Maryland Casualty Company v. Hallatt

• Decision Date: 08 November 1961
• Docket Number: No. 18485.,18485.
• Citation: 295 F.2d 64
• Parties: MARYLAND CASUALTY COMPANY, Appellant, v. Harry H. HALLATT and Mary Valentine Hallatt, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

295 F.2d 64 (1961)

MARYLAND CASUALTY COMPANY, Appellant, v. Harry H. HALLATT and Mary Valentine Hallatt, Appellees.

No. 18485.

United States Court of Appeals Fifth Circuit.

October 6, 1961.

Rehearing Denied November 8, 1961.

Jackson L. Peters, Miami, Fla., Knight, Smith, Underwood & Peters, Miami, Fla., of counsel, for appellant.

Lawrence G. Ropes, Jr., Coral Gables, Fla., Kelly, Brooks & Ropes, Coral Gables, Fla., of counsel, for appellees.

Before TUTTLE, Chief Judge, and RIVES and JONES, Circuit Judges.

JONES, Circuit Judge.

On April 11, 1956, in West Palm Beach, Florida, the appellees, Mr. and Mrs. Hallatt, were passengers in an automobile involved in a collision with another automobile owned and operated by one James R. Richardson, Jr. Richardson was then a waiter residing in Palm Beach, and was insured by the appellant, Maryland Casualty Company, under a policy of automobile liability insurance which contained the following provisions:

"No action shall lie against the company unless, as a condition precedent thereto, the insured shall have complied with all the terms of this policy * * *

"Payment for loss may not be required nor shall action lie against the company unless, as a condition precedent thereto, the named insured shall have fully complied with all the terms of this policy * * *"

Under the caption "Conditions," No. 17, "Assistance and cooperation of the Insured" reads as follows:

"The insured shall cooperate with the company and, upon the company\'s request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of the accident."

The Hallatts claimed damages for their injuries. Maryland investigated the accident, and secured a written statement from Richardson. The Hallatts filed suit against Richardson, and Maryland undertook the defense of that action. Before the case was finally set for trial on May 18, 1959, some three years after the collision, Richardson had moved to Massachusetts.

Maryland duly and repeatedly notified Richardson of the trial date and requested him to attend. Richardson declined, stating that he had been out of work all of the preceding winter, and had then secured a job painting bridges which paid him $200 per week. Maryland continued to insist on Richardson's attendance, and offered to pay his traveling expenses. On May 9, 1959, Richardson wrote to Maryland, "I shall be unable to make it to Florida as I am working now." Maryland notified Richardson that, if he persisted in his refusal to attend the trial, it would disclaim coverage because of his failure to cooperate. Richardson politely, but adamantly, persisted in his refusal to attend the trial.

Counsel employed by Maryland to defend the suit then moved the court for leave to withdraw as counsel for Richardson. That motion was denied, and the case proceeded to trial. The trial court granted the motion of the Hallatts for a directed verdict as to liability. The jury assessed their damages at a total of $8,797, for which amount, together with costs of court, judgment was rendered against Richardson. For the collection of that judgment the Hallatts caused a writ of garnishment to be issued against Maryland.

In response to the garnishment, Maryland denied being indebted to Richardson on the ground that Richardson's conduct in failing and refusing to attend the trial of the negligence action brought against him amounted to a breach of Condition No. 17 of the policy, quoted supra. The jury in the garnishment proceeding returned a verdict against Maryland for $9,267.52. From the judgment entered upon that verdict this appeal is prosecuted. Maryland insists that the district court erred: (I) in denying its motion for a directed verdict; (II) in admitting certain evidence; (III) in refusing to give certain instructions to the jury.

The pretrial stipulation provided that:

"The sole issue to be tried is whether or not the assured, James Richard Richardson, has voided the insurance coverage under Policy No. 2-2236179, for violation of the assistance and cooperation clause of the said policy of insurance, as set forth in paragraph 2 of the reply of the garnishee to the plaintiffs\' traverse.

* * * * * * "The following issues of fact, and no others, remain to be litigated upon the trial:

"(A) Maryland Casualty Company contends that the policy of automobile liability insurance was voided by its insured, James Richard Richardson, by violation of the assistance and cooperation clause of the said policy of insurance.

"(B) The plaintiffs contend that the good faith and diligence of the garnishee with respect to the insured and the plaintiffs is an issue of fact to be resolved."

It is not claimed that Richardson failed to cooperate with Maryland from the date of the accident on April 11, 1956, to the time when the negligence case was finally set for trial on May 18, 1959. The claim is that Richardson's refusal to attend the trial was such a breach of the condition as to relieve Maryland of its obligation to pay for the loss.

Maryland put one of its claim agents, Leonard W. Lafferty, Jr., on the stand and by him established that letters had been sent to the insured advising him of the date of the trial, requesting his attendance and offering to advance such sums as might be required to cover expenses of attending the trial. On cross-examination he was asked by counsel for the Hallatts as to whether or not Richardson's testimony would have been helpful. Over objection by Maryland he was required to answer. Maryland's claim manager, Thomas B. Barton, was put on the stand by it to show his efforts in attempting to produce Richardson's presence at the trial. On cross-examination, over objection, he was required to say whether, in his opinion, Richardson's testimony would have been helpful. The answers given to these questions were equivocal. Lafferty said he didn't know and Barton said it would be hard to say.

The objections were made to the testimony on the ground that it was improper to admit evidence for a purpose of showing that the insurance company was not prejudiced in the absence of the insured from the trial. It has been said that:

"While a few courts have taken the view that liability policy clauses requiring the insured to cooperate in the defense of actions under the policy by attending the trial and testifying, where requested to do so, are to be construed strictly and in accordance with their plain terms, so that an insurer may escape liability by merely showing a failure or refusal to attend or testify, it appears to be the view of the great majority of the courts that the lack of cooperation by the insured in failing to attend the trial or testify must be substantial or material, and that a technical or inconsequential lack of cooperation is insufficient to void the policy. Before the insured\'s failure to attend the trial can be regarded as a material breach of the condition requiring the insured\'s cooperation, the insurer must show that the lack of cooperation resulted in prejudice to the insurer." 29 A Am.Jur. 588, Insurance § 1479.

In discussing the same question the Court of Appeals for the Seventh Circuit recently stated that a majority of American decisions hold that the failure of an insured person to attend a trial and aid in the defense when a case against him is called for trial, is prejudicial per se. Potomac Insurance Co. v. Stanley, 7 Cir., 1960, 281 F.2d 775. We have no academic interest as to which pan of the scales carries the greater bulk of the precedents. Our task is to determine which of the conflicting rules is the law of Florida.

The earliest of the Florida cases to which our attention is called is United States Fidelity & Guaranty Co. v. Snite, 106 Fla. 702, 143 So. 615. There it appeared that the insured did everything he was requested to do by the insurer. The insured was not present at the trial. He was not asked to be present and the attorneys for the insurers made no effort to notify him at addresses furnished them where he might have been located. The insurer filed a motion for continuance stating that the insured was absent because he had not been informed that the case had been set for trial. The judgment was sustained because it clearly appeared that the insured had not intentionally absented himself from the trial. In the course of the opinion it was observed that it had not been shown that if the insured had been present at the trial he could have rendered any assistance to the insurer. In view of the court's holding that the cooperation clause was not breached because the insured's absence from the trial was not intentional, we do not regard as a ground for decision the comment regarding the failure to show that the insured could have rendered assistance if he had been present. The opinion, as we read it, does not announce a principle that a showing must be made that the presence of the insured would probably have changed the result of the trial. In the Snite case the cooperation clause required the insured to "aid in securing information, evidence and the attendance of witnesses in effecting settlements and in defending suits * * *" and "at all times render to the Company all reasonable co-operation and assistance." The policy did not contain a provision such as is in the policy here which expressly requires the insured to attend hearings and trials. Even if it could be said that prejudice must be shown for an insurer to be relieved of liability for a breach by the insured of a covenant to render cooperation and assistance, it does not follow that the rule would be applicable where the insured breached an undertaking to attend...