Catherine H. DAVENPORT
v.
The TRAVELERS INDEMNITY COMPANY.
No. 29.
Supreme Court of North Carolina.
April 11, 1973.*532 Don Davis, Charlotte, for plaintiff appellee.
Boyle, Alexander & Hord, by Robert C. Hord, Jr., Charlotte, for defendant appellant.
BRANCH, Justice.
The Court of Appeals held that defendant's "broadside exceptions to the findings of fact, conclusions of law and judgment entered thereon" would not bring up for review the findings of fact or the evidence on which they were based, but presented the record proper for review upon the question of whether error of law appears on the face of the record. We agree. Such a review presents the question of whether the facts found support the judgment and whether the judgment is regular in form. Fishing Pier v. Town of Carolina Beach, 274 N.C. 362, 163 S.E.2d 363; In Re Appeal of Broadcasting Corp., 273 N.C. 571, 160 S.E.2d 728.
The pleadings, issues and judgment are necessary parts of the record proper. Williams v. Contracting Company, 259 N. C. 232, 130 S.E.2d 340; Campbell v. Campbell, 226 N.C. 653, 39 S.E.2d 812; 1 Strong's N.C. Index 2d Appeal and Error § 40.
The judgment here is regular in form; we must, therefore, consider whether the Court of Appeals erred in holding that the "facts found by the court support the conclusions of law in the judgment." The crucial question is whether the facts found support the conclusion that defendant waived the contract provision pleaded by defendant.
The policy provision that "If claim is made or suit is brought against the insured he shall immediately forward to the company every demand, notice, summons or other process received by him or his representative" is a valid stipulation, and unless the insured or his judgment creditor can show compliance with the requirement, the insurer is relieved of liability. Moreover, an injured party who obtains judgment against the insured has no greater rights against the insurer than the insured. Clemmons v. Insurance Co., 267 N.C. 495, 148 S.E.2d 640; Woodruff v. Insurance Co., 260 N.C. 723, 133 S.E.2d 704; Henderson v. Insurance Co., 254 N.C. 329, 118 S.E.2d 885; Muncie v. Insurance Co., 253 N.C. 74, 116 S.E.2d 474.
However, failure to give notice or immediately forward summons or other process received by the insured may be waived by denial of liability on other grounds. The rationale of this rule is that denial of liability on other grounds is generally regarded as saying that payment would not have been made had the policy provisions been complied with, and that the law will not require a vain thing. Gardner v. Insurance Co., 230 N.C. 750, 55 S.E.2d 694; Felts v. Insurance Co., 221 N.C. 148, 19 S.E.2d 259; Gorham v. Insurance Co., 214 N.C. 526, 200 S.E. 5; Gerringer v. Insurance Co., 133 N.C. 407, 45 S.E. 773.
Consistent with this rule is the rule recognized in most jurisdictions that the unjustified refusal of the insurer to defend an action against the insured on the ground that the claim on which the action *533 is based is outside the policy coverage deprives the insurer of its right to insist upon compliance with a policy provision requiring forwarding of summons or other process received by the insured. Clemmons v. Insurance Co., supra; Lowe v. Fidelity and Casualty Co., 170 N.C. 445, 87 S.E. 250; Annot., 49 A.L.R. 2d 694; § 30; 8 Appleman, Insurance Law and Practice § 4731 et seq. See Nixon v. Insurance Co., 255 N.C. 106, 120 S.E.2d 430.
The sine qua non of the rule of waiver by denial of liability, however, is that the insurer has notice that a claim of loss is being asserted against it. Turpentine & Rosin Factors v. Travelers Ins. Co., 45 F. Supp. 310 (D.C.S.D.Ga.1942); Peeler v. Casualty Company, 197 N.C. 286, 148 S.E. 261; Annot., 6 A.L.R. 2d 661; 8 Appleman, Insurance Law and Practice §§ 4732, 4740.
The courts have noted different rules in determining liability between insurers who refuse to defend and those who commence a defense and abandon it. See 14 Couch on Insurance 2d §§ 51, 124; 44 Am.Jur.2d Insurance §§ 1544-1546, 1557-1559. However, the facts of this case do not require consideration of this question.
In Clemmons v. Insurance Co., supra, Bobbitt, J. (now C.J.), in discussing waiver of an insurance contract provision, stated:
"Ordinarily, waiver is defined as a voluntary and intentional relinquishment of a known right. In Hospital v. Stancil, supra, waiver is defined as `the intentional surrender of a known right or privilege, which surrender modifies other existing rights or privileges or varies the terms of a contract.' In Fetner v. Granite Works, 251 N.C. 296, 302, 111 S.E.2d 324, Moore, J., in accord with 56 Am. Jur., Waiver § 12, stated: `The essential elements of a waiver are: (1) the existence, at the time of the alleged waiver, of a right, advantage or benefit; (2) the knowledge, actual or constructive, of the existence thereof; and (3) an intention to relinquish such right, advantage or benefit."
We think that Campbell v. Continental Casualty Co. of Chicago, 170 F.2d 669, 6 A.L.R. 2d 655 (8th Cir. 1948), sheds light upon the question before us. We quote from the decision of the 8th Circuit Court of Appeals:
"The insured's principal contention here is that he was not required to forward his summons and copy of petition to the insurer, because, he says, his truck driver, who under the omnibus coverage clause in the policy also was an insured, had previously delivered his summons and copy of petition to an employee in the insurer's office and this constituted a sufficient compliance as to both of them.
* * * * * *
. . . The driver's suit papers might have informed the insurer that the insured had been named as a defendant in the action, but as we have stated they would not advise it that the insured had been brought into court. And neither the language of the policy, nor the construction made by any court of such provisions as it contains, has imposed on the insurer, merely because it knows that an insured has been named as a defendant in an action, the sentry duty of tracking back and forth to the court house to keep a check on if or when he may be served with process.
Under the trial court's finding, which the evidence clearly sustains, the insurer never knew, until after the default judgment was entered, that the insured had been brought into court by the service of process. The prejudice to the insurer's right from the failure to have forwarded the summons, or otherwise to have given adequate notice that such service had been made, is in the situation indisputable.. . .
* * * * * *
. . . Without an estoppel or waiver (which does not here exist), there is no decision in Missouri or elsewhere, so far as we have been able to discover, which permits an insurer to be held liable to an *534 insured on a standard policy of liability insurance for a default judgment against the insured, where the insured has failed to forward to the insurer the process served upon him in the action and the insurer never has had any notice that such service has been made, so as to have afforded it the opportunity to defend."
Cf. Kershaw v. Maryland Casualty Co., 172 Cal. App. 2d 248, 342 P.2d 72; Jameson v. Farmers Mutual Automobile Ins. Co., 181 Kan. 120, 309 P.2d 394; General Ins. Corp. v. Harris, 327 S.W.2d 651 (Tex.Civ. App.1959).
The only action in which defendant denied coverage was the action seeking to enforce a claim against Thomas Mills, t/a Mills Grocery. Manifestly, the terms of the policy issued by defendant to Thomas and Ralph Mills, d/b/a Mills Motor Company afforded no coverage to Thomas Mills, t/a Mills Grocery; defendant's refusal to defend the action against Mills Grocery was therefore justified.
The written contract is conclusively presumed to express the agreement between the parties until it is reformed or set aside because of fraud or mutual mistake. Peirson v. Insurance Co., 248 N.C. 215, 102 S.E.2d 800; Floars v. Insurance Co., 144 N.C. 232, 56 S.E. 915. See Clark v. Ice Cream Co., 261 N.C. 234, 134 S.E.2d 354. Here plaintiff did not seek to reform the insurance contract or offer any evidence to show coverage of Thomas Mills, t/a Mills Grocery but elected to amend so as to add defendant's named insured as a party to this action.
There was no claim asserted against the named insured in the policy issued by defendant until the court allowed the amendment on 18 November 1965 making Thomas Mills and Ralph Mills, d/b/a Mills Motor Company an additional party to the action. Defendant had no notice of the claim of loss against its named insured and could not have knowingly and intentionally waived the policy provision upon which it now relies.
We hold that the facts found by the trial judge do not support his conclusions of law that "when the insurance company denied coverage of the defendant Thomas Mills they waived the condition of the policy that all summonses and other papers be forwarded to them."
The decision of the Court of Appeals is reversed and this cause is remanded to the Court of Appeals with direction that it be certified to the District Court Division of the General Court of Justice of Mecklenburg County for entry of judgment in accordance with this opinion.
Reversed.