Schmidt v. National Auto. & Cas. Ins. Co.

• Decision Date: 16 November 1953
• Docket Number: No. 14826.,14826.
• Citation: 38 ALR 2d 1142,207 F.2d 301
• Parties: SCHMIDT et al. v. NATIONAL AUTO. & CAS. INS. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

38 ALR 2d 1142, 207 F.2d 301 (1953)

SCHMIDT et al. v. NATIONAL AUTO. & CAS. INS. CO.

No. 14826.

United States Court of Appeals, Eighth Circuit.

October 23, 1953.

Rehearing Denied November 16, 1953.

Rudolph K. Schurr, St. Louis, Mo., (Schurr & Inman, St. Louis, Mo., Cletus E. Rudolph, John C. Kappel, Jr., and Harry G. Neill, Jr., St. Louis, Mo., on the brief), for appellants.

Lee M. Carter, St. Louis, Mo. (Moser Marsalek, Carpenter, Cleary & Carter, St. Louis, Mo., on the brief), for appellee.

Before GARDNER, Chief Judge, and WOODROUGH and THOMAS, Circuit Judges.

GARDNER, Chief Judge.

The National Automobile & Casualty Insurance Company brought this action against Eugene P. Schmidt and Dorothy E. Schmidt, parents of Eugene P. Schmidt, deceased, and Helene St. John and Patrick E. St. John, appellants, seeking a declaratory judgment exonerating it from liability under a one year collision and liability policy dated October 16, 1949, issued by it to Edward G. St. John covering a 1948 Cadillac 5 passenger Club Coupe automobile. The insured died March 10, 1950. Thereafter and on the 4th day of August, 1950, this Cadillac automobile was involved in a collision resulting in the death of one of the occupants, Eugene P. Schmidt, and serious injury to the other occupant, Patrick E. St. John. The policy contained the following provisions:

"Assignment. Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon; if, however, the named insured shall die or be adjudged bankrupt or insolvent within the policy period, this policy, unless cancelled, shall, if written notice be given to the company within sixty days after the date of such death or adjudication, cover (1) the named insured\'s legal representative as the named insured, and (2) under coverages A and B, subject otherwise to the provisions of Insuring Agreement III, any person having proper temporary custody of the automobile, as an insured, and under coverage C while the automobile is used by such person, until the appointment and qualification of such legal representative but in no event for a period of more than sixty days after the date of such death or adjudication."

No legal representative was appointed for the estate of the deceased insured, Edward G. St. John, until November 27, 1950, and no written notice of his death or the appointment of a legal representative of the insured was given to the insurance company. The premium covering the full duration of the policy was paid at the time the policy was issued. The policy also contained a provision that, "This policy may be canceled by the company by mailing to the named Insured at the address shown in this policy written notice stating when, not less than five days thereafter, such cancellation shall be effective." In the event of the cancellation of the policy by the insurance company it was required to return to the insured the unearned premium. The insurance company gave no notice of cancellation prior to the time of the accident here involved nor did it return nor offer to return the unearned premium until after the expiration date of the policy which was October 16, 1950, nor until June 5, 1951, at which time the company mailed to the surviving widow of the insured a check for $102.89 representing the unearned premium, it being recited in the letter accompanying said check that the check represented the pro rata refund for the period from May 11, 1950, to the expiration date of the policy. This check was declined and returned to the insurance company.

On April 5, 1951, Eugene P. Schmidt and Dorothy E. Schmidt, appellants herein, filed suit in the state court against appellant Patrick E. St. John seeking to recover damages by reason of the death of Eugene P. Schmidt in the collision in which this Cadillac automobile was involved. Thereafter and on the 10th day of April, 1951, the insurance company filed complaint in the present action seeking a declaratory judgment. In a supplemental complaint the insurance company alleged that the policy had lapsed and terminated May 10, 1950, which was 60 days after the date of the death of the named insured, but that "* * * it cannot safely undertake the defense of the action brought by Eugene P. Schmidt and Dorothy Schmidt without abandoning its position that there is no coverage under the policy." The policy contains the following provision relative to the duty of the insurance company to defend:

"As respects the insurance afforded by the other terms of this policy under coverages A and B the company shall:

(a) defend any suit against the Insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent * * *."

After action was brought to recover damages for death resulting from the collision in which the insured Cadillac was involved the insurance company through its attorneys wrote the defendants named in the damage action advising that the company would defend the action of Eugene Schmidt and Dorothy Schmidt against Patrick St. John with the understanding that in so doing the company was not waiving any of its rights under the policy of insurance. In answer to this communication counsel representing defendants in the damage action wrote counsel representing the insurance company advising that the insurance company would be obligated to accept full responsibility for any judgment rendered and further emphasized that no agreement existed relative to any conditions under which defense of the action could be accepted. Thereafter and on the 8th day of June, 1951, the insurance company filed an answer on behalf of defendants in the damage action and assumed the defense thereof. The facts were all stipulated except that one witness was called by the plaintiff for the purpose of proving the records of the insurance company relative to the issuance of the policy and any action of the company or its officers with reference thereto. The court found the issues in favor of the insurance company and adjudged that there was no liability, duty or obligation on the part of the...