Hope Spoke Co. v. Maryland Casualty Co.

• Decision Date: 08 January 1912
• Citation: 143 S.W. 85,102 Ark. 1
• Parties: HOPE SPOKE COMPANY v. MARYLAND CASUALTY COMPANY
• Court: Arkansas Supreme Court

143 S.W. 85

102 Ark. 1

HOPE SPOKE COMPANY v. MARYLAND CASUALTY COMPANY

Supreme Court of Arkansas

January 8, 1912

Appeal from Hempstead Circuit Court; Jacob M. Carter, Judge reversed.

Cause remanded. Rehearing denied.

Thos C. McRae, W. V. Tompkins and D. L. McRae, for appellant.

The evidence that there was a custom or usage among insurance companies that where policies were obtained by brokers notices were sent to the broker was sufficient to go to the jury. Upon it the court would have been justified in instructing a verdict for the appellant. 3 Brewst. (Pa.) 452-456; 46 Ark. 210, 215; Id. 222, 226; 58 Ark 565, 574; 85 Ark. 568.

Having without objection permitted notice to be given to Carnes & Son, appellee is now estopped to deny their authority to receive it. 85 Me. 429; 83 Me. 100; 51 N.H. 287; 16 Cyc. 791; 55 Ark. 347; 105 Mo.App. 384, 394; 79 S.W. 1013; 12 Wall. (U.S.) 681; 49 C. C. A. 555.

By its course of dealing appellee had constituted Carnes & Son its agents to receive notice and settle claims. Evidence of its course in permitting them to receive notice and to settle claims was admissible, and the court's directing a verdict for appellee was equivalent to excluding all such evidence. 3 Elliott on Ev. §§ 1633-1635; 1 Wigmore Ev. § 377. See also 52 Ark. 11, 21; 23 L. R. A. 181; 62 Ark. 562; 31 Cyc. 1219, and authorities collated; 96 P. 48; 17 L. R. A. (N. S.) 219, and note; 101 S.W. 130; 49 C. C. A. 555, 557; 80 U.S. 222; 36 C. C. A. 615.

Forfeitures are not favored in law, but on the contrary will be enforced only when the strict letter of the contract requires it, and particularly is this true of insurance policies. 53 Ark. 494, 499; 96 U.S. 577; 57 Neb. 622; 28 Neb. 846; 51 L. R. A. 698; 35 Col. 19; 183 U.S. 25-40; 95 U.S. 673; 151 U.S. 462; 55 L. R. A. 291; 15 Cyc. 1037.

The clause in the contract requiring immediate notice will not be literally construed. Such rule is not inflexible, but an honest effort made with due diligence to comply with it will be deemed sufficient, especially where the insurer's rights have not been prejudiced. 55 L. R. A. 290, 291, 292; 62 L. R. A. 485; 29 Pa.St. 198; 126 Pa.St. 870; 93 Am. St. Rep. 514, 518; Niblack, Accident Ins. § 415; 3 Neb. 391; 62 L. R. A. 485.

Where the policy does not provide that the failure to give notice shall cause a forfeiture, no forfeiture results. 35 Cal. 19; 9 Am. & Eng. Ann. Cases, 916; Niblack, Accident Ins. § 415; 26 L. R. A. (N. S.) 747, and note; 102 Pa.St. 281; 59 S.W. 863.

The question whether notice was given in a reasonable time was for the jury. 63 L. R. A. 425, 427; 1 L. R. A. (N. S.) 422; 55 L. R. A. 290; 1 Cyc. 301; 1 Am. & Eng. Enc. of L. 324; 3 May on Ins. 462.

Henry M. Armistead and Ashley Cockrill, for appellee.

1. The policy expressly requires immediate notice as a condition precedent to liability. The clause, "Immediate notice of any accident and of any suit resulting therefrom, with every summons or other process, must be forwarded to the home office," etc., is more clearly a condition precedent than the clause in the proof of loss provision in the standard fire insurance policy, which this court has frequently held to be a condition precedent. 72 Ark. 484, and subsequent decisions.

This provision is a condition precedent, even though not expressly made so, and though no forfeiture clause is found in the policy. 4 Cooley's Briefs on Law of Insurance, 3570; 118 N.Y.S. 865; 99 P. 537; 82 N.E. 745; 67 N.E. 882; 57 N.E. 458; 63 N.E. 54. Immediate notice being an essential of the contract and a condition precedent to recovery, the question whether appellee was prejudiced by the failure of appellant to give such notice is immaterial.

2. Where the facts are undisputed, the question whether notice was given immediately becomes one of law for the court. 3 May on Ins. § 462; 63 N.E. 54; 21 N.E. 898; 2 N.E. 1041; 57 N.E. 458; 66 N.E. 481. Without regard to whether the reasonableness of the time is a matter for the court or jury, the courts have held "unexcused delays of varying length unreasonable per se." 4 Cooley's Briefs, 3573; 171 Mass. 357; 67 N.E. 882; 40 L.R.A. 833; 44 Md. 460; 12 Wend. (N. Y.) 452; 7 Jones (N. C.) 435; 29 Pa.St. 198; Cyc. Annotations, 1910, "Liability Insurance," p. 2431; 50 N.E. 516; 36 Wash. 46; 86 Minn. 464.

Notice to Carnes & Son, general agents of the Standard Life & Accident Company, was not notice to appellee. No issue that they were agents for appellee was tendered in the complaint, and appellee objected to the introduction of testimony to show proof of notice sent to Carnes & Son as being notice to appellee.

In any event notice to Carnes, a broker, was not sufficient as notice to appellee. Ostrander on Ins., § 45; 3 Cooley on Ins., 2490; 2 Clement on Ins., 474, 475; May on Ins., §§ 122, 123; Mechem on Agency, § 931; 128 N.Y.S. 805; 84 Id. 375; 79 Ill. 404; 83 Md. 22; 129 Ill. 599; 611; 64 N.Y. 85; 83 N.Y. 168; 36 Mich. 502; 123 Ind. 177; 36 F. 118; 185 S.W. 713; 66 N.Y. 464; 123 N.Y. 6; 74 Mo. 41; 53 Minn. 220; 80 N.Y. 32. Local fire insurance agents and soliciting agents of insurance companies can not waive provisions of policies relating to notice and proof of loss. 60 Ark. 532; 85 Ark. 337, 345; 75 Ark. 25. Carnes & Son, being mere brokers, did not represent appellee for any purpose, and can not be held to have had as much power to receive notice of the accident as a soliciting agent would have had.

Parol evidence of usage or custom among insurance men for brokers to receive notices of injury is inadmissible to vary the terms of the policy. 109 U.S. 278; 196 U.S. 157. Usage is only resorted to for the purpose of ascertaining with greater certainty the intent of the parties, not to contravene their express stipulations. 44 N.Y. 495; 55 N.Y. 209; 67 Me. 83; 34 N.Y. 417; 20 Wall. 488; 62 Tex. 461; 49 Kan.178; Ostrander on Ins. p. 15; Id. § 27; 68 Ark. 259; 54 Ark. 423; 91 Ark. 600.

The testimony offered to establish a usage or custom was insufficient to go to the jury. To be admissible, such proof must be of a general custom, and one in existence a sufficient length of time to become generally known. 91 Ark. 600; 90 Ark. 71, 73; 58 Ark. 125; 17 Ark. 428; 20 Ark. 251; 89 Ark. 591; 81 Ark. 549; 54 F. 839. A usage must be uniform and notorious to be binding. Ostrander on Ins. § 27; 65 F. 729; 75 N.Y. 65, 77.

3. Appellee did not waive its defense of failure to give notice by investigating the accident. The investigation was made after first obtaining an agreement with appellant that it would be made under reservation of liability. 67 N.E. 882.

MCCULLOCH, C. J. WOOD and HART, JJ., dissent.

OPINION

MCCULLOCH, C. J.

This is an action instituted by appellant, Hope Spoke Company, a concern engaged in operating a manufacturing plant at Hope, Arkansas, against the Maryland Casualty Company, to recover on a policy of employers' liability insurance the amount of a loss sustained by reason of appellant's liability for an injury to Homer E. Presley, one of its employees. Presley sued appellant, and recovered judgment for damages, and on appellee's refusal to pay the judgment appellant paid it and instituted this action. The parties entered into a stipulation in the lower court to the effect that, in the event appellant should be entitled to recover at all, the amount of such recovery should be the sum of $ 3,812.03, with interest from September 6, 1910, the date of the judgment of the circuit court in Presley's action against appellant. Appellee defended solely on the ground that "immediate notice" of the accident was not given, as provided for in the policy, and on that ground that the trial court directed the jury to return a verdict in appellee's favor.

So much of the policy as is material to the question now presented reads as follows:

"In consideration of forty-nine and 50-100 dollars ($ 49.50) initial premium, which is based on the estimated compensation set forth in the schedule below, * * * the Maryland Casualty Company, of Baltimore, herein called the company, hereby agrees to indemnify Hope Spoke Company, of Hope, * * * against loss from the liability imposed by law upon the assured for damages on account of bodily injuries, including death resulting therefrom accidentally suffered by any employee of the assured while upon the premises * * * occupied by the assured in the conduct of the business and at the places mentioned in the schedule below; provided such bodily injuries or death are suffered as a result of accidents occurring within the period of twelve months, beginning on the 1st day of April, 1909, at noon, and ending on the 1st day of April, 1910, at noon. * * * The company's liability for loss from an accident resulting in bodily injuries, including death resulting therefrom, to one person is limited to five thousand and 00-100 dollars ($ 5,000), and subject to the same limit for each person, the company's total liability for loss from an accident resulting in bodily injuries, including death therefrom, to more than one person is limited to ten thousand and 00-100 dollars ($ 10,000). In addition to these limits, however, the company will, at its own cost (court costs being considered part thereof), investigate all accidents and defend all suits, even if groundless, of which notices are given to it as hereinafter required, unless the company shall elect to settle the same. * * * Immediate notice of any accident and of any suit resulting therefrom with every summons or other process must be forwarded to the home office of the company, or to its authorized representative."

It appears from the evidence adduced at the trial that appellant had for some years carried this kind of insurance in another company, the Standard Life & Accident Insurance Company, of which W. W. Carnes &...