Northwestern Mut. Ins. Co. v. Independence Mut. Ins. Co.

• Decision Date: 06 January 1959
• Docket Number: No. 30065,30065
• Citation: 319 S.W.2d 898
• Parties: NORTHWESTERN MUTUAL INSURANCE CO., a Corporation (Plaintiff), Respondent, v. INDEPENDENCE MUTUAL INSURANCE CO., a Corporation, Garnishee of Reese Politte (Defendant), Appellant.
• Court: Missouri Court of Appeals

Page 898

319 S.W.2d 898

NORTHWESTERN MUTUAL INSURANCE CO., a Corporation (Plaintiff), Respondent, v. INDEPENDENCE MUTUAL INSURANCE CO., a Corporation, Garnishee of Reese Politte (Defendant), Appellant.

No. 30065.

St. Louis Court of Appeals, Missouri.

Jan. 6, 1959.

Motion for Rehearing or to Transfer to Supreme Court Denied

Feb. 2, 1959.

A. Robert Belscher, St. Louis, for garnishee-appellant.

Lawrence E. Ehrhart, St. Louis, for respondent.

HOUSER, Commissioner.

Garnishment. Northwestern Mutual Insurance Company, hereinafter 'Northwestern,' issued a policy of collision insurance covering an automobile owned by Luther R. McKinnon. Independence Mutual Insurance Company, hereinafter 'Independence,' issued a policy of insurance with personal injury and property damage coverage insuring an automobile owned by Reese Politte. While these policies were in force the two automobiles collided and McKinnon's automobile was damaged. McKinnon made claim upon his insurer and was paid $1,152.50 for the damage to his automobile. By the terms of its policy Northwestern became subrogated to McKinnon's claim against Politte for negligently causing the collision. Northwestern brought suit against Politte, obtained judgment, and then instituted these garnishment proceedings in which interrogatories were filed naming Independence as garnishee of Politte. Garnishee answered, denying any indebtedness to Politte. Issue was joined by the filing of a Denial of Garnishee's Answer and Reply of Garnishee. The garnishee admitted the issuance of a liability policy on Politte but set up the defense of breach of the conditions of the policy in that its insured failed to forward to Independence any notice, summons or process received by him, failed to cooperate with the company, refused to attend the trial or assist in any way in the conduct of the lawsuit, and did not fully comply with all the terms of the policy, as required by the contract of insurance. Submitted to the Circuit Court of the City of St. Louis, sitting without a jury, judgment was rendered for Northwestern, subrogee, and against Independence, garnishee, for $1,204.36. Garnishee has appealed from the judgment.

The pertinent conditions of the policy follow:

'2. If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

'16. 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 * * *

'6. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.

'Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy.'

Northwestern issued a policy to McKinnon with collision coverage. Independence issued a policy to Politte with personal injury and property damage liability coverage. Both policies were in force and effect on July 21, 1955. The two automobiles collided in Franklin County on that date. The accident was reported to Indpendence, and known to the president of the company. Independence referred the matter to Holtcamp, Miller & Risch, a firm of St. Louis attorneys, for investigation. A representative of that firm, Jim Amelung, made an investigation of the case. He took a statement from the insured, Politte. McKinnon made claim upon Northwestern and was paid $1,152.50. By the terms of the policy Northwestern became subrogated to McKinnon's rights against Politte. A lawsuit against Politte for personal injuries arising out of the accident was filed (by whom is not shown), in the course of which depositions of several witnesses were taken 'after a lot of trying' on the part of Independence's lawyer, Mr. Miller, 'to get Politte into' his office. That lawsuit was compromised and payment of the sum agreed upon was made by Independence under the same policy which contained the property damage coverage of Politte. Mr. Miller had in his file a letter written and signed by Mr. Lawrence E. Ehrhart, attorney for Northwestern, addressed to Politte, informing Politte that Mr. Ehrhart represented Northwestern in the Luther R. McKinnon case for property damage arising out of the accident. On March 2, 1956 Mr. Miller sent Mr. Ehrhart an acknowledgment of that letter. On March 7 Mr. Ehrhart wrote Mr. Miller to the effect that his client's total loss was $1,152.50. On March 12 Mr. Miller wrote Mr. Ehrhart stating that he was in a position to discuss settlement of the property damage claim against Politte at that time and that if Mr. Ehrhart's proposition was 'all right' he would consider it. On several occasions the two lawyers discussed the merits of the subrogation claim, how much Mr. Ehrhart wanted in settlement in order to dispose of it, etc. but the subrogation claim was never settled. On July 20, 1956 Northwestern filed a subrogation action against Politte on account of the property damages suffered by McKinnon. Personal service of process on Politte was obtained July 21, 1956 by delivering a copy of the summons and a copy of the petition to Reese Politte, according to the sheriff's return. Politte did not send a copy of the petition and summons in the Northwestern lawsuit to Independence nor did he give Independence or its president any information with respect thereto. In August or September, 1956 Mr. Miller received a message from Mr. Ehrhart informing him that suit had been filed in behalf of Northwestern against Politte; that Politte's answer was overdue, and to please file an answer. In September, 1956 Mr. Ehrhart sent Mr. Miller a letter, enclosing a copy of the petition in Northwestern v. Politte. Mr. Miller then contacted Politte numerous times on the telephone, telling him that Miller had been informed that a suit had been filed and asking him to send in the petition and summons to Mr. Miller's law office. Mr. Miller also wrote to Politte, demanding that he bring the suit papers into the attorney's office, so that the attorneys could 'prepare the necessary answer and defense,' calling Politte's attention to the conditions of his policy requiring co-operation, and threatening to disclaim coverage and withdraw the protection of the insurance coverage. Those letters were dated September 10, October 2, October 23 and November 17, 1956. The latter was sent registered mail and came back marked 'refused.' Mr. Miller testified he was 'never able to get Politte to do anything.' He got no response whatever to his letters and phone calls. Mr. Miller could never get the petition and summons from Politte; he 'wouldn't send it in.' No pleadings were filed in the Northwestern suit by or on behalf of Independence. No depositions were taken in the instant litigation. The case was set for trial March 6, 1957. Mr. Miller did not notify Politte that the case had been set for trial on a certain date. It does not appear that Politte was requested to attend the trial or that he knew from any source that a trial date had been set. On March 6, 1957 a default judgment for $1,152.50 was rendered for Northwestern and against Politte. The judgment not having been paid, these proceedings in garnishment were instituted.

Appellant's point on this appeal is that the trial court erred in entering judgment for Northwestern, in overruling garnishee's motion for new trial, in not setting aside the judgment for Northwestern and in not giving judgment for garnishee in accordance with the latter's motion for a directed verdict, because the conduct of insured, Politte, constituted a breach of certain conditions precedent in the contract, which were of the essence of the contract, in that insured failed (1) to forward the petition and summons to Independence or its representatives and (2) to cooperate with Independence after suit was filed.

Conditions 2, 6 and 16 of the policy are conditions precedent. They are valid, binding and enforceable provisions, Donlon v. American Motorists Ins. Co., Mo.App., 147 S.W.2d 176; Nevil v. Wahl, 228 Mo.App. 49, 65 S.W.2d 123, of the very essence of the contract, Donlon, and of vital importance to the insurer. Nevil.

With respect to (1) above, insured was personally served with a copy of the summons and a copy of the petition on July 21, 1956. Neither 'immediately,' as required by Condition 2 of the policy, nor at any time did insured forward to the company the summons and process received by him. There was a total failure on the part of insured to comply with Condition 2. By the terms of Condition 6 of the policy full compliance with Condition 2 was expressly made a 'condition precedent' to the liability of the company under the policy. Where the forwarding to the insurer of the summons, process or other suit papers relating to an action against the insured is made a condition precedent to liability on the part of the insurer, by clear and unambiguous language in the policy, compliance with such condition is necessary, and non-compliance entitles the insurer to deny liability under the policy, Donlon; Nevil; 45 C.J.S. Insurance Sec. 1048; 29 Am.Jur. 829, Sec. 1105; 76 A.L.R. 182, et seq., and particularly at pages 188, 189, 190; 123 A.L.R. 981, et seq.; State Farm Mut. Automobile Ins. Co. v. Cassinelli, 67 Nev. 227, 216 P.2d 606, 18 A.L.R.2d 431, and cases cited; Annotation, 'Liability Insurance: clause with respect to notice of accident or claim, etc., or with respect to...