State Farm Mut. Auto. Ins. Co. v. Wright
| Decision Date | 11 February 1976 |
| Docket Number | No. 3,No. 51649,51649,3 |
| Citation | 224 S.E.2d 796,137 Ga.App. 819 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. Reba W. WRIGHT |
| Court | Georgia Court of Appeals |
Fulcher, Hagler, Harper & Reed, John I. Harper, Augusta, for appellant.
Allgood & Childs, Thomas F. Allgood, Augusta, for appellee.
State Farm Mutual Automobile Insurance Company (State Farm) brought this action for a declaratory judgment against its insured, Penrow, and Wright who alleged that she was injured by Penrow in an automobile accident.
Writht had brought an action against Penrow on October 19, 1972 for $100,000 arising out of an automobile accident on December 16, 1971. Penrow did not file an answer although he was served October 25, 1972. Penrow did not advise State Farm of the auto accident or the lawsuit 'until December 21, 1972 or perhaps several days thereafter.' Counsel for Wright, on December 12, 1972, wrote a letter to State Farm advising them that their insured, Penrow, was in default, but 'in order to avoid any prejudice . . . to State Farm . . . (they were willing) to extend the answer date for a period of thirty days . . . (to) enable your Company to evaluate this matter and file a proper answer.'
On December 21, 1972, State Farm's local agent talked to Mr. Penrow and obtained his signature on a form titled, 'Prequest For Claim Service and Non-Waiver of Rights.' Essentially this form stated that 'it was questionable' whether Mr. Penrow had complied with policy conditions 'to immediately forward' to State Farm 'every demand, notice of claim, summons, or other process' received by him, and that although State Farm 'may have no obligation to defend or indemnify' Mr. Penrow for claims arising out of the accident with Wright they would defend the action on the condition that '(s)uch action shall not waive any right the Company may have to deny any obligation under the policy . . ..'
Counsel for Wright stated that he spoke with State Farm's agent Ted Winner on December 27, 1972, and (Emphasis supplied.) Counsel for Wright introduced a memorandum of Mr. Winner dated the following day, December 28, 1872, to State Farm in which he stated, '(i)t is my recommendation that we do extend coverage to this insured, since it is felt that our rights have not been jeopardized by his failing to forward the suit papers on to us . . ..'
On January 11, 1973, an Order Opening Default' was presented to the trial court by counsel for Penrow and consented to by counsel for Wright. The consent order opening default was signed by the judge that same date.
On November 19, 1973, the case of Wright v. Penrow was tried in Superior Court of Richmond County and a verdict rendered in favor of Wright for $40,000.00. On that same date State Farm filed this present action, a Complaint for Declaratory Judgment, against Penrow and Wright alleging that Penrow violated the conditions of the policy of insurance and it was not obligated to pay defendant Wright any amount of compensation or any part of a verdict which might be given in her favor against defendant Penrow.
Wright answered and entered a counterclaim under the policy of insurance of Penrow for the amount of the judgment-up to the policy limits. State Farm and Wright each entered motions for summary judgment. The trial court granted summary judgment for defendant Wright and denied State Farm's motion. Plaintiff brings its appeal to this court. Held:
A liability insurer with knowledge of noncompliance by its insured of a condition of the policy which could be a ground of forfeiture of coverage, which assumes and conducts the defense of an action brought against the policyholder, is thereafter estopped in an action upon the policy from...
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