American Casualty Co. v. Callaway , 75 Ga. App. 799 ( 1947 )

1. The court correctly construed the policy of insurance, in holding that it covered the semi-trailer truck involved, and the verdict directed for the plaintiff on this question was proper.

2. Whether the defendant was liable for attorney's fees, because of its bad faith, was a question for the jury, and the verdict in favor of the plaintiff on this issue was authorized by the evidence.

DECIDED SEPTEMBER 6, 1947. REHEARING DENIED OCTOBER 3, 1947. This is an action by W. W. Callaway as plaintiff, against American Casualty Company as defendant, to recover $1377.21, with interest, and $500 as attorney's fees. The action is based on the refusal of the defendant to assume certain liabilities incurred by the plaintiff, under an indemnity-insurance policy issued by it to the plaintiff, on two automobile trucks described therein. The plaintiff contended that one of the trucks included in the policy was involved in a collision with another automobile, driven by Mrs. Exie Smith, on account of which he had been sued and caused to pay out the principal sum for which this action was brought, and that the defendant was indebted to him in said amount, and for reasonable attorney's fees because of its bad faith in declining liability and in refusing to defend the suit brought against the plaintiff. The defendant contended that it was not liable to the plaintiff because the policy issued by it did not include or cover the particular automobile which was involved in the collision. The issue made by these respective contentions is the controlling point in the case. The trucks were described in the policy as "1940 Chevrolet 1 1/2 Ton [Motor number] M T-33503, [and] 1938 Chevrolet 1 1/2 Ton [Motor number] M 1762078."

The plaintiff testified in part as follows: "I bought some insurance from the American Casualty Company. I made my trade with Mr. Paul Henderson. . . As to what were the circumstances and details leading up to the execution and delivery of this policy to me; well, Mr. Henderson had been carrying my insurance for sometime on other trucks, he would come over there, if I had a truck to insure why I just gave him the business, and Mr. Henderson would go to the trouble and time to secure the numbers. On this particular occasion which was December 14, 1943, Mr. Henderson came to my place. . . I had some trucks there that I wanted to be insured; I wanted liability insurance. . . I had two trucks that I wanted insured; they were Chevrolet trucks; one of them was just a straight Chevrolet, ton and a half job, and one of them was a semi-trailer. Yes, they were both there at the time Mr. Henderson came over there to insure them. As to what he did [when] he came over there with reference to identifying the trucks; well . . I told him I had some trucks I wanted to insure and he went and got the numbers. He didn't deliver the policy at that time; it was ten days before I got my policy. I said that one of these was a straight truck and the other one was a semi-trailer. This semi-trailer truck, it has a tractor that pulls a trailer; the front end of the trailer is connected to the tractor, over the back wheels of the tractor with a fifth wheel, and the trailer has two back wheels, makes it a six-wheel job; in other words, the trailer has wheels at the rear end, but none at the front. You can't haul anything on the tractor; it is just an engine that pulls the trailer. You couldn't haul anything on the trailer without the tractor. Yes, Mr. Henderson saw that vehicle there at the time, and wrote me this insurance, and I paid the premium. . . The truck which I have described as the semi-trailer truck was involved in an accident with Mrs. Exie Smith of Dalton. Yes, she sued me."

The plaintiff also testified that the suit resulted in a verdict against him, and that his total expenses in defending the action and paying off the judgment were $1377.21, the principal amount sued for in this case; and that "this automobile of mine that was in the accident with Mrs. Smith was one of the automobiles which Mr. Henderson saw and examined at the time he got the description of my automobiles on which this policy here was issued." The plaintiff introduced in evidence the insurance policy and certain correspondence had by his attorneys with the company and its attorneys, showing that he sought to convince the company that it should assume liability in the matter, and the refusal of the company to do so; and testimony to the effect that reasonable attorney's fees in the case would be $500 to $750.

No evidence was offered by the defendant. Thereupon the court charged the jury as to the contentions of the parties, and instructed the jury to return a verdict in favor of the plaintiff for the $1377.21, with interest thereon, and to determine whether or not a verdict should be returned in favor of the plaintiff for reasonable attorney's fees for the prosecution of the case. In this connection the court gave in charge the Code, § 56-706, relating to the liability of insurance companies for damages and attorney's fees, where it is made to appear to the jury that the refusal to pay the loss was in bad faith, but limiting the charge to attorney's fees as no damages as therein provided were claimed by the plaintiff. The jury returned a verdict for the plaintiff for $375 as attorney's fees. The defendant filed an amended motion for a new trial which was refused. The exception here is to the ruling of the court on the motion for new trial. The general grounds of the motion for new trial, and the three special grounds included in the amendment thereto, present but two questions for our decision. Did the court correctly hold that the semi-trailer truck of the plaintiff, the truck which had the collision with Mrs. Smith's car, was covered by the policy of indemnity insurance issued by the defendant to the plaintiff; and, if so, was the defendant liable for reasonable attorney's fees because of bad faith in declining to recognize its liability? We will consider these questions in their proper order.

1. "The construction of a contract is a question of law for the court. Where any matter of fact is involved (as the proper reading of an obscurely written word), the jury should find the fact." Code, § 20-701. We think it was the duty of the court to construe the contract of insurance in this case. In so doing the court had to consider two provisions of the policy. Under the head of "Insuring Agreements" is this paragraph: "IV. Automobile defined, trailers, two or more automobiles. Except where specifically stated to the contrary, the word ``automobile' wherever used in this policy shall mean the motor vehicle, trailer or semitrailer described in this policy. The word ``trailer' shall include semi-trailer." Under the head of "Exclusions" is this provision: "This policy does not apply: . . (c) under coverages A [relating to bodily injury liability] and B [relating to property damage liability], while the automobile is used for the towing of any trailer owned or hired by the named insured and not covered by like insurance in the company; or while any trailer covered by this policy is used with any automobile owned or hired by the named insured and not covered by like insurance in the company." The plaintiff relies upon the first of these quoted provisions to sustain his contentions that the truck involved in the collision with Mrs. Smith's car was covered by the insurance, and the defendant relies upon the latter provision to sustain its contentions that said truck was not covered by the policy.

Certain well-known rules of construction are applicable to the contract under consideration. "The cardinal rule of construction is to ascertain the intention of the parties. If that intention be clear, and it contravenes no rule of law, and sufficient words be used to arrive at the intention, it shall be enforced, irrespective of all technical or arbitrary rules of construction." Code, § 20-702. "The intention of the parties may differ among themselves. In such case, the meaning placed on the contract by one party, and known to be thus understood by the other party, at the time, shall be held as the true meaning." § 20-703. In applying these rules to this case it should be remembered that the plaintiff testified, and his testimony was not contradicted, that the agent writing the insurance saw the two trucks the plaintiff intended to insure, one of which was a semi-trailer truck, and the same truck that was involved in the collision with Mrs. Smith's car. This evidence, which must be taken as true in the absence of a denial by the defendant, indicates clearly that the intention of the plaintiff was to insure the semi-trailer truck, and that this intention was known to the company through its agent who saw both trucks and took their motor numbers which were inserted in the policy. The company makes the point here that the evidence did not show that Mr. Henderson was the agent of the company, but we think this was inferable from the testimony showing that Mr. Henderson was the only person with whom the plaintiff dealt in purchasing the insurance, and that the policy issued by the company was delivered about ten days thereafter to the plaintiff.

Other rules of interpretation to be applied to the construction of contracts include the following: "If the construction is doubtful, that which goes most strongly against the party executing the instrument, or undertaking the obligation, is generally to be preferred." Code, § 20-704 (5). "If any doubt should exist in regard to the construction of the contract of insurance, the doubt should be resolved in favor of the insured, and the policy should be liberally construed in favor of the validity of the contract and against the insurance company." Mutual LifeInsurance Co. v. Durden, 9 Ga. App. 797 (10) (72 S.E. 295). This case states the general rule that if the policy is so drawn as to require interpretation, and to be fairly susceptible of two different constructions, the one will be adopted that is most favorable to the insured. See also Johnson v. Mutual LifeInsurance Co., 154 Ga. 653 (115 S.E. 14), and citations therein. In construing insurance contracts, "any exception in a policy of insurance altering the terms of general liability is to be taken and construed most strongly against the insurer." AtlasAssurance Co. v. Lies, 70 Ga. App. 162, 165 (27 S.E.2d 791). Under the foregoing rules of construction and interpretation, as applied to the contract in this case, we think the court was right in holding as a matter of law, under the facts as they appeared upon the trial, that the semi-trailer truck in question was covered by the policy, and in directing the jury to find a verdict for the plaintiff as to the principal amount for which he sued.

2. As to the question of attorney's fees, our law provides that they may be recovered, in a reasonable amount, in an action against an insurance company refusing to pay a loss, where "it shall be made to appear to the jury trying the case that the refusal of the company to pay said loss was in bad faith." Code, § 56-706. The record shows that the plaintiff, through his attorneys, in letters to the defendant and its attorneys, called the attention of the defendant to the specific provisions of its policy under which it was liable to the plaintiff. The defendant was necessarily familiar with all the terms of its policy, and it is inferable that it knew the circumstances surrounding the writing of the policy, including the fact that its agent saw the trucks and knew exactly the types of vehicles the policy was intended to cover, and the particular trucks the plaintiff intended to insure. "Bad faith," within the meaning of the law, is not the equivalent of actual fraud, but is "any frivolous or unfounded refusal in law or in fact" to pay according to the insurance contract, after a proper demand. See Missouri State Life Ins. Co. v. Lovelace,1 Ga. App. 446, 466 (58 S.E. 93), and Metropolitan InsuranceCo. v. Lovett, 50 Ga. App. 763, 768 (179 S.E. 253). "Bad faith is usually a jury question." Liberty Mutual Insurance Co. v. A. C. L. R. Co., 66 Ga. App. 826, 834 (19 S.E.2d 377). We think that whether or not the action of the defendant, in refusing to recognize its liability, was or was not in bad faith, under the facts of this case, was a question decidable solely by the jury. The court properly submitted that question to the jury, and we can not say as a matter of law that its finding was not authorized.

3. One other question made by the bill of exceptions relates to the overruling by the court of a general demurrer to the petition of the plaintiff, to which exceptions pendente lite were filed. The question raised by the demurrer was whether the petition showed on its face that the semi-trailer truck was covered by the insurance policy. For the reasons stated in the first division of this opinion the court did not err in overruling the demurrer and the exceptions to that ruling are without merit.

4. The evidence supported the verdict as directed by the court, and for attorney's fees as found by the jury, and the court was right in overruling the motion for new trial.

Judgment affirmed. Sutton, C. J., concurs. Felton, J.,concurs in the judgment.