Appendix — Maryland Casualty Co. v. Hallatt

ss a : App. 6

IN THE UNITED STATES COURT OF APPEALS ~—

| FOR THE FIFTH CIRCUIT |

No. 18485

-_ MARYLAND CASUALTY COMPANY,

* ’ Appellant,

cam versus a tea rer

HARRY H. HALLATT AND.

. MARY.VALENTINE HALLATT, -

me) Appellees.

* ° °

No. 20197

\

HARRY H. HALLATT, Individually and as Exgcutor™*

of the Estate of MARY VALENTINE HALKATT.~

‘Deceased, |

. ie ‘ _Appeliant,

te versus, * Ct

" MARYLAND CASUALTY COMPANY, :

Se hese Nae ' Appellee.

-- Appéals from the United States District Court for the

. Southern District of Florida

Before RIVES ‘and CAMERON, Circuit Judges, and

HUNTER, District Judge. Ape : 2

JUDGMEN-T

This cause came on to be heard on the transeript of

the record from the United States District Court-for the

Southern District of Florida, and was argued by counsel ;

a

Pam |

‘ App. 7

_ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged ‘by this Court that the petition for

ring in Civil Action No, 18485 be, and tha same is -

hereby, granted; the initial opinion and order therein is

vacated; and the judgment of the District Court rendered

‘on June 17, 1960, is affirmed.. It is further ordered that

the appeal in Civil Action No. 20197 is now moot and it is”

- remanded to the said District € ‘oft to enter such orders

as Yt may deem necessary, consistent with the oginion of

this Court. Be: .

. ‘ P = m . Pe, -

It is further ordered and .fdjudged that Maryland

‘Casualty Company be condemned to pay the costs of this

cause in this Court for which axecution may be tana’ out

of the said. District Court.

/ as a

January 10, 1964

Issued as Mandate:

App. 8

~

Filed Feb. 20, 1964, U.S . Court of a ae Steers

W. ‘Wadsworth; Clerk.

IN THE UNITED STATES COURT OF APPEALS

- FOR THE FIFTH CIRCUIT

NO, 18485

MARY LAND CASUALTY COMPANY, a

. Appellant,

a

8 -HARRY H. HALLATT and

‘MARY VALENTINE HALLATT,.

Appellees.

NO. 20197

HARRY H. HALLATT, Individually. and As Executor |

of the Estate of MARY VALENTINE HALLATT,

Deceased,

“Appellant,

vs. :

MARYLAND CASUAL TY COMPANY,

Appellee. ;

. Appeals from the United States District Court for the -

Southern District of Florida

ON PETITION FOR REHEARING |

2

_ ( DENIED.

| App. 9

“Before RIVES and CAMERON, -Cireuit ret and

HUNTER, Distriét Judge.

PER CURIAM.

—,

Upon considering . the petition i, /vehearing filed

by the appellant, Maryland Casualty Cémpany, it jis or-

déred and decreed that said petition be! and it. ies is.

ee ad

4

App. 10

3 IN THE .

_ UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT |

; No. ease:

« MARYLAND CASU ALTY COMPANY,

"Appellant,

‘versus |

HARRY H. HALLATT ‘and |

MARY VALENTINE HALLATT,

; : a Appellees:

. Appeal from the United States District Court for the

° Southern District of Florida.

(October 6; 1961)

__. Before TUTTLE, Chief Sie: and RIVES and JONES,

- Circuit Judges. |

~ JONES, Circuit: Judge: On’ April 11, 1956, in West

Palm Beach, Florida, the appellees, Mr. and Mrs. Hallatt.

were passengers in’ an automobile involved in a collision

with another automobile owned and operated by one James ,

“R. Richardson, Jr. Richardson was then a waiter residing

in Palm-Reach, and was insured: by ‘the appellant, Mary-

land Casualty Company, under a policy of automobile

liability insurance which contained the following provi-

sions:

App. 11

“No action shall lieagainst the company unless, |

as a condition precedent thereto, the-insured shall

have complied with all the terms of this policy...

“Payment for loss may not be required nor

shall action Jie against the company unless, as a —

condition precedent thereto, the named insured

shall have fully“complied with all the terms of

this policy is :

ede the caption “CONDITIONS,” No. a1, “As-

, sistance and cooperation of the Insured” reads as follows: =

“The insured shall cooperate with the company

‘al ‘upon the company’s request, shall attend

hearings and trials and shall assist in effecting

settlements, securing and giving evidence, obtain-

ing the. attendance of witnesses and in the con-

duct of suits. The insuréd shall not, except at his °

own ¢ost,voluntarily make any payment, assume

‘any obligation or incur any expense other than

for such immediate medical and surgical relief

te others as shall be imperative at the time of..

the accident.” | ;

The Hallatts clairned damages for their injuries.

Maryland investigated the accident, and secured a. written

statement from Richardson. The Hallatts filed suit against

Richardson, and Maryland undertook the defense of that

action. Before the case was finally set for trial on May

18. 3959, some three years after the collision, Richardson

had moved to Massachusetts. '

Maryland duly and repeatedly notified Richardson of

App. 12

the trial ‘date and requested him to Perey y Richardson de-

clined, stating that he had begiout of work all of the pre-

ceding winter, and had then seetired a job painting bridges

‘which paid him $200.00 per week. Maryland continued to

insist on Richar‘dson’s attendance, and offered to pay his

traveling expenses. On May 9, 1959, Richardson wroté to

Maryland, “I shall be unable to make it to Florida as I am,

working now.” Maryland notified Richardson that, if he

persisted in his refusal te attend the trial, it would dis- . 0.

claim coveraze béatise of - his ‘failure to cooperate. Rich-

ardson politely, but adamantly, persisted in his refusal

to attend the trial. exe. ;

Counsel empigyed by Maryland to defend the suit

then moved the cout for leave to withdraw as counsel for

Richardson. That motion was denied, and the case pro-

ceeded to trial. The trial court granted: the motion of.the

Hallatts for a directed: verdict as to liability. The jury

assessed their damages at a total of °8,797.00, for which

‘amount, together with costs of court, judgment was ren-~

dered against Richardson. -For the collection of that judg-

ment the Hallatts caused a writ of garnishment to be is-

~~ sued against Maryland.

In response to the garnishment, Maryland denied be-

ing indebted to Richardson on the ground that Richardson’s

condnet in failing and refusing to attend the trial of the

negligence action brought against him amounted to a

} breach of Condition No. 17 of the policy, quoted supra. The

jury in the parnishment proceeding returned a verdict

against Maryland for $9,267.52. From the judgment en-

tered upor that verdict this appeal is prosecuted. Maryland

' insists that the district‘court erred; (1) in denying its mo-

fion for a directed verdict; (ITs in n admitting certain evi-

“oon

“~~,

Pt

_— 13

denge; | af I) in refusing to give certain instructions to the

jury.

The pretsial stipulation prov ided that:

“The pee issue to ii tried is whether or not

-the assured, James Richard Richardson, has

voided the insurance coverage under Policy “No:

_-2-2236179,. for violation of the assistance and

~~ ~eooperation clause ¢ of the said policy of insurance, .

- as set forth in paragraph” 2of-the reply of the

' garnishee to: the Plaintiffs’ traverse.

a ee er i

“The following issues of fact, and no others,

remain to be litigated upon. the trial:

“(A)- Maryland Casualty Company contends.

that the policy of automobile liability insurance

was voided by its insured, James .Richard Rich-

“~ —. ardson, by violation of the assistancé and coop-

eration clause of the said policy of insurance.

“(Bi The plaintiffs; ‘cgntend that the good:

faith and diligence of. the garnishee with respect.

to the insured and the plaintiffs isan issue of ©

fact to be resolved. ;

‘It is not claimed that Richardson failed to cooperate

with Maryland from the date of the accident on April 11,

1956, to the time wherf ihe negligence case was finally set:

for trial on May 18, 1959.-The claim is that Richardson's

" refusal to attend the trial was such a breach. of the con-

App. 14

dition as to relieve Maryland of its obligation to pay for

the loss. ©

Maryland put one of its claim agents, Leonard W.

Lafferty, Jr., on the stand and by him established that

letters had ‘been sent to the insured advising him of the

date of the trial, requesting -his attendance and offering to

adyance such sums as might be required to cover expenses .

of attending the trial. On cross-€xamination he was asked

by counsel for the .Hallatts as to whether or not ‘Richard-

’s testimony would have been helpful. Over objection by

Maryland hé was required to answer. Maryland's claim

manager, Thomas B. Barton, was put on the stand by it to

show his effort& in attempting to produce Richardson's.

presence at the trial: On cross-examination, over objection,

he was required to say whether, in his opinion, Richard-

son’s testimony would have been helpful. ‘The answers

given to thése questions were equivocal. Lafferty said he

‘didn’ t know and Barton said it would be hard to say.

z

The objections were made to the testimony on the

ground that it was improper to admit evidence

pose of showing that the insurance comp;

prejudiced in the absence of the insur

_It has been said that:

ra pur-

y was not

from ‘the trial.

“While a few courts have taken the view that-

- liability policy clauses requiring the insured to

cooperate in the defense of actions under the

policy by attending the trial and testifying, where '

requested to do so, are to be construed strictly

and in accordance with their plain terms, so that

"an insurer may escape liability by merely show-

ing a failure or refusal to attend or testify, ‘it

queee tem

App. 15

appears to besthe view of the great majority of :

the courts that the lack of cooperation by the in-

. sured in failing to attend'the trial or testify must

be substantial or material, and that a technical or

inconsequential lack of cooperation is ‘insufficient -

to void the policy. Before the insured’s failure to

attend the trial can be. regarded as a materia!

breach of the condition requiring the insured’s

cooperation, the insurer must sliow that the lack

of cooperation resulted: in. prejudice .ta the- in-

surer.” 29 A Am. Jur. 588, Insurance § 1479.

In discussing the same question the Court of Appeals for .

the Seventh Circuit recently stated that a majority of

American decisions hold that the failure of an insured .

person to attend a trial and aid in the defense when a case

against him. is called for trial, is prejudicial per se. Po-

tomac Insurance Co. v. Stanley, Tth Cir. 1960, 281 F. 2d

775. We have no academic interest as to which pan of the

_ scales carries the greater bulk of the precedents. Our task

is to determine which of the conflicting rules is the law of

Florida..

| The earliest of the Florida cases to which our at-

tention is called is United States Fidelity & Guaranty Co.

' », Snite, 106 Fla: 702, 143 So. 615. There it appeared that

_the insured did everything -he was requested to do by the

Insurer. The insured was not present at the trial. He was |

not asked to be present and the attorneys for the insurers

made no effort to notify him at addresses furnished them

where he might have been located. The insurer filed a mo-

tion for continuance stating that the insured was absent

because he had not been informed that the case had been

set for trial. The judgment was sustained because it

App. 16

a

clearly .appeared that the insured had not intentionally -

absented himseif from the trial. In the course of the opin-

ion it was observed that it had not been shown that if the |

- insured had been present at the ‘trial he could have ren- - |

dered any ‘assistance to the insurer. In view of the court’s

holding that the cooperation clause was not breached be-

cause the insured’s absence from the trial was not: inten-

tional, we do fiot regard as a ground for decision the com-

* ment regarding the failure to show that the insured could

have rendered assistance if he had been present. The opin- .

ion, as we read it, does not announce a‘principle that .a ”

showing must be, made that the presence of the. insured

woul probably have changed the result of the trial. In

the Snite case the cooperation clause required the insured -

to, “aid in sgcuring information, evidence and the attend-. °

ance of Witnesses, in effecting settlements and in defend-

ing suits...” and “at all times render to the Company

all reasonable’ cooperation and assistance.” The. policy

.did not contain a provision such as is in the policy here

- which expressly requires the insured to attend hearings

' and trials. Even if it could be said that. prejudice must

be shown for an insurer to be relieved of liability for a

~ breach by the insured of a covenant to render. cooperation

and assistance, it does not follow that the rulg ) Would be

applicable where the arr ag breached an nee to

attend: oe and trials.

| ate ee

In’ the case of American Fire and C asualty Company

Vliet, 148 Fla. 562; 4 So. 2d 862, 189 A.L.R. 767, the

utomobile liability policy insured J. R. Battle and his wife.

he insured car while being driven by Mrs. Battle was in-

_ volved in an accident resulting in injuries to Clarence L.

Vliet who recovered judgment against the Battles and

garnished the insurance company. The Battles hac moved

‘App.177. "©

from Florida to Georgia, J. R. Battle had become insane.

_ Mrs. Battle*declared her willingness to go to Florida and

render any assistance she could if the insurer would guar-

antee her expenses. This was not done. The court held that

an insured is/not required to attend a trial at his ewn ex-

pense, and a | failure to do so does not void the policy. The .

court, in its | opinion, stated that the breach of the coopera-

tion clause — be material and the insurer must’ show

. substantial / prejudice. In this case, as in the Snite case

which it cites, the decision was based upon the fact that -

{ of the insured was justified. The court’s ob-

servation as to thé need for showing prejudice i is, we think,

obiter dictum and not-a statement of the law of Florida

which is binding upon us. The court cited with approval

» the caselof Bauman v. Western & Southern Indemnity Co.,

230 Mo, 835, 77 S.W. 2d 496, where it is shown that it is —

only ary unexcused failure to cooperate ¥ which releases the

insurey from liability.

he most recent of the Florida cases iny olving the. co-

; oper tion clause in automobile liability insurance policies

- in- merican Universal Insurance Co. V. Stotsherry,: Fla.

"App. 116 So. 2d 482. The’ appellate court reversed a sum-

. mary judgment for the insurance company. There was a

quéstion as to whether the insured knew,that a suit had

been brought against him so-as to permit “ finding of fail-

ufe to cooperate because he had not bee.. given notice of |

shit. There was\a question as to whether the insurer had

enied liability on another ground and, if so, whether such

denial: would excuse the insured’s failure to cooperate. It

was contended by the insurer that the insured had ab-

sented himself and so became unavailable for appearance

at the trial. Citing the Snite and Vliet cases; “thé courtsheld

that there were fact issues as to whether the’ circumstances

i o - ire

—- 18 © : ™

of. thie insured’syabsence or. taihire to cooperate were such

- as to amount to a breach Sf the-ooperation clause. .The

clause was asters for’ & trial of the fact: issues.

a g

At°is our belief that the Florida _—r courts have |

not had before them for decision the question as to whether

the unexcused absence of an insured from a trial, contrary

to. the expréss'] ‘provision of a cooperation clause in an auto-”

mobile liability policy of insurance. will relieve the in-

_ surer from liability without -proof that the insurer was

prejudiced ‘by the insured’s ‘absence. Whatever may have

’ been said in any of the Opinions of the Florida courts was

* not essential to the decision. It was, therefore, mere obiter

dictum. See Pell v, State, 97 Fla. 650,122 So. 110. A fed-

eral court in a diversity case, adjudicat ing matter aris-

_ ing under state law, has been characterized as: “in effect,

‘- only another court of ‘the State.” Guaranty Trust Co. v.

York, 326 U.S, 99, 65.S.. Ct. 1469, 89 L. Ed. 2079, 160

A.L.R. 1231. "This being-so, a federal court is not bound

by a decision which ‘would not be. binding upon the courts

of the state. King v. Order of. United Commercial Trav--

_elers, 333 U.S. 153, 68 S. Ct. 488,92 L. Ed. 608, reh. den.

- $33 U.S. 878, 68 S..Ct. 900, 92 L. Ed. 1153. The Florida

courts have held, on a number of occasions, that the-lan- .

guage in’ a judicial opinion which is not essential to the

decision is without force as a precedent. State v. Florida

State Inmiprovement Commission, FiR., 60 So, 2d 7475 Twy-

man v. Roell, 123 Fla, 215, 166 So. 215; State ex rel Hel-

seth v. Du Bose, 99 Fla. 812. 128 So. 4; Pell v. State; supra.

We conclude that the question as for the need.for proving

prejudice is not controlled by any of the decisions of the

’ Florida courts. _ ne ee 5

Since we find no authoritative-precedent-of a Florida .

owe.

Venn”

.

~ . , > 6

App. Ii I

court it is‘appropriate tht we be ‘guided by the. period de-.

cisions of this Court as, in effect, another cout of the

State. Cf. MarGregor vs. State Mutual Life Assurance Co.,: |

315 U.S. 280, 62 S. Ct. 607, 86 L: Ed.’ 846, reh. den. 315

‘ that the failure to-cooperate was not material since under —

_ be secured was prejudicial to garnishee’s. rights and would’

have a material effect on the verdicts.” The Gourt ap- -

U. 8/829, 62 S: Ct. 908, 86 L. Ed. 1224..Pertinent to, and,

we think, decisive of the question -under consideration are

the two’ Rexford cases, Royal Indemnity Co. v. Rexford,

5th Cir. 1952, 197, F. 2d 83, and Rexford v. Royal Inden-

nity Co., 5th Cir., 1954, 215 F. 2d 693. These cases were

appealed from the District Court for the Southern District

of Florida’ and, were decided under the law of Florida. —- .

There, as here, the vourt admitted ev idence on. behalf of .

the plaintiff in garnishment for the purpose of showing

the evidence there was no defense to the suit. Permitting

the. introduction of this evidence was characterized as reé

trying the damage suit and improper. In reversing the

cause 1or a new trial, the Court, in the first Rexford: case,

held that°the failure of an insured toattend trial would

be material noncooperation. The Court quoted with ap-

proval from Cameron v. Berger, 132 Pa. Super, "484, 1, A, fe:

2d 529, 433, where it was said, “The very fact that he

defernidant.was absent without explanation and could not

proved thé following statement from Gleé ns Falls Indem-

nity Co. v. Keliher, 88°N. H. 253, 187° A: 473, 476, “Every

person familiar: with the trial of cafes by jury knows

that the case of an individual defendant is seriously, if _

not hopelessly, prejudiced by his absence from the trial.”

This Court commented -that- the cited cases from Florida

were tc no different effect that those from which it quoted. °

- . : s

Thé case of Cameron v. Berger, supra, from which this

e

at

Re’:

oS

C

ae . @ = App. 20 .

Court quoted in the Rexford opinion, was affirmed by the

Supreme Court of Pennsylvania. Cameron v. Berger, 336

Pa, 229, 7 A. 2d 2983. The Court of Appeals for the Seventh

Cireutin Potomac Insurance Company v. Stanley, supra,

where Indiana law controlled in.a diversity case, quoted at

length ei the first Rexford case and followed the holding ‘

of this Court that failure of an insured to attend a. trial

would be prejudicial noncooperation: In the opinion of the

Seventh Circuit it said: : .

“We think the majority view, that the failuie

of an insured person to. attend a trial and aid in

the defense when a case against him is called for

trial, is‘per se, prejudicial, is consistent with the

established principle of Indiana law that one who

would seek to enforce a ‘contract for his benefit

must show that he has performed al] conditions

on his part required to be performed as a condi-

tion precedent to his right.” 281 F. 2d 775, 781.

¢.

The Florida law; like that of- Indiana, requires that per-

formance of conditions precedent, or a valid exeuse fer non-

_ performance, must be made fo appear. Ballas v. Lake Weir

Light & Water Co., 100 Fla. 913, 136 So. 421. The rule an-.

nounced in the Rexford opinion seems to be the law -of

Arkansas where the District Court for the Western Dis-

trict of Arkansas cited and followed the Rexford decision.

Roberts v. Commercial Standard Fnsurance Co., 188 F.

Supp. 363. yh .

: °

U

in favor of the insured, yet such contracts are subject to

the same rules of coristruction applied to other contracts,

‘and language used in a policy of insurance‘is to be given its

é - - :

\ “oe % . SF

While insurance contracts are to be liberally construed —-

. 2

a App. 21

aes | °

popular and usual significance unless the context requires

a different construction. Aetna Casualty & Surety Com-

pany v- Cartmel, 87 Fla. 495, 100 So. 802, 35 A.L.R. 1013; |

18 Fla. Jur. 4, Insurance?§s. 91, 92. The, Supreme Court

of Florida has considered the effect of conditions relieving

‘an insurance company of liability and in so doing took ov-

casion to Say:

2

“In Atlantic Coast Line BR. €e. . Beazley, BA.

Fla. 311, text 392, 45 So. 761, text + 7. we said:

i- ‘All parties litigant who are sui juris, whether

railroad corporations or their employees, in the

eves of the law, before the courts, stand upon an

equal footing, entitled to equal rights and protec-

tion and’ none to special privileges.” We would

now hdd insurance contpanies and the insured,

and that the persons. insured, like railroad em-

plovees, cannot be said ‘to bewwards of the court.’

We also held in the cited case as. in Scotch Mfg.

Co. vy. Carr, 53 Fla. 480, 43 South. 427, that par-

ties are free to make what contracts they please’

so long as no fraud or deception is practiced and

there is no infraction of law. We further held that’

the fact that one of the parties made a rather

‘hard bargain would no* avoid the contract. This

being true, and, the plaintiff having accepted a

policy from the defendant with such a clause or

condition of the contract therein, why should not

_ the defendant have the legal right, in an action

brouglit against it on such policy, to base its de-’

_S fense on such provision?” Southern Home Insur-

ance Co. v. Putnal, 57 Fla. 199, 49 So. 922. 930.

Why, too, should not Maryland Casualty Company have

t

pO ‘App. 22

the right to be relieved from liability because of the failure |

of the insured to attend the trial without having to show

that it was prejudiced? ~

As used here it means that the insuréf is hurt or injured

The word “prejudice” is one of fs or meanings.

in that it is less able to resist a claim‘ugainst its insured

by defeating recovery or reducing the award of damagey :

Long v. Brown, 64 Idaho 39,.128 P. 2d 754; Itzkowitz v.

‘Finer & Bachsach, 218 App. Div: 440, 218 N.Y.S. 272.

Whether or. not the testimony ‘of the insured would be

beneficial to the defense, his presence at the trial would”

justify the jury’s belief in his faith in the defense, as noted

in Rexford, supra, and, as pointed out by the Sixth Circuit:

“His taltuee to be present in defense’ of the’

claim can have an intangible effect upon the: jury

both as to the question of liability and the amount _

of the verdict, the net effect of which is difficult

to measure. Unexpected developments: in the

plaintiff’s evidence might ‘be offset by. an explana--

tion on,the part of the insured. Inaccurate or ex-

aggerated testimony at the time of the trial may

be prevented or held to a minimum by the mere

presence of the insured.” Beam y. State Farm

Mutual Automobile Insurance Co., 6th Cir. 1959,

269 F. 2d 151.

_ The court cited, in support of the quoted statement, Buu-

man v. Western & Southern Indemnity Co., supra, which

_ was approved in the Vliet case. The Bauman case was

also cited and relied upon in Fischer v. Western & South-

ern Indemnity. Co., Mo. App., 106 S. W. 2 490), from

‘thin which this Court acid in the Rexford case,

\

2

App. 23 f

- Our conviction thate-the courts of Florida would not

require a showing of prejudice to an insurer in order that

it might be relieved of liability by breach of the insured’ s

duty to attend the trial is strengthened. by thé decision of

- the Florida District Court of Appeal i in State Farm Mutual |

Automobile Insurance Co. . Ranson, Fla. App: 121 So. 2d

175, decided in 1960. Th condition which was breached by

the insured was the se requiring the giving of notice of

accident as soon practicable. The court took notice of

the conflict of the authorities on the question as appeared

in the annotation at 18 A.L.R. 2d 443, 479. It was held -

that since the policy contained a provision that no action

should lie against the insurance company unless, as a con-

dition precedent thereto, the insured shall have fully com-

plied with all of the terms of the policy, the question of

notice bedame immaterial once it became established that

_ the notice was not given as soon as practicable. The policy

before us contains a clause identical with the clause in the

' Ranson case to the effect that seca’ policy re-

- quirements is a condition precedent to ‘recovery. We see no

logical reason for a different rule where the breach is one

af the clause providing for notice than in a case where

there is an unjustified absence from the trial. We conclude

that under the law of Florida, prejudice need not be

shown. ree

Since the question of prejudice was not a proper issue

the court’s admitting, over objection, of evidence on the

question was error, and for that error, the judgment must

be reversed. The insurance company attempted, by evi-

dence, to show that it had been.prejudiced but by doing.

so it did not waive its objections to the evidence offered by

_the garnishor which was improperly admitted. .1 Wigmore

on Evidence. 3rd Ed. 345, $ 18, Cf. Louette v. State, 152

App: 24

. ~ .

Fla. 495, 12 So. 168. The insurance company did me bre

serve objections td the court’s instructions as to the heces-

sity far proof of prejudice. See Clark-Warwick,:Inc. v=

National Fire Insurance Co., 5th Cir. 1961, 291 F. 2d 828,

and cases there cited. However, since the case was tried on

an erroneous theory of law and evidence under that theory

was received over objections, we do not need:to reach the

specification of error relating to instructions.’

‘One of the issues in the district court was: whether

Maryland had exercised good faith and diligence in mak-

ing efforts to procure the attendance of Richardson at. the

trial, and the Hallatts contended that the evidence sup-

ported their contention that good faith. and diligence were:

hot shown. There was some evidence fron: which it might

have been inferred that Maryland was hoping it could use —

the noncooperation of Richardson as a basis for disclaim-

ing liability. The insurer must exercise’ good faith. and

diligence, but if it does so and is unsuccessful in its efforts.

it will not be precluded for disclaiming liability because of

its desire to be released. 6 Blashfield, Cyclopedia of Auto-

mobile Law and Practice, Perm. Ed./74 § 4059. So tod,

”

must the insured use good faith, If he, is to be- absent from

the trial and the absence is to be successfully asserted as a

breach of the policy, it must be shown that the absence was .

intentional and without legal’ excuse or justification.

United States Fidelity & Guaranty Co. ». Snite. supra.

There may be an issue as to whether, as said in the first

Rexford case, the absence was accidental or incidental.

197 F.-2d 83, 86:

In the usual case the question as to whether there has.

been an unjustified refusal to-attend a trial So as to relieve

the insurer of liability ‘s one of fact for the jury. United

.

‘SPP. 25

States Fidelity & G 7 Co. v. Snite, supra; American

Fire & cepiped Co: v. Vliet, supra; American Universal

Insurance Co. . Siasieerry, supra. If, however, the evi-

dence is ad ‘dispute and clearly shows a failure to co-

operate, a directed verdict should be granted for the in-

surer. State Farm Mutual Automobile Insurance’ Co, v.

Ranson, supra; Williams v. Employers Mut. Liability Ins.

‘Co. of Wisconsin, 5th Cir. 1942, 131-F. 2d 601. See also

Associated Indemnity Corporation v. Davis, 3rd Cir., 1948,

186 F.2d 71. Although the failure of the insured to attend

a trial is, as a matter of law in Florida, prejudicial to the

insurer, we think that, on the issues of the good faith and

diligence of Maryland and the excuse’ or justification of

Richardson for nonattendance, questions for the jury. were

present. °

On the question of the failure of an insured to comply

with a cooperation clause, the burden of proof is cast’ upon

the insurer to establish the facts showing the breach by

the insured. United States Fidelity & Guaranty Co. v.

Snite,. supra: Williams ». Employers Mutual Liability

Insurance Co., supra. But the insurer is required to do .no

. more than to show that it exercised good faith and diligence.

in an effort to procure the ‘attendance of the insured at

the trial and that the insured did not attend. It is not

required to anticipateand negate all of the excuses and red-

sons that might justify the nonattendance of the insured.

If, counsel has suggested, Richardson might have jeopar-..

dized his job by leaving it to attend the trial, but that he

might have attended at a later date, this might have justi-

_ fied his breach of the policy provision. Cf. State Farm Mu-_

tual. Automobite Insurance Co. v. Palmer, 9th Cir., 1956,

237 F.2d 887. -If this was so, or ‘if other excuse or justifi-

cation existed for, Richardson's absence from the trial, the

. é .

App. 26

burden of establishing it rested — the Hallatts. 1 Jones ©

en Evidence, Sth Ed. 375.et seq., $ 207; Grand Assembly,

. ete. v. New Amsterdain- er Co., Fla. App. 102 So. 2d

842.

Since the case was tried.on an erroneous theory of

law as .to the necessity of proof by Maryland that it was

prejudiced by the ‘absence of Richardson from the trial the

judgment must be reversed. Since there are fact issues:

that the trier of fact should determine, the cause will be

remanded for a new trial.

"REVERSED AND REMANDED.

-

RIVES, Circuit Judge, dissenting:

- Richardson’s liability to respond in damages for: the

injuries which he had inflicted on Mr. and Mrs. Hallatt .

was fully covered by insurance on the date of the collision,

April 11, 1956, and remained so protected for more than

three years. Richardson declined to come from Massachu-

setts to Florida to attend the trial, stating that he had

been out of work all of the preceding. winter, and had then |

secured a job painting bridges which: paid him $200.00 per

week. There was no proof that Richardson could give any

testimony beneficial to the defense of the negligence action.

There had been no effort to take his depositién. The evi- -

dence of Richardson’s liability was such that the trial court

directed a verdict for the Hallatts on that issue. The

Hallats got a judgment against Richardson for $8,797.00.

Maryland Casualty: Company refuses to pay that amount .

to the Hallatts because it says that Richardson breached

App. 27

~ the condition of the policy providing for “Assistance and.

iy Cooperation of the Insured”: “The insured shall cooperate

with the company and, upon the company’s request, shall

attend hearings and trials and shall assist in effecting set-

‘tlements, securing and giving evidence, obtaining. the at-

tenda.:ce of witnesses ana in the conduct of suits.” The

district court admitted evidence, over Maryland’s objec-

~ tion, from which the: jury might, and probably did, de-

termine that Richardson’s mere presence at the trial was

not material, and that his failure to attend was not prej-

udicial. to the defense of the action. The majority holds

that the failure of the insured to attend the trial in Flor-

ida is prejudicial to the insurer as a matter of law, and

hence.that the question of prejudice was not 'a proper issue

for the jury. I agree with the district court.

- hsncmeiie liability insurance supplies a highly. im-

portarit social need. Without it few’of the drivers on our

highways could respond in damages to the victims of their

negligence. ‘Some of the States have recognized the social

need by enacting compulsory automobile liability insurance

laws. Many more encourage the .aking of liability in- |

surance by financial responsibility laws, or by other means.

That social need should be kept<in’ ‘mind by the courts, es-

pecially in:a case like this, where the liability insurer ad-

-mits coverage on the date of the injury but ciaims a de-

fense arising more than three years thereafter because of

conduct of its insured, in which the injured persons had .

no part.. In such cases, the courts will, of course, accord

to the liability insurer al) legally sufficient defenses, but

they should, I submit, be-slow to recognize technic al de-

fenses or those which are not: really substantial.

In differing with the learned’ district judge, my

*App. 28°

brothers find that thére is no case in point from the Flor-

ida appellate courts: “Whatever may have been said in any

-of the opinions of the Florida courts was not essential to

the decision. It was, therefore, mere obiter dictum.” I

disagree. :

In the first place, I do not agree with my brothers ~

that every statement in an opinion not essential to the de-.

cision is mere obiter dictum. For example, in Parsons v.

Federal Realty Corporation, Fla., 1932, 143 So. 912, 920,

the Florida Supreme Court said: “Two or more questions

properly arising in a case under the pleadings and proof

may be determined, éven though either one would dispose

of the entire case upon ‘ts merits, and-neither holding i iS a

dictum, so long as it is properly raised, considered, and de-

terminéd.” :

_ The rule of the Supreme Court of the United States is

to like effect:

“Of course,; Where there are two grounis, upon

either of which the judgment of the trial court

can, be rested, and the appellate court sustains

both, the ruling’on neither is-obiter; but.each is

the judgment of the court and of equal validity

with the other. Whenever a question fairly arises

in the course of a trial, and there is a distinct de-

cision of that. question, the ruling of the court in

respect thereto cam, in no just sense, be called’

mere dictum. 4

Union Pacific Co. v. Mason City Co., 1905, 199 U. S. 160,

166.

Ajfp. 29

In State Roads Commission v. Johnson, 222 Md. 493,

161 A. 2d 444, it was held that where the court’s state-

ment was germane and may have been jritended to guide

- the trial court upon retrial of the case, the statement was

not dictum,

Let me re-examine the cases from the Florida appel-

late courts to show why I disagree with my brothers’ hold-

ing that the pertinent statements in those cases are mere

obiter dicta. LC .

In U.S.F. & G. Co. v. Snite, 1932, 143 So. 615, 616, the

liability insurer defended on the ground that its‘insurél

had ‘violated the condition of the policy requiring his co-

operation: in defending thé suit. The-insured had been

absent’ from the trial of the damage suit. In the course of

its opinion, the Supreme Court of Florida said: “Neither

is it shown that, if Scocos had been present at the trial, he

could have rendered any assistance to the surety company

. in connection therewith which would probably have

changed the result of that trial.” My brothers dismiss that

statement as mere dictum, saying: “In view of the ‘court’s:

holding that the cooperation « ause. was not breached -be-

cause the insured’s absence from the trial was not inten-

tional, we do not regard as a ground for decision the com- ©

ment regarding the failure to shéw that the insured could

have rendered assistance if he had been present.” With

deference, I] submit that my brothers have misanpre-

hended the ‘holding of the Florida Court. While it made

the.statement which my brothers paraphrase, that Court

did not itself hold that the cooperation clause had not been -

breached, but merely held that the jury was. warranted in

reaching that conclusion. To make that.clear, at the risk

of repetition, I quote semewhat fully:

App. 30

“The-record fails to show any bad faithon the

part of Scocos in connection with his absence

_ from the trial,” Neither is it shown that, if Scocos

had been present at the trial, he could have ren- .

dered any assistance to the surety company in

connection therewith which would probably have

changed the result of that trial. The record af-

* firmatively shows by the allegations of the mo- ;.

* tion fer continuance above referred to, and by

' which allegations the surety company was bountl,

that Scocos had not intentionally absented him-

self from that trial.

“The question of whether or not Nicholas Sco-

cos violated the condition of the liability policy

above referred to in such manner as to relieve

the surety company of liability on its policy ‘be-

came a question of fact for the jury to determine,

the burden of proof’ being on the surety company

to show that-such condition of the policy had been’

~ so violated. See Taxicab Motor Co. v. Pacific

Coast Casualty Co., etc., 73 Wash. 631, 132 P..

393; U.S. Fidelity & Guaranty Co. v. Williams,

148 Md. 289, 129 A. 660; U.S. Casualty Co. v.

Drew (C.C.A.) 5-F. (2d) 498. :

“The jury resolved. this question against the

surety company. The evidence warranted that

conclusion.” (143 So. at p. 616.) .

The failure to prove that the insured’s absence from the

trial prejudiced the defense of the case- Was: one of the™

| reasons which led the Florida Supreme Court to hold that

the jury was warranted in resolving the question against

; App. 31

the insurance. company. True, it was one of several sugh

reasons. It seems clear to me that the pertinent statement

in the. Snite case is mot dictum, but is a part of the ratio

decidendi. See Parsons v. Federal Realty Cor poration,

supra; Union Pacific Co. v. Mason City Co., supra.

My eet eee next ‘conanles to differentiate the Snite

case because the cooperation clause in the ‘present case is

more specific in requiring the insured to attend hearings

and trials, saying: “The policy did not contain a provision —

such as is in the policy here which expressly requires the

insured to attend hearings and trials. Even if it-could_

be said that prejudice must be shown for an‘ insurer to

- be relieved of liability for’ a breach by the insured of a,

- covenant to render cooperation and assistance, it does not

follaw that the rule would be applicable where the in-

sured breached an undertaking to ittend hearings and

trials.” ;

‘With deference, I submit that the attempted distinc-

tion is not warranted. Under the present .policy, the in-

sured’s ‘duty to attend hearings and trial§ is simply, a part

of his broader duty to cooperate. ‘See the condition for

“Assistance and Cooperation of the Insured,” heretofore

quoted.) Assuming that there could otherwise have been

some doubt about the proposition, the policy made definite

‘that the required assistance and cooperation include the

insured’s attending the trial upon the insurer's request.

There is, however, no ‘indication that the effect of non--

attendance is any different from the effect of any other

failure to assist and cooperate. The Florida Supreme Court

held in the Snite case, supra, that the jury, in determining

the question of whether the insured had violated the con-

dition ‘of a liability policy requiring him to “aid : .*. in de

a

\’

App. 32°

fending suits” and to “render to the Company all reason-

able cooperation and assistance,” could. considér the lack

of proof.that the insurer was prejudiced by hiss absence.

_ from the trial. The rule should not be different because the, »

., policy spells out the already obviqus fact that conperation

includes the insured’s compliance. with the insurer’s request

to attend the trial. Under either provision, the failure to.

cooperate is not material. unless it is prejudicial to the

insurer. |

In the casé of American Fire & Casualty Co. v. Vliet,

_ Fla., 1941, 4 So. 2d 862, 863, the Court, did hold as a mat-

" ter of law that: the insured did not violate the cooperation

clause when she failed-to come to court from a distant city

at her own expense, and I would concede that its statément

about the necessity of proving prejudice was dictum. It.

Was nonetheless a clear and well-considered statement of

the law of Florida, viz: “The rule is that to constitute the’

breach of such a policy the lack of cooperation must be

material and the insurance company must show that it was *

- substantially prejudiced in the particular case by the fail-

‘ure to cooperate.” Oy ake

That statement was quoted approvingly by the Third

District Court of Appeals of Florida in Ameri ican Univer-

sal Insurance Co: v. Stotsberr. y,, 1959, 116 So. 2d 482, 484.

That Court reversed a summary judgment against the lia-

- bility insurer, and remanded the ‘cause for further pro-

- ceedings. The quotation was obviously intended to guide

the trial court in determining * ‘whether the circumstances

of Lorenzo’s absence or non-cooperation were sueh as to

amount to a breach of the co-operation clause of the policy

under the facts.of this case.” As such, the statement should

not be reduced to the level of a “mere dictum” on the part

e*

> App. 33

of the appellate court. See State Roads Commission x.

Johnson, supra. Nor can any attempted distinetion be

drawn as to the wording of the cooperation clause, for it

"was the same in that case as in this. See 16 So, 2d-483, n. 2

Let me go further, and assume arquendo that my

brothers are correct in holding. that al} three statements of

the” Florida appellate courts are.dicta, what then? Are the

statements to be wholly disregarded, as the majority opin-

ion would seem to indicate? The Florida cases cited in that

opinion go no further than to hold that dictum “is not con-

trolling” ina subsequent case. State vw. Florida State Im-

provement Commission, 1952; 60 So. 2d 747, 750. The rule

in Florida appears no different than that in other common-

law jurisdictions, that dictum by the highest court of the

jurisdiction or by an appellate court, while not controlling,

is entitled to respectful consideration. 21 C. J. $.; Courts,*

Sec, 190; pp. 318, 314. My brothers themselves made a clear,

: statement of. the true rule in an extremely recent case: “If

as dicta the statements are to be treated, they must never- — .

theless be régarded as cansidered and repeated dicta, arid

therefore highly persuasive of the correctness of the Com-_

mission’s decision.” Miss. Valley Gas Co. v. Fed. Power

Commission, 5 Cir., No. 185601, m/s, decided.September 12,

1961 ‘per Jones, Circuit Judge; Tuttle, Chief Judge, and

Cameron, Circuit Judge. concurring). An immediate ex-.

ample is supplied by the Florida appellate court’ in the

Stotsherry case following the dictum of the Supreme Court

of that State in the Vlief case. This Court. as “in effect, ,

only another Court of the State,” should, -1 think, do. like-

wise.* im ;

As was said in West v. A. T. & T. Co., 1940, 811.U. S.

223, 236, 237: “OR ee | ae

* + App.34 ;

'“A state is not’ without law save.as its highest

court has declared it. There are many rules of |

‘decision commonly accepted and acted upon by

_the bar and inferior courts which are nevertheless

_laws of the state although the highest court of the

. State has never passed upon them. In those cir-

cumstances a federal court is not free to reject

_the state rule merely because it has. not received |

the sanction of the highest gourt, even though it...

thinks the rule is unsound in principle or that an-

other is preferable. State iaw is to be applied ‘in

. the federal as we!l as the state courts “and it is the

duty of the former in every case to ascertain from

all the available data what the state law is and

apply it rather than to prescribe a different rule,

- however superior it may appear from the view-—

point of ‘general law’ and how ev er much the state

=~" “rule may have departed from prior decisions of-

the federal courts. See Erie —. Co. v. Tomp-

kins, supra, 78 [304 U. S. 64, 78]: Rus ssell v,

Todd, supra, 203 (sic) ap U. S. 280, 293}.”.

Professor: Meore collects the pertinent authorities in

a 1 Moore’s Federal Practice, 2nd ed., p. 3312, in support of

_ his text that: |

“The obligation to accept local law extends not

merely to definitive decisions, but to considered

. dicta as well, and if explicit pronouncements are

wanting, the federal court should endeavor to dit-

cover the law of the state on the point at issue by

considering related decisions, analogies, and any

' reliable data tending convincingly to show what

the state rule is.”

App. 35

Surely expressions to like effect in the opinions of two

State Supreme Court Justices concurred in by their col-

leagues, and still further in an opinion of a State Appel-

_ late Court Judge concurred in by his colleagues,.must rank

_ at least as “considered dicta” to be used along ‘with any

-other relevant data to ascertain state law.

By what seems to'me to be a kind of bootstr: ap opera-

tion, my brothers consider themselves bound by tWo cases

from this same federal Courf of Appeals: “Pertinent ‘to

and, we think, decisive of the question under consideration

are the two Rexford cases, Koyo! Indemnity Co. v. Rev-

ford, 5th Chr. 1952, 197 F. 2d 83, and Rexford v. Royc!.

Indemnity Co., 5th Cir. 1954, 215 F. 2d 693." |

The careful annotator in 60 A. L. R. 2d°1151 observed

that this Court in Royal indemnity Co, v. Rexford, 1952,

197 F. 2d 83,,"approved, arguendo, the statement that the

very fact that an insured is absent from the trial without |

explanation is prejudicial to the rights of the insurer and .

has a material effect upon the verdict.” I agree with the

annotator that that part of the opinion was dictum. The

decision was expressly stated to be “because of the error

in permitting the plaintiff to retry the damage suit, the

case was not fairly tried.on the issue of non cooperation.”

This -Court stated unequivocally that “there is no doubt

that, under all the authorities, th. non-cooperation must

have been material.” (197 F, 2d at 86). Further. the Court

expressly denied any intention to direct the rendition of a

verdict.

“The case is a very close one as to whether

there snould not have been an instructed verdie:

in favor ef the insurer on the ground that the in-

App. 36 .

sured failed as matter of law to cooperate, but we —

have concluded that the judgment should not be

reversed and rendered on that issue.” |

(197-F, 2d at 86). Upon remand, aeeanaieks: the district

court did just that, and upon second appeal this © ourt

again reversed, stating that “the decision in the .former

appeal, reported in 197 .F. 2d 83, became the law of the

case and, as this,court found at that time that it was not

a for a directed verdict to be granted..." Rexford

Sota Indemnity Company, 5 Cir.. 19@4. 215 F. 2d 695,

_- The Rexford cases appear to mé to support the rulings

of the district court in the present case; if effect be given

to their actual holdings rather than to dictum. Certainly,

‘to my- way of thinking, the cases of U.S.F. & G. Co. rv.

Snite, supra, and American Universal Insurance Co. ¥.

Stotsberry? sipra are decisions binding upon this Court

under the Erie doctrine. Under all. of the.Florida cases

which havé either passed upon or discussed an insured’s

breach of the cooperation clause of condition, | submit.

the injured person may show lack of prejudice to the in-

surer and that the failvre of the insured was immaterial!

—and unsubstantial ‘and, hence, not a breach of the coopera-

tien clause within the fair intendment and purpose of that:

clause. 1 think that the judgment should be affirmed. and

therefore respectfully dissent.

App. 37

28 U.S.C. § 48 Terms of court

Terms -or sessions of.courts of appeals shall be held _

annually at the places listed below, and at such other places -

within the respective circuits as may be designated by rule

of court.’ Each court of appeals may hold special terms at

any place within its circuit. —

_ Circuits Places

District of Columbia Washington.

First . Boston.

Second .___.. New York.

Third Philadelphia. .

Fourth - Richmond, Asheville.

Fifth - New Orleans, Atlanta, Fort Worth,

Jacksonville, Montgomery.

Sixth Cineinnati.

Seventh Chicago. Aas

Fighth : St. Louis, Kansas City, Omaha, .

St. Paul. Oey

Ninth . - San Francisco, Los Angeles, Port-

‘ , land, Seattle. - |

Tenth Denver, Wichita, Oklahoma City.

Any court of appeals may, with the consent of the

Judicial Conference of the United States, pretermit any

regular term or session of. the court at any place for in-

sufficient business or other good cause. As amended Oct.

31: 1951, c- 655, § 36, 65 Stat. 723. ,

App. 38

- RULES OF THE UNITED STATES COURT OF

APPEALS FIFTH CIRCUIT

Rule 3. Terms

A session of this court shall be held annually at the

citw of Atlanta, Ga.; at the city of Montgomery,.Ala.; at

the city of Fort Worth, Tex.; at the city of Jacksonville,

Fla.; and at the city of New Orleans, La., and shall be ad-

journed to such other times and places as the court may

from time‘to time order and designate.

\