Interstate Fire & Cas. Co. v. Burns

• Citation: 29 Colo.App. 276,484 P.2d 1257
• Decision Date: 09 March 1971
• Docket Number: 24105,Nos. 70--527,s. 70--527
• Parties: INTERSTATE FIRE & CASUALTY CO., an Illinois corporation, Plaintiff in Error, v. T. Mitchell BURNS, d/b/a T. Mitchell Burns Insurance Agency, Defendant in Error. . I
• Court: Court of Appeals of Colorado

Page 1257

484 P.2d 1257

29 Colo.App. 276

INTERSTATE FIRE & CASUALTY CO., an Illinois corporation, Plaintiff in Error, v. T. Mitchell BURNS, d/b/a T. Mitchell Burns Insurance Agency,

Defendant in Error.

Nos. 70--527, 24105.

Colorado Court of Appeals, Div. I.

March 9, 1971.

Rehearing Denied April 6, 1971.

Certiorari Denied June 1, 1971.

Yegge, Hall & Evans, James C. Perrill, Denver, for plaintiff in error.

Clanahan, Tanner, Downing & Knowlton, Richard Downing, Jr., Denver, for defendant in error.

DWYER, Judge.

This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

The parties appear here in reverse of the order of their appearance in the trial court. Plaintiff in error, Interstate Fire & Casualty Co., will be referred to as 'Interstate.' Defendant in error, T. Mitchell Burns, d/b/a T. Mitchell Burns Insurance Agency, will be referred to as 'Burns.'

Interstate seeks reversal of a judgment which Burns recovered against it in an action on an errors and omissions policy. Burns was in business as an insurance agent or broker. Interstate had issued to Burns its errors and omissions policy by which it agreed to indemnify Burns against claims made against him by reason of any negligent act, error or omission in the conduct of his business. During the period for which the policy was issued, Burns accepted from a customer, Earl Pinckney, an application for automobile liability insurance and a deposit on account of the premium. The insurance company to which Burns submitted the application declined to issue the policy. Before Burns notified Pinckney that he was unable to obtain the insurance, Pinckney was involved in an automobile collision. An action was filed against Pinckney in which the people injured in the accident sought to recover damages for their injuries. Pinckney filed a third-party complaint against Burns, alleging that Burns was liable to him for any judgment obtained in the action because Burns had negligently failed to procure liability insurance for him. In turn, Burns filed a third-party complaint against Interstate, alleging that Interstate, under the errors and omissions policy, was contractually obligated to pay any judgment which might be entered against him.

The claims asserted in the complaint and in the two third-party conplaints were tried separately in successive actions. In the first trial, a judgment was entered against Pinckney. In the second trial, Pinckney recovered a judgment over against Burns. These two judgments were not appealed.

The third-party action which Burns filed against Interstate was tried to the court. Interstate admitted insuring Burns, but in defense of the action asserted that Burns had failed to give notice of the claim against him as required by the contract of indemnity and that such notice was a condition precedent to its liability under the contract. The trial court found that Interstate had received notice within the terms of the insurance contract and, accordingly, entered judgment in favor of Burns.

In urging reversal of the judgment, Interstate argues that the evidence fails to support the trial court's finding and judgment; and that, as a matter of law, the requisite notice of claim was not given.

The errors and omissions policy contains the following provision:

'E. (1) The Insured shall as a condition precedent to their right to be indemnified under this Insurance give to the Company immediate notice in writing

'(a) of any claim made against them or

'(b) of the receipt of notice from any person of an intention to hold the Insured responsible for the results of any breach of duty as Insurance Brokers, Insurance Agents or General Insurance Agents, and shall in either case, upon request, give to the Company such information as the Company may reasonably require.'

The face of the policy contains the following statement:

'In the event of any loss insured by this policy you should IMMEDIATELY contact your agent or broker or wire this company collect'

The record discloses that the action against Pinckney was filed on March 15, 1966. Thereafter, on April 4, 1966, Pinckney's attorney sent a letter to Burns demanding representation in the action. The letter also requested the name of Burns' errors and omissions insurance company and threatened legal action against Burns. On April 5 or 6, 1966, Burns called the All Risk Agency Company and advised it of Pinckney's claim and demand against him. All Risk Agency Company was a sales agent for Interstate and its name appeared on the errors and omissions policy. All Risk advised Burns that they would look into the matter and...