ABRAMS v. AMERICAN FIDELITY CASUALTY CO

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District Court of Appeal, Second District, Division 3, California.

ABRAMS v. AMERICAN FIDELITY & CASUALTY CO.

Civ. 15752.

Decided: December 02, 1947

Reginald I. Bauder and Robert E. Ford, both of Los Angeles, for appellant. Charles A. Son and Joseph D. Taylor, both of Los Angeles, for respondent.

On December 25, 1940, an automobile which was driven by plaintiff and a motor truck driven by A. Visser collided on a highway near Beaver, Utah, and plaintiff suffered personal injuries. In an action against Visser to recover damages for such injuries plaintiff was awarded $3,910 in a default judgment entered on April 30, 1941. Prior to said collision the defendant herein had issued its policy of insurance agreeing to indemnify Visser against liability to third persons arising out of the operation of his truck, and at the time of said collision said policy was in effect. The judgment became final and remained unpaid, and on December 4, 1941, the plaintiff commenced the present action against the defendant to recover the amount of said judgment. The defendant asserted as a defense that Visser, the insured, failed to comply with a provision of the policy concerning the insured's duty to give notice of the accident to the insurance company, and with a provision concerning the insured's duty to cooperative with the insurance company. In a trial herein without a jury plaintiff obtained judgment, and defendant appeals therefrom. The appeal relates only to the alleged failure to give notice of the accident within proper time, and does not relate to the alleged failure to cooperate.

A. Visser purchased the truck from Fred Kerr, who was an insurance broker, and also purchased from him the said insurance policy. On the day of the accident Visser sent a postal card to Kerr on which was written: ‘I had an accident this morning 14 miles north of Beaver, Utah on Hiway 91. Please inquire at the Sheriff's office in Beaver Utah for all particulars My policy number is No. 36803. I remain as ever A. Visser.’ Although the insured mailed notice to the insurance broker on the day of the accident, that was not effective as a notice to the insurance company. As an insurance broker, Kerr was the agent of the insured and not of the insurer. Insurance Code, sec. 33; Arthur v. London Guar. & Acc. Co., 78 Cal.App.2d 198, 202, 177 P.2d 625.

Kerr did not proceed to notify the insurance company or Markel Service, Inc., the Los Angeles agent for the insurance company, concerning the accident until January 31, 1941, when Visser returned to Los Angeles and went to Kerr's office. At that time Kerr wrote a letter to the Markel Service, Inc., stating the details of the accident, which letter was received by said agent on February 4, 1941, 41 days after the accident, and that was the first notice of the accident the insurance company had.

The policy provided in part as follows: ‘Upon the occurrence of an accident, or an alleged accident, covered under this Policy, the Assured shall give immediate written notice thereof with the most complete detailed information obtainable at the time to the Company, at its Home Office in Richmond, Virginia, or to its nearest Branch Office or to its duly authorized agent; if a claim is made on account of such an accident or if any suit is brought against the Assured to enforce such a claim the Assured shall forward to the company immediately every written communication, or information as to any verbal communication, and every process, pleading and paper relating to any claim and/or proceeding. The words ‘Immediate’ or ‘Immediately’ as used herein shall be construed to mean not exceeding five days.'

Although the policy states that notice of an accident shall be given within five days, section 551 of the Insurance Code provides that such a requirement is not valid. That section is as follows: ‘Except in the case of life, marine, or fire insurance, notice of an accident, injury, or death may be given at any time within twenty days after the event, to the insurer under a policy against loss therefrom. In such a policy, no requirement of notice within a lesser period shall be valid.’

Respondent (insured) asserts that since the 5-day provision in the policy is void there is no provision in the policy requiring notice. Even though the definition in the policy of the word ‘immediate’ (that it means not to exceed five days) is to be disregarded because the requirement of notice within such period is void, the provision in the policy that ‘immediate written notice’ shall be given, remains in effect, and there is therefore a provision in the policy requiring notice.

Appellant (insurer) asserts that it is implicit in said code section that it was intended that the 20-day provision in the code section should be substituted for the 5-day provision in the policy, and that the policy should be read as if a provision for notice within 20 days were expressly embodied in it. That section does not state that the notice must be within 20 days, and does not state that a notice given after 20 days shall be invalid. It states that notice may be given at any time within 20 days after the event. In other words, a notice within 20 days is permissible even though the policy provides that notice should be given in a lesser period of time. If a policy provides that notice shall be given within a lesser period than 20 days, such a provision is void, and in the event the insured gives notice within 20 days after the accident occurs, the timeliness of the notice is not to be controverted. The statutes do not provide that if a notice provision in a policy is invalid the period of 20 days mentioned in said section 551 shall supersede the invalid provision and be the agreement of the parties. The policy does not provide that if the notice provision in its is invalid by statute the period mentioned in the statute shall supersede the invalid provision and be the agreement of the parties. In some states it is provided by statute that if a limitation in the policy as the time within which notice must be given is invalid because it is at variance with the statute the statutory provision as to when notice must be given shall supersede the invalid provision in the policy. In some policies it is provided by agreement of the parties that such a statutory provision shall supersede such an invalid policy provision, but, as just stated, the policy herein does not contain an agreement to that effect. Here the insurer, which prepared and issued the policy or agreement between the parties, did not elect to state therein that the 20-day period mentioned in the statute as the time within which notice might be given should be the period within which notice must be given; nor did it elect to insert therein a provision that if its 5-day provision should be invalid under a statute then a period designated by statute as a period within which notice would be permissible should be adopted as the agreement of the parties as the period within which notice must be given. In other words, the 5-day provision in the policy being void, there is no express agreement of the parties within the words of the policy, or under the provisions of the policy by reference to the statutes, or by reference in the statutes to such a policy, as to any stated period of time within which notice must be given. It is proper to read into the policy the provision of the statute that notice of an accident may be given at any time within 20 days after the accident, but it is not proper to read the policy as if it stated that the word ‘immediate,’ as used therein in the expression ‘shall give immediate written notice,’ shall be construed to mean not exceeding twenty days. In other words, the word ‘twenty’ used in the statute is not to be lifted alone from the context of the statute and be substituted alone in the policy in place of the word ‘five.’ If such a substitution were made it would appear thereby that the parties had agreed that the word ‘immediate’ as used therein ‘shall be construed to mean not exceeding’ twenty days, whereas the statute states that ‘notice * * * may be given at any time within twenty days,’ and does not state that a notice given after 20 days shall be invalid. As above indicated, it is permissible under the statute to give notice within 20 days, and if so given its timeliness is not to be controverted. If the notice is given after 20 days, the sufficiency of the notice as to timeliness is controvertible as hereinafter indicated in discussing prejudice to the insurer.

Appellant contends that a delay of 41 days on the part of the insured in giving notice of the accident was prejudicial to the insurer as a matter of law, and therefore that the insurance company is not liable under the policy. It does not argue that any delay beyond the 20-day period, however short, would constitute a defense. By its argument, based on a delay of 41 days, it seems that appellant concedes that a breach of a notice provision of a policy must be substantial in order to constitute a defense,—otherwise it might argue that a delay even of 21 days would be conclusively presumed to be prejudicial to the insurer.

The trial court found that the defendant (insurer) was not prejudiced by any delay on the part of the assured in giving notice of the accident; that the witnesses to the accident were only the parties involved and the defendant secured written statements as to the facts of the accident from them within twenty days of receipt of the notice; that on account of conditions at the time and place of the accident there were no road marks indicating the circumstances under which said accident happened; that the defendant was informed of all the material facts of the claim by plaintiff within such time after the accident that defendant was not prejudiced in the defense of the action by reason of the failure of Visser (the insured) to give an earlier notice.

Appellant argues that a clause in such a policy imposing a duty to give notice of the accident, and a clause imposing a duty to cooperate with the insurer, stand on different footings with respect to the showing required of the insurer when it relies upon a breach of such clauses as a defense. As to the cooperation clause, it asserts that the insurer must show as a matter of fact that there has been such lack of cooperation on the part of the insured that the insurer has been prejudiced, but as to the clause regarding notice it argues that when an insurer defends on the ground that the contract was breached by the insured in failing to give notice of the accident ‘similar considerations are not involved.’ That argument as to notice is in effect that the insurer is not required to show as a matter of fact that it has been prejudiced by reason of such failure to give notice, and further the argument is in effect that a showing by any party that as a matter of fact no prejudice resulted to the insurer is of no consequence. In other words, that argument is in effect that it is immaterial whether as a matter of fact the insurer is prejudiced.

Respondent (plaintiff) asserts that if there is a substantial breach of the notice clause it is presumed that such breach is prejudicial to the insurer, but that such presumption is disputable and may be controverted. The appellant, in support of its argument that a cooperative clause and a notice clause stand on different footings regarding proof of prejudice to the insurer, quotes from Distributors Packing Co. v. Pacific I. Co., 21 Cal.App.2d 505, at page 509, 70 P.2d 253, at page 255 (wherein there was a delay of more than 11 months), as follows: ‘The cases relied on by plaintiffs are all factually distinguishable from the present case. For example, in Hynding v. Home Acc. Ins. Co., 214 Cal. 743, 7 P.(2d) 999, 85 A.L.R. 13, it was failure to comply with the co-operative clause in the policy that was under consideration by our Supreme Court and not a breach of the clause requiring notice of an accident to be given to the insured.’ In the Distributors case, upon which appellant herein relies to support its contention that failure to give immediate notice is conclusively presumed to be prejudicial, the court also said (page 508 of 21 Cal.App.2d page 254 of 70 P.2d): ‘The law is settled that, if * * * more than eleven months elapses after the accident and before the giving of such notice, such delay is * * * prejudicial to the insurer as a matter of law, and the failure to comply with this term of the insurance policy constitutes a complete defense to any action based thereon against the insurer. Purefoy v. Pac. Auto Indem. Exch., 5 Cal.2d 81, 88, 53 P.2d 155.’ In the Purefoy case, cited in support of that statement, prejudice to the insurer as a matter of fact was shown, and the Supreme Court said (page 87 of 5 Cal.2d, page 158 of 53 P.2d): ‘We are not disposed at this time to enter upon a further consideration of the conflicting decisions as to whether prejudice must be shown, for we are of the view in the instant case, as we were in the Hynding case, supra, that prejudice sufficiently appeared, and the court below so found.’ (Italics added.) It therefore appears that the implied statement in the Distributors case, supra, that cases based upon failure to comply with the cooperative clause and cases based upon failure to comply with the notice clause are distinguishable (in that prejudice must be shown as a fact when there is a breach of a cooperative clause but prejudice is conclusively presumed when there is a substantial breach of a notice clause) is based upon the Purefoy case, supra, wherein the Supreme Court did not say whether, in a case involving a notice clause, prejudice ‘must be shown’ as a fact or whether prejudice is conclusively presumed. It seems therefore that the said statement in the Distributors case, relative to such a distinction in the matter of proof between a case involving a cooperative clause and in a case involving a notice clause, being based as it is on the Purefoy case, is not authority for appellant's assertion that prejudice to the insurer is conclusively presumed.

In support of its contention that the delay of 41 days was conclusively presumed to be prejudicial, appellant cites the case of Burbank v. National Casualty Co., 15 Cal.App.2d 483, 59 P.2d 589, wherein it was stipulated that the notice of the accident had not been given to the insurer until 91 days after the accident. The policy therein provided that ‘immediate written notice’ should be given and that failure to give notice within the specified time should not invalidate a claim if it was not reasonably possible to give the notice within the prescribed time. No excuse for the delay was offered, and the question on appeal was whether a delay of ‘some ninety-one days' was ‘such a breach of the contracts as would absolve it from liability.’ There was no evidence that the insurer was not prejudiced by the delay. The court therein held that the delay of 91 days was not immediate notice, and said that it only remained to determine whether the insurer was prejudiced by the delay. The court then quoted from Purefoy v. Pacific Automobile Indem. Exch., 5 Cal.2d 81, at page 88, 53 P.2d 155, at page 159, (wherein there was a delay of 3 1/212 months), as follows: ‘The insurer was deprived of an opportunity to make a prompt investigation while the facts were fresh in the minds of the parties and witnesses, and before physical marks and effects of the accident had been obliterated. As to certain breaches of condition it may more readily be shown whether prejudice had resulted therefrom. But respondent argues with convincing force herein that the lapse of time which removes the opportunity for prompt investigation, also destroys the possibility of showing prejudice arising from delayed inquiry. Where witnesses are interviewed after lapse of time, during which they either may have forgotten the facts, or been approached solely by representatives of the injured party, it virtually becomes impossible to learn what facts, favorable to defendant, could have been ascertained through prompt inquiry. We are impelled to the conclusion that prejudice must be presumed in such situations.’ As above indicated, it was not held therein that prejudice must be conclusively presumed. The judgment of the trial court therein, which was for plaintiff, was reversed, apparently because the presumption of prejudice had not been overcome.

Appellant also cites the case of Burbank v. National Casualty Co., 43 Cal.App.2d 773, 111 P.2d 740, which is another appeal, after retrial, in the case just mentioned. On the retrial therein, the stipulation regarding the delay of 91 days upon which the prior decision was based, was withdrawn, and the insured attempted to show that he had orally notified an agent of the insurer within proper time, the agent had investigated the accident, and also that he had a reasonable excuse for the delay in giving the written notice. The trial court therein found that the insured did not know until 41 days after the accident that he had in an accident. (It appears from respondent's brief therein that the insured while driving his automobile and passing the automobile in which plaintiffs were riding cut in upon plaintiffs' automobile without any noticeable impact and caused plaintiffs' automobile to be driven off the road in such a manner that plaintiffs were injured.) Also in that case, after the 41 days had elapsed (during which period the insured was not aware of the accident) he delayed notifying the insurer for 49 days additional (the court therein stated ‘some forty days'), that is, the insurer was not actually notified until 90 days after the accident. The only evidence therein to the effect that the insurer was not prejudiced was evidence that an alleged agent of the insurer investigated the accident about five days after the insured knew he had been in the accident. The court therein held that the insured was excused from giving notice until he discovered he had been in the accident, that the person whom he had notified and who made the investigation was not an agent of the insurer, that notice was not given immediately after the insured learned of the accident, and that prejudice to the insurer was presumed. Since it was held therein that the alleged agent of the insurer, who investigated the accident, was not its agent, there was no evidence that the insurer was not prejudiced by the delay, but there was evidence, namely, the presumption of prejudice, that the insurer was prejudiced. In the present case the insured delayed ‘some forty days' also, that is, 41 days, but the delay of 41 days here was not after a prior delay of 41 days. Since it would seem that greater diligence should be exercised after a delay of 41 days than when there has been no prior delay, it appears that the second Burbank case, supra, is not a holding that a delay of ‘some forty days' is in itself an unreasonable delay in giving the notice, but rather is a holding that a delay of ‘some forty days' following a prior delay of 41 days, although the prior delay was excusable, is presumed to be prejudicial.

It also cites Arthur v. London Guar. & Acc. Co., 78 Cal.App.2d 198, 177 P.2d 625, wherein the policy provided that written notice should be given ‘as soon as practicable’ and wherein written notice was given 11 months after the accident. In that case it was said (page 201 of 78 Cal.App.2d, page 626 of 177 P.2d) that it was established by the insurer that as a result of the long delay in receiving notice the insurer was unable to make an effective investigation and was prevented from discovering the two men who were riding with the driver at the time of the collision. The court held therein that the delay of 11 months was not a compliance with the policy.

It appears from said cases so relied upon by appellant that it has been decided that the giving of notice of an accident to the insurer 11 months or 3 1/212 months, or 91 days, or ‘some forty days,’ after the happening of an accident, when the policy provides that immediate or prompt notice should be given, is presumed as a matter of law to be prejudicial to the insurer. It was not decided therein that prejudice was conclusively presumed. It is conceded by appellant, as hereinbefore stated, that if an insurer relies on a breach of a cooperation clause it must show that it has been prejudiced by such breach. It was so held in the case of Hynding v. Home Acc. Ins. Co., 214 Cal. 743, at page 752, 7 P.2d 999, at page 1002, 85 A.L.R. 13, where a breach of a cooperation clause was involved, the court stating: ‘* * * that the violation of the condition [referring to the cooperative clause] by the assured cannot be a valid defense against the injured party unless in the particular case it appears that the insurance company was substantially prejudiced thereby.’ In the Purefoy case, supra, in stating, as above quoted, the reason for requiring prompt notice and the reason it must be presumed that prejudice results from a breach of a notice clause, the court said (page 88 of 5 Cal.2d, page 159 of 53 P.2d), ‘As to certain breaches of condition, it may more readily be shown whether prejudice had resulted therefrom.’ It was thereby indicated that difficulty of proof was the reason for the presumption of prejudice to the insurer. Although it may be more difficult to prove that an insurer was prejudiced by a delay in notifying it than it is to prove that it was prejudiced by a lack of cooperation, that difficulty in proof is not a sufficient reason for a determination that as a result of a breach of a notice it should be conclusively presumed that the insurer was prejudiced. It might well be that in certain instances a substantial breach of a notice clause would not as a matter of undisputed, established, and known fact be prejudicial to the insurer. In the cases relied upon by appellant, concerning the presumption of prejudice, it was not shown by the insurer or at all as a fact that the insurer was not prejudiced, and was not shown by any evidence, other than the presumption of prejudice in favor of the insurer, that the insurer was prejudiced. It might be difficult in most instances for the insured to overcome the presumption of prejudice to the insurer by proving as a fact that the insurer was not prejudiced, and it might also be difficult for the insurer to present evidence that it was prejudiced, but such difficulties should not be the basis for declaring as a rule of law that under such circumstances it is conclusively presumed that the insurer is prejudiced, and thereby deprived the insured of an opportunity to prove as a matter of actuality that the insurer was not prejudiced, as opposed to insured's being bound by a legal fiction that the insurer was prejudiced. The matter as to whether an insurer is prejudiced by a breach of a provision in a liability insurance policy requiring notice of an accident to be given to the insurer is a question of fact for the trier of the facts, except in those instances when only one inference may reasonably be drawn as to prejudice from the facts. The only conclusive presumptions are those so designated in the statutes (Code Civ.Proc. sec. 1962), and the statutes do not so designate such a presumption of prejudice as that involved here. An insurer is entitled to rely upon a substantial breach of a provision in a policy requiring the insured to give notice of an accident unless it has waived compliance with the provision. A substantial breach of such a provision is presumed to be prejudicial, but such presumption is not conclusive and is disputable and may be controverted.

The findings of the trial court that the insurer was not prejudiced by any delay in giving notice of the accident, and that on account of conditions at the time and place of the accident there were no road marks indicating the circumstances under which the accident happened, are supported by the evidence. After the accident the insured, Mr. Visser, took Mr. Abrams to the hospital in Beaver, a distance of approximately 14 miles, and returned to the scene of the accident soon thereafter accompanied by the sheriff of Beaver County. The sheriff's report of the accident, a copy of which was received by the insured on February 17, 1941, and was received in evidence herein, shows that it was snowing at the time of the accident and that the highway was icy. A copy of a letter to the insurer from an attorney at Beaver, who was acting for the insurer in investigating the accident (which letter was dated February 14, 1941, and in which the sheriff's report was enclosed), stated that the sheriff said to him that ‘the road was so icy that he could locate no marks on the road whatsoever which might have been caused by the application of brakes or the skidding of the automobiles.’ Also the insured, Mr. Visser, testified that the road was covered with snow and ice at the time of the accident, that it was snowing when he returned with the sheriff, and that there the sheriff what happened, and that there were no marks in the snow from the accident. It therefore appears reasonably certain that if a notice of the accident had been given to the insurer even on the day of the accident it would not have afforded the insurer an opportunity to observe any physical marks on the highway resulting from the accident.

The sheriff's report shows that the accident occurred about 5 a. m. on December 25, 1940, on a straight, level, oil-surfaced, 18-foot-wide (24-foot with shoulders), open country, U.S. highway; that Mr. Abrams' automobile was traveling south, straight ahead, at the rate of 30 miles an hour at the time of the accident, and went about 87 feet after the impact; that Mr. Visser's truck was traveling north, straight ahead, at the rate of 35 miles an hour, and went about 267 feet after the impact; that the cause of collision was that on the icy road both cars held too close to center of the road; that the damaged automobile was taken to Terry's garage in Beaver by Andrew Terry; and that the report to the sheriff was made by Mr. Abrams and Mr. Visser. The letter from the attorney (insurer's representative) also stated that the sheriff told him: that the information in the report was given to the sheriff by both drivers; and ‘that both drivers admitted to him [sheriff] that because of the icy condition of the road and the snowy weather, both drivers were hugging the center of the road.’ That letter also stated that after the vehicles stopped, following the impact, both were in upright positions on the highway; and that the only persons present at the time of the accident were Abrams, Visser, and Heber Thacker, who was in the Visser truck and who resided at Provo, Utah, R. F. D. No. 1, Box 204.

On February 20, 1941, Heber Thacker made a written statement concerning the accident which statement was received by the insurer on February 26, 1941. In that statement he said: ‘I had been driving until we reached Beaver changed drivers and I went to sleep was asleep at time of accident. The sound awoke me and I administered first aid to the driver of the Pontiac sedan who was alone.’

On February 26, 1941, in the office of the insurer's agent in Los Angeles, Mr. Visser made a written statement concerning the accident. In that statement he said in part that at the time of the accident he was driving his cattle truck; that his helper Heber Tucker (Thacker) of Provo was with him; that the highway was about 16 feet wide; that it had been snowing and raining, and ice was on the highway; that he was traveling north, and the other car which was traveling south and near the center of the road passed the cab of his truck and struck the left front of the body of the truck; that the left side of the other car was damaged badly, and the driver had cuts on his face from flying glass; that after the accident the other car was in the center of the road facing southeast; that he (Visser) and his helper pushed the car off the road and then took the other driver to a doctor in Beaver. On March 10, 1941, in the office of the same agent, he made another written statement. In that statement, after reciting that he had made a statement on February 26th concerning the facts of the accident, he said that on the afternoon of the day of the accident he had mailed a post card to Mr. Kerr, the insurance broker, telling him that he had had an accident near Beaver, and telling him to get in touch with the sheriff there for the details of the accident; that when he returned to Los Angeles about January 4, 1941, Mr. Kerr said he had received the card and had sent a telegram to the sheriff, but the telegram had not been answered; that he told Kerr all about the accident and showed him the truck which had a big hole in it, and Kerr had the truck repaired; that Kerr did not tell him whether he had reported the accident to the insurer, and he (Visser) did not ask him about that because he felt that was Kerr's business; that about February 25th Kerr told him to go to the office of the Markel Service (the insurer's agent), and he went there and gave the statement of February 26th.

It thus appears that on the day of the accident a public officer, the sheriff, observed the scene of the accident and made a written report of it, based upon his observations at the scene and upon information furnished to him by the only persons who saw the accident, namely, the two drivers; that that report was available, and was examined by the insurer after it was notified of the accident; that the insurer's representative (an attorney) interviewed the sheriff, soon after the insurer was notified of the accident, concerning the sheriff's report and observation, and that the representative reported his findings to the insurer; that after the insurer had been notified, Visser, at the request of the insurer, made two written reports concerning the accident; that the only person (other than the two drivers) who was present when the accident occurred was Visser's helper, who was asleep at the time and did not see the accident, but he, at the request of the insurer after it had been notified, made and gave to the insurer a written statement concerning the accident; that no statement was obtained from Mr. Abrams, the plaintiff herein, except the statement he made to the sheriff, but he was available for a further statement after the notice was given; that, as above stated, by reason of the snow and ice on the road at the time of the accident there were no road marks indicating the circumstances under which the accident happened; that information as to the physical damage done to each vehicle was available to the insurer after the notice was given—the Abrams automobile having been taken in its damaged condition to a garage in Beaver, and the Visser truck having been exhibited in its damaged condition to Kerr, the insurance broker in Gardena, and repaired under an arrangement made by him. It appears therefore that, under the circumstances here, defendant's opportunity to investigate the accident after notice was given to it on February 4th was practically the same as its opportunity to investigate would have been if the notice had been given at any time previously. Although it was presumed that the insurer was prejudiced by the delay in giving notice, the evidence was sufficient to overcome that disputable presumption.

A question arises as to whether defendant, by reason of the delayed notice, was deprived of an opportunity to defend the action in which Mr. Abrams obtained judgment against Mr. Visser. That action was filed on March 14, 1941, summons was served on March 19, 1941, default of Visser was entered April 8, 1941, and default judgment was entered April 30, 1941. On March 17, 1941, the attorney for Mr. Abrams in that action told a representative of the insurer that he had filed the action, and the representative said that the insurer would deny liability under the policy by reason of insufficiency of notice. On April 3, 1941, the attorney for Mr. Abrams told the insurer by telephone that the defendant in that action was in default and that if the insurer wanted to defend the action he would give it time to plead and would not enter the default. In reply thereto the insurer said it would resist liability. It therefore appears that after the action had been filed and before default was entered, and after the insurer had received all the statements and reports above mentioned, it had an opportunity to defend the action.

It appears also that on March 10, 1941, a representative of the insurer discussed in detail with Mr. Visser the matter of notice of the accident and said to him that the company might disclaim liability, and the representative also said that the matter of disclaiming liability under the policy would be submitted to the company's attorney, but in the opinion of the representative the company would not proceed further until the insured had executed a reservation of rights agreement. The insured then said he would not sign such an agreement. Thereafter the representative told the insured and Kerr that the company would have to have the reservation of rights agreement before it could proceed with the defense. On March 11th (more than a month after notice was given), in a memorandum from that representative to the manager of the insurance company in San Francisco, he said, ‘We haven't as yet served a reservation of rights notice upon our assured, because we don't know whether you will want us to go ahead and defend this claim in suit or turn it back to the assured.’ On April 8th and 25th, 1941, the insurer wrote letters to the insured stating that it had been informed that the insured was in default in the action filed against him, and that unless it received from him an agreement in writing which would provide that by taking further action it did not waive its rights under the policy, it would not take any further action. When the summons and complaint in that action were first taken to the insurer's office by the insured (the date is not shown) they were not accepted because the reservation of rights agreement, which had theretofore been submitted to him, had not been signed. In the latter part of June, 1941, the insured returned to the office with the summons and complaint and the reservation of rights agreement which he had signed. The insurer then sent those documents to its attorney. The attorney testified that the answer to the complaint had been prepared in March from information furnished to him by the insurance company; that the insured came into the attorney's office later and signed the answer; and that the attorney had an understanding that the answer would not be filed until the reservation of rights agreement was signed. The answer was verified on May 20, 1941. On July 18, 1941, the attorney for the insurer wrote a letter to the insured stating that, ‘Since your execution of the reservation of rights agreement and your verification of the answer which I prepared on your behalf we have learned that a default has been entered against you some months ago by the attorney representing the plaintiff, and that it therefore appears that it is too late to enter an appearance for you. Since your failure to report the accident and to deliver the summons and complaint has made it impossible for the carrier to assume its obligation under the policy to defend you, they have instructed me to advise you that it will be necessary for you to employ your own counsel, should you desire, to make an effort to set the default aside.’

Respondent asserts that the insurer is estopped to set up the matter of delay as a defense. He argues that there was a failure of consideration for the reservation of rights agreement, in that, the consideration for the agreement was the promise of the insurer to defend the action of Abrams v. Visser, and the insurer failed to defend. That there was such a consideration for the agreement is shown, he asserts, by said letter of July 18, 1941, written by the insurer's attorney to Visser, a part of which is as follows: ‘You will recall that thereafter [referring to conversations and correspondence regarding failure to give notice] the carrier agreed to proceed with the defense of the case upon your execution of a reservation of rights agreement and to assume the burden of defending the case in your behalf, even though the above matters constituted a violation of your policy provisions.’ Respondent argues that had it not been for the reservation of rights agreement the conduct of the insurer, in assuming control of the litigation by preparing the answer and having Visser verify it, would have been a waiver of the alleged breach of the policy regarding notice, and that Visser was not bound by the reservation of rights agreement after the consideration for it failed and the company had repudiated the agreement. As to the company's alleged reason for refusing to proceed with the defense, namely, that ‘We have learned that a default has been entered,’ it appears that the company was not in a position to urge such a reason as a ground for repudiating its agreement, since the company was informed on April 3, 1941 (about three months before the agreement was made), that the action was in default, and that a default would not be entered if the company desired time to plead. Since the company rejected the offer of time to plead, its counsel should have anticipated at the time the agreement was made (in the latter part of June—about three months after said offer was rejected) that, under such circumstances, a default had been entered and that the defense would include the matter of seeking to set aside a default. The company had held the reservation of rights agreement approximately three weeks after receiving it from Visser and before repudiating it. From May 20th, when the answer was verified, to July 18th, when the letter of repudiation was written, 58 days had elapsed. The trial court here made no finding as to estoppel or waiver in connection with the conduct of the company in allegedly assuming the defense of Visser, and therefore the contention as to estoppel or waiver is not to be determined by this court.

The judgment is affirmed.

WOOD, Justice.

SHINN, Acting P. J., and VALLEE, J. pro tem., concur.