Warren v. Commercial Standard Insurance

Robinson, J. The appellee herein, Commercial Standard Insurance ■ Company, is the insurer, in a policy of liability insurance issued to Guy and Bill Bowen, covering taxicabs owned and operated by the said Bowens. Such policy was in full force- and effect on the 4th day of December, 1948, at which time Guy Bowen, while operating one of the.taxicabs covered by the policy, collided with a car driven by-appellant herein, Ed 0. Warren. As a result of said collision,-Warren obtained judgment ¡against the Bowens in the sum of $250. Prior to the judgment no notice whatever was given to the Insurance Company as to the occurrence of the accident or the pendency of the suit. Warren was unable to collect his judgment against the Bowens and filed suit against the appellee Insurance Company to collect on said judgment. There is no dispute between parties as to the facts, the case having been submitted on a stipulation in that respect. The trial court, after considering the agreed statement of facts, entered a judgment in favor of the Insurance Company, the court holding that the Insurance Company was not liable on the policy because no notice of the accident or of the pendency of the suit was given to the Company prior to the judgment. The policy provides: “Notice of Accident — When an accident 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 and circumstances of the accident, the names and addresses of the injured and of available witnesses. “Notice of claim or suit; Coverages A and B—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 representative.” Appellant contends that, since he did not know what company had issued a policy to the Bowens—in fact, did not know, the Bowens had a policy of liability insurance, and therefore could not notify the insurance company— he should not now be deprived of collecting from the insurance company because the policy holder failed to notify the company of the occurrence of the collision and the pendency of the suit. Appellant relies to some extent on § 66-526, Ark. Stat., which provides in effect, among other things, that insolvency or bankruptcy on the part of the policy holder is no defense to the insurer in a suit brought by an injured third party. ■ However, appellant’s contention in that respect is untenable for the reason that the insurance company is not seeking to avoid liability on the ground that the policy holder is insolvent or bankrupt, but on the ground that the company had a right to be notified of the occurrence of the accident and the pendency of the suit, so that it could take whatever steps it deemed necessary in defense of the case. Also, appellant relies on the case of Maryland Casualty Company v. Waggoner, 193 Ark. 550, 101 S. W. 2d 451, but, in that case tbe insurance company was given notice of the claim and bad an opportunity to defend tbe case if it bad cared to do so. Here, tbe Insurance Company did not receive notice until after tbe rendition of the judgment against tbe policy bolder. Tbe appellee herein contends that tbe terms of tbe policy provide for notice to tbe insurance company so that tbe company could take whatever action appeared advisable in tbe circumstances, and since it received no notice, tbe policy bolder himself could not recover on tbe policy, and a third party who bad suffered damages bad no greater rights than did tbe person to whom tbe policy was issued. This was tbe effect of tbe bolding of tbe trial court. In tbe case of Home Life & Accident Ins. Co. v. Beckner, 168 Ark. 283, 270 S. W. 529, this court said: “We do, however, fully agree with tbe counsel for appellant in bis contention that there must be at least a bona fide compliance on tbe part of tbe assured with these provisions of the contract before be is entitled to a recovery. Tbe assured, in other words, cannot wholly ignore tbe 'requirements of tbe policy as to notice of tbe occurrence of tbe accident and as to tbe claim of tbe assured on account thereof, and likewise tbe provision requiring notice of any suit brought by tbe injured party against tbe assured for damages on account of tbe accident. These provisions in an insurance policy are valid. They are intended for tbe protection of the insurer, in order that be may investigate tbe circumstances of tbe injury and determine tbe course that be will pursue with reference to any claim that may be asserted against tbe assured by reason of such injury, either before or after suit. Even though not a condition precedent and not a ground for forfeiture of tbe policy, tbe insurer has tbe right to insist that tbe insured comply with tbe obligations of bis contract. ’ ’ With regard to the rights of the injured third party to recover against tbe insurer in circumstances of this kind, tbe weight of authority is as stated in 46 C. J. S. 122, as follows: “ Ordinarily, unless otherwise provided by statute, the injured person cannot recover against insurer if insured breaches material terms of the policy by reason of which insurer would be released from liability to insured, such as where insured fails to give insurer the required notice of the accident or injury, notice of the claim against insured, notice of litigation against insured, or fails to co-operate with insurer in defense of liability.” In support of the text, cases are cited from numerous States. Section 75-203, Ark. Stats., (being Act 385, 1947, in effect when the collision occurred between the Warren and Bowen vehicles), requires that the owner of a taxicab have “. . . liability contract of insurance . . . substantially in the form of the standard automobile liability insurance policy, in customary use, to be approved by the Commissioner of Insurance1 . . .”. But, there is no claim made in the case at bar that the clause heretofore quoted (notice of claim or suit) is different from such clause in any ‘ ‘ standard automobile liability policy in customary use.” Therefore, the policy of insurance issued to Bowen, for all that appears in this record, fully complies with the terms of the Statute. Our Statute does not require that the insurance policy issued under it be a policy on which anyone may bring an action at any time. On the contrary, our Statute requires that the policy of insurance be a policy in customary use. Attention is called to the case of Hynding v. Home Accident Ins. Co., 214 Cal. 743, 7 Pac. 2d 999, 85 A. L. R. 13, wherein is discussed liability of insurance companies under statutes which require, or policies which provide for recovery by the injured party against the insurance company regardless of the acts of the assured. In many States there are statutes providing that nothing contained in the policy or any endorsement thereon, nor the violation of any of the provisions thereof by the assured, shall relieve the company from liability under the policy or from payment of a judgment in favor of an injured third party. Of course, where there is a statute which so provides, the failure of the insured to give notice is no defense against an injured third party. However, we do not have such a statute in this State applicable to the parties involved here. Affirmed. Mr. Justice Ward dissents. Footnotes [1] Act 485 of 1949 substitutes the Commissioner-of Revenue for the Commissioner of Insurance.