Hoffman v. Employer's Liability Assur. Corp.

• Decision Date: 13 February 1934
• Citation: 146 Or. 66,29 P.2d 557
• Parties: HOFFMAN v. EMPLOYER'S LIABILITY ASSUR. CORPORATION, Limited.
• Court: Oregon Supreme Court

29 P.2d 557

146 Or. 66

HOFFMAN v. EMPLOYER'S LIABILITY ASSUR. CORPORATION, Limited.

Supreme Court of Oregon

February 13, 1934

In Banc.

Appeal from Circuit Court, Multnomah County; James P. Stapleton Judge.

Action by L. H. Hoffman against the Employer's Liability Assurance Corporation, Limited. Judgment for plaintiff, and defendant appeals.

Affirmed.

RAND C.J., and CAMPBELL, J., dissenting in part.

F. P. Keenan, of Portland (Reynolds, Flegel & Smith of Portland, on the brief), for appellant.

Randall S. Jones and E. L. McDougal, both of Portland (Lawrence Lister, of Portland, on the brief), for respondent.

RAND Chief Justice.

This is an appeal from a judgment in favor of the plaintiff. The action was brought to recover on a policy of indemnity insurance issued by the defendant to plaintiff. Except as otherwise provided therein, the policy covers "bodily injuries, including death at any time resulting therefrom, accidentally sustained by any person or persons other than employees of the Assured by reason of the business operations carried on by the Assured, and at the locations, as described in the Declarations."

The defense set up in the answer was that the defendant is not liable by reason of plaintiff's nonfulfillment of Condition D, which reads as follows.

"Upon the occurrence of an accident covered by this Policy, the Assured shall give immediate written notice thereof to the Corporation or its duly authorized Agent. The Assured shall give like notice with full particulars of any claim made on account of any such accident. If any suit or other proceeding mentioned in Agreement III is instituted against the Assured on account of any such accident, the Assured shall immediately forward to the Corporation or its duly authorized Agent every notice, summons, or other process served upon the Assured."

The policy expressly provided that the agreements of the defendant to indemnify the plaintiff "are subject to the following conditions," one of which is Condition D above quoted. There is no express provision contained in the policy for forfeiture upon plaintiff's failure to comply with any of said conditions.

It appears from the uncontradicted evidence that an accident covered by the policy occurred at The Dalles, Or., on March 10, 1929, while plaintiff was engaged in constructing the Granada Theater building and in laying a cement sidewalk in front of said building. Charles W. Donaca was plaintiff's foreman and in charge of the work at the time of the accident. He had been instructed to report all accidents to plaintiff or to plaintiff's general superintendent immediately upon their occurrence. At the close of work on that day, Donaca erected a barricade across the sidewalk, consisting of a 2x6 inch plank placed upon the top of one barrel and extending to the inner edge of the sidewalk, and a lighted lantern at the outer edge thereof. About 9:15 o'clock that evening, Mrs. Margaret Sharp, a resident of The Dalles, was walking along the sidewalk with her daughter and, not observing the barricade, stumbled over it and fell, breaking her arm, and she was immediately taken to a hospital for treatment.

On the following morning when Donaca resumed work, he saw that the barricade had been knocked down and made inquiry as to the cause thereof of one of the men employed at the work. Donaca was informed that some woman had fallen over the barricade the evening before, but who she was or the extent of her injuries, if any, was unknown to his informant. Donaca remained at The Dalles for about two weeks and until the job was finished. He made some perfunctory inquiries but was unable to obtain any definite information as to the identity of the person injured or the extent of her injury. He made no report of the accident to plaintiff or to plaintiff's general superintendent.

Plaintiff was not at The Dalles at the time of the accident and never learned of the accident until March of the following year, when he was apprised of the accident by Mrs. Sharp's attorney and was told that a claim for damages would be made. After receiving such notice, and on March 27, 1930, plaintiff notified one of defendant's general agents of the accident and that a claim for damages had been made. This the undisputed evidence shows was the first time defendant had ever received notice of the accident or that a claim for damages had been made on account thereof. Subsequently, Mrs. Sharp sued plaintiff and plaintiff was compelled to pay $2,250 in settlement of her claim, and, upon defendant's refusal to reimburse him under the policy, plaintiff brought the present action and recovered judgment for that amount together with interest, costs, and attorney's fees.

Defendant contends that performance by plaintiff of Condition D, under the express terms of the policy itself, was made a condition precedent to liability on defendant's part and that plaintiff's breach of that condition by failing to give notice of the accident for more than one year after its occurrence operates as a matter of law to defeat the right which plaintiff would otherwise have had to be reimbursed for the moneys paid to the injured party in settlement of her claim for damages.

On the other hand, plaintiff contends that performance by him of the condition was not a condition precedent to liability because not so provided in the policy and also because the policy itself contains no express provision of forfeiture. In support of the last point, plaintiff cites Dakin v. Queen City Fire Ins. Co., 59 Or. 269, 117 P. 419. He also contends in his brief that precedent conditions relate only to the formation of contracts and not to liability under them. These contentions will first be noticed.

A condition precedent is one which must be fulfilled before the right to which it is precedent is acquired, or, as otherwise stated, it is one which "must be performed or happen before liability arises on the promise which the condition qualifies." 2 Williston on Contracts, § 666a; 5 Page on Contracts, § 2586. "A condition subsequent," says Page in the section above cited, "is one the happening of which defeats a contractual right which was in existence when such condition was broken." Williston defines a condition subsequent as follows:

"The term condition subsequent in contracts as used in contrast to condition precedent must mean subsequent to liability,-that is, a condition which divests a liability on a contract after it has once accrued. Such conditions are very rare." Section 667, 2 Williston on Contracts.

It seems clear from the mere reading of the policy that the parties intended to make defendant's agreement to indemnify plaintiff subject to performance by plaintiff of Condition D. The policy expressly so provides. It stipulates in express terms that defendant's agreements are "subject to the following conditions," and names Condition D as one of the conditions upon which performance by plaintiff is made to depend.

Conditions in contracts may be precedent, subsequent, or concurrent. That Condition D was not intended to be a subsequent condition is clear from the definitions above given and that it was not intended to be a concurrent condition is obvious from the fact that the policy does not contemplate performance by plaintiff and defendant concurrently. It requires plaintiff to give immediate notice to defendant of the happening of any accident covered by the policy and, if claim is thereafter made, to "give like notice with full particulars of any claim made on account of any such accident." The purpose of requiring notice to be given is to enable the defendant to resist false or exorbitant claims. Mandell v. Fidelity & Cas. Co., 170 Mass. 173, 49 N.E. 110, 64 Am. St. Rep. 291. "It was to enable the defendant to investigate the facts and circumstances of the accident while they were fresh in mind, with the view of settling the loss, in case it should be so advised, and, in case of a contest, to be prepared to defend the same as stipulated in the policy." Underwood Veneer Co. v. London Guar. & Acc. Co., 100 Wis. 378, 75 N.W. 996, 997.

The parties to this contract had a lawful right to make the giving of notice a condition precedent to liability and that they intended to do so is clearly evidenced by the language used in the contract. It was not an unreasonable condition. It contravened no principle of public policy, and was one the performance of which was essential to the protection of the defendant. It is as much a part of the contract as any other provision contained in it. Courts have no power to ignore such provisions nor to eliminate them from the contract after the parties have once entered into it. Such action upon the part of a court would result in the making of a new contract for the parties and would not be an interpretation of the one which they themselves had made.

The question involved in Dakin v. Queen City Fire Ins. Co. supra, was whether the failure of the assured to furnish proof of loss by fire within the time specified in the policy was fatal to plaintiff's right of recovery. That case followed Stinchcombe v. New York Life Ins. Co., 46 Or. 316, 80 P. 213, where it was held that the failure, under a life insurance policy, to furnish proof of the death of the assured within the time specified merely operated to postpone the time of payment and did not defeat the right of recovery for the death. It is true that in the Dakin Case the court assigned as one of the reasons for its decision that the policy did not provide for a forfeiture in case the proof was not furnished within the time specified but that was not the reason for the decision. If there had been such a provision in the policy, the court probably would have decided the case different...