Wilkerson v. Maryland Cas. Co., Civ. A. No. 1423-1425.

• Decision Date: 23 June 1953
• Docket Number: Civ. A. No. 1423-1425.
• Citation: 119 F. Supp. 383
• Parties: WILKERSON et al. v. MARYLAND CAS. CO.
• Court: U.S. District Court — Eastern District of Virginia

119 F. Supp. 383

WILKERSON et al. v. MARYLAND CAS. CO.

Civ. A. No. 1423-1425.

United States District Court E. D. Virginia, Richmond Division.

June 23, 1953.

J. Segar Gravatt, Blackstone, Va., and Watkins & Brock, Farmville, Va., for plaintiffs.

May, May & Garrett, Richmond, Va., for defendant.

STERLING HUTCHESON, Chief Judge.

This opinion is written in lieu of findings of fact and conclusions of law.

On November 18, 1950 the plaintiffs, Elon J. Wilkerson, Elizabeth Rodgers and Gertrude A. Crowder, were injured when the automobile in which they were riding collided with an automobile operated by Gulley C. Dowdy in Prince Edward County, Virginia. At the time of the accident Dowdy had a policy of public liability insurance on his car issued by defendant, Maryland Casualty Company. The policy is what is generally referred to as an assigned risk policy which the defendant was compelled to issue to Dowdy under the laws of Virginia. Code of Virginia 1950, Sections 46-492 to 46-498, inclusive. The limits of the policy were $5,000 for personal injury to any one person, $10,000 for personal injuries arising out of any one accident and property damage in any one accident to the extent of $5,000.

After the collision Dowdy (here sometimes referred to as insured) notified the defendant (here referred to as insurer) of the accident and after some investigation the insurer discussed with counsel for the injured parties (referred to as plaintiffs) a possible settlement of the claims. Negotiations for a settlement were terminated after the insurer was informed by plaintiffs' counsel that their clients would not execute agreements releasing the insured from all liability for the amount of his coverage but would insist upon collecting from the insured amounts in excess of the coverage of the policy if judgments therefor were obtained.

Thereupon plaintiffs instituted actions against the insured in the Circuit Court of Prince Edward County, Virginia for injuries sustained. The insured received copies of the suit papers but did not notify the insurer. He did not forward the papers to the insurer or make any appearance in the suits. On June 22, 1951, the state court rendered judgment against the insured for each of the plaintiffs in the following amounts: Elon J. Wilkerson $20,000 personal injuries, and $1,614 property damages; Elizabeth Rodgers $10,000 personal injuries, and $88.81 property damages; Gertrude A. Crowder $15,000 personal injuries, and $329.84 property damages. Costs were awarded each plaintiff.

Approximately two weeks later the insurer for the first time learned of the proceedings and requested the insured who was then in Alexandria, Virginia, to go to its office in Washington and deliver the suit papers and confer with its representative there. This the insured did. No reason was given for his failure to notify the insurer of the suits. The insurer informed the insured that if he would employ counsel and succeed in having the judgments vacated and thus re-open the cases it would then appear and defend the actions. The insured then consulted counsel of his own choosing and for a period of approximately three months correspondence was exchanged between such counsel, the insurer and counsel for the plaintiffs. In this correspondence counsel for the plaintiffs offered to assist in vacating the judgments. Insurer insisted that counsel for insured should do this if he so desired and counsel for the insured inquired as to what the insurer expected to do. No definite action toward vacating the judgments was taken by any one and in October 1951 each of the plaintiffs instituted suit in the Circuit Court of Prince Edward County, Virginia, against the insurer, the present defendant, seeking recovery on the liability policy. These actions were based upon the judgments against the insured, Dowdy. The last mentioned suits were removed to this court on the ground of diversity of citizenship between the plaintiffs and the present defendant. After such removal, by agreement between counsel for the plaintiffs and counsel for the defendant, the defendant, on March 7, 1952, paid to counsel for the plaintiffs, to be divided between the plaintiffs, the sum of $11,000, with interest on that amount from the date the plaintiffs recovered their judgments against Dowdy until the date of payment, and all costs accrued in the state court. It was agreed that the issue as to the full limit of the defendant's liability should not be affected by the payment nor was the question of the amount of interest for which the company was liable under its policy affected thereby, these issues being reserved for decision by the Court.

All parties agree that the defendant has paid the limit for which it could be held liable for personal injury coverage under the policy and all property damage of Gertrude A. Crowder and Elizabeth Rodgers. The issues now involved relate to the defendant's liability to Elon J. Wilkerson for his property damage over and above the $1,000 paid under the agreement of March 7, 1952, and the defendant's liability for interest at 6% per annum on the full amount of the judgments recovered by the plaintiffs on June 22, 1951, from that date to March 7, 1952, when defendant paid the $11,000 to plaintiffs.

Defendant contends that the failure of insured to notify it of the suits against him and to forward to it the suit papers constituted a lack of co-operation and a breach of the insurance contract and therefore there is no liability on the insurer under the policy for any sum excepting the minimum amount of $10,000 for personal injury claims and $1,000 property damage claims required by the Virginia Statute. It contends that since it has paid this amount with interest thereon to the plaintiffs under the agreement of March 7, 1952, it is not liable to the plaintiffs for any further sums. It is further contended that even though defendant should be found liable under the policy for additional property damage to Elon J. Wilkerson, it is not liable for the interest claim of the plaintiffs as the policy provides that it shall pay interest only on that part of the plaintiffs' judgments for which it is liable and since it has already paid interest on that part of the judgments there can be no further interest due the plaintiffs under the policy.

The plaintiff Wilkerson contends that even though the insured may have failed to cooperate with the defendant and may have breached the contract as alleged yet the defendant by its actions and conduct both before and after the plaintiffs recovered judgments against the insured has waived this defense and is now estopped to assert it. He insists that the policy is in full force and effect notwithstanding the alleged breach and therefore defendant is liable for property damage to the limit of $5,000 provided by the policy.

All plaintiffs insist that under the contract the defendant specifically agreed to pay all interest due on the judgments from the date of recovery until the defendant paid such part of the judgments as it was liable for and therefore the defendant now owes interest on the full amount of the judgments from the date of recovery until the $11,000 was paid.

Plaintiffs concede that defendant is entitled to credit for the interest on the $11,000 which it has paid.

As stated, there are three separate cases involved but as the interest feature is identical the cases were consolidated in this Court for trial and will be disposed of together.

As the case of the plaintiff Wilkerson is the only one involving a claim for additional property damage under the policy, this phase of the issues presented will be dealt with first.

It is settled in this jurisdiction that in asserting claims such as those at bar the plaintiffs' rights are governed by the rights of the insured. The plaintiffs claim through the insured and have his rights and disabilities. State Farm Mutual Automobile Insurance Co. v. Arghyris, 189 Va. 913, 55 S.E.2d 16. This being true, the plaintiffs have whatever rights the insured, Dowdy, had and are encumbered with whatever disabilities he had. Item 7 following "conditions" on page 4 of the policy titled "Notice of claim or suit" specifically provides: "If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representatives".

This the insured failed to do and in failing he breached his contract. At this point the company was relieved from liability under the policy. Notwithstanding this the plaintiffs contend that by its conduct and actions before and after the judgments were rendered the insurer waived the breach and is now estopped to assert it. With this contention I can not agree.

Nothing the defendant did before the judgments were rendered can be construed as a waiver, since the breach of the...