Wright v. Farmers Automobile Inter-Insurance Exchange

BARNARD, P. J.

The plaintiff herein was injured while riding in an automobile driven by one Sellers. In a former action this plaintiff recovered judgment against Sellers, which has become final. (Wright v. Sellers, 25 Cal. App. (2d) 603 [78 Pac. (2d) 209, 213].) Thereafter, this action was brought, based upon that judgment and a policy of indemnity insurance which had been issued to Sellers by these defendants. A jury returned a verdict in favor of the plaintiff, and the defendants have appealed from the judgment and from an order denying their motion for judgment notwithstanding the verdict.

The main contention of the appellants is that the insured (Sellers) violated certain terms of the policy in that he failed to cooperate with them in the preparation and trial of the action, that he failed to give them the fullest information obtainable with respect to the facts surrounding the accident, and that he concealed or misrepresented material portions of those facts. The facts involved on this appeal are fully set forth in a dissenting opinion filed herewith, and need not be here repeated.

It may be first conceded that there is a conflict in the evidence with respect to the correctness and effect of the statement signed by the insured at the request of the insurance adjuster. Sellers denied that this statement correctly set forth the facts as stated by him to the adjuster and testified that it did not contain all of such facts. In that regard a question of fact was presented on conflicting evidence, and the finding of the jury thereon may not be disturbed on appeal.

A different situation is presented, however, by the denials and allegations of the answer which was signed and verified by the insured, taken in connection with the testimony which he gave at the trial of the former action. An answer was prepared in accordance with the facts contained in the original statements made by the insured. Sellers refused to sign this answer until certain changes were made and at that time made some modification of his statement of facts. Another answer was then prepared in accordance with the facts as then stated by him, which Sellers signed and verified, and which was filed. Regardless of any question which might have existed with respect to statements of fact as previously made by Sellers, there was and is no room for misunderstanding with respect to the statement of facts then made by him and set forth in the answer which he verified. If we disregard the various conflicting statements made by Sellers as to the speed of his automobile at the time of the accident, the fact remains that he alleged upon his oath that the respondent herein had not remonstrated or objected to the manner in which he was driving his automobile, and denied that he was driving the same at an excessive rate of speed or that the automobile swerved from the road or overturned because of his speed or because of any conduct upon his part. There can be no escape from the legal effect of the statements thus solemnly made by the insured and upon which the insurance carriers were entitled to rely. The verified answer speaks for itself, and there is and can be no question in the evidence with respect to whether those representations of fact were actually made by the insured to his insurers. If those allegations of the answer had been true the insured would have had a substantial defense in the prior action. The insurance carriers were entitled to rely upon those denials and allegations of the answer and were justified in defending the former action in reliance upon the truth of those allegations and in the belief that they would be supported by the testimony of the insured.

It is equally true that there is no conflict in the evidence with respect to the exact testimony which was given by Sellers in the trial of the former action, as shown by the evidence in this case. He there testified that the accident happened as he was going down a slight grade traveling between sixty and sixty-five miles an hour; that he came to a turn; that he “couldn’t make the turn” because he “was going too fast”; that “practically immediately” before the accident Wright asked him to slow down; that he told Wright not to worry, “I know this road”; and that he did not slow down. It was largely upon his testimony that this court affirmed the judgment against Sellers. (Wright v. Sellers, supra.) In that case we said:

“He was familiar with the road. In the face of remonstrances on the part of plaintiff he drove his ear at almost seventy miles an hour into a curve. He said himself that the speed was so great that he could not hold his automobile on the paved portion of the road.”

In this testimony the insured materially changed his version of the facts in connection with the accident as theretofore given by him to these appellants and incorporated in the verified answer which he filed in the other action. This evidence was in direct conflict with the allegations of the answer and it effectually destroyed any hope of a judgment in favor of Sellers in that action.

As there is no conflict whatever in the evidence with respect to what was denied and alleged in the answer and concerning the facts as testified to by Sellers at the trial of the former action, it cannot be said that there is any conflict in the evidence with respect to the issue raised in that connection, namely, whether the insured, without misrepresentation, furnished the fullest information obtainable to the insurer and rendered to the insurer all cooperation and assistance in his power. An exactly opposite situation appears without conflict. If Sellers’ testimony on the witness stand was not the truth, he was certainly not cooperating. If it was the truth he violated the cooperation clause of the policy by concealing the real facts from the insurer up to the very moment he testified, thus causing the insurer to go to trial under an absolute misapprehension of what the facts were. This could not be other than prejudicial.

We may say here as we said in Margellini v. Pacific Automobile Ins. Co., 33 Cal. App. (2d) 93 [91 Pac. (2d) 136]: “ . . . there was a violation on the part of the assured of the cooperation clause contained therein which we think brings this.case within the principles of the recent case of Valladao v. Fireman’s Fund Indemnity Co., 13 Cal. (2d) 322 [89 Pac. (2d) 643], and which bars a recovery on the part of the respondent. In that ease it was pointed out that it is now definitely settled in this state that in an action of this character the injured person stands in no better position than the assured with respect to the effect of a violation, on the part of the latter, of a cooperation clause in the policy; that a condition of a policy requiring the cooperation and assistance of the assured in opposing a claim made, or an action brought, by an injured party is material to the risk and of the utmost practical importance; that without such cooperation and assistance the insurer is severely handicapped and may be precluded from making any defense; and that the insurer is entitled to know from its assured the true facts concerning the accident, in order that it may determine for itself whether to contest or attempt to settle the claim.”

Except perhaps in the degree of the false swearing of the insured, we cannot distinguish this case from Valladao v. Fireman’s Fund Indem. Co., 13 Cal. (2d) 322 [89 Pac. (2d) 643, 649], where, in quoting from the opinion of the trial judge, it was said:

“A co-operation clause binds the insured to the exercise of good faith and when he speaks concerning the facts of the accident it must be to tell the truth. To wilfully misstate or conceal facts in such a case is clearly not cooperation or assistance; it is exactly the opposite. Was it, then prejudicial? I see no escape from the conclusion that under all the circumstances here prejudice naturally, inherently and necessarily existed. The insurance company had taken a formal position as to the facts from which it could not recede without great disadvantage. The answer bearing all the forms of verification was on file. . . . When the true facts were disclosed, the company had to exactly reverse its position with regard to essential facts and virtually proclaim their parties and chief witnesses to be liars and wholly unworthy of belief. Practically its only props were struck from under it. Better a great deal that there had been an absolute refusal to tell the facts at all than that it should have been deceived into taking a false position and then suffering the disadvantage and detriment of confessing it, thereby utterly destroying the credibility of the principal witnesses to the facts upon which it relied in defense. I am of the opinion that damage and prejudice inheres in and must be presumed to exist in such a ease. Hence it is a matter of law and not of fact; a problem for the court and not for the jury.”

In our opinion, the failure of Sellers to cooperate with the insurers in the defense of the prior action was an established fact with respect to which there was no conflict in the evidence. The insured and the insurers were bound by the clear provisions of their contract. (Bachman v. Independence Indem. Co., 214 Cal. 529 [6 Pac. (2d) 943].) This failure to cooperate and misrepresentation or concealment of facts on the part of the insured were a violation of the insurance contract, and prejudice must be presumed as a matter of law under the rules announced in the cases above cited.

The judgment and order appealed from are reversed.

Marks, J., concurred.