Luntz v. Stern
| Decision Date | 29 March 1939 |
| Docket Number | 27192. |
| Citation | 135 Ohio St. 225,20 N.E.2d 241 |
| Parties | LUNTZ et al. v. STERN. |
| Court | Ohio Supreme Court |
Syllabus by the Court.
1. 'By virtue of the provisions of Section 9510-3, General Code, the liability of an insurance company in the event of loss or damage on account of a casualty covered by a contract of insurance becomes absolute only in the sense that the payment of loss by the insurance company shall not depend upon the satisfaction by the assured of a final judgment against him for loss or damage or death
occasioned by such casualty.' Stacey v Fidelity & Casualty Co. of New York, 114 Ohio St. 633 151 N.E. 718, approved and followed.
2. By the provisions of Section 9510-4, General Code, a judgment creditor is entitled to a direct action against the insurance company after obtaining a judgment against the assured and after the lapse of 30 days after judgment is rendered, provided that any valid conditions or requirements in the contract of insurance which would be binding upon the assured are likewise binding upon such judgment creditor. Stacey v. Fidelity & Casualty Co. of New York, supra, approved and followed.
3. The purpose of the provisions of Sections 9510-3 and 9510-4, General Code, is to afford an injured person direct and prompt benefit of the provisions of the indemnity policy of the assured. He succeeds to only the rights of the assured and cannot recover in an action on the policy against the indemnity company if there has been such a breach of the contract by the assured as would prevent recovery by him.
4. Under the terms of a liability indemnity policy providing that the assured shall at all times render all possible cooperation and assistance with respect to claims and in the defense of suits, the assured is not required to join the indemnity company in presenting a sham defense, but is required to make a fair and frank disclosure of information demanded by the company and act with the utmost honesty and good faith. He may not condition his cooperation upon conformance to his demands for payment or settlement of claims, and he may not arbitrarily or unreasonably decline to assist in making a fair and legitimate defense or refuse to permit any defense to be made in his name in suits against him upon claims covered by the indemnity policy.
5. When the facts presented are undisputed, whether they constitute a performance or a breach of a written contract, is a question of law for the court.
This case involves the terms of a liability insurance policy and presents the question whether the conduct of the assured in this instance constituted a violation of the provisions of the policy that the assured 'shall at all times render all possible cooperation and assistance' in defending against claims made on account of any accident in which the automobile covered by the policy is involved, renders the policy void, and absolves the insurance company from liability upon its timely election, declaration and notice of its purpose to terminate the contract.
The action was instituted in the Court of Common Pleas of Summit county upon the filing of a supplemental petition wherein it was alleged that in a certain action theretofore instituted, the plaintiffs, as executors of Charles T. Luntz, deceased, had recovered a judgment against one Karl Stern in the sum of $10,000 on account of injuries, resulting in the death of Luntz, claimed to have been caused by the negligence of Stern in the operation of his automobile in which Luntz was a passenger. It was then averred that prior to and on April 8, 1933, the date of the accident, there was in full force an automobile insurance policy covering the operation of a certain Buick sedan then owned and operated by Stern, which policy had been issued by the defendant, Ohio Casualty Insurance Company. By the terms of the policy that company insured Stern against legal liability resulting from bodily injuries or death occasioned by Stern. The terms of the policy were set forth, stating that the liability for loss on account of an accident resulting in bodily injuries or death was limited to $20,000, and the company's total liability for loss on account of any one accident causing injuries to more than one person was limited to $40,000. It was asserted that, though more than thirty days had elapsed, the judgment was unpaid and recovery for the amount thereof was sought against the insurance company.
The answer of The Ohio Casualty Insurance Company admitted the essential facts stated in the supplemental petition and then set forth provisions of the policy which in substance made it a condition precedent to the company's liability that, upon the occurrence of any loss or accident, immediate written notice thereof should be given by the assured and further notice of any claim made on account thereof. The policy also contained the following provisions:
The company then alleged that the assured had failed, neglected and refused to furnish it or to aid it in securing information and evidence relative to the accident, had refused to aid in the preparation of the defense against such action, had failed, neglected and refused to aid in obtaining witnesses, and had failed, neglected and refused to render cooperation and assistance, as required by the terms of the policy, although frequently requested so to do. It was further alleged that Stern knowingly and wilfully refused to sign an answer prepared and presented to him by the company in order to enable it to defend against such action and that, on the contrary, he aided and abetted the plaintiffs in the commencement and prosecution of their cause and was hostile to the company. It was charged that as a result thereof the company had, on January 8, 1934, elected to declare, and did declare, the policy of insurance broken, null and void, and that it declined and refused to perform further services under the contract or to proceed any further in the defense of the action, hence that the company was under no obligation to the plaintiffs or indebted to them in any sum whatever.
The reply, after certain admissions and denials, charged that, by reason of the large sum sought to be recovered as damages growing out of the automobile collision involved in the litigation, the defendant wilfully and knowingly devised ways and means to escape liability, and insisted that Stern engage in a sham defense and, in pursuance thereof, demanded him to verify an answer he did not in good faith believe to be true so that it might escape liability to him and to the plaintiffs.
The trial of the case resulted in a verdict for the full amount sought, upon which judgment was rendered by the Court of Common Pleas, a motion for judgment at the close of the evidence and for judgment non obstante veredicto, as well as a motion for new trial, having been overruled. Upon appeal to the Court of Appeals, that court found the 'judgment of the trial court, finding that there was not a lack of cooperation upon the part of Stern, the policy holder, is manifestly against the weight of the evidence,' denied the application of the appellant therein for final judgment and remanded the case to the Common Pleas Court. The case is in this court for review pursuant to the allowance of a motion to certify.
Waters, Andress, Wise, Roetzel & Maxon, of Akron, for appellant.
Oscar Abt and Ben Dreyer, both of Canton, and Slabaugh, Seiberling, Huber & Guinther, of Akron, for appellees Vera F. Luntz and Darwin S. Luntz.
This proceeding is instituted by the judgment creditors pursuant to the provisions of Sections 9510-3 and 9510-4, General Code, to enforce the right of subrogation thereby conferred upon them. The purpose and effect of this statute is to afford the injured party direct and prompt benefit of the policy of the insured. It is well settled, however, that such statutory provisions do not and could not have the effect of placing the injured person in a favored position contrary to the terms of the policy. He succeeded to only such rights as the assured had against the company.
The indemnity policy is a contract in which there are mutual undertakings and obligations by the insurance company and the assured. The principle is well settled in cases of this...
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Luntz v. Stern, 27192.
...135 Ohio St. 22520 N.E.2d 241LUNTZ et al.v.STERN.No. 27192.Supreme Court of Ohio.March 29, 1939. Appeal from Court of Appeals, Summit County. Action by one Luntz and others, executors of Charles T. Luntz, deceased, against Karl Stern and the Ohio Casualty Insurance Company to recover from t......