David Snellenburg, II, of Killoran & Van Brunt, Wilmington, for appellants.
Joseph H. Flanzer, Wilmington, for appellee.
SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.
This appeal is based upon the refusal of the lower court to permit appellants to recover against appellee,--because of failure on the part of appellee's insured to give notice of suit and to forward suit papers,--the amount of judgment by default obtained by appellants against appellee's insured.
The appellee had insured William J. McCabe (hereafter 'William' or 'insured') against liability for damages arising out of automobile accidents. William was employed as an agent in the office of his father, John D. McCabe (hereafter 'John'). John was licensed by appellee as agent for the purpose of soliciting applications for insurance. The agency was limited in its scope. John took applications for insurance and forwarded them to the home office for approval. If the approval was granted, appellee wrote the policy and forwarded it to John for John's countersignature. John thereupon made delivery thereof and collected the premium therefor. John testified that on a few occasions he had given notice to the company of accidents involving policy holders of appellee but that he had never on behalf of any insured given notice to appellee of a claim
or suit or forwarded suit papers to appellee. Any applications for insurance received by William were turned over to John, who, in turn, forwarded them to appellee.
[49 Del. 562] On July 11, 1952, William was involved in an automobile accident. Notice thereof was given promptly to appellee. Appellants instituted suit for their loss against William on July 1, 1953. Service was made on William on July 8, 1953, by leaving a copy of the summons and complaint at his home in the presence of John. On August 12, 1953, appellants filed a motion for judgment by default against William by reason of his failure to appear and answer. On August 13, 1953, the motion was granted. The trial judge found as a fact that William did not notify appellee of the institution of suit or forward to appellee the summons and complaint served upon him until August 20, 1953. Upon receipt of summons and complaint by appellee, appellee's adjuster promptly called upon appellants' attorney. He notified appellants' attorney that the adjuster who would be handling this case was then on his vacation. He called attention to the lateness of the forwarding of suit papers and requested that the judgment by default be vacated, or, at least, that inquisition upon the judgment be held up for a short time until the return of the adjuster who would handle this case on behalf of appellee. The latter request was granted by appellants' attorney. In the latter part of August the adjuster for appellee in charge of the case, upon his return from his vacation, called upon appellants' attorney. He informed appellants' attorney of insured's failure to give notice of suit and forward suit papers in accordance with the contract of insurance and advised appellants' attorney that unless the suit could be settled amicably, or the judgment by default vacated, appellee would disclaim by reason of insured's breach of the contract of insurance. On September 17th, appellee's counsel, on behalf of William, asked leave to enter a special appearance and to vacate the judgment. The trial judge denied appellee's motion on October 16, 1953. Thereupon appellee on October 27, 1953, wrote appellee's insured, notifying him of the denial of the motion to vacate and advising him that because of insured's failure to give due notice of the institution[49 Del. 563] of suit appellee was disclaiming all liability under the contract. On December 31, 1953, appellants instituted this action against appellee. Appellee denied liability. The trial judge entered judgment for appellee and appellants appealed.
Two questions are presented: (1) Was appellee duly notified of suit? and, (2) Did appellee waive its right to notice of suit?
1. Was Appellee Duly Notified of Suit?
It is admitted that appellee received notice of the accident. The trial judge found that it received no notice of the suit until after judgment by default had been taken against appellee's insured. Under Rule 12 of the Superior Court, Del.C. Ann.,--unless otherwise directed by that Court,--insured had twenty days within which to file an answer. He failed to comply. Judgment by default followed.
The pertinent provisions of the policy with respect to notice are as follows:
'Notice of Accident. * * * When an accident occurs, written notice shall be given by or an behalf of the insured to the company or any of its authorized agents as soon as practicable.'
'Notice of Claim or Suit. 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.' [Italics supplied.]
It will be observed that the provisions as to the forwarding of notice of accident and the notice of suit are worded differently. In the former it is provided that notice shall be given 'to the company or any of its autohrized agents'; in the latter, notice shall be given 'to the company'.
Appellee contends that under the circumstances of this case, the failure by insured
to forward the suit papers to appellee, or to give notice thereof, as provided by the policy, within a reasonable time after service upon insured, constitutes a violation [49 Del. 564] of the insurance contract. Appellants contend that appellee received notice, alleging that when the summons and complaint were served upon William in the presence of John, that fact constituted notice to John, since John was appellee's agent.
It is true that under some circumstances knowledge on the part of an agent is chargeable to the principal, even though not actually communicated by the agent to the principal. See cases cited in 2 Am.Jur., Agency, Sec. 374, p. 292, n. 4. But the same authorities also hold that such knowledge or notice must pertain to the duties of the agent, the subject matter of his employment and must not affect matters outside the scope of his employment. The agent having such knowledge or receiving such notice must have authority to act in regard to those matters affected by the knowledge or notice. Trentor v. Pothen,46 Minn. 298, 49 N.W. 129; Clement v. Young-McShea Amusement Co., 70 N.J.Eq. 677,67 A. 82.
John was licensed by the Insurance Commissioner of this State as an insurance agent. His authority was in no way enlarged by the contract of employment between appellee and John. John was given no general powers involving the exercise of judgment or discretion. We find nothing in the contract between appellee and John to indicate that a managing or general agency was contemplated. See Hotel Glenmore v. American Eagle Fire Ins. Co., 280 A.D. 445,114 N.Y.S.2d 234.
Appellants in their brief say that it was the practice of both John and William to forward notice of accidents, claims and suits. However, we are unable to find anything in the record to substantiate appellants' contention as to suits. John specifically testified that he had never forwarded a summons and complaint to a general agent or to the company or given notice thereof.
Appellants cite a number of cases holding that notice to a general agent is binding upon the company. We assume this to be true, but the principle of law enunciated in those cases has no application here. As previously stated, John's agency was limited to negotiating the sale of insurance. He was in no sense [49 Del. 565] a general agent as that term is understood in the insurance field. It is provided in the policy that notice of suit and summons and complaint shall be forwarded 'to the company'. It is not disputed that such provision is reasonable and binding upon both insured and appellants.
Appellants assert in their brief that the injured person may perform conditions of the policy, the breach of which would work a forfeiture for and on behalf of the insurer. They call attention to the fact that their attorney wrote to insured, advising him that suit was being filed and enclosing copy of petition for appointment of next friend to prosecute the action. Conceding that the statement of law enunciated by appellants is generally speaking correct, it has no application to the facts of this case. In the first place, William was not an agent to receive notice of suit; in the second place, the notice was of an intention to institute suit, not of the actual beginning of the action. The suit papers when received must be forwarded to the company. The notice by appellants' attorney to the insured is of no effect in showing notice to appellee.
We think that the serving of the summons and complaint against William by leaving copies thereof in the presence of John did not constitute notice to appellee and did not comply with the terms of the contract of insurance.
2. Did Appellee Waive Its Right To Notice Of Suit?
Appellants contend that appellee has waived any violation of the terms and conditions of the policy of insurance by conduct totally inconsistent with any disclaimer
of liability. This contention is bottomed upon (1) conversations between agents of appellee and counsel for appellants, to the effect that appellee would disclaim any responsibility under the policy of insurance unless a reasonable settlement was reached, and (2) the filing by appellee, on behalf of William, of a motion for leave to enter a special appearance and for the vacation of the judgment by default. As to the latter, appellants contend that [49 Del. 566] appellee thereby undertook the defense of the suit on behalf of appellants.
To constitute a waiver the right alleged to have been waived must have been known to the person to be charged therewith and his waiver thereof must have been intentional. Such intention will not be implied from slight circumstances. Miller, Inc., v. Northern Insurance Co., 3 Terry 523,39 A.2d 23; Jones v. Savin, 6 Boyce 180,97 A. 591. Appellants aver that appellee had not formulated any intention to disclaim until after its motion to vacate the judgment was denied. Such statement is not warranted by the record. The record shows conclusively that appellee, through its adjusters, informed appellants that liability under the policy would undoubtedly be denied unless a satisfactory settlement could be made or appellee permitted to defend on the merits. Subject to these stipulations, appellee's position of denial of liability was consistent throughout. The fact that inquiry was made relative to the possibility of settlement or the vacation of the judgment by default or the request that no further action be taken until the return of appellee's adjuster in charge of the matter does not indicate any intent on the part of appellee to waive the forfeiture. See Miller, Inc., v. Northern Ins. Co., supra; Nevil v. Wahl,228 Mo.App. 49, 65 S.W.2d 123.
The fact that appellee filed a motion for leave to enter a special appearance and to vacate the judgment does not under the circumstances constitute an undertaking by appellee to defend the action. Judgment by default had been entered against insured by reason of his carelessness and indifference. Appellee, on his behalf, undertook to have the judgment vacated. Presumably, had its efforts in this respect been successful, appellee would ...