Home Indemnity Co. v. Walker

Singley, J., delivered the opinion of the Court. In 1965, Mrs. Catherine Norris, whose liability insurance carrier was The Home Indemnity Company (The Home) was involved in an automobile accident with Mrs. Walker. Mrs. Norris notified The Home of the accident, and thereafter, an adjuster for The Home entered into settlement negotiations with the Walkers’ attorney. When these led nowhere, the Walkers brought suit against Mrs. Norris in Prince George’s County and obtained a default judgment.

After an ex parte hearing on damages, judgments were entered against Mrs. Norris in amounts of $15,000 in favor of Mrs. Walker and $4,274.67 in favor of Mr. Walker. When The Home refused to pay the judgments, the Walkers brought suit for $19,274.67, with interest and costs. From a judgment against it in this amount, The Home has appealed. The Home endeavors to buttress its position, as it did below, by the argument that the provisions of the policy required Mrs. Norris to forward to the company any “notice, summons or other process” received by her, and that failure to do so relieved The Home of liability under the policy.

Germane to a consideration of this contention are the provisions of Code (1957, 1968 Repl. Vol.) Art. 48A, § 482: “Where an insurer seeks to disclaim coverage on any policy of liability insurance issued by it, on the ground that the insured or anyone claim ⁶⁸⁶ ing the benefits of the policy through the insured has breached the policy by failing to cooperate with the insurer or by not giving requisite notice to the insurer, such disclaimer shall be effective only if the insurer establishes, by a preponderance of affirmative evidence that such lack of co-operation or notice has resulted in actual prejudice to the insurer.” It is against the mandate of the statute that the facts relied upon by both The Home and the Walkers must be tested. James H. Lewis, a senior claims adjuster for The Home, called as its witness, testified that he received notice of the accident from Mrs. Norris; interviewed her; investigated the case, and endeavored to negotiate a settlement with the Walkers’ attorney. Mr. Dotson, the Walkers’ attorney, testified that when it became apparent that no settlement could be reached, he filed suit in Prince George’s County against Mrs. Norris on 17 April 1967, and discovered that Mrs. Norris had left the state.

Sometime thereafter, Mr. Dotson had a telephone conversation with Mr. Lewis. Mr. Dotson said: “At that time I told him [Lewis] that I had filed suit and I could not find Mrs. Norris and I asked him to tell me where she was, and he jokingly said, ‘I’m not going to tell you where she is, but I suggest you get yourself a detective and find her.’ ” Mr. Dotson said that he did locate Mrs. Norris in California and effected service by both registered mail and through the local sheriff. 1 Settlement negotiations continued, he said, and he took his default judgment on 1 July 1968. On 9 August he wrote to Mr. Lewis: “Please be advised that at great expense I have been able to locate and serve Catherine Norris, ⁶⁸⁷ defendant in the above case, with our suit papers. Additionally, on the 1st day of July 1968, I obtained a judgment by default against Mrs. Norris and the case is presently set for ex parte hearing on proof of