State Farm Mut. Auto. Ins. Co v. Arghyris

• Decision Date: 07 September 1949
• Citation: 180 Va. 913,55 S.E.2d 16
• Court: Virginia Supreme Court
• Parties: STATE FARM MUT. AUTOMOBILE INS. CO. v. ARGHYRIS et al.

55 S.E.2d 16

180 Va. 913

STATE FARM MUT. AUTOMOBILE INS. CO.

v.ARGHYRIS et al.

Supreme Court of Appeals of Virginia.

Sept. 7, 1949.

Nicholas C. Arghyris, an infant, by his father, and next friend, Christ Arghyris, and another sued the State Farm Mutual Automobile Insurance Company, to recover amounts of judgments entered in favor of the respective plaintiffs in an action against an insured of defendant company.

The Circuit Court, City of Norfolk, Clyde H. Jacob, J., entered a final judgment against the defendant company and company brought error.

The Supreme Court of Appeals, Spratley, J., set the judgment aside and entered final judgment for the defendant company on the ground that the party using the insured's automobile at the time the accident occurred materially prejudiced the defendant company by failure to comply with the cooperation clause of the insurance contract.

Before HUDGINS, C. J., and GREGORY, EGGLESTON, SPRATLEY, BUCHANAN, STAPLES and MILLER, JJ.

John B. Browder, Robert Lewis Young, Richmond, for plaintiff in error.

Broudy & Broudy, Norfolk, for defendants in error.

SPRATLEY, Justice.

Nicholas C. Arghyris, an infant, who sued by his father and next friend, Christ Arghyris, on the 5th day of December, 1947, recovered a judgment against Dennis R. Bohler for the sum of $5,000 for personal injuries sustained by him as a result of the negligent operation of a motor vehicle by Bohler. On the same day Christ Arghyris, the father of Nicholas C. Arghyris, also obtained a judgment against Dennis R. Bohler for $1,542.95 for damages arising out of the injuries sustained by his infant son. Executions were issued on these judgments and returned unsatisfied, marked "No Effects."

Subsequently, the same two plaintiffs instituted separate notices of motion for judgment against the State Farm Mutual Automobile Insurance Company, alleging its liability for the amount of the judgments obtained by them against Bohler, by reason of an automobile liability insurance policy issued by it to George Newman, the owner of the automobile involved in the accident mentioned, insuring Newman, and also Bohler who was driving the motor vehicle with the permission of Newman, at the time of the infliction of the injuries. Virginia Code, 1942, (Michie), section 4326a.

The insurance company appeared on June 14, 1948, and filed its separate grounds of defense to each action and denied any liability on its part to the respective plaintiffs on the ground that Bohler had failed to comply with a condition of the policy requiring his assistance and cooperation with the company, in the event the automobile insured was involved in an accident.

On motion of the parties the causes were consolidated and set for trial on July 29, 1948. On that day, by consent of all parties, the whole matter of law and fact was heard and submitted to the trial court for determination. The issue was whether or not the failure of Bohler to comply with the cooperation clause of the insurance policy resulted in prejudice to the interests of the company. The court expressed the opinion that "The evidence did not sustain prejudice in any way by the false statements of Bohler or that the company had been deceived in any way as to what the true facts were, " and entered a final judgment against the insurance company for the respective amounts awarded the plaintiffs in their actions against Bohler. From this judgment this writ of error was allowed the insurance company.

For purposes of convenience, Arghyris and his son will be sometimes hereinafter referred to as plaintiffs, and the insurance company as the defendant, the respective positions they occupied in the trial court.

The facts of the case are without material conflict; but, because of the questions involved, will be set out somewhat at length.

On April 19, 1947, the defendant issued to George V. Newman, a petty officer in the Marine Corps, stationed at Norfolk, Virginia, its automobile liability policy covering Newman's 1938 Ford sedan. It was in the standard form, containing the usual omnibus provisions, extending its coverage to any one operating the automobile with Newman's permission.

Dennis R. Bohler, a petty officer of the Navy, and a friend of Newman, owned a more recent model automobile, which Newman borrowed to drive on a trip, leaving his Ford for Bohler's use.

On a day prior to May 12, 1947, not fixed by the evidence, Bohler telephoned McDonald Meadors, one of the company's agents, in Norfolk, and the one who had issued the policy to Newman, informing him that he, Bohler, had been erroneously accused of being involved in an accident. Meadors referred him to John Cole, a claim adjuster of the defendant company.

On May 12, 1947, Newman and Bohler went to Meadors' office, and Meadors sent them to Cole's office. Newman and Bohler informed Cole that Bohler had been arrested, charged with having struck Nicholas C. Arghyris in front of the Rosna Theater, on 35th street, in the city of Norfolk, Virginia, on May 7, 1947, and having failed to stop at the scene of the accident, give his name, or render assistance to the injured person. Bohler denied that he was involved in the accident charged against him, and denied that he had been on 35th street the night of May 7th. He gave a written statement about an accident which he claimed he had the same night on Granby street, five or six blocks distant from 35th street. He stated that there his car had been side-swiped on its left side by another car which had not stopped. At the same conference, Newman executed a proof of loss form stating that Bohler denied being involved in the accident on 35th street. Bohler then told Cole that he had employed Mr. Ralph H. Daughton, a Norfolk attorney, to represent him on the criminal charge. Cole called Daughton, and asked him to have a court reporter present at the trial, at the cost of the insurance company.

That day, May 12th, or within a day or two thereafter, Cole went with Newman and Bohler to look at Newman's car, which was in the possession of the police department. They found that its left front fender, left headlight, and left side of the hood were damaged.

Having been told that the police department also had the front license plate of the car, which had been picked up at the scene of the accident, in its possession, Cole examined the license bracket on the front bumper of the car about twelve inches from the right-hand side. It appeared to him that the license had been pulled off, as Bohler contended. Cole said that he did not then doubt Bohler's statement that he was not involved in the accident, because he saw no reason for him to make a false statement.

On May 20th, Bohler was given a preliminary hearing in the police court on the criminal charge. Cole was present a part of the time. After it had been disclosed that the front license plate of the car had been picked up at the scene of the accident and a young boy had testified that as the car involved in the collision was driven away from the scene, he had taken its rear license number, which number was the same as that of the license plate found in the street, Cole requested Bohler and Newman to come to his office. He said he then became doubtful whether Bohler had told him the truth, and told Bohler that he didn't see how he was going to get around the testimony against him. He had Bohler sign a non-waiver agreement, in the usual form, which provided that any action taken by the insurance company in investigating, objecting to, or defending any claim growing out of the accident in question should not be construed as a waiver of its right to deny liability at any time.

Bohler was bound over to the grand jury by the trial justice, and at the June term, 1947, was indicted for a felony under Virginia Code, 1942, (Michie), section 2154 (104) and (105), for leaving the scene of an accident without stopping.

The notices of motion for judgments in favor of the plaintiffs against Bohler were returnable on June 21, 1947. The defense of these actions was turned over by the insurance company to Mr. W. R. Ashburn, an attorney at law. Ashburn wrote Newman and Bohler to come to his office for the purpose of conferring about the cases. Newman came but Bohler did not. Ashburn prepared affidavits denying operation and control and mailed the same to Bohler, asking that the latter bring them to Ashburn's office for acknowledgment before his secretary, who was a notary public. Bohler, however, took them to Cole's office, where they were retyped, the name of Cole's secretary substituted as notary, and executed them. The same day Bohler appeared at Ashburn's office where, after a critical interrogation, he repeated the same statement which he had formerly made to Cole, denying involvement in any accident on 35th street. He said he could not account for the fact that the license plate from his car had been found at the scene of the accident, unless some one had taken it from his car or it had fallen off when he passed through the street on a former occasion. He again explained the dents and scars on his car as arising from a collision on Granby street.

On June 30, 1947, Bohler was tried in the Corporation Court of the city of Norfolk on a criminal charge. He entered a plea of "Not Guilty, " and testified in his own behalf, again denying any connection with the accident on 35th street. The jury was unable to agree upon a verdict, and was discharged.

On July 23, 1947, without consulting Cole or Ashburn, Bohler appeared in the corporation court and pleaded guilty to the hit and run charge, and received a sentence of ten days in jail and a fine of $250.

Bohler subsequently said that his conclusion to plead guilty was based upon the fear that if he received a sentence of more than six months, he would be automatically discharged from the Navy after years of service, and, therefore, he thought it advisable to follow the advice of his counsel, plead guilty, and take a short sentence of ten...