Muncie v. Travelers Ins. Co.

• Citation: 253 N.C. 74,116 S.E.2d 474
• Decision Date: 12 October 1960
• Docket Number: No. 595,595
• Parties: Grace Mae MUNCIE v. TRAVELERS INSURANCE COMPANY.
• Court: United States State Supreme Court of North Carolina

Page 474

116 S.E.2d 474

253 N.C. 74

Grace Mae MUNCIE v. TRAVELERS INSURANCE COMPANY.

No. 595

Supreme Court of North Carolina.

Oct. 12, 1960

Hostetler & McNeill and H. D. Harrison, Jr., Raeford, for plaintiff appellee.

Bynum & Bynum, Rockingham, for defendant appellant.

RODMAN, Justice.

The court overruled defendant's motions to nonsuit. It charged the jury the burden of proof was on defendant to show that notice had not been given in a reasonable time, and that defendant was prejudiced by such failure to give notice.

There is no allegation that defendant has in any manner waived the policy provisions, nor is there contention that there is any evidence tending to show earlier notice to defendant of the accident of 24 October 1954 than the letter from Crosby dated 10 June 1955, received 20 June 1955. Nor is it contended there is evidence tending to explain such delay or justify the delay as reasonable. It is asserted by plaintiff that defendant has not offered evidence of nor in fact suffered prejudice from the failure to give earlier notice. The rulings therefore present for determination these questions: Who had the burden of proof with respect to notice required by the policy? Is the evidence sufficient to permit a finding that the policy provisions have been complied with? Plaintiff has the right, of course, to the benefit of any evidence offered by defendant which tends to support her allegation that the conditions of the policy were complied with.

The learned trial judge presumably based his rulings and charge on MacClure v. Accident & Casualty Ins. Co., 229 N.C. 305, 49 S.E.2d 742. It must be conceded that the language there used supports his honor's rulings. There can be, we think, no question that the Court in that case reached the correct result, but it is, we think, apparent from the facts as there stated that the Court used language not necessary to support its conclusion.

There insured promptly gave notice of the accident and of the institution of the action by the injured party against the insured. Pursuant to this notice the insurer assumed the defense of that action but permitted a default judgment to be rendered against the insured. It based its assertion of nonliability on these facts: the insured was the proprietor of a carnival; he traveled with the show throughout the South; because of such travel insurer experienced delay in locating the insured and in having him verify the answer which the insurer's attorneys had prepared. Because of the difficulty in locating the insured, the attorneys, on 7 April, asked permission to withdraw as his counsel. That day the insured received letter written by counsel employed by the insurance company. He replied by telegraph the next morning, the earliest possible moment. Counsel then sought to impose conditions on which they would agree to continue to represent him. Counsel for plaintiff in the personal injury action had agreed that counsel for insured might file an answer, and that they would waive verification. A verified answer was received from insured on 16 April, but permission to counsel to withdraw was not granted until May. The injured then brought suit against the insurance company. It disclaimed liability on the assertion that the insured had failed to comply with a condition precedent, to wit: full co-operation in the defense of the litigation. The trial court held as a matter of law that the defense was established and entered judgment in favor of the insurance company. Justice Seawell, speaking for the Court, said: 'There is no question here as to the validity and importance of clauses in liability insurance policies similar to that with which we are dealing, to the materiality of which appellee's counsel address many citations of authority. But the issue here concerns the manner in which the breach of the co-operation clause may be ascertained, and by which branch of the court it may be determined,--judge or jury. ' Thereafter he said: 'As we are dealing with a nonsuit of plaintiff's action based on an affirmative defense set up by the defendant while the burden of proof with respect thereto rested on him, it is well to say that we are advertent to the fact that the policy names compliance with all its terms a condition precedent to the maintenance of the suit. In passing it may be observed that defendant made no objection to the pleading in that respect, and voluntarily undertook to prove its affirmative defense in avoidance of liability. ' (Emphasis added.)

It is apparent from the opinion that the Court was not called upon to determine who had the burden of proof. Whether rightly or wrongly, the insurance company had voluntarily assumed that burden. It would not on appeal be permitted to shift its position and assert that the burden was in fact on plaintiff. Bowling v. Bowling, 252 N.C. 527, 114 S.E.2d 228; Rhyne v. Mount Holly, 251 N.C. 521, 112 S.E.2d 40; Bivins v. Southern R. R. Co., 247 N.C. 711, 102 S.E.2d 128; Gorham v. Pacific Mut. Life Insurance Co., 214 N.C. 526, 200 S.E. 5; Webster v. Wachovia Bank & Trust Co., 208 N.C. 759, 182 S.E. 333. The question for decision in the MacClure case was: Did the admitted facts establish as a matter of law a failure of the insured to cooperate? The trial court answered in the affirmative, and this Court properly held that the facts did not as a matter of law establish failure to co-operate, but the evidence required the submission of an issue to a jury. This was all the Court was called upon to decide. That portion of the opinion dealing with the burden of proof, being unnecessary to a decision, was merely obiter dicta and should not influence the decision in this case unless it logically assists in answering the question we are now called upon to decide. Hayes v. Wilmington, 243 N.C. 525, 91 S.E.2d 673; Washburn v. Washburn, 234 N.C. 370, 67 S.E.2d 264; Suskin v. Hodges, 216 N.C. 333, 4 S.E.2d 891.

To determine the application of the language of the MacClure case to this case we must recognize established rights and be guided by well-settled rules repeatedly declared for the protection of those rights.

Freedom of contract, unless contrary to public policy or prohibited by statute, is a fundamental right included in our constitutional guaranties. Constitution, art. I, sec. 17; Alford v. Textile Insurance Co., 248 N.C. 224, 103 S.E.2d 8, 70 A.L.R.2d 408; 12 Am.Jur. 641, 642.

The policy provision requiring notice of facts which may impose liability on the insured as a result of the operation of his motor vehicle does not violate public policy, and, except as to a limited kind of policy, G.S. § 20-279.21, is not declared invalid by statute.

Since the contractual provision is, as related to the facts of this case, a valid one, the parties are entitled to have it enforced as written. We cannot ignore any part of the contract. Suits v. Old Equity Life Insurance Co., 249 N.C. 383, 106 S.E.2d 579; Peirson v. American Hardware Mut. Insurance Co., 248 N.C. 215, 102 S.E.2d 800; Ray v. Hospital Care Ass'n, 236 N.C. 562, 73 S.E.2d 475; Federal Reserve Bank v. Manufacturing Co., 213 N.C. 489, 196 S.E. 848; Whitaker v. Jefferson Standard Life Insurance Co., 213 N.C. 376, 196 S.E. 328.

The policy makes the giving of notice a condition precedent to insurer's liability. Prior and subsequent to the decision in the MacClure case this Court has consistently held that plaintiff has the burden of showing that he has complied with those conditions precedent to his right to maintain his action. Illustrative of this well-settled rule are cases under the wrongful death statute as originally enacted, Wilson v. Chastain, 230 N.C. 390, 53 S.E.2d 290; Webb v. Eggleston, 228 N.C. 574, 46 S.E.2d 700; Hatch v. Alamance R. R. Co., 183 N.C. 617, 112 S.E. 529; filing of a claim as required by G.S. § 153-64 to impose liability by contract on a municipal corporation, Nevins v. Lexington, 212 N.C. 616, 194 S.E. 293; filing of a bond by caveators as required by G.S. § 31-33, In re Winborne's Will, 231 N.C. 463, 57 S.E.2d 795; contract to pay money on the happening of a specified event, Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906; notice of loss under a fire insurance policy, Gardner v. Carolina Insurance Co., 230 N.C. 750, 55 S.E.2d 694; Boyd v. Bankers & Shippers Insurance Co., 245 N.C. 503, 96 S.E.2d 703; Zibelin v. Pawtucket Mut. Fire Insurance Co., 229 N.C. 567, 50 S.E.2d 290; notice of accidental death or injury as required in accident policies, Gorham v. Pacific Mut. Life Insurance Co., supra, Fulton v. Metropolitan Life Insurance Co., 210 N.C. 394, 186 S.E. 486; Dewease v. Travelers Insurance Co., 208 N.C. 732, 182 S.E. 447; Rhyne v. Jefferson Standard Life Insurance Co., 196 N.C. 717, 147 S.E. 6; Woodfin v. Asheville Mut. Insurance Co., 51 N.C. 558; policy provision that the injured may not bring an action on the policy 'unless and until 'execution against the assured is returned unsatisfied,'' Small v. Morrison, 185 N.C. 577, 118 S.E. 12, 31 A.L.R. 1135; Anderson & Co. v. American Mut. Liability Insurance Co., 212 N.C. 672, 194 S.E. 281.

The general rule requiring plaintiff to establish compliance with contractual conditions precedent has general recognition. Murray v. Cunard S. S. Co., 235 N.Y. 162, 139 N.E. 226, 26 A.L.R. 1371; Prudential Ins. Co. v. Myers, 15 Ind.App. 339, 44 N.E. 55; Wachovia Bank & Trust Co. v. Independence Indemnity Co., 4 Cir., 37 F.2d 550; A. Perley Fitch Co. v. Continental Ins. Co., 99 N.H. 1, 104 A.2d 511, 49 A.L.R.2d 156; Public National Ins. Co. v. Wheat, 100 Ga. App. 695, 112 S.E.2d 194; Segal v. Aetna Casualty Co., 337 Mass. 185, 148 N.E.2d 659; American Fidelity Co. v. Hotel Poultney, 118 Vt. 136, 102 A.2d 322; Depot Cafe v. Century Indemnity Co., 321 Mass. 220, 72 N.E.2d 533; Lauritano v. American Fidelity Fire Insurance Co., 2 Misc.2d 930, 147 N.Y.S.2d 748; Houran v. Preferred Acc. Ins. Co. of New York, 109 Vt. 258, 195 A. 253; Zengerle v. Commonwealth...