Jeannette Glass Co. v. Indemnity Insurance Co. of North America

Opinion by

Mr. Chief Justice Drew,

Under the notice provision of an insurance policy covering liability for personal injuries, must notice be given promptly after an accident or, is the provision satisfied by the giving of notice only after the insured has learned of its potential liability by having suit filed against it eight months later? The learned court below held in this case that notice was required promptly after the accident and directed a verdict for defendant, Indemnity Insurance Company of North America. Judgment was entered on that verdict and the insured, The Jeannette Glass Company, plaintiff, has appealed.

On May 24, 1944, defendant issued to plaintiff a contract of insurance covering liability for personal injuries and property damage for a period of three years. That policy provided: “Upon the occurrence of an accident, 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 after notice thereof has been received by its executive officers at the insured’s headquarters.” It is that clause out of which this dispute arises.

While the policy was in force plaintiff, through Eichleay Engineering Company, began constructing some large tanks in its factory. On November 26, 1945, in the course of that construction work a steel beam fell and injured one Stucker, an employe of Eichleay. Carl T. Sloan, vice president of plaintiff, learned of the accident and arrived at the scene just as Stucker was being placed in an ambulance. He and two of plaintiff’s employes immediately conducted investigations which satisfied them that plaintiff was not liable. Two or three days later, Kirkland W. Todd, president of plaintiff, learned of the accident and after a summary investigation reached the same conclusion. Plaintiff did nothing to notify defendant of the accident until August 10, 1946, when a complaint in trespass, filed by Stucker, was served on it. Defendant denied liability on its policy because of plaintiff’s failure to give prompt notice. Stucker eventually recovered a verdict against plaintiff in the sum of $7000.00 which plaintiff settled in full by paying to Stucker $4000.00. To recover that sum plus the costs of defending that suit, plaintiff brought this action in assumpsit.

The rule is well established that notice must be given to the insurer within a reasonable time and what constitutes a reasonable time necessarily depends on the facts and circumstances of each case: Unverzagt v. Prestera, 339 Pa. 141, 13 A. 2d 46; Curran v. Nat’l. L. Ins. Co., U. S. of A., 251 Pa. 420, 96 A. 1041; Hughes v. Central Acc. Ins. Co., 222 Pa. 462, 71 A. 923. It is equally clear that in the absence of extenuating circumstances eight and one-half months is an unreasonable delay in giving notice. See: Unvermgt c. Prestera, supra (3% months) ; Bartels B. Co. v. Employers’ I. Co., 251 Pa. 63, 95 A. 919 (6 months); Gerber v. Fletcher, 108 Pa. Superior Ct. 226, 164 A. 135 (7 months).

Plaintiff contends that its employes and officers conducted a prompt investigation and from that determined that it Avas not liable. It concludes that since it aqted Avith due diligence in making its investigation and reaching its conclusion there was no necessity for giving immediate notice to defendant. That argument ■ignores both the language and the purpose of the notice clause in the contract.

That clause states: “Upon the occurrence of an accident, written notice shall be given . . .” (Italics added.) It is admitted that an accident occurred in which Stucker was seriously injured and that it was the type of accident covered by the policy. Also, plaintiff’s vice-president knew of the accident immediately after it occurred and the president not more than two or three days latér. Under those circumstances it was incumbent upon plaintiff to give notice as soon as possible after its executive officers learned of the accident. Thus, there can be no excuse for the delay of eight and one-half months in notifying defendant.

The fact that plaintiff investigated the accident and determined it was not liable does not justify this failure. Eather, in view of the verdict for Stucker, it emphasizes the reason this failure releases defendant from liability. As we said in Bartels B. Co. v. Employers’ I. Co., supra, at p. 66, the' notice clause is “designed to enable the insurer to investigate the circumstances of the accident while the matter is yet fresh in the minds of all, and ,to make timely defense against any claim filed.” It might well be that had defendant been notified promptly its investigation by men trained in that work would have revealed a defense to that action. It is equally possible that defendant could have obtained a more favorable settlement had it learned of the accident immediately. It is for these reasons that the failure to give notice releases the insurer from the obligation of the contract: Unverzagt v. Prestera, supra. And this is true even though the insurer does not show that he was in fact prejudiced: ibid.

A case very similar to this one on that point is Ross v. Mayfl’er D. Stores, Inc., 338 Pa. 211, 12 A. 2d 569. There the insured notified the wrong company. That company conducted an investigation before it learned of the error. The proper company was not notified until one year later at which time all investigation reports were turned over to it. We stated, at p. 215: “. . . the St. Paul Company may well have suffered a disadvantage in not having the opportunity to make its OAvn inquiries, and, more especially, in being deprived for an entire year of the opportunity to settle the claim before the prosecution of the suit had increased the difficulties of adjustment.”

Appellant cites that: case for the proposition that the issue here should have been left for the jury to decide. It is true that there it was left to the jury but we' said, at p. 214: “Ordinarily, in the absence of special circumstances,' the question whether an insured has failed to meet the requirements of the policy in regard to the time of giving. the notice stipulated therein is one for the court; at least the delay may be great enough to justify the court in so ruling as a matter of law . . . [citing cases] Here, however, the question was submitted to the jury, which concluded that a delay of a year and two days was not ‘prompt’ notification. This finding was clearly proper, for notifying the wrong company was not a sufficient legal excuse for failure to comply with the terms of the policy on which recovery was sought.” (Italics added.) Likewise, in the instant case, the failure to give notice because plaintiff thought it was not liable is not a sufficient legal excuse.

All of the cases cited by appellant are cases where some essential fact was unknown to the insured.¹ In those cases the question was properly left to the jury as to whether the insured exercised due diligence to ascertain the facts and whether in view of their ignorance they had given notice within a reasonable time. Here, on the other hand, all of the facts were known to plaintiff and it was only because plaintiff reached the legal conclusion that it was not liable, that notice was not given. There being no dispute as to the facts, the sufficiency of that excuse was purely a question of law which was properly decided by the learned court below.

In support of its contention, plaintiff offered in evidence the testimony from the trespass action in an effort to show that Stucker’s claim was fraudulent and that plaintiff was, therefore justified in not giving notice to defendant. Upon timely objection this offer was rejected by tbe trial judge. That ruling was clearly correct. A properly constituted court and jury found that Stucker had a valid claim and the verdict in that suit is not open to collateral attack in this proceeding. See Moeller v. Washington County, 352 Pa. 640, 44 A. 2d 252; Greiner v. Brubaker, 151 Pa. Superior Ct. 515, 30 A. 2d 621.

Plaintiff had no legal justification for its failure to give prompt notice of the accident and for that reason defendant was released from liability on its policy. Judgment affirmed.

1 Curran v. Natl. L. Ins. Co., U. S. of A., supra (policy was lost and beneficiary did not know name of insurer) ; Hughes v. Central Acc. Ins. Co., supra; Peoples M. Accident Ass’n. v. Smith, 126 Pa. 317, 17 A. 605; Schambelan v. Preferred, A. Ins. Co., 62 Pa. Superior Ct. 445 (All cases where insured had no immediate knowledge of injuries) ; Public Coal Co. v. Continental Cas. Co., 138 Pa. Superior Ct. 480, 10 A. 2d 860 (No knowlédge by executive officers that accident occurred.)