Keehn v. Excess Ins. Co. of America

• Decision Date: 17 June 1942
• Docket Number: No. 7880.,7880.
• Parties: KEEHN v. EXCESS INS. CO. OF AMERICA.
• Court: U.S. Court of Appeals — Seventh Circuit

129 F.2d 503 (1942)

KEEHN v. EXCESS INS. CO. OF AMERICA.

No. 7880.

Circuit Court of Appeals, Seventh Circuit.

June 17, 1942.

Charles F. Hough, William H. Beckman and George H. Braasch, all of Chicago, Ill. (Ferre C. Watkins, of Chicago, Ill., of counsel), for appellant.

L. Duncan Lloyd, C. H. G. Heinfelden, and Leonard F. Martin, all of Chicago, Ill., for appellee.

Before MAJOR, KERNER, and MINTON, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal from a judgment in favor of the defendant, entered June 4, 1941, in a suit filed by plaintiff's predecessor against the defendant February 26, 1935. The action was predicated upon a reinsurance contract issued by the defendant to the Central Mutual Insurance Company, January 10, 1935, whereby the defendant insured Central Mutual on third party automobile public liability risks above certain amounts assumed by the latter company. It was sought to recover the excess amount paid by Central Mutual by virtue of its policy issued to Hartliep Transit Company on account of recovery by Barton Snow and his wife for injuries sustained in an accident within the terms of the policy issued by Central Mutual.

The suit by Snow and his wife against Hartliep Transit Company was instituted February 26, 1935, for injuries sustained in an automobile collision which occurred February 12, 1935. This suit was defended by Central Mutual and resulted in a verdict and judgment in favor of the plaintiff. Central Mutual refused to pay the judgment and on October 28, 1935, garnishment proceedings were instituted against it which resulted in a judgment from which an appeal was taken on April 7, 1936, to the Appellate Court of Illinois, Second District. The judgment was affirmed November 30, 1936, and leave to appeal to the Supreme Court of Illinois denied April 6, 1937. Hartliep Transit Co. v. Central Mut. Ins. Co., 288 Ill.App. 140, 5 N.E.2d 879. The judgment was paid by the surety company on the appeal bond furnished by Central Mutual out of funds deposited with it as security for the appeal bond.

The reinsurance contract, upon which plaintiff's cause of action was predicated, contained the following provision:

"Section IX. The Company shall notify the Reinsurer immediately after it has had notice of any accident in which this reinsurance is or may probably be involved. Such notice shall be given to the Reinsurer on Preliminary Loss Advice on forms as per copy attached, and when final settlement is made the Reinsurer shall advise on Final Loss Advice on forms as per copy attached.

"The Reinsurer shall have the right and opportunity to associate with the Company in the defense and control of any claim or suit or proceeding relative to an accident where the claim or suit involves this reinsurance."

The court below held that the failure to give notice to the defendant of the Snow accident, in compliance with this provision of the contract, was such as to bar recovery by the plaintiff. In doing so, it held contrary to plaintiff's contention that the provision was not controlling for the reason that the contract failed to designate this provision as a condition precedent, nor did it contain a declaration of forfeiture for non-compliance.

The actual time as to when defendant received notice of the Snow accident is a matter of controversy here as it was in the court below. Plaintiff contends that the defendant had notice on numerous dates, particularly in the latter part of June or the first part of July, 1935, September 2, 1935, and February 25, 1936. The court below specifically found that defendant received no notice on the various dates claimed by the plaintiff, that notice was first received by the defendant on or about October 5, 1936, and that on October 14, 1936, it wrote Central Mutual that by reason of its delay in giving notice, the defendant declined all liability in the matter. Plaintiff contends that there is no substantial evidence to support the court's finding as to the time of notice. We have read the testimony upon which the plaintiff relies and we do not agree with this contention. We are convinced that the court's findings are amply supported — in fact, there is no competent substantial evidence which would support a finding that notice was given at a date earlier than that found by the court.

So we have a situation where the accident, out of which the liability arose, occurred February 12, 1935, judgment in a suit against Hartliep Transit Company entered October 25, 1935, garnishment proceedings instituted against Central Mutual October 28, 1935, judgment against the latter March 6, 1936, and an appeal to the Appellate Court on April 7, 1936, all prior to the date (October 5, 1936) when defendant received notice from Central Mutual.

Plaintiff cites and discusses authorities from a number of jurisdictions, as well as numerous text books, in support of his contention as to the majority rule in construing a provision in insurance contracts as to notice and proof of loss. In our view, a review of such authorities would serve no good purpose — in fact, it would be wasted energy. What may be the rule in some other jurisdiction, or what rule is supported by the weight of authority, is of little consequence since Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L. Ed. 1188, 114 A.L.R. 1487. We must look for guidance to the Illinois decisions and those only.

Unfortunately for plaintiff, the effect to be given the provision of the contract in dispute has been decided favorably to defendant's contention in Niagara Fire Insurance Co. v. Scammon, 100 Ill. 644, and Scammon v. Germania Insurance Co., 101 Ill. 621. We see no occasion to analyze or discuss these cases for the reason that plaintiff, in his brief, frankly concedes they support the position of the defendant. Nor is it claimed that the rule of those cases has been subsequently overruled or modified by the Supreme Court. It is sought to dissipate their effect by reference to what is claimed to be the majority rule and by general statements appearing in certain decisions of the Appellate Courts of Illinois,...