Summary
In Flagg v. Puleio, 189 Pa. Super. 329 (1959), the insurance company knew of the accident the day after it happened, investigated it and attempted settlement with plaintiff; it did not receive information of the lawsuit until a default judgment had been taken against its insured; no suit papers were forwarded to the insurer by its insured.
Summary of this case from Hargrove v. CNA Insurance GroupOpinion
March 9, 1959.
April 16, 1959.
Insurance — Automobile liability — Failure to deliver suit papers to plaintiffs' insurer — Mistaken belief that defendant's insurer was liable.
1. In an attachment execution proceeding, in which it appeared that defendant, at the request of the wife-plaintiff, was driving her in an automobile owned by plaintiffs, and an accident occurred; that the garnishee, A insurance company, which insured plaintiffs, was given notice of the accident, made an investigation, and endeavored to secure from plaintiffs a general release from all liability, charging that defendant was driving the automobile on his own business; that at the time of the action defendant owned a car and was covered by liability insurance policy which had been issued to him by T insurance company; that plaintiffs instituted an action in trespass against defendant, and the suit papers were duly forwarded by defendant to T company, which denied its liability and returned the papers to defendant with the statement that they should be forwarded to A company, but the suit papers were never forwarded to A; that the policy issued by A, indemnified any person using it with the permission of the insured, and further provided that in the event of any accident written notice should be given by or for the insured to garnishee as soon as practicable and that if a claim was made or suit was brought against insured he should immediately forward to garnishee every notice or summons received by him; that in the trespass action a default judgment was entered against defendant, and damages assessed in favor of husband-plaintiff and wife-plaintiff, following which, some two years and six months after the action was instituted, garnishee was first notified of the action and that a default judgment had been entered against defendant; and that the pleadings did not reveal a denial of liability by garnishee until after it had been notified of the entry of judgment, prior to which date it had not evidenced any indication that it would not defend defendant if it knew that an action had been instituted against him; it was Held that since the suit papers had not been forwarded to garnishee, plaintiffs could not recover against the garnishee.
2. Plaintiffs' further contention that they could not forward the suit papers because they had been served on defendant, was Held to be without merit, since they could have given notice of the commencement of the suit or sent a copy of the papers to garnishee.
3. It was Held that the mistaken belief of plaintiffs and defendant that defendant's insurance carrier was liable under the policy issued to defendant did not constitute a legal justification for the failure to deliver the suit papers to garnishee.
Before RHODES, P.J., HIRT, GUNTHER, WRIGHT, WOODSIDE, ERVIN, and WATKINS, JJ.
Appeal, No. 210, April T., 1958, from judgment of Court of Common Pleas of Allegheny County, April T., 1956, No. 1905, in case of Robert H. Flagg et al. v. Eugene Puleio et al. Judgment affirmed.
Proceeding upon motion of plaintiff for judgment on the pleadings in attachment execution issued following judgment in trespass.
Order entered directing judgment for garnishee, before THOMPSON, NIXON and DUFF, JJ., opinion by DUFF, J. Plaintiffs appealed.
Samuel J. Goldstein, for plaintiffs, appellants.
Robert E. Wayman, with him Dickie, McCamey, Chilcote Robinson, for garnishee, appellee.
Argued March 9, 1959.
This is an appeal from an order of the court below entering judgment for Allstate Insurance Company, garnishee, on plaintiffs' motion for judgment on the pleadings filed in an attachment execution instituted by the plaintiffs, Robert H. Flagg and Lola Flagg, his wife, against Eugene Puleio, the defendant, and Allstate Insurance Company (hereinafter called "Allstate") as garnishee, based upon judgments in favor of plaintiffs in an action in trespass against the defendant Puleio. This action was not defended by Puleio and judgments were had in default and on October 25, 1954 the damages were assessed by a jury in favor of the wife in the amount of $1,900.00 and in favor of the husband in the amount of $1,000.00.
On January 18, 1953 the defendant Puleio, at the request of the wife-plaintiff, was driving her to her home in an Oldsmobile automobile owned by plaintiffs; defendant fell asleep while en route; the car ran off the road and struck a pole, as a result of which the wife-plaintiff suffered personal injuries and husband plaintiff's car was damaged. At the time of the accident defendant Puleio owned a Studebaker automobile and was covered by a liability insurance policy which had been issued to him by The Travelers Indemnity Company. The suit papers in the trespass action were duly forwarded by Puleio to The Travelers Indemnity Company, which denied its liability and returned the papers to Puleio with the statement that they should be forwarded to Allstate. The suit papers were never forwarded to Allstate.
At the time of the accident plaintiffs had coverage under a policy issued by Allstate which protected them against liability for personal injuries and loss or damage to property arising from the operation of their Oldsmobile car as well as for damages to the vehicle arising from collision or upset. The policy likewise indemnified Puleio as an unnamed insured while driving the Flaggs' car as appears under clause X, Definitions, which provides: "1. The unqualified word `insured', wherever used with respect to the liability insurance, includes the named insured, spouse, and: (a) with respect to the owned automobile or a substitute automobile, any other person or organization legally responsible for its use, provided the actual use of the automobile is by the named insured or spouse or with the permission of either; and (b) with respect to any non-owned automobile, any other person or organization, not owning or hiring it, but legally responsible for its use by the named insured or spouse." The policy also provides: "2. NOTICE: In the event of accident, occurrence or loss, written notice containing all particulars shall be given by or for the insured to Allstate as soon as practicable, and in case of theft the insured shall also promptly notify the police. If claim is made or suit is brought against the insured, he shall immediately forward to Allstate every demand, notice or summons received by him or his representative."
The sole question for determination on this appeal is whether Allstate, the garnishee, is relieved of liability to the insured because of the failure of the insured to immediately forward to Allstate the suit papers. The suit was commenced early in 1953 and, after the entry of a default judgment, the jury on October 25, 1954 assessed damages in favor of Robert H. Flagg in the amount of $1,000.00 and Lola Flagg in the amount of $1,900.00. On September 22, 1955, some two years and six months after the action was instituted, Allstate was first notified of the action and that a default judgment had been entered against Eugene Puleio. On January 19, 1953, the day after the accident, the garnishee was given notice of the accident and it promptly made an investigation. In September 1953 Allstate tendered to plaintiffs a receipt and release offering $257.00 under its passenger-medical payments coverage and a general receipt and release in the total amount of $1.00 from its liability under all liability types of coverage in the policy. The plaintiffs took no action with respect to the offer and did not inform Allstate of the suit which they had theretofore instituted against Puleio. Since the garnishee had notice of and investigated the accident and endeavored to secure from plaintiffs a general release from all liability and charged that Puleio was driving the automobile on his own business, it is contended by the appellants that the garnishee denied liability and that notice of the trespass action or the transmission of the suit papers was not required. The pleadings do not reveal a denial of liability by the insurer until after Allstate had been notified of the entry of the judgment and the assessment of the damages. Prior to this date, Allstate had not evidenced any indication that it would not defend Puleio had it known that an action had been instituted against him. None of these matters excused the Flaggs from complying with the express condition of the policy of immediately forwarding to Allstate the suit papers. The right of the plaintiffs to recover in this proceeding is derived through the unnamed insured — Puleio — and if he did not perform his duty under the policy, the Flaggs could not successfully maintain an action against the insurer.
The appellants' further contention that they could not forward the suit papers because they were served on Puleio is without merit. They could have given notice of the commencement of the suit or sent a copy of the papers to Allstate: McClellan v. Madonti, 313 Pa. 515, 169 A. 760; Morris v. Bender, 317 Pa. 533, 177 A. 776.
The failure to forward suit papers will not alone void the policy: Frank v. Nash, 166 Pa. Super. 476, 71 A.2d 835. The insurer must show that it was prejudiced by the failure to deliver the suit papers. In the present case the insurer did not have an opportunity to appear and defend the action on liability, was not given an opportunity to cross-examine plaintiffs' witnesses on damages and was not given an opportunity to present its own evidence relative to liability and damages.
It is fairly obvious that the Flaggs and Puleio failed to deliver the suit papers to Allstate because of their mistaken theory that Puleio's insurance carrier, The Travelers Indemnity Company, was liable under its policy issued to Puleio. This mistake, however, does not constitute a legal justification for the failure to deliver the said papers to Allstate.
Judgment affirmed.