The facts of this case were such that an independent insurance agent or broker was found to be an agent of an insured corporation. As such, the Georgia Court of Appeals held that notice to him of a lawsuit against the insured was not notice to the insurer.

The insurance company's agency contract with the individual, who owned an agency bearing his name, was determined by the court to create an independent contractor relationship between him and the insurer. The contract stated that he would "....provide all usual and customary services of an insurance agent on all insurance contracts placed by the Agent with the Company."

A principal of the insured corporation was a brother-in-law of the agent/broker. He relied on his in-law to procure needed business insurance and to determine amounts of insurance and the insurance company. The insured was sued for alleged illegal use of software materials and, in the process, for copyright infringement. The principal told his insurance counselor (brother-in-law) of the situation promptly upon service of suit. The latter advised that the pertinent policy did not cover the allegations, an opinion that was accepted by the insured.

The insured decided to file notice of claim with the insurance company 18 months after service of the suit, largely in an effort to secure payment of defense costs of over one million dollars. The insurance company filed a motion for summary judgment based on failure of the insured to give proper notice to the insurer as required by the policy. The insured appealed trial court grant of the insurer's motion.

The trial court took notice of the fundamental condition precedent in liability policies that insurers be given timely notice and delivery of suit papers. It stressed that "....neither the language of the policy nor anything stamped upon the face of the policy gave apparent authority to the independent insurance agent to receive the notice required to be given to the insurer...."

A distinction was made between the situation under review and one where "....the terms of a policy or instructions stamped on the face of a liability policy instruct the insured that it is to provide notice of suit, either to the independent insurance agent or the insurer." Here, the independent insurance agent or broker was the agent of the insured, a condition underscored by the familial relationship and the absence of instructions beyond those for giving notice of suit to the insurer.

The trial court grant of summary judgment for the insurer was affirmed. It did not have a duty to defend. (SOUTHEASTERN EXPRESS SYSTEMS, INCORPORATED ET AL., Appellants v. SOUTHERN GUARANTEE INSURANCE COMPANY OF GEORGIA, Appellee. Georgia Court of Appeals. No. A97A0050. February 17,.1997. CCH 1997 Fire and Casualty Cases, Paragraph 6035.)