James Lee HARRIS
v.
NATIONWIDE MUTUAL INSURANCE COMPANY.
No. 248.
Supreme Court of North Carolina.
March 25, 1964.*210 Welling, Welling & Meek, Charlotte, for plaintiff appellee.
Haynes, Graham & Bernstein, Charlotte, for defendant appellant.
DENNY, Chief Justice.
The appellant's only assignment of error is to the ruling of the court below in sustaining the demurrer to each of the four further defenses set out in the defendant's answer.
The first further answer and defense to which the plaintiff's demurrer was sustained, was based on the allegation that no premium had been paid for the alleged insurance coverage. The plaintiff alleges in his complaint that a premium of $12.00 was paid to the agent of the defendant for the insurance binder. The defendant denied this allegation in its answer. Likewise, the second further answer and defense to which the demurrer was sustained was the allegation *211 that no agreement had been made at any time by the defendant or any of its agents to issue a binder for automobile liability insurance coverage to the plaintiff as alleged in the complaint. The defendant denied in its answer that any such coverage had ever existed; therefore, upon the trial of this cause, the defendant may introduce its evidence with respect to nonpayment of premium, as well as to the nonexistence of any agreement to issue the binder for insurance coverage, as alleged in the complaint.
In Chandler v. Mashburn, 233 N.C. 277, 63 S.E.2d 553, it is said: "The plea of denial controverts and raises an issue of fact between the parties as to each material allegation denied, and forces the plaintiff to prove them. That is all that is required of the defendant to admit of presentation of his defense. McIntosh N.C.P. & P. 461. In such case the defendant may show any facts which go to deny the existence of the controverted facts."
The sustaining of the demurrer as to the first and second further defenses is in no way prejudicial to the defendant, and, as to it, the appellant has failed to show prejudicial error. Hinson v. Britt, 232 N.C. 379, 61 S.E.2d 185.
The third further answer and defense is to the failure of the plaintiff to give notice as required by defendant's policy, if it be found that such a policy was issued.
The complaint alleges that the accident out of which the subsequent litigation arose, occurred on 9 January 1961; that on 18 January 1961 a civil action for damages and personal injuries was instituted against the plaintiff herein; that the complaint was filed in said action on 7 February 1961; that the plaintiff herein upon being served with summons and complaint, forwarded the same to the defendant, the receipt of which is admitted in defendant's answer. The date these papers were received by the defendant is not disclosed by the pleadings. However, the defendant admitted in its answer that it refused to defend the action.
The general rule is that denial of liability under a policy of insurance waives notice of accident. Moreover, the request to defend an action, accompanied by the suit papers, constitutes notice. However, whether such notice was given within a reasonable time depends upon the facts and circumstances. Anderson v. American Mut. Insurance Co., 211 N.C. 23, 188 S.E. 642; Strong's North Carolina Index, Volume 2, Insurance, section 60.
We think the refusal of the defendant to defend the action was tantamount to a denial of liability under the terms of the alleged binder agreement. Even so, there is no allegation on the part of the defendant in its answer that it was in any way prejudiced by not receiving notice of the accident prior to the receipt of the suit papers. Moreover, the defendant's pleadings are to the effect that neither the defendant nor any of is agents ever entered into an agreement to issue a binder for automobile liability insurance coverage as alleged in the complaint and that if such agreement was made, the plaintiff failed to pay any premium in connection therewith.
In light of these allegations, did the issuance of Form FS-1 and the forwarding of same to the Department of Motor Vehicles estop the defendant from denying coverage under the alleged binder?
The mere issuance of such form and the forwarding thereof to the Motor Vehicles Department, under our decisions, would not constitute an estoppel as between the insurer and the insured. Seaford v. Nationwide Mut. Insurance Co., 253 N.C. 719, 117 S.E.2d 733, 85 A.L.R.2d 496, and cited cases. However, it is otherwise as to third party beneficiaries. In Crisp v. State Farm Mut. Auto. Insurance Co., 256 N.C. 408, 124 S.E.2d 149, Moore, J., speaking for this Court, said: "By the issuance of the certificate (FS-1) an insurer represents that it has issued and there is in effect an owner's motor vehicle liability policy. Swain v. Nationwide Mutual Insurance Co., 253 N.C. *212 120, 126, 116 S.E.2d 482. In substance, by the issuance of the certificate the insurer represents that everything requisite for a binding insurance policy has been performed, including payment, or satisfactory arrangement for payment, of premium. Once the certificate has been issued, nonpayment of premium, nothing else appearing, is no defense in a suit by a third party beneficiary against insurer."
If upon the trial of this cause the plaintiff can establish his allegations with respect to the insurance coverage, timely notice, and the payment of premium, the plaintiff would be entitled to recover of the defendant the amount he was reasonably required to spend by virtue of the failure of the defendant to defend the suit instituted against the plaintiff for personal injuries and damages growing out of the alleged negligent operation of plaintiff's 1955 Chevrolet. Anderson & Co. v. American Mut. Liability Insurance Co., 212 N.C. 672, 194 S.E. 281.
The fourth defense in defendant's further answer is based on G.S. § 20-279.21 (h) which reads as follows: "Any motor vehicle liability policy may provide that the insured shall reimburse the insurance carrier for any payment the insurance carrier would not have been obligated to make under the terms of the policy except for the provisions of this article."
The plaintiff alleges in his complaint that the agent of the defendant agreed to issue the binder for automobile liability insurance coverage as required by the Financial Responsibility Act of 1957, and that such coverage was in full force and effect on the date of the automobile accident complained of and growing out of which the plaintiff herein was sued. Even so, as we construe the allegations in the plaintiff's complaint, if proven by the greater weight of the evidence, they furnish no basis for affirmative relief as alleged in defendant's further answer and defense by way of counterclaim or recoupment in favor of the defendant.
The ruling of the court below sustaining the demurrer as to each of the four further defenses set out in the defendant's answer, is
Affirmed.