Seawell, J.
Preliminarily we should observe that under the definition of “insured” in the above quoted clause of the policy, Spence, operator of the LaSalle automobile by permission of the owner, is as much entitled to the benefit of the insurance as the “named insured,” Delph, and stands in the same relation to the plaintiff in the procedure for ultimate recovery.
The defense that the insurer had not been notified of the accident or of the institution of the suit against him is not tenable. Delph had promptly notified agents of the Company of the occurrence and they, together with claim adjuster DeVault, were immediately and actively employed in the investigation of the accident soon after it occurred. The record shows that the defendant was aware of the institution of the suit and immediately employed counsel to defend both Delph and Spence. In that capacity the counsel designated knew of the institution of the suit and were so conversant with the facts and with the plaintiff’s claims, presumably as alleged in the complaint, that in an early letter addressed to Spence they advised him that he had a good defense, which defense they formulated in an answer.
The case is distinguishable on principle from
Peeler v. Casualty Co.,
197 N. C., 286, 148 S. E., 261, cited by the appellee, as may be seen from the statement of facts in that case, p. 287: “It is admitted that the defendant never had written notice of a collision and knew nothing about it until the trial between the plaintiff and Graham had begun.” (Graham was the insured.)
The plaintiff does not contest the only point in the
Peeler case
applicable to the case at bar,—that a forfeiture of his rights by the insured through substantial breach of the co-operation clause would defeat recovery on the policy.
Sears v. Casualty Co.,
220 N. C., 9, 16 S. E. (2d), 419. There is no question here as to the validity and importance of clauses in liability insurance policies similar to that with which we are dealing, to the materiality of which appellee’s counsel address many cita
tions of authority. But the issue here concerns the manner in which the breach of the co-operation clause may be ascertained, and by which branch of the court it may be determined,—judge or jury. The cases cited by the appellee are not briefed to that point and will be found to vary in material aspects, both factual and legal.
The controversy narrows down to the co-operation clause in the policy of insurance and the propriety of nonsuit of the plaintiff, after a
prima facie
case had been made out, solely on defendant’s evidence of its breach. We find no other plausible ground upon which the case could have been taken from the jury, except upon some breach of that clause; and appellee’s brief, in its statement of the question involved, frankly assumes that nonsuit was granted on that ground, and defends here upon that theory.
The general rule is that the party who seeks to avoid liability by interposing an affirmative plea assumes the burden of proving his allegation by competent evidence before the jury. Stansbury, North Carolina Evidence, sec. 208; McIntosh, North Carolina Practice and Procedure, sec. 474; 38 C. J. S., Evidence, sec. 104, 162-3-4;
Pearson v. Pearson,
227 N. C., 31, 32, 40 S. E. (2d), 477;
Wilson v. Casualty Co.,
210 N. C., 585, 188 S. E., 102.
As we are dealing with a nonsuit of plaintiff’s action based upon an affirmative defense set up by the defendant while the burden of proof with respect thereto rested upon him, it is well to say that we are adver-tent to the fact that the policy names compliance with all its terms a condition precedent to the maintenance of the suit. In passing it may be observed that the defendant made no objection to the pleading in that respect, and voluntarily undertook to prove its affirmative defense in avoidance of liability.
The designation of the condition as a condition precedent does not necessarily vary the court procedure or the rules of evidence which places the burden of proving an affirmative defense upon the party making it, especially where the condition relates to the conduct of the insured subsequent to the accident maturing the liability. The rule applies to that which is “affirmative in substance and not necessarily in form.” Stansbury, North Carolina Evidence, sec. 208;
Walker v. Carpenter,
144 N. C., 674, 57 S. E., 461;
Williams v. Ins. Co.,
212 N. C., 516, 193 S. E., 728;
Wilson v. Casualty Co., supra.
By the great weight of authority the rule is specifically applicable where the breach of the co-operation clause in insurance policies similarly worded is pleaded and relied upon by the insurer; and the burden of proof carries the issue to the jury.
In
General Casualty & Surety Co. v. Kierstead,
67 F. (2d), 523, 525, the Court stated the principle thus: “The condition of the policy requir
ing co-operation by the insured is in the nature of a condition precedent to liability on the company’s part for the loss growing out of a claim with the disposition of which the insured’s co-operation is demanded,” but further says, “The defense is an affirmative one pleaded by the defendant, and the burden of proof was upon it.
Francis v. London Guarantee & Accident Co.,
100 Vt., 425, 138 A., 780;
Cowell v. Employers’ Indemnity Corp.,
326 Mo., 1103, 34 S. W. (2d), 705;
Conroy v. Commercial Casualty Ins. Co.,
292 Pa., 219, 140 A., 905;
United States Fidelity & Guaranty Co. v. Remond,
221 Ala., 349, 129 So., 15.”
The attempt by mere nomenclature to convert what is really a promissory warranty into a condition precedent is dealt with in Williston on Contracts, Vol. 3, sec. 667A, p. 1919:
“The application of this principle to insurance policies is frequent, and the law has been thus stated: 'Those clauses usually contained in policies of insurance, which provide that the policy shall become void, or its operation defeated or suspended, or the insurer relieved wholly or partially from liability, upon the happening of some event, or the doing, or omission to do some act, are not in any proper sense conditions precedent. If they may properly be called conditions, they are conditions subsequent, and matters of defense, which, together, with their breach, must be pleaded by the insurer to be available as a means of defeating a recovery on the policy; and the burden of establishing the defense, if controverted, is, of course, upon the party pleading it.’ ”
It is to be observed that in substance the plea relates to conduct of the insured after the liability on the policy has matured by reason of the accident. It is not questioned that liability on the policy matures upon the happening of the accident; and the rights of the insured attach subject to be defeated by substantial failure to co-operate in a matter essential to the defense. Blashfield, Automobile Law, Vol. 6, sec. 4071, p. 111;
Pennsylvania Casualty Co. v. Phoenix,
139 F., (2d), 823;
Dunn v. Jones,
53 P. (2d), 918, 143 Kan., 218;
Fallon v. Mains,
19 N. E. (2d), 68, 302 Mass., 166.
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Seawell, J.
Preliminarily we should observe that under the definition of “insured” in the above quoted clause of the policy, Spence, operator of the LaSalle automobile by permission of the owner, is as much entitled to the benefit of the insurance as the “named insured,” Delph, and stands in the same relation to the plaintiff in the procedure for ultimate recovery.
The defense that the insurer had not been notified of the accident or of the institution of the suit against him is not tenable. Delph had promptly notified agents of the Company of the occurrence and they, together with claim adjuster DeVault, were immediately and actively employed in the investigation of the accident soon after it occurred. The record shows that the defendant was aware of the institution of the suit and immediately employed counsel to defend both Delph and Spence. In that capacity the counsel designated knew of the institution of the suit and were so conversant with the facts and with the plaintiff’s claims, presumably as alleged in the complaint, that in an early letter addressed to Spence they advised him that he had a good defense, which defense they formulated in an answer.
The case is distinguishable on principle from
Peeler v. Casualty Co.,
197 N. C., 286, 148 S. E., 261, cited by the appellee, as may be seen from the statement of facts in that case, p. 287: “It is admitted that the defendant never had written notice of a collision and knew nothing about it until the trial between the plaintiff and Graham had begun.” (Graham was the insured.)
The plaintiff does not contest the only point in the
Peeler case
applicable to the case at bar,—that a forfeiture of his rights by the insured through substantial breach of the co-operation clause would defeat recovery on the policy.
Sears v. Casualty Co.,
220 N. C., 9, 16 S. E. (2d), 419. There is no question here as to the validity and importance of clauses in liability insurance policies similar to that with which we are dealing, to the materiality of which appellee’s counsel address many cita
tions of authority. But the issue here concerns the manner in which the breach of the co-operation clause may be ascertained, and by which branch of the court it may be determined,—judge or jury. The cases cited by the appellee are not briefed to that point and will be found to vary in material aspects, both factual and legal.
The controversy narrows down to the co-operation clause in the policy of insurance and the propriety of nonsuit of the plaintiff, after a
prima facie
case had been made out, solely on defendant’s evidence of its breach. We find no other plausible ground upon which the case could have been taken from the jury, except upon some breach of that clause; and appellee’s brief, in its statement of the question involved, frankly assumes that nonsuit was granted on that ground, and defends here upon that theory.
The general rule is that the party who seeks to avoid liability by interposing an affirmative plea assumes the burden of proving his allegation by competent evidence before the jury. Stansbury, North Carolina Evidence, sec. 208; McIntosh, North Carolina Practice and Procedure, sec. 474; 38 C. J. S., Evidence, sec. 104, 162-3-4;
Pearson v. Pearson,
227 N. C., 31, 32, 40 S. E. (2d), 477;
Wilson v. Casualty Co.,
210 N. C., 585, 188 S. E., 102.
As we are dealing with a nonsuit of plaintiff’s action based upon an affirmative defense set up by the defendant while the burden of proof with respect thereto rested upon him, it is well to say that we are adver-tent to the fact that the policy names compliance with all its terms a condition precedent to the maintenance of the suit. In passing it may be observed that the defendant made no objection to the pleading in that respect, and voluntarily undertook to prove its affirmative defense in avoidance of liability.
The designation of the condition as a condition precedent does not necessarily vary the court procedure or the rules of evidence which places the burden of proving an affirmative defense upon the party making it, especially where the condition relates to the conduct of the insured subsequent to the accident maturing the liability. The rule applies to that which is “affirmative in substance and not necessarily in form.” Stansbury, North Carolina Evidence, sec. 208;
Walker v. Carpenter,
144 N. C., 674, 57 S. E., 461;
Williams v. Ins. Co.,
212 N. C., 516, 193 S. E., 728;
Wilson v. Casualty Co., supra.
By the great weight of authority the rule is specifically applicable where the breach of the co-operation clause in insurance policies similarly worded is pleaded and relied upon by the insurer; and the burden of proof carries the issue to the jury.
In
General Casualty & Surety Co. v. Kierstead,
67 F. (2d), 523, 525, the Court stated the principle thus: “The condition of the policy requir
ing co-operation by the insured is in the nature of a condition precedent to liability on the company’s part for the loss growing out of a claim with the disposition of which the insured’s co-operation is demanded,” but further says, “The defense is an affirmative one pleaded by the defendant, and the burden of proof was upon it.
Francis v. London Guarantee & Accident Co.,
100 Vt., 425, 138 A., 780;
Cowell v. Employers’ Indemnity Corp.,
326 Mo., 1103, 34 S. W. (2d), 705;
Conroy v. Commercial Casualty Ins. Co.,
292 Pa., 219, 140 A., 905;
United States Fidelity & Guaranty Co. v. Remond,
221 Ala., 349, 129 So., 15.”
The attempt by mere nomenclature to convert what is really a promissory warranty into a condition precedent is dealt with in Williston on Contracts, Vol. 3, sec. 667A, p. 1919:
“The application of this principle to insurance policies is frequent, and the law has been thus stated: 'Those clauses usually contained in policies of insurance, which provide that the policy shall become void, or its operation defeated or suspended, or the insurer relieved wholly or partially from liability, upon the happening of some event, or the doing, or omission to do some act, are not in any proper sense conditions precedent. If they may properly be called conditions, they are conditions subsequent, and matters of defense, which, together, with their breach, must be pleaded by the insurer to be available as a means of defeating a recovery on the policy; and the burden of establishing the defense, if controverted, is, of course, upon the party pleading it.’ ”
It is to be observed that in substance the plea relates to conduct of the insured after the liability on the policy has matured by reason of the accident. It is not questioned that liability on the policy matures upon the happening of the accident; and the rights of the insured attach subject to be defeated by substantial failure to co-operate in a matter essential to the defense. Blashfield, Automobile Law, Vol. 6, sec. 4071, p. 111;
Pennsylvania Casualty Co. v. Phoenix,
139 F., (2d), 823;
Dunn v. Jones,
53 P. (2d), 918, 143 Kan., 218;
Fallon v. Mains,
19 N. E. (2d), 68, 302 Mass., 166.
“The liability insurer claiming the forfeiture by the insured’s breach of the co-operation clause has the burden of proof in that respect”; Appleman, Insurance Laws and Practice, Vol. 8, sec. 4787; and, “What constitutes co-operation or lack thereof is usually a question of fact for the jury”; 21
ibid.,
sec. 12277; “The burden is upon the liability insurer to prove its alleged defense of lack of co-operation by the insured.” See cases under note 32.
If the insurer relies on a substantive defense reserved in the policy, the defense becomes an affirmative one and the case is for the jury.
“Whether or not in any particular instance the insured has so far failed to give the co-operation in and about the defense of the action which is contemplated by the co-operation clause in the policy will ordinarily be a question of fact determinable by the jury.” Blashfield, Automobile Law, Vol. 6, sec. 4059, p. 73. See cases under note 72.
While there is some contrary authority, the better reasoned cases hold that the failure to co-operate in any instance alleged must be attended by prejudice to the insurer in conducting the defense. Blashfield, Automobile Law, Vol. 6, sec. 4059, p. 78.
The clause cannot be interpreted in a way that would make it a mere device to entrap the insured, or a technicality so arbitrarily weighted that, without detriment to the insured in the performance of its obligation to defend, it wipes out that obligation, which is the essence of the contract, and a duty wholly surrendered to the insurer by its terms. We are unable to adopt a theory so opposed to substantial justice.
Levy v. Indemnity Insurance Co. of North America,
8 So. (2d), 774, La. Appls.;
Associated Indemnity Corp. v. Davis,
136 F. (2d), 71;
Pacific Indemnity Co. v. McDonald,
107 F. (2d), 446; 131 A. L. R., 208;
State Automobile Mutual Ins. Co. of Columbus, Ohio, v. York,
104 F. (2d), 730
(certiorari
denied), 308 U. S., 591, 8 Cal. App. (2d), 532 (failure to attend trial);
Rochon v. Preferred Accident Ins. Co. of N. Y.,
161 A., 429, 118 Conn., 190.
In
Hedgecock v. Ins. Co.,
212 N. C., 638, 641, 194 S. E., 86, we find: “'A judgment of nonsuit is never permissible in favor of the party having the burden of proof upon evidence offered by him,” citing
Wharton v. Ins. Co.,
178 N. C., 135, 100 S. E., 266;
Spruill v. Ins. Co.,
120 N. C., 141, 27 S. E., 39;
Baker v. Ins. Co.,
168 N. C., 87, 83 S. E., 16;
Thaxton v. Ins. Co.,
143 N. C., 34, 55 S. E., 419;
Parker v. Ins. Co.,
188 N. C., 403, 125 S. E., 6. “There is but one exception to this rule,” says
Air. Justice Barnhill
for the Court in the main case cited, “When the plaintiff offers evidence sufficient to constitute a
prima facie
case in an action in which the defendant has set up an affirmative defense, and the evidence of the plaintiff establishes the truth of the affirmative defense as a matter of law, a judgment of nonsuit may be entered.”
In the absence of such evidence or admissions on the part of the plaintiff it does not matter how clearly the matter appears in the evidence of the defendant, decision is not thereby shifted to the court as a matter of law, since the question of credibility still remains; G. S., 1-183, and cases cited.
It is the practice of this Court to refrain, as far as it may without destroying the clarity of opinion, from comment on the evidence when the case is sent back for a new trial—a rule that cannot always be strictly observed when the question involved is a nonsuit upon demurrer.
We believe, however, that the case under review calls for an observance of the rule. We have refrained from passing upon the objections to the evidence because the same situation may not recur, but the want of specific discussion has no other significance. We find nothing in it, however, which would justify the lower court in nonsuiting the plaintiff solely upon the evidence of defendant who has made an affirmative defense with respect to which the burden of proof still rests upon him. The case should have gone to the jury.
The judgment of nonsuit must be reversed and the cause remanded for trial in its regular course.
Reversed.