * * *.

'4. Notice of Claim or Suit--Coverage L. If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative' (Emphasis supplied.)

Under Coverage P the company agreed to pay, at the request of the named insured, for loss or property of others caused by an insured. 'Loss' is defined as meaning damage or destruction, but not including disappearance, abstraction or loss of use.

The insured's duties when loss occurs under Coverage P are set forth in Condition 6:

'6. Insured's Duties When Loss Occurs--Coverage P. When loss occurs, the insured shall give written notice As soon as practicable to the company or any of its authorized agents, file sworn proof of loss with the company within ninety-one days after the occurrence of loss, exhibit the damaged property, if within his control, and cooperate with the company in all matters pertaining to the loss or claims with respect thereto' (Emphasis supplied).

Actions against the company are allowed for in Condition 7 in these words:

'7. Action Against Company--Coverages M and P. No action shall lie against the company unless, As a condition precedent thereto, there shall have been full compliance with all the terms of this endorsement, nor until thirty days after the required proofs of claim have been filed with the company' (Emphasis supplied).

The policy excluded '(c) under coverages L and M, * * * bodily injury or property damage caused intentionally by or at the direction of the insured'.

The incident giving rise to this suit occurred September 24, 1961, when plaintiffs' 15-year-old son, Mark, was alleged to have intentionally set fire to a semitrailer truck in Dubuque, destroying its cargo. September 18, 1963, National Fire Insurance Company, who had paid the loss occasioned by the fire, filed suit against Mark as sole defendant for damages, alleging his acts were the sole and proximate cause of the loss sustained. The Henschels made no demand on Hawkeye to afford a defense to that action. May 6, 1965, it was dismissed for lack of prosecution.

September 15, 1966, National Fire Insurance Company, joined by Terminal Warehouse and Storage, Inc., filed another action seeking damages resulting from this fire. In Division I plaintiffs again sought to recover from Mark on an intentional tort theory. In Division II they proceeded for the first time against Richard C. and Mildred L. Henschel, whom they had joined as defendants, on the theory that as parents they were negligent in failing to restrain Mark when they knew or should have known he would commit such as intentional tort.

October 7 the Henschels made written demand that Hawkeye defend them in this negligence action under the terms of its comprehensive liability policy.

Defendant refused to defend the action and perform under its contract of insurance on the grounds the incident was an intentional tort excluded from coverage under the policy and plaintiffs had not given timely notice of loss as required by the policy.

After Hawkeye's refusal plaintiffs retained counsel to defend the negligence action. Settlement was reached when plaintiffs paid an agreed figure.

They then brought this action alleging coverage under a comprehensive personal liability policy issued by defendant was in force on September 24, 1961, and because of defendant's refusal to comply with its insurance contract they incurred expenditures of $615.25 in settlement, $16.50 for court costs and $323.96 as fees for National's attorney. During trial plaintiffs amended their petition by adding a claim for $318.57 as fees for their present attorney, making a total demand as amended of $1274.28.

Answering plaintiffs' petition defendant admitted plaintiffs were insured on September 24, 1961, under a policy issued by it. It asserted as an affirmative defense that Mark was a resident of plaintiffs' household on September 24, 1961, and was an insured pursuant to the terms of the insurance contract; as an insured he intentionally caused the property damage to the truck cargo by setting fire to it; coverage is specifically execluded to property damage caused intentionally by or at the direction of an insured.

As another affirmative defense Hawkeye alleged plaintiffs first gave oral notice of the fire loss on or about September 16, 1966, nearly five years after the loss and under the conditions of the policy issued to plaintiffs they were required to give defendant or its authorized agent written notice of said occurrence as soon as practicable; the giving of said notice was a condition precedent to its liability.

In reply plaintiffs admitted they first gave Hawkeye and its agent oral notice of the fire loss on or about September 16, 1966.

I. Defendant's motion, made at the close of plaintiffs' evidence and renewed at the close of all evidence, based on the contentions insured failed to prove due and timely notice of the September 24, 1961, loss or legal justification or excuse for the delay and that the loss was occasioned by an intentional tort, was overruled.

However, in its judgment entry dismissing plaintiffs' petition the trial court stated as a finding of fact plaintiffs' notice of loss to defendant was not timely, a ground urged in defendant's motion to dismiss, as previously noted.

This procedural situation requires some comment.

Since a motion to dismiss made during trial in an action tried to the court is equivalent to a motion for directed verdict if there had been a jury, Brown v. Schmitz, 237 Iowa 418, 420, 22 N.W.2d 340, 341, it is incumbent on the trial court to review the evidence in a light most favorable to plaintiffs, making all reasonable inferences in their favor. LaFontaine v. Developers & Builders, Inc., Iowa, 156 N.W.2d 651, 655; Jackson v. Brown, 164 N.W.2d 824, 826 (Iowa 1969); 89 C.J.S. Trial § 595, pages 396--397. Necessity of the trial court viewing the evidence in such a light explains its overruling of defendant's earlier motions to dismiss.

Not until after submission, sitting as a trier of fact--as a jury--to determine a case on its merits did the court by findings of fact, conclusions of law and judgment entry determine plaintiffs' action should be dismissed for failure of timely notice. At this latter stage the court was not required to view the evidence in a light most favorable to plaintiff but only to weigh the evidence and determine the credibility of the witnesses. Re Claim of gwynne v. Vance, 258 Iowa 875, 879, 140 N.W.2d 917, 919; Schmitt v. Jenkins Truck Lines, Inc., 170 N.W.2d 632, 643 (Iowa 1969).

II. We next determine whether the trial court's dismissal because of plaintiffs' failure to file a timely notice of loss was a finding of fact or a ruling as a matter of law.

Ordinarily, the sustaining of a motion to dismiss at the close of plaintiffs' evidence or all the evidence is a ruling as a matter of law whereas a dismissal by a court sitting as the jury is a finding of fact. Davis v. Knight, 239 Iowa 1338, 1352--1353, 35 N.W.2d 23, 31. Only if we see the trial court's ultimate dismissal as a belated response to defendant's motion could we view his ruling as a dismissal as a matter of law. We choose not to do this for the following reasons.

Our discussion in Division I concerning the viewing of evidence lends support to a determination that the trial court was sitting as a trier of fact deciding the case on its merits by a finding of fact when it dismissed plaintiffs' cause of action. Further, this court's past pronouncements support such a conclusion. In Davis v. Knight, supra; Batliner v. Sallee, 254 Iowa 561, 562--564...