State Farm Mut. Auto. Ins. Co. v. Farmers Ins. Exchange

• Decision Date: 08 July 1964
• Citation: 393 P.2d 768,238 Or. 285
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and O. A. Sjolund, Respondents, v. FARMERS INSURANCE EXCHANGE, Appellant.
• Court: Oregon Supreme Court

Page 768

393 P.2d 768

238 Or. 285

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and O. A.

Sjolund, Respondents, v. FARMERS INSURANCE EXCHANGE, Appellant.

Supreme Court of Oregon, In Banc.

Argued and Submitted on Rehearing April 30, 1964.

Decided July 8, 1964.

George L. Hibbard, Oregon City, argued the cause for appellant. On the briefs were George A. Rhoten, Myron L. Enfield and Rhoten, Rhoten & Speerstra, Salem.

Alfred J. Laue, Salem, argued the cause for respondents. With him on the brief were Williams & Skopil, Salem.

James H. Clarke, Portland, filed a brief amicus curiae, urging reversal.

Burl L. Green, Portland, filed a brief amicus curiae, urging affirmance.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN, O'CONNELL, GOODWIN and DENECKE, JJ.

O'CONNELL, Justice.

We granted defendant's petition for rehearing, and granted a motion by Mr. James H. Clarke to file a brief as amicus curiae. We also called upon Mr. Burl L. Green to prepare a brief as amicus curiae on the following question propounded by the court.

'What is the nature and extent of an insurer's duty to exercise due diligence to secure the cooperation of its insured to assist in the defense of an action for damages?'

The excellent briefs submitted by amici curiae have been helpful to the court.

After a careful re-examination of the question presented on this appeal we still are of the opinion that defendant failed to use due diligence in its attempt to secure the cooperation of the insured. We held that the insurer does not prove the exercise of due diligence simply by showing that one or more letters were directed to the insured requesting his attendance at the trial. We believe that this position is sound. Assuming that the insured received the written request (as we must in this case because of the presumption created by ORS 41.360(24)), ¹ his failure to appear may still not constitute a breach of the cooperation clause of the policy under some circumstances. Thus it may be that after the insured received the request he died or was incapacitated or could not attend without undue hardship. The cases generally support the view that the cooperation clause is not breached if the insured's failure to attend is not willful. ² Some cases, perhaps a majority, require that insurer show prejudice to its position. ³ We need not decide whether these latter cases are sound. In the present case there is no evidence explaining why the insured did not appear. For the reasons expressed in our original opinion we believe that the insurer should have the burden of showing that the insured's failure to appear was in fact due to his non-cooperation.

In our former opinion we stated that 'It appears that a representative of Farmers personally contacted the insured at his address in Eureka and supervised the execution of the agreement.' Defendant contends that there was no evidence to support this statement. We inferred that insured was personally contacted from the circumstances surrounding the insured's execution of a reservation of rights agreement. A majority of the court believes that the inference is too tenuous to constitute evidence and that defendant's objection is well taken. We are of the opinion, however, that even in the absence of such evidence plaintiff is entitled to prevail for the reasons previously stated.

Subject to the correction noted, we adhere to our former opinion.

McALLISTER, C. J., and PERRY, J., adhere to the views expressed in the prior dissent of PERRY, J., and therefore dissent from the foregoing opinion.

1 '41.360. All presumptions other than conclusive presumptions are satisfactory, unless overcome. They are disputable presumptions, and may be controverted by other evidence,...