Alford v. TUDOR HALL AND ASSOCIATES, INC.

330 S.E.2d 830 (1985)

J.A. ALFORD and wife, Mary V. Alford
v.
TUDOR HALL AND ASSOCIATES, INC.

No. 8430SC1117.

Court of Appeals of North Carolina.

June 18, 1985.

Holt, Haire & Bridgers by R. Phillip Haire, Sylva, for plaintiffs-appellants.

Morris, Golding and Phillips by Thomas R. Bell, Jr. and James N. Golding, Asheville, for defendant-appellee.

ARNOLD, Judge.

The sole question presented is whether the trial court erred in granting the defendant's motion for judgment notwithstanding the verdict.

Judgment notwithstanding the verdict was properly granted if all the evidence supporting plaintiffs' claim, taken as true and considered in the light most favorable to plaintiffs, was not sufficient as a matter of law to support a verdict for the plaintiffs. Hargett v. Air Service and Lewis v. Air Service, 23 N.C.App. 636, 638, 209 S.E.2d 518, 519 (1974), cert. denied 286 N.C. 414, 211 S.E.2d 217 (1975); Musgrave v. Savings & Loan Assoc., 8 N.C.App. 385, 392, 174 S.E.2d 820, 824 (1970).

The plaintiffs claim that defendant negligently failed to procure fire insurance on plaintiffs' house. The law is well-settled that an insurance agent or broker is not obligated to assume the duty of procuring a policy of insurance for a customer, Musgrave v. Savings & Loan Assoc., 8 N.C.App. 385, 393, 174 S.E.2d 820, 825 (1970), but that an agent or broker "who, with a view to compensation for his services, undertakes to procure insurance on the property to another, and who fails to do so, will be held liable for any damage resulting therefrom." Boney, Insurance Comr. v. Insurance Co., 213 N.C. 563, 566, 197 S.E. 122, 125 (1938) quoting 18 A.L.R. at 1214. See also Elam v. Realty Co., 182 N.C. 599, 602, 109 S.E. 632, 633 (1921).

In determining whether an agent has undertaken to procure a policy of insurance, a court must look to the conduct of the parties and the communications between them, and more specifically to the extent to which they indicate that the agent has acknowledged an obligation to secure a policy. Where "an insurance agent or broker promises, or gives some affirmative assurance, that he will procure or renew a policy of insurance under circumstances which lull the insured into the belief that such insurance has been effected, the law will impose upon the broker or agent the obligation to perform the duty which he has thus assumed." 3 Couch on Insurance 2d (Rev. ed.) § 25:46 (1984). Further, if the parties have had prior dealings where the agent customarily has taken care of the customer's needs without consultation, then a legal duty to procure additional insurance may arise without express and detailed orders from the customer and acceptance by the agent. Id.; see McCall v. Marshall, 398 S.W.2d 106 (Tex.1965).

Evidence that an agent took an application from the customer is sufficient to support a duty to procure insurance. See Musgrave v. Savings & Loan Assoc., 8 N.C.App. 385, 392-93, 174 S.E.2d 820, 824-25 (1970). A "bare acknowledgment" of a contract to protect the insured against casualty of a specified kind until a formal policy can be issued is enough, even if the parties' communications have not settled all the terms of the contemplated contract of insurance. Sloan v. Wells, 296 N.C. 570, 573, 251 S.E.2d 449, 451 (1979); see also Harrell v. Davenport, 60 N.C.App. 474, 477-78, 299 S.E.2d 308, 311 (1983) (parties' failure to agree on premium or policy period is not fatal to plaintiff's claim).

In the present case, the evidence considered in the light most favorable to the plaintiffs indicates that the defendant's employees at no time informed or assured plaintiffs that their new house was covered or that a policy of insurance would be sought from an insurer. The evidence shows that although plaintiff Julius Alford told defendant's employee John Hall that he needed insurance on his house, he also left open the question of the extent of coverage and the amount of the premium. Alford requested defendant to calculate premiums for several coverages and said that he would bring a check by later.

Alford testified that in previous dealings with insurance agents other than defendant it was his practice to decide how much coverage he wanted, then examine the premium quoted, and decide whether he was willing to pay the premium. Alford admitted that he had gone to defendant's office before November, 1981 and discussed with John Hall insurance on his barn. The record does not show, however, that Alford went ahead and insured the barn through defendant.

Further, Alford testified that his present house was insured by defendant, but he admitted that he merely assumed the policy, which had been originally purchased by his aunt, when he bought the house from her. Alford also stated that his company's liability policy was acquired through Tony Chambers when Chambers was with defendant's firm, but that Chambers left defendant a week or so later and formed his own firm and that defendant carried the policy through him afterwards and at the time of the fire.

The record indicates that defendant did not have sufficient information or authority to seek a formal policy of insurance for plaintiff, and we do not believe plaintiffs could have reasonably expected defendant to go forward on the basis of the conversation between Mr. Alford and John Hall on the Monday before Thanksgiving. Moreover, the evidence fails to show that the parties had a course of dealing whereby the defendant would obtain insurance for plaintiffs without their approval as to the amount of coverage.

From the record it appears that the defendant did not promise or undertake either impliedly or expressly to procure insurance for the Alfords. An agreement by the agent to calculate premiums at various levels of coverage, without more, is in the nature of preliminary discussion, and does not reflect an undertaking to secure insurance. Given this lack of an undertaking, the law does not impose on defendant a duty to attempt to contact plaintiff or to warn him of the lack of coverage on his house.

Our review of the record convinces us that the evidence is not sufficient to support an inference that defendant acknowledged an obligation to procure insurance, which is essential to plaintiffs' claim of negligence. The trial judge's grant of judgment notwithstanding the verdict was properly entered.

Affirmed.

MARTIN and PARKER, JJ., concur.