Security Insurance v. Snyder-Lynch Motors, Inc.

Appeal by plaintiff from the judgment in an action for declaratory relief upon an automobile liability policy issued by plaintiff to defendant Snyder-Lynch Motors, Inc., which policy covered as “additional insured” persons driving an insured vehicle with the permission of the owner Snyder-Lynch Motors, Inc. (hereinafter called Snyder-Lynch). While this policy was in effect, Snyder-Lynch, a dealer in new and used cars, sold on December 6, 1956, a certain Lincoln convertible coupé to defendants Ronald E. Wright and his wife Paloma Wright upon a conditional sale contract. On December 10, 1956, an accident occurred on the Harbor Freeway in Los Angeles while Mrs. Wright was driving the ear. It involved several automobiles which apparently contained defendants Ruth Ramirez, Guadalupe Lopez, Freda Lopez, Josephina Valles, Consuelo Huerta and Ysidro Huerta, also defendant Sims. The Ramirez group sued Snyder-Lynch and Paloma Wright for personal injuries on July 22, 1957, and Sims sued them on October 17, 1957. Snyder-Lynch, having been served with summons and complaint in the Ramirez action promptly notified plaintiff on July 31, 1957, of the

Before the trial closed plaintiff’s counsel conceded that Snyder-Lynch is in that position and by stipulation made in this court the appeal was dismissed as to that defendant on March 1, 1960. As to Sims (a damage claimant) no argument is made by appellant’s counsel and it was specifically stated upon oral argument that no error is claimed with respect to him. The briefs are devoted to the question of whether the Wrights are now covered by the policy. Originally it was claimed that they had no coverage because they were not in the category of “additional insured”; that the car had been sold outright to them and they were not driving a ear owned by Snyder-Lynch and with its permission. This issue having been decided against plaintiff, it has come to rest upon the failure of the Wrights to give notice of accident. It seems that this is a shift of position which is precluded by the pretrial conference order.

The policy differentiates between “named insured” and the broader term “insured” and in section 10 requires notice of accident to be given by “the insured,” which provision standing alone well may include Mrs. Wright as permissive driver. But the consolidated pretrial statement of counsel for plaintiff and defendants (which was incorporated by reference in the judge’s order) says that: “The policy also provided that when an accident occurs, written notice should be given by and on behalf of the named insured to the company

Dell’Orto v. Dell'Orto, 166 Cal.App.2d 825 [ 334 P.2d 97 ], was a specific performance case in which no proof of plaintiff’s ability and readiness to perform was made. At page 831 the court said: “As hereinbefore set forth, rule 8.8 provides that the pretrial order controls where inconsistent with the pleadings unless modified at or before the trial, and in the instant case appellant made no request for a modification of the pretrial conference order. We, therefore, conclude that the issues of ability to perform and tender, not being raised at the pretrial conference, and not being listed in the pretrial conference order as issues remaining in dispute, were no longer issues in the case. To hold otherwise would, in our opinion, not be in conformity with either the letter or the spirit of the Eules Eelating to Pretrial Conferences.” (See also 48 Cal.Jur.2d, § 33, p. 98.) This rule seems fully applicable at bar but we do not rest our decision upon this one ground.

Out of a substantial conflict in the evidence the court accepted the testimony of Clarence A. Holland, an investigator and adjuster who had been employed by Sims. He telephoned plaintiff insurance company about January 9, 1957, talked with its supervisor of claims, Mr. Philip Theis, Jr., identified himself as an adjuster and investigator, learned that Snyder-Lynch had coverage issued by Security, told Theis he had information which would lead him to believe that possibly Security would be engaged in a lawsuit owing to a statement their insured had made, that the car was registered to Snyder-Lynch and Mrs. Wright possibly would be an insured or a defendant “owing to a latent defect, or a car being sold with

It also appears that a police investigation and report of the accident had been promptly made; that Officer Goodman, the investigating officer, had interviewed the witnesses, listed their names and addresses and included their statements (11 in number) in the report which was filed on December 10, 1956, the day of the accident; that this report also included 14 pictures taken at the scene, the officer having arrived a few minutes after its occurrence. Officer Rogers interviewed Mrs. Wright on January 8, 1957, and made a report of her statement a part of the police record on that day. Officer Johnson was driving southbound behind one of the cars involved in the accident and saw it cross over the dividing strip. He filed a report of the accident on December 12, 1956. The attorneys who have appeared for plaintiff throughout this action also appeared for the Wrights in the damage actions, set aside defaults that had been entered against them; those actions seem to have been held in abeyance pending final determination of this case; under what arrangement or with what reservation of rights this representation has occurred is not disclosed by the record.

Assuming an obligation to rest upon the Wrights to give a notice pursuant to condition 10, the foregoing would not suffice to comply with its terms for there was no writing and Mr. Holland’s oral notice seems not to have embraced ‘‘reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.” Nor does it appear that anybody called plaintiff insurer’s attention to the police file. So the Wrights cannot be said to have given notice within the purview of the policy.

We do not pause to discuss the question of whether a notice

It now is established law in this state that failure to give the required notice, though designated as a condition of the policy, is not fatal to claimant’s cause of action unless the insurer has been prejudiced thereby. Reed v. Pacific Indem. Co., 101 Cal.App.2d 151 , 159 [ 225 P.2d 255 ] : “It appears to be settled law in California that whether an insured has complied with the ‘Notice to Company’ or ‘Assistance & Cooperation’ provisions of his policy is a question of fact, and that before the breach of such provisions precludes a recovery under the policy by the insured, it must appear that the insurer has suffered prejudice. In the recent case of Gibson v. Colonial Ins. Co., 92 Cal.App.2d 33 [ 206 P.2d 387 ], in which a hearing was denied by the Supreme Court, the court held that, ‘Where a policy of liability insurance provides that as a condition precedent to the insurer’s obligation the insured shall notify it of any accident covered by such policy “immediately” or “as soon as practicable,” the notice required is only such as is prompt and reasonable under the circumstances, and the question whether the insurer’s obligation is excused by delay in such notice depends on whether the insurer has been substantially prejudiced by such delay, which in turn depends on the facts of the particular case, and prejudice will not be presumed as a matter of law from a delay of seven and one-half months. ’ The court said, at page 34: ‘ The legal principles which must govern our decision were stated in Abrams v. American Fidelity & Cas. Co., 32 Cal.2d 233 [ 195 P.2d 797 ]. In that case, as in the present one, an injured plaintiff was seeking to enforce the contract liability of the insurer after his

The circumstances above outlined were sufficient to justify the court’s implied finding of absence of prejudice from the failure of the Wrights to give any notice. Orally, plaintiff was advised of the accident about January 9,1957 (or perhaps it was January 30), and of the probability of suit against the named insured, Snyder-Lynch and the driver, Mrs. Wright. This would alert any insurer to the necessity of immediate investigation. Mr. Theis, plaintiff’s supervisor of claims, while declaring he had no recollection of any conversation with Holland, said he would have opened a file and assigned the matter to an adjuster had an adjuster for another company called him. Common knowledge of such matters suggests that the adjuster or some other representative of the insurer (or any claimant) would have consulted the police report at once. Had this been done it would have disclosed the entire story of the accident. The 11 witnesses’ statements contained therein were not privileged (People v. Misner, 134 Cal.App.2d 377 , 381 [ 285 P.2d 938 ] ; Dwelly v. McReynolds, 6 Cal.2d 128 , 131 [ 56 P.2d 1232 ]). Plaintiff rested entirely upon the presumption of prejudice, making no effort to show that in fact its investigation of the accident or defense of the personal injury suits had been impeded or embarrassed in any way. The evidence is sufficient to support the trial court’s implied finding of absence of prejudice from failure of the Wrights to