Tennessee Farmer's Mutual Insurance Company v. Billy Wagner and wife Mona G. Wagner ( 1995 )

TENNESSEE FARMERS MUTUAL )
INSURANCE COMPANY, )
)
Plaintiff/Appellee, )
) Appeal No.
) 01-A-01-9505-CV-00190
VS. )
) Lawrence Circuit
) No. C 13595
BILLY WAGNER, and wife, )
MONA G. WAGNER,
Defendant/Appellant.
)
)
)
FILED
Dec. 1, 1995
Cecil Crowson, Jr.
COURT OF APPEALS OF TENNESSEE Appellate Court Clerk
MIDDLE SECTION AT NASHVILLE
APPEALED FROM THE CIRCUIT COURT OF LAWRENCE COUNTY
AT LAWRENCEBURG, TENNESSEE
THE HONORABLE WILLIAM B. CAIN, JUDGE
PAUL B. PLANT
HARWELL, PLANT & CHEATWOOD
225 MAHR AVENUE
P. O. Box 399
Lawrenceburg, Tennessee 38464
Attorney for Plaintiff/Appellee
CHARLES W. HOLT, JR.
BOSTON, BATES & HOLT
235 Waterloo Street
P. O. Box 357
Lawrenceburg, Tennessee 38464
Attorney for Defendant/Appellant
AFFIRMED AND REMANDED
BEN H. CANTRELL, JUDGE
CONCUR:
TODD, P.J.
LEWIS, J.
OPINION
The issues in this appeal are (1) whether the misrepresentations in an
application for insurance made the policy void as to the applicant and (2) whether the
insurance was void as to the appellant's wife, who did not sign the application. The
Circuit Court of Lawrence County granted summary judgment to the insurance
company. We affirm.
I.
In December of 1988 Billy Wagner applied for insurance in his and his
wife's joint names to cover a dwelling they owned in Lawrence County. Although Mrs.
Wagner was present, she did not answer any of the questions on the application and
did not sign it. In response to a question on the form asking if the applicant had ever
had any fire, theft, or liability loss, Mr. Wagner answered "no". In fact, Mr. Wagner
had had several fire and theft losses, some as recent as 1985. Most of the losses
were covered by insurance.
After the dwelling was damaged by fire in June of 1992, the insurance
company refused to pay the claim and brought this action for a declaratory judgment.
The trial court held that there were no genuine issues of fact and that the insurance
company had no liability to Mr. and Mrs. Wagner.
II.
It is well established in this state that material misrepresentations in an
application for insurance will void the policy. Loyd v. Farmers Mutual, 838 S.W.2d 542
(Tenn. App. 1992); Milligan v. MFA Mutual Insurance Co., 497 S.W.2d 736 (Tenn.
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App. 1973). The legislature, however, has provided that insurance companies may
void a policy only if the misrepresentation is made with the actual intent to deceive,
or if it increases the risk of loss. Tenn. Code Ann. § 56-7-103.
Whether a misrepresentation increases the risk of loss is a question of
law, Billington v. Crowder, 553 S.W.2d 590 (Tenn. App. 1977), and we have held that
a misrepresentation that influences the judgment of the insurer in making the contract
increases the risk of loss within the meaning of the statute. Seaton v. National
Grange Mutual Insurance Co., 732 S.W.2d 288 (Tenn. App. 1987); Sloop v. Mutual
of Omaha Ins. Co., 55 Tenn. App. 656, 404 S.W.2d 265 (1966). The uncontradicted
proof filed in support of the motion for summary judgment in this case supports a
conclusion that the insurer relied on the information in the application, and that the
information influenced the insurer's judgment in deciding to issue the policy.
III.
a. Mr. Wagner
There can be no doubt that the trial judge properly granted summary
judgment to the insurance company on Mr. Wagner's claim.
b. Mrs. Wagner
Since Mrs. Wagner did not answer the questions on the application (she
was not even asked) and did not sign it, she argues that the misrepresentations do
not bar her right to recover under the policy. In her affidavit she says that she and Mr.
Wagner married in 1986 and that she was not aware of Mr. Wagner's prior loss
history.
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We think, however, that the misrepresentations in the application defeat
Mrs. Wagner's rights under the policy as well. In 43 Am. Jur. 2d Insurance § 1038 the
text writer states a general proposition that "In the absence of a contract or statutory
provision to the contrary, an insured is bound by representations contained in an
application signed by his own duly authorized agent." While this rule of law is most
often applied to situations where the agent misrepresents facts in reference to the
principal, we think it also applies to the agent's statements about himself where the
principal and agent jointly own the insured property and the agent signs the
application securing coverage for both.
There can be no doubt that Mr. Wagner was acting as the agent for Mrs.
Wagner. The application was in their joint names, but Mr. Wagner alone signed it.
The policy issued in their joint names was, therefore, obtained through the agency
of the husband. Either Mr. Wagner was acting as Mrs. Wagner's agent or the policy
should have been issued to Mr. Wagner alone.
If Mr. Wagner was not acting as Mrs. Wagner's agent, there is a related
doctrine that would effectively defeat her right to recover. In Woodmen of the World
Life Insurance v. Kinnaird, 874 S.W.2d 47 (Tenn. App. 1993), this court held that the
fraud of a beneficiary to a life insurance policy would allow the insurer to avoid
payment under the policy (and defeat the claims of the insured's heirs) even though
the insured herself had no part in the fraud. This court quoted at length from
Columbian Mutual Life Insurance Company v. Martin, 175 Tenn. 517, 136 S.W.2d 52
(1940), which established that innocent persons could not avail themselves of an
advantage gained by the fraud of another unless the innocent person had given value
or had materially changed his or her position in reliance on the transaction. (For the
rule applied to contracts generally see Restatement of the Law of Contracts § 477).
In this case there is no evidence that Mrs. Wagner gave any consideration separate
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and apart from that given jointly with Mr. Wagner. Therefore, she could not claim a
status superior to his.
The judgment of the trial court is affirmed and the cause is remanded
to the Circuit Court of Lawrence County for any further proceedings necessary. Tax
the costs on appeal to the appellants.
_________________________________
BEN H. CANTRELL, JUDGE
CONCUR:
_______________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION
_______________________________
SAMUEL L. LEWIS, JUDGE
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