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BROWN v. STATE FARM MUT. INS. CO.

August 21, 1958

ROBERT E. BROWN AND JEROME O'KEEFE, RESPONDENTS,
v.
STATE FARM MUTUAL AUTOMOBILE LIABILITY INSURANCE COMPANY, APPELLANT.



The opinion of the court was delivered by: Moss, Justice.

August 21, 1958.

Robert E. Brown, one of the respondents herein, did on April 13, 1957, in the United States District Court for the Eastern District of South Carolina, obtain a judgment against one George H. Lloyd, in the amount of $10,000.00 actual damages and $200.00 punitive damages. The judgment rendered in the United States District Court was upon a cause of action for personal injuries sustained by Robert E. Brown while riding as a passenger in an automobile owned and being operated by George H. Lloyd, when said automobile was involved in an accident which occurred on June 23, 1956. It appears that Robert E. Brown assigned an undivided interest in this judgment to Jerome O'Keefe.

It appears that State Farm Mutual Automobile Liability Insurance Company, the appellant herein, had issued a liability policy of insurance covering the automobile of George H. Lloyd, which applied to the liability of Lloyd to Robert E. Brown, if any such liability existed.

The present action was instituted by Robert E. Brown and Jerome O'Keefe, the respondents herein, against State Farm Mutual Automobile Liability Insurance Company, appellant, to recover the sum of $10,000.00 based on the judgment obtained by Brown against Lloyd. We will, in this opinion, disregard the fact that Jerome O'Keefe is a respondent, and when reference is made to the respondent it will refer to Robert E. Brown. George H. Lloyd will be referred to as the insured. The State Farm Mutual Automobile Liability Insurance Company will be referred to as the insurer, or appellant.

The insurer, by way of answer to the complaint, alleged that it did issue to the insured a standard form automobile liability insurance policy, covering the operation of a 1953 Oldsmobile automobile, and insuring the said insured against liability and damages arising out of an accident occurring during the operation of said automobile in an amount not to exceed $10,000.00 for injuries to any one person. The insurer admitted that on June 23, 1956, the insured was involved in an automobile accident in which the respondent was injured, and as a result of an action tried in the United States District Court a judgment was rendered in favor of the respondent for such injuries and damages sustained by him in said accident. The appellant denied liability on the grounds that the insured had failed to comply with the terms of the policy and that full compliance was a condition precedent to any action against the appellant.

The appellant set up two affirmative defenses. It alleged that the policy of insurance issued to the insured provided as conditions precedent to appellant's liability thereunder, that the insured would give written notice to the insurer when an accident or loss occurs. The policy also provided that the insured would co-operate with the insurer. The policy provisions applicable to these defenses are as follows:

"1. Notice of Accident or Loss. When an accident or loss occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured, and also reasonably obtainable information respecting the time, place, circumstances of the accident, names and addresses of injured persons and available witnesses. In the event of theft, larceny, robbery or pilferage prompt notice shall also be given to the police.

"2. Notice of Claim or Suit — Coverage A and B. The insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

"5. Action against company. No action shall lie against the company:

"(a) Unless as a condition precedent thereto there shall have been full compliance with all terms of the policy."

The assistance and co-operation clause is as follows:

"6. Assistance and co-operation of the insured. The insured shall co-operate with the company and upon its request, attend hearings, and trials, assist in effecting settlement, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits."

The answer alleged that the insured did not give written notice of the accident or loss to the applicant for more than four months after said accident. It was also alleged that the insured did, on October 25, 1956, give to the appellant a written statement of the facts involved in the accident in question, in which he exculpated himself from liability. Thereafter, at the trial of the case, he testified that he could not and did not remember how the accident occurred. Appellant asserts that the failure to give notice of the accident or loss, and the failure to co-operate, constituted a direct violation of the explicit conditions contained in said policy of insurance and relieved the appellant of any liability thereunder. The appellant also alleged that the insured authorized it to investigate, negotiate, settle, deny or defend the action in the United States District Court and that in so doing the Company did not waive any of its rights under the contract of insurance.

At the trial of this case in the lower Court, there was admitted, over the objection of the appellant, evidence tending to show waiver of the policy conditions respecting written notice of the accident, and also evidence showing the giving of oral notice of the happening of the accident. The trial Judge charged the jury as follows:

The appellant made timely motions for a nonsuit, for a directed verdict and for judgment non obstante veredicto, or in the alternative, for a new trial, upon the grounds that the evidence is susceptible of no other reasonable inference but that the insured did not give written notice as soon as it was practicable to do so, and that the insured failed to cooperate in the defense of the action in the United States District Court. All of such motions were denied by the trial Judge and this appeal followed.

Three questions arise upon this appeal. (1) Did it constitute prejudicial error for the trial Judge to admit, over objection, evidence tending to show waiver by the insurer of the policy requirements respecting the giving of written notice to the insurer as soon as practicable by the insured or someone in his behalf of the happening of an accident; and in connection therewith, to admit, over objection, testimony showing the giving of oral notice over the telephone of the happening of the accident to the insurer by a person acting on behalf of the insured; and, thereafter, to submit for the consideration of the jury the issue of such waiver and the evidence with respect thereto in the giving of verbal notice? In connection with this question the issue is raised as to whether evidence of waiver could be introduced under the pleadings. (2) Did the Circuit Judge err in failing to hold as a matter of law that the insured did not give the appellant written notice of the accident as soon as practicable as required by the terms of the insurance policy? (3) Did the Circuit Judge err in failing to hold as a matter of law that the insured did not co-operate with the appellant as required by the terms of the insurance policy?

The appellant asserts that the respondent had no right to introduce any evidence of waiver of the conditions contained in the policy for the reason waiver was not pleaded in the complaint.

The complaint alleges that "the said George H. Lloyd at all times completely and fully complied with and performed all of the terms and conditions set forth in the aforesaid policy of liability insurance. * * *" This is an allegation of the performance of all conditions precedent. The appellant specifically denies this allegation of the complaint. It also asserts that the insured did not give to it written notice of the accident as soon as practicable, which failure constituted a violation of the explicit condition contained in said policy, thereby relieving the appellant of liability thereunder.

Section 10-673 of the 1952 Code of Laws provides:

"In pleading the performance of conditions precedent in a contract it shall not be necessary to state the facts showing such performance but it may be stated generally that the party duly performed all the conditions on his part. If such allegation be controverted the party pleading shall be bound to establish on the trial the facts showing such performance."

The complaint of the respondent has complied with the requirements of the above quoted section of the Code. The answer of the appellant, following proper practice, set up affirmatively, in its second defense, that there was no liability under the contract of insurance for the reason that no written notice of the accident or loss was given by the insured. If the appellant desired a reply to this new matter set forth in its answer, then it should have made a motion, pursuant to Section 10-661 of the 1952 Code of Laws of South Carolina, to require the respondent to reply thereto. Powell v. Continental Insurance Company, 97 S.C. 375, 81 S.E. 654. The appellant did not avail itself of this remedy. The respondent had no right to reply to this defense, and under Section 10-608 of the 1952 Code of Laws of South Carolina, this new matter in the answer was deemed to be controverted or denied by the respondent.

The liability policy in this case provides that: "When an accident or loss occurs, written notice shall be given by or on behalf of the insured to the company, or any of its authorized agents, as soon as practicable." It is then provided that no action would lie against the appellant "unless as a condition precedent thereto there shall have been full compliance with all the terms of the policy."

This Court has held that conditions precedent may be waived. Fender v. New York Life Ins. Co., 158 S.C. 331, 155 S.E. 577; Rogers v. Atlantic Life Ins. Co., 135 S.C. 89, 133 S.E. 215, 45 A.L.R. 1172; Jennings v. Clover Leaf Life & Casualty Co., 146 S.C. 41, 143 S.E. 668; and Welch v. New York Life Ins. Co., 183 S.C. 9, 189 S.E. 809.

The respondent offered as evidence, by agreement, a specimen liability insurance policy, the one issued to the insured having been lost in the accident or misplaced. This policy contained the provision above quoted as to the giving of written notice in case of an accident or loss. The insured testified that there was attached to his policy a "Members Identification Card" and that provision 3 of this card read as follows:

"If you have an accident

"3. Report accident to your State Farm Agent promptly. (If anyone is injured, phone the nearest State Farm Agent or Claim Office * * * immediately. If unlisted, call information in nearest large town.)" Emphasis added.

Prior to the insured testifying as to the issuance to him of the policy with the aforesaid card attached thereto, two former agents of appellant testified that there was issued with each liability policy of the appellant a similar card affixed thereto by staple. The appellant objected to the introduction of this card in evidence. The following took place when the respondent tendered evidence showing the giving of oral notice of the accident by telephone to the appellant:

"Q. As a result of your conversation with Sergeant Lloyd did he make any requests of you? A. Yes, sir.

"Q. As a result of the request he made, what did you do? A. That night after I left the hospital I went to Bath, South Carolina, Green's Garage No. 2, said I wanted to get Sergeant Lloyd's clothes and his insurance papers. They ...


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