Lennon v. American Farmers Mut. Ins. Co.

• Decision Date: 05 December 1955
• Docket Number: No. 45,45
• Citation: 208 Md. 424,118 A.2d 500
• Parties: William Earl LENNON v. AMERICAN FARMERS MUTUAL INSURANCE COMPANY, a body corporate.
• Court: Maryland Court of Appeals

Page 424

208 Md. 424

118 A.2d 500

William Earl LENNON v. AMERICAN FARMERS MUTUAL INSURANCE COMPANY, a body corporate.

No. 45

Court of Appeals of Maryland.

Dec. 5, 1955.

Wesley E. Thawley, Denton, for appellant.

William W. Travers, Salisbury (Webb, Bounds & Travers, Salisbury, on the brief), for appellee.

Before BRUNE, C. J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

DELAPLAINE, Judge.

On September 5, 1953, Dr. William Earl Lennon, a physician of Federalsburg, with offices also in Easton, was sued for damages in the Circuit Court for Caroline County by Elmer T. Russell for injuries allegedly sustained as a result of the doctor's negligent operation of his automobile on January 31, 1952. Dr. Lennon, who held an automobile liability insurance policy of the American Farmers Mutual Insurance Company, asked that company to defend the suit. The policy required the company (1) to defend any suit against him alleging bodily injury sustained by any person, caused by accident and arising out of the ownership, maintenance or use of his automobile, even if such suit is groundless, false or fraudulent; and (2) to reimburse him for all reasonable expenses, other than loss of earnings, incurred at the company's request. The company refused to defend the suit on the ground that he did not comply with the provision that written notice of an accident shall be given to the company 'as soon as practicable.' Dr. Lennon thereupon employed K. Thomas Everngam and Harry R. Hughes, of the Caroline County bar, to act as his attorneys in defending the suit.

The case was tried before a jury in April, 1954. It appeared at the trial that Dr. Lennon, while on the way to his home on the night of January 31, 1952, stopped at a beer tavern near Federalsburg, operated by Stanley H. Klemm, to get a bottle of beer. Russell, whom he had never known before, urged him to match coins. Dr. Lennon agreed to do so and in a short time won about ten dollars from him. The doctor then decided to leave. Russell, hoping his luck would turn, tried to prevent him from leaving. The doctor, however, went out to get in his car, and Russell followed. When the doctor backed his car across the highway, Russell, using abusive language, walked alongside the car with the door open. The doctor warned him that if he didn't get away he would push him out of the way. He testified, however, that he did not cause Russell any injury.

The jury, finding that there had not been any injury, rendered a verdict in favor of Dr. Lennon, who thereupon called upon the insurance company to reimburse him for the attorneys' fees and other expenses incurred in the defense of the suit. The company refused to do so, and he accordingly entered suit against it to recover the expenses incurred. He claimed $1,000 for the attorneys' fees, $200 for physical examinations of Russell and expert testimony of the physicians, $23 for X-ray and laboratory expenses, and $23 for shorthand reporting.

Defendant pleaded that plaintiff had failed to give it notice of the accident as required by the insurance policy. This requirement reads as follows:

'When an accident occurs 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. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.'

At the trial of this case plaintiff again testified that no accident occurred and he did not injure Russell when he backed his car on the road. He said he was positive of this because Russell was walking slowly and was still arguing with him when he was ready to drive away toward Federalsburg. 'I could have hurt the boy,' he said, 'if I had gone across the road fast, because I could have knocked him down and drug him, but I didn't do that.' He also said that if he had known of any accident, he would have reported it to the Commissioner of Motor Vehicles and the insurance company. He further said that he did not receive any notice of any injury or any claim during the period of one year and seven months prior to the institution of the suit.

The insurance company set up the defense that when Dr. Lennon stopped in the tavern again about three weeks after the incident, Klemm, the proprietor of the tavern, said to him: 'Did you know that the Russell boy is gunning for you? * * * He said you hurt his foot.'

At the conclusion of the case the Court submitted the following issues to the jury:

(1) Did Russell sustain personal injuries as a result of the operation of an automobile by Dr. Lennon?

(2) Could Dr. Lennon, by the exercise of ordinary care and diligence, have determined within one month after the incident that a collision had occurred between his car and Russell which might give rise to a law suit against Dr. Lennon?

(3) What is the reasonable value of the legal services rendered by Dr. Lennon's attorneys in the case filed by Russell?

To the first two questions the jury answered 'No.' To the third question they answered '$1,000.00.'

Thus the jury found, as did the jury in the damage suit, that Russell did not sustain any injuries caused by negligence of Dr. Lennon. It also found that the remark in the tavern was not sufficient to lead Dr. Lennon to believe that Russell would sue him for damages.

The judge, on defendant's motion for judgment n. o. v., set aside the verdict and judgment nisi and entered judgment in favor of defendant. From that judgment plaintiff appealed to this Court.

The judge based his action upon Klemm's remark to Dr. Lennon that Russell was 'gunning' for him. He stated the reasons for his decision as follows:

'It is the opinion of this Court that under these circumstances a reasonably prudent person exercising due diligence should have known that Russell was threatening him because of a claim that he had hurt his foot as a result of backing the car and that in the exercise of due diligence he should have investigated the threat and reported his findings to the insurance company and not regarded the information as a joke. The Court further finds that reasonable minds should not differ in respect to the reaction of a reasonable person under these circumstances and therefore rules as a matter of law that Dr. Lennon should have known approximately three weeks after the incident that Russell was claiming he had hurt his foot as a result of Dr. Lennon backing his car in an effort to get away from him and even though the claim was groundless and false, as the jury has found, it might well result in a law suit which the insurance company was bound to defend under the terms of its policy and the incident should have been reported as soon as practicable thereafter. Such notice was not given and the failure to perform this condition relieves the company of liability irrespective of whether the insurer was prejudiced by such failure.'

The purpose of the provision in an insurance policy that the insured shall give the insurer notice of an accident as soon as practicable is to give the insurer an opportunity to make an adequate investigation of the circumstances, and either to prepare for a defense or determine that it is prudent to settle any claim arising therefrom. The provision 'as soon as practicable' in a liability insurance policy means as soon as may reasonably be possible under the facts and circumstances of each particular case. Maryland Casualty Co. of Baltimore v. Ohle, 120 Md. 371, 378, 87 A....