State Farm Mutual Automobile Insurance v. Collins

1. The binder receipt contained all the essential elements of a contract of insurance and was not subject to general demurrer.

2. Under the facts of this case the court did not err in admitting in evidence a certain advertisement showing what was included in the defendant insurance company's "full service" policy, since the defendant did not deny that the advertisement was its own.

3. Where the application was ambiguous in that it was for a new policy and at the same time for the reinstatement of an old policy, and the agent told the applicant that he would issue a new policy and issued a binder receipt which he could do only upon application for a new policy, the binder receipt is conclusive on the company that the application was for a new policy.

4. Where, under the facts of the case it is conclusively shown, by virtue of a written agreement, that the agent is acting as agent for the insurance company in receiving an application for insurance and in communicating the application for insurance to the company by mail, the agent selected the mails as agent for the company, and the refusal on the part of the company to issue the insurance is not binding on the plaintiff until she received actual notice of the refusal.

5. Under the facts of this case, notice to the plaintiff that the agent did not have authority to bind the company in negotiating for a reinstatement of an old policy would not apply where the agent took the application for both the reinstatement of an old policy and a new policy, and agreed to procure a new policy.

6. The refusal to strike counts 2 and 3 was harmless.

7. The allowance of count 4 by amendment, over objections, was harmless.

8. The legal evidence in the case demanded the verdict directed.

DECIDED MAY 29, 1947. REHEARING DENIED JUNE 27, 1947. Willene Collins sued the State Farm Mutual Automobile Insurance Company upon a temporary "binder" insurance receipt covering the plaintiff's 1940 Ford coupe automobile. The petition alleged in count 1 that the "binder" receipt was given in connection with her application to the defendant for the insurance described in the application. The petition further alleged in count 1: "5. That said contract of insurance was issued in consideration of the application and payment of the first premium, called the membership fee, of fifteen dollars and fifty cents ($15.50), and according to the terms of the contract was to run for six months from the effective date thereof, which date from which the insurance was effective as stated in the contract was November 24, 1945. 6. That, according to the terms of the contract, the second premium of fifteen dollars ($15.00) was payable on December 15, 1945, and the balance of the amount due on the contract was payable on January 20, 1946. The total premium above and beyond the membership fee, which itself is nothing but a part of the premium, was twenty-nine dollars and thirty-five cents ($29.35). 7. That under the terms of said contract, plaintiff received "full coverage" which includes coverage for bodily injury and property damage liability, medical payments, comprehensive (fire, wind and theft), eighty per cent collision (one hundred per cent on all damage above two hundred and fifty dollars) and emergency road service. 11. That the loss caused by the accident and covered by the contract included total destruction of the insured automobile, demand for payment of which was then made as aforesaid; emergency road service and medical payments for plaintiff and two guests. 14. That the total loss caused by the accident and covered by the contract amounts to $1,643.46, an itemized statement of which is hereto attached and marked ``Exhibit A.' 15. That the said temporary contract executed by defendant in favor of your petitioner binds defendant to liability according to the terms of said contract and according to the terms of defendant's standard Full Service Automobile Policy which provides reimbursement for personal injury expense arising from the automobile insured for hospital, medical, surgical, dental, ambulance, professional nursing and funeral expenses up to $500 for the assured, $500 for each member of the assured's family, $500 for each guest of the assured and $500 for each pedestrian injured by the operation of an automobile by the assured. Liability is further provided for eighty per cent of all emergency road service and eighty per cent of the first $250 damage to the insured automobile and one hundred per cent of all damage to said automobile in excess of $250." Attached to the petition as Exhibit A was a statement of the damages claimed, $912 on the automobile, $446.82 medical expenses for the plaintiff, $109.63 expenses for the injury to J. M. Whidden, a guest injured in the accident to the plaintiff's automobile and $175.01 expenses for injuries to Mrs. Sarah Burke Hall, a guest injured in the accident. Also attached to the petition was the binder receipt sued on as follows:

"Notice to the Applicant. This receipt is to be issued only when written application has been made to the Company for policy of Insurance. Date 11-24-1945.

                 State Farm Mutual Automobile Insurance

                     Company, Bloomington, Illinois

Received of
Name          Willene Collins
Address       Savannah, Georgia Amount indicated below for insurance
specified on car described as follows:
Model year           1940        Check coverage applied for
Trade Name            Ford       Bodily Injury  Property Damage
Type body           Conv. Coupe    Liability
Serial number                    Medical Payments
Motor number       18-5280045    Comprehensive (Fire, Wind and Theft)
                           Collision, 80%
                           Collision, $ ____ ded, or conv

Farm Liability (Inc. medical pay)
                           Farm Employer's Liab. (Inc. medical pay)
                           Residence Liability (Inc. medical pay)
                                               Mem. Fee     Premium
Amount                                           15.50       29.35
Cash                                             15.50
                                     Bal.                    29.35
Check
Time Check
Date checks due      12/-15-15.00  Jan. 20-46
Date Insurance effective        11/24/45
                                  (Over) /s/ E. C. Sharp
Agent"
   [On the back of the receipt there was the following:]

"The policy as issued constitutes the entire contract between the assured and the Company. The initial term of insurance will be for a period of not exceeding six months from the date insurance is effective as shown on this receipt. To continue insurance in force for a succeeding period of six months, payment of the renewal premium must be made to the company at its Home Office on or before the expiration of the initial term.

If you have an accident
Report promptly, giving full particulars.
Never acknowledge liability in an accident.
             Always secure the names of disinterested witnesses.

If another automobile is involved secure its license number.

If you exchange cars notify us immediately to transfer your insurance.

This Company is operated for the benefit of its policyholders and the greater the cooperation given by the members, the greater benefit they will derive from the Company in sound protection at the lowest cost consistent with safety.

Notify your Agent
Stamped:         E. Charles Sharp
                 Dist. Manager, 501 Blun Building
               Phones: Office 3-8863 — Night 2-0900
Savannah, Georgia"

There was written by hand across "Check Coverages Applied For" the following: "Full Service."

The defendant demurred generally to the petition. It demurred to counts 2 and 3 on the ground that they were incomplete. The defendant excepted to the overruling of these demurrers and to certain special demurrers, the exceptions to which special demurrers are waived. By amendment the plaintiff attached to the petition a photostatic copy of the binder receipt sued on and a schedule alleged to have been delivered to the plaintiff as a part of the contract showing the coverage contracted for and by amendment added the names of her two guests as parties plaintiff. The demurrer to this amendment was overruled and the defendant excepted. The plaintiff amended the petition by adding count 4. In this amendment she sought to incorporate paragraphs 1 through 21 of the first count by reference and to add a claim for expenses of the injuries to her guests in her name for their use. This amendment was allowed over the objection of the defendant to which it excepted, the objection being that the count was incomplete and there was no right shown in the plaintiff to sue and recover for the benefit of third persons. Upon the trial, the court directed a verdict for the plaintiff for $1,358.82 for her individual claim and for the plaintiff for the use of Sarah Burke Hall $175.01. The defendant's motion for a new trial was overruled. It excepted to that ruling and to the overruling of the various demurrers and to the allowance of the amendment adding count 4 over objections. 1. The first count was not subject to general demurrer. The petition alleged that the binder receipt covered certain risks named in the petition. The binder contained all the necessary elements of an insurance contract: subject-matter to which the policy should attach; the risk insured against (the term "full service" being ambiguous could be proved by extraneous evidence); the duration of the risk; the amount of liability; and the consideration to be paid. Todd v. German-AmericanInsurance Company, 2 Ga. App. 789 (59 S.E. 94). The contention that the binder did not show the duration of risk is without merit because the duration was stated on the reverse side of the receipt. Since the word "over" appeared on the face of the receipt everything on the reverse side was made a part of the face of the receipt. See, in this connection, In re Johnston's Estate, 64 Cal.App. 197 (221 P. 382). The amount of indemnity could be proved under the provision for "full service," without violating the rule that a written contract can not be added to by parol.

2. The binder receipt was issued in connection with an application for insurance. The application was for a "full service" policy which included: "Bodily injury liability, $10,000 One person; $20,000 one accident; Property Damage Liability, $5,000 each accident; Medical Payments, $500 each person; Bail Bond expense, 80% of actual expense; Comprehensive (Including Fire Theft) Actual Cash Value; Collision — 80%, 80% of Actual Cash Value; Loss of use, As provided in the policy; Emergency Road Service, 80% of actual expense." An advertisement showing what a full coverage policy was was also introduced in evidence. While the advertisement was not signed, it was a printed advertisement and in the absence of evidence by the company that it was not their advertisement, it was admissible with the application to show what full service meant.

3. The application indicated that it was for a new policy and for the reinstatement of an old policy. Such an application was an ambiguity under the facts because the agent taking the application did not have authority to issue a binder receipt in connection with an application for reinstatement but did have authority in connection with an application for a new policy. The evidence was undisputed that the agent told the plaintiff he would issue her a new policy. This plus the issuance of the binder receipt is conclusive on the company that the application was for a new policy.

4. The receipt contained the following notice: "Notice to the applicant. This receipt is to be issued only when written application has been made to the company for policy of insurance." The signing of the receipt by the insurance agent in connection with the application and the receipt of and acceptance of the receipt by the plaintiff amounted to an agreement in writing that the agent was acting as agent for the company in receiving the application and any understanding that the agent was acting for the plaintiff in communicating the application to the company was without effect. Since the agent was the agent of the company in receiving the application, when he mailed it to the company he selected the mails as agent for his company and not for the plaintiff and the refusal on the part of the company to issue the insurance was not binding on the plaintiff until she received notice of the refusal, which was after the accident, though the notice of such refusal was mailed before the accident.

5. Under the facts of this case notice to the plaintiff that the agent did not have authority to bind the company in negotiating for a reinstatement of an old policy would not apply where he took the application for both and agreed to procure a new policy.

6. The refusal to strike counts 2 and 3 on demurrer was harmless because count 3 was the same as count 1 and no recovery was sought under count 2.

7. The allowance of count 4 by amendment over objections was error but harmless. The first count was not subject to general demurrer. There was no valid special demurrer to it because it sought recovery for guests. Count 1 stated a cause of action for the guest's expenses and the proof authorized the verdict for one guest. The contract to pay such expense was made by the company with the plaintiff for consideration paid by her and she is the only party under the law who can recover at law on a contract for the benefit of a third person. It will be noted that liability for expenses of guests is not dependent on liability of the plaintiff for negligence.

8. The legal evidence in the case demanded the verdict directed and if there was illegal evidence admitted it was harmless. The same applies as to any expression of opinion by the judge as to what had been proved.

The rulings on the demurrer and the allowance of the amendment do not require a reversal of the case and the court did not err in overruling the motion for a new trial.

Judgment affirmed. Sutton, C. J., and Parker, J., concur.