Weaver v. Hartford Acc. & Indem. Co.

• Decision Date: 28 June 1978
• Docket Number: No. B-7168,B-7168
• Citation: 570 S.W.2d 367
• Parties: Joseph May WEAVER, Petitioner, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Respondent.
• Court: Texas Supreme Court

Page 367

570 S.W.2d 367

Joseph May WEAVER, Petitioner, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Respondent.

No. B-7168.

Supreme Court of Texas.

June 28, 1978.

Rehearing Denied Oct. 4, 1978.

Turner & White, Joe E. Turner, Houston, for petitioner.

Fulbright & Jaworski, Russell H. McMains, Houston, for respondent.

BARROW, Justice.

This is a suit by a judgment creditor against an insurer to recover under an automobile liability policy on the basis of a judgment secured against an omnibus insured. It is stipulated that the alleged omnibus insured failed to comply with the provision of the policy requiring him to forward to the insurer "every demand, notice, summons, or other process" he received. At issue is whether compliance with this policy provision by the named insured, in forwarding the citation which was served on him, should also be held to operate as compliance by the omnibus insured. The trial court rendered judgment in favor of the judgment creditor. The court of civil appeals reversed and rendered a take-nothing judgment. 556 S.W.2d 117. We affirm the judgment of the court of civil appeals.

J. C. Thomas Enterprises is the named insured on a comprehensive automobile liability insurance policy issued by Hartford Accident and Indemnity Company. The policy defines an "insured" under the policy to be the named insured and any other person using the vehicle with the permission of the named insured. Clyde Lee Busch was an employee of Thomas Enterprises. While driving one of Thomas' trucks in September 1969, Busch was involved in an accident with Joseph Weaver. Notice of the accident was given to Hartford who made an investigation.

In March 1971, Weaver filed suit against Busch seeking damages of $11,800. Busch testified at the trial of this case that he had been served with process in that suit in the office of Weaver's attorney, but had left the papers in that office and they were never forwarded to Hartford. He did not file an answer and none was filed on his behalf. Busch further testified that he had made a statement to Hartford, during its investigation of the accident, stating unequivocally that he was not operating the vehicle with the permission of Thomas Enterprises at the time of the accident.

In September 1971, Weaver filed his First Amended Original Petition in which he added Thomas Enterprises as a defendant, alleging that Busch was a Thomas employee acting within the course and scope of his employment, and increased the damages sought to $201,800. Service was had on Thomas Enterprises which promptly forwarded the citation and petition to Hartford. However, the District Clerk of Montgomery County testified at the trial of this case that Busch was never served with the amended petition and his testimony is supported by the court records of that case.

The answer which was filed on behalf of Thomas Enterprises specifically denied that Busch was in the course and scope of his employment at the time of the accident. Subsequently, in February 1973, Weaver non-suited his cause of action against Thomas Enterprises and was granted a default judgment against Busch for $114,433.96, a sum in excess of the policy limit of $100,000 recovery per person.

This suit was filed in June 1973 against Hartford on the basis of that default judgment. Weaver alleged that the accident was caused by the negligent operation of the Thomas truck, that the truck was operated by Busch with the permission of the company, and that the policy covered the accident. A special issue was submitted which inquired whether Busch was an "insured" under the Hartford policy issued to Thomas Enterprises. ¹ The jury answered affirmatively and judgment was entered for Weaver in the amount of $100,000.

The Hartford policy in question contains provisions concerning an insured's duties in the event of an accident, claim or suit. ² Among these provisions is the requirement that the Insured shall immediately forward any process received by him if a suit is brought. The policy makes satisfaction of these requirements, when applicable, a condition precedent to the insurer's liability on the policy. This Court in Members Mutual Insurance Company v. Cutaia, 476 S.W.2d 278 (Tex.1972), held that, irrespective of any showing of harm to the insurer, the failure of the named insured to forward the suit papers to the insurer relieved the latter of liability to an injured third party. See also: Klein v. Century Lloyds, 154 Tex. 160, 275 S.W.2d 95 (1955); New Amsterdam Casualty Co. v. Hamblen, 144 Tex. 306, 190 S.W.2d 56 (1945).

No contention has been made that Hartford waived or was estopped to assert this policy provision requiring the forwarding of suit papers. In fact, not only did Hartford not refuse to defend Busch, but because of Busch's statement, during Hartford's investigation of the accident, that he was not operating the vehicle with the permission of Thomas Enterprises, Hartford had no reason to believe that Busch expected Hartford to defend him.

The question presented here is not controlled by this Court's holding in Employers Casualty Co. v. Glens Falls Insurance Co., 484 S.W.2d 570 (Tex.1972). There it was held that timely notice Of the accident by the named insured alone fully satisfied the provision of the insurance policy requiring notice by the "insured", and that it was not also necessary for the omnibus insured to give notice of the accident. It was pointed out that the purpose of such a notice requirement is to enable the insurer to promptly investigate the circumstances of the accident while the matter was fresh in the minds of the witnesses. Obviously, that purpose can be fully satisfied when notice of an accident is received from one insured only.

Different purposes are served by the requirement that the insured immediately forward to the insurer "every demand, notice, summons or other process received by him or his representative." It is undoubtedly true, as some cases hold, that one purpose of the provision is to enable the insurer to control the litigation and interpose a defense. See, e. g., Brown v. State Farm Mutual Automobile Casualty Insurance Co., 506 F.2d 976 (5th Cir. 1975); M. F. A. Mutual Insurance Co. v. White, 232 Ark. 28, 334 S.W.2d 686 (1960); Wendel v. Swanberg, 384 Mich. 468, 185 N.W.2d 348 (1971). However, a more basic purpose is to advise the insurer that an insured has been served with process and that the insurer is expected to timely file an answer.

In Campbell v. Continental Casualty Co. of Chicago, 170 F.2d 669 (8th Cir. 1948), the omnibus insured forwarded his summons and a copy of the pleadings to the insurer, but the named insured did not. A default judgment was taken against the named insured. The court held that the insurer was not liable to the judgment creditor on this default judgment and said:

The driver's suit papers might have informed the insurer that the insured had been named as a defendant in the action, but as we have stated they would not advise it that the insured had been brought into court. And neither the language of the policy, nor the construction made by any court of such provisions as it contains, has imposed on the insurer, merely because it knows that an insured has been named as a defendant in an action, the sentry duty of tracking back and forth to the court house to keep a check on if or when he may be served with process.

See also, Lummus v. Western Fire Ins. Co. of Fort Scott, Kan., 443 S.W.2d 767 (Tex.Civ.App. El Paso 1969, no writ).

The need for notice of service is especially evident in this case in that Busch was never served with Weaver's amended petition. Since Busch had not entered an appearance in the case, service on him of the amended petition was required because the demand was increased from $11,800 to $201,800. It is recognized that new citation is necessary for a party who has not appeared when the plaintiff, by amended petition, seeks a more onerous judgment than prayed for in the original pleading. Sanchez v. Texas Industries, Inc. 485 S.W.2d 385 (Tex.Civ.App. Waco 1972, writ ref'd n. r. e.); Phillips v. The Maccabees, 50 S.W.2d 478 (Tex.Civ.App. Waco 1932, no writ); McDonald Texas Civil Practice, § 8.11.2 (1970).

Under the facts of this case, Hartford would have been gratuitously subjecting itself to liability if it had entered an appearance for Busch, who had failed to comply with the policy conditions, who had stated he was not a permissive user, and who had never been served with process, in a suit which sought damages in excess of the policy limits. Therefore, we hold that Hartford had no duty to voluntarily undertake a defense for Busch. We express no opinion as to the validity of the judgment against Busch.

The judgment of the court of civil appeals is affirmed.

GREENHILL, Chief Justice, concurring dissenting.

I agree with the substance of the dissenting opinion of Justice McGee. I do not agree with his statement that the court's opinion declared void the default judgment obtained against Busch. Nor is it necessary to express an opinion on the "present day tendency to interpret automobile liability insurance . . . as a contract for the benefit of the injured party."

This case, however, is distinguishable from Members Mutual Insurance Company v. Cutaia, 476 S.W.2d 278 (1972), and related cases. There the Named insured, the person who entered into the agreement and who had the possession of the policy and could consult it, failed to carry out the provisions of the policy. This court had previously held that the failure of the named insured to give notice of the accident or forward suit papers was a breach of the agreement which excused performance by the insurance company. I would not extend those holdings to excuse the insurance company where it has prompt and actual knowledge of the accident, notice of the accident from the named insured, and has the suit papers in hand giving the names of all the defendants, well in...