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HARTFORD ACCIDENT AND INDEMNITY CO. v. LOYD

May 15, 1959

HARTFORD ACCIDENT AND INDEMNITY COMPANY, PLAINTIFF,
v.
MRS. H.B. LOYD, JESS MCCONNELL, D/B/A MCCONNELL PEST CONTROL, AND MCCONNELL TERMITES, INC., DEFENDANTS.



The opinion of the court was delivered by: John E. Miller, Chief Judge.

On April 3, 1959, the plaintiff, Hartford Accident and Indemnity Company, filed its complaint for declaratory judgment herein against the defendants, Mrs. H.B. Loyd, Jess McConnell, d/b/a McConnell Pest Control, and McConnell Termites, Inc., hereafter referred to as McConnell and Termites, Inc., respectively. The plaintiff alleged that it is a corporation organized under the laws of Connecticut with its principal place of business in said State, that each of the defendants is a citizen and resident of the Western District of Arkansas, and that the amount in controversy is in excess of $10,000. The plaintiff alleged that it had issued a policy of liability insurance to the defendant McConnell, covering McConnell's operations; that on March 14, 1959, Mrs. H.B. Loyd filed a complaint in the Circuit Court of the Southern District of Logan County, Arkansas, against McConnell and Termites, Inc., in which suit Mrs. H.B. Loyd, as plaintiff therein, contended that her home was damaged by fire as a result of alleged negligence on the part of McConnell. In the suit filed by Mrs. Loyd against McConnell and Termites, Inc., she contended that she had contracted with McConnell and Termites, Inc., for termite extermination at her home, and that in the course of their work McConnell and the corporation negligently broke a butane pipe, as a result of which a fire occurred destroying her home on June 17, 1958. The complaint of the plaintiff insurer herein further alleged that its policy issued to McConnell required immediate notice of any claim which might be made against him, but that no notice was given to the plaintiff of any such claim until after suit was brought by Mrs. Loyd against McConnell and Termites, Inc., on March 14, 1959. The plaintiff further alleged that by the failure of McConnell to give the required notice, it was unable to make an efficient investigation, and that it would be impossible for it to defend the suit brought by Mrs. Loyd.

In due course the defendant, Mrs. H.B. Loyd, filed her answer to plaintiff's complaint herein, in which she alleged that no valuable evidence had been destroyed, and that the plaintiff insurance company has had and will be given adequate opportunity to investigate and defend the suit, and prayed that the complaint of the plaintiff be dismissed or, in the alternative, that the court declare it to be the plaintiff's legal duty to defend McConnell and Termites, Inc. The defendants, McConnell and Termites, Inc., answered denying that notice of Mrs. Loyd's claim was not furnished to the plaintiff, and alleging that notice of said claim was given to one John McConnell, who was an agent for the plaintiff, Hartford Accident and Indemnity Company. They further denied that any possible liability fell upon McConnell Pest Control for any damages claimed by Mrs. Loyd.

On April 17, 1959, the plaintiff filed its request for admission of facts, which were duly answered by all defendants, and thereafter the plaintiff filed its motion for summary judgment herein based upon the admissions filed by the parties.

The facts as established by the admissions of all defendants are not in dispute and are substantially as follows. Sometime shortly prior to June 17, 1958, Mrs. H.B. Loyd contracted either with Jess McConnell, d/b/a McConnell Pest Control and/or McConnell Termites, Inc., for the extermination of termites in and around her home. The contract was headed:

"Termites Inc. "McConnell Pest Control"

and the same words in the same order appear over the signature shown to be "Authorized Representative." McConnell Pest Control is not a corporation, but is a business operated by Jess McConnell. McConnell Termites, Inc., or sometimes known as merely Termites, Inc., is a corporation formed by Jess McConnell and two other persons.

Following the treatment of Mrs. Loyd's home for termites by either McConnell or Termites, Inc., a fire occurred on June 17, 1958, destroyed or seriously damaging the home. Mrs. Loyd contends the fire was a result of negligence on the part of the McConnell organizations in causing a break in a butane pipe.

On July 2, 1958, Mrs. Lloyd addressed an envelope to "McConnell Pest Control" in Fort Smith, Arkansas, and addressing the letter in the same manner advised McConnell Pest Control that the fire had occurred, and stated further:

    "I let you do the work because I believed that
  you were a large, reputable company and you
  assured me you were bonded and insured to make
  your customers safe.
    "I hope that you will talk this over with me
  and look at the evidence. I have suffered a
  tremendous

  loss and I know that it could have been avoided
  by careful checking."

Mrs. Loyd again wrote McConnell Pest Control on July 29, 1958, indicating that unless she heard further from McConnell within the next week that she would "tell my attorney to proceed as he sees necessary."

After receipt of the first letter from Mrs. Loyd, the defendant McConnell turned the letters over to Termites, Inc., which employed an adjuster to investigate the fire, who addressed his report to McConnell. However, he was employed only by Termites, Inc., and not by the Pest Control. The investigator located a butane pipe which evidently had been broken or ruptured in some manner, and advised that a metallurgist should be employed to determine whether the pipe was ruptured due to a blow or due to some other condition. No metallurgist was employed.

McConnell never notified the plaintiff until March 25, 1959, that any claim was being made against him.

The policy issued by the plaintiff was issued solely to Jess McConnell, d/b/a McConnell Pest Control, and it is not contended by anyone that the policy covered Termites, Inc. It is the contention of McConnell, however, that as the work at Mrs. Loyd's house was done solely by the corporation, McConnell had no reason to believe that a claim was being made against him. The defendant, Jess McConnell, therefore, argues that he was not obligated to advise the plaintiff of any claim against him since he could not be liable, and since he had no reason to believe that the claim was being pressed against anyone other than the Termites, Inc. It is admitted, however, that no notice was given ...


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