Summary
In Ellis v. Southern Farm Bureau Casualty Ins. Co., 233 Miss. 840, 103 So.2d 357 (1958); Benton v. Canal Ins. Co., 241 Miss. 493, 130 So.2d 840 (1961), and United States Fidelity and Guaranty Co. v. Mathis, 236 So.2d 730 (Miss.
Summary of this case from Universal Underwriters Ins. Co. v. American, Etc.Opinion
No. 40816.
June 9, 1958.
1. Insurance — automobile liability policy — restrictive endorsement — construction.
Where there was nothing ambiguous in restrictive endorsement of an automobile liability policy limiting coverage to named insured and members of his family, such endorsement would be construed according to usual rules of law applicable to contracts.
2. Insurance — automobile liability policy — endorsement limiting coverage to named insured and members of his family supported by adequate consideration and was valid.
Where at time insured entered the armed forces insurer had unquestioned right to cancel automobile liability policy, and there was no restriction on the right to cancel, and parties agreed to that endorsement modifying the policy as to persons covered, limiting such coverage to named insured or members of his family, was in consideration of continuance of the policy, such endorsement was supported by adequate consideration and was valid.
Headnotes as approved by Arrington, J.
APPEAL from the Circuit Court of Harrison County; LESLIE B. GRANT, J.
Thos. J. Wiltz, Biloxi; Pittman Pittman, Hattiesburg, for appellant.
I. The Court should have entered judgment in favor of appellant and against the garnishee as the exclusionary rider in question was null, void and ineffective, being without consideration. Bassi v. Springfield Fire Marine Ins. Co., 57 Cal.App. 707, 208 P. 154; Wackerle v. Pacific Employers Ins. Co., 219 F.2d 1, 52 A.L.R. 2d 814, 349 U.S. 955, 99 L.Ed. 1279, 75 S.Ct. 884; Maryland Cas. Co. v. First Natl. Bank of Atlanta, Tex., 82 F.2d 465; Titus v. Whiteside (D.C.), 228 Fed. 965; Maine St. A.P.R. Co. v. Los Angeles Traction Co., 129 Cal. 301, 61 P. 937, 52 A.L.R. 826; Federal Life Cas. Co. v. Robinson, 28 Ala. App. 1, 178 So. 549, 235 Ala. 308, 178 So. 551; American Eagle F. Ins. Co. v. McKinnon, 36 Ariz. 409, 286 P. 183; American Building Maintenance Co. v. Indemnity Ins. Co., 214 Cal. 608, 7 P.2d 305; Isadore v. Washington Fire Marine Ins. Co. (La.), 75 So.2d 247; Fidelity Cas. Co. of N.Y. v. Calicott (La.), 75 So.2d 247; Bower Kaufman v. Bothwell, 152 Md. 392, 136 A. 892, 5 2A.L.R. 158; Rice v. Provident Life Acc. Ins. Co., 231 Mo. App. 560, 102 S.W.2d 147; Hagelin v. Commonwealth Life Ins. Co., 106 Neb. 187, 183 N.W. 103; Willetts v. Sun Mut. Ins. Co., 45 N.Y. 45, 6 Am. Rep. 31; Massachusetts Bonding Ins. Co. v. Florence (Tex.), 216 S.W. 471, 52 A.L.R. 830; 12 Am. Jur., Secs. 410, 427 pp. 988, 1004-05; 13 C.J. 592; 44 C.J.S., Sec. 281 p. 1120; Mississippi Digest, Insurance, Key 146 (3).
II. The exclusionary rider given effect in the Court below was invalid for the reason that the same was squarely in conflict with the provisions of the Motor Vehicle Safety Responsibility Act (Sec. 8285-01, et seq., Mississippi Code of 1942), which provisions are read into the policy, and would preclude the application of the rider in question. Farm Bureau Auto Ins. Co. v. Martin, 97 N.H. 196, 84 A.2d 823, 29 A.L.R. 2d 811, 817; Atlantic Cas. Ins. Co. v. Bingham, 10 N.J. 460, 92 A.2d 1, 18 N.J. Super. 170, 86 A.2d 792, 34 A.L.R. 2d 1293; Sec. 8285-21 (b-2, f-1, 2, 4), Code 1942.
III. The Court erred in failing to enter judgment against the garnishee insurance company for the full amount of judgment below and over and above the policy limits of the policy by virtue of the utter failure and neglect of the insurance company to display any element of good faith, and in arbitrarily failing and refusing to defend the suit. Southern States F. Ins. Co. v. Hand-Jordan Co., 112 Miss. 565, 173 So. 578; United States F. G. Co. v. Yazoo Cooperage Co., 157 Miss. 27, 127 So. 579; U.S.F. G. Co. v. Cook, 181 Miss. 619, 179 So. 551; Commercial Cas. Ins. Co. v. Tri-State Transit Co., 190 Miss. 560, 1 So.2d 221, 133 A.L.R. 1510; Boutwell v. Employers' Liability Assur. Corp. (Miss.), 175 F.2d 597; Anno. 49 A.L.R. 2d 711; Vol. VI, Blashfield's Cyclopedia of Automobile Law Practice, p. 183.
Wallace Greaves, Gulfport, for appellee.
I. Where provisions are in conflict or ambiguous, the policy is construed more strongly against the insurer, but where the terms are clear and unambiguous, they are construed like any other written contract according to the intention of the parties. National Bankers Life Ins. Co. v. Cabler, 229 Miss. 118, 90 So.2d 201; Farmers Mut. Ins. Assn. v. Martin, 226 Miss. 515, 84 So.2d 688; Myles v. National Life Acc. Ins. Co., 223 Miss. 181, 77 So.2d 815; Stewart v. American Home Fire Ins. Co. (Miss.), 52 So.2d 30; Camden Fire Ins. Assn. v. New Buena Vista Hotel Co., 199 Miss. 585, 24 So.2d 848; 44 C.J.S., Insurance, Secs. 223, 260, 300; Appleman's Automobile Liability Insurance, p. 175.
II. The exclusionary rider or endorsement was valid; therefore, the Lower Court committed no error in dismissing the garnishment proceedings as to appellee. Kentucky Farm Bureau Mut. Ins. Co. v. McMullin, 280 S.W.2d 882; Old Colony Ins. Co. v. Berryman Realty Co., 234 S.W. 748; Federal Life Cas. Co. v. Robinson (Ala.), 178 So. 549; State Automobile Ins. Assn. v. Kooiman, 143 F. Supp. 614; Wildman v. Government Employees Ins. Co., 301 P.2d 465; Boole v. Union Marine Ins. Co., 198 P. 416; Crook v. State Farm Mut. Ins. Co., 98 S.E.2d 427; State Farm Mut. Automobile Ins. Co. v. Arhgyris, 55 S.E.2d 16; Peeler v. U.S. Cas. Co., 148 S.E. 261; Temple v. Va. Auto. Mut. Ins. Co., 25 S.E.2d 268, 274; Wackerle v. Pacific Employers Ins. Co., 219 F.2d 1; Rice v. Provident Life Acc. Ins. Co., 102 S.W.2d 147; Massachusetts Bonding Ins. Co. v. Florence, 216 S.W. 471; Hartford Acc. Indemnity Co. v. Breen, 153 N.Y.S.2d 732; Lauritano v. American Fidelity Fire Ins. Co., 147 N.Y.S.2d 748; Maryland Cas. Co. v. First Natl. Bank of Atlanta, 82 F.2d 465; Hartford Fire Ins. Co. v. Aaron (Ala.), 147 So. 628; Simpson Sales Co., Inc. v. British General Ins. Co., Ltd. (Ala.), 40 So.2d 409; Bankers Shippers Ins. Co. of N.Y. v. Blackwell (Ala.), 51 So.2d 498; Great American Ins. Co. v. Dover, 122 So. 658; Alabama State, Etc., Ins. Co. v. Long Clothing Shoe Co. (Ala.), 26 So. 655; Moore v. Williamson (Ala.), 104 So. 645; Gray Sons v. Satuloff Bros. (Ala.), 105 So. 666; May v. Robinson, 130 So. 81; Cowin v. Salmon, 13 So.2d 190; Commercial Credit Co. v. Perkins (Ala.), 184 So. 178; Spencer v. Richardson (Ala.), 175 So. 278; 12 Am. Jur., Contracts, Secs. 410-12; 29 Am. Jur., Insurance, Sec. 238; Anno. 52 A.L.R. 2d 833.
III. The exclusionary rider in question does not conflict with the Motor Vehicle-Safety Responsibility Acts of the State or the State of Arkansas, nor do the provisions of same preclude the application of the rider. Farm Bureau Automobile Ins. Co. v. Martin, 84 A.2d 823; State Automobile Ins. Assn. v. Kooiman, supra; Utah Farm Bureau Ins. Co. v. Chugg, 315 P.2d 277; Wildman v. Government Employees Ins. Co., supra; State Farm Mut. Automobile Ins. Co. v. Arghyris, supra.
IV. Appellee was not lacking in good faith but was justified in declining to defend against appellant's suits, and is not liable for the full amount of her judgment or any part of same. Weis v. State Farm Mut. Automobile Ins. Co., 64 N.W.2d 366; U.S.F. G. Co. v. Wilson, 184 Miss. 823, 185 So. 802; State Automobile Ins. Assn. v. Kooiman, supra; Wildman v. Government Employees Ins. Co., supra; Crook v. State Farm Mut. Automobile Ins. Co., supra; Mannheimer Bros. v. Kansas Cas. Surety Co., 184 N.W. 189; Schuler v. Murphy, 91 Miss. 518, 40 So. 810; Ford v. Mutual Life Ins. Co. of N.Y., 194 Miss. 519, 13 So.2d 45; Anno. 49 A.L.R. 2d 688, 701-08.
There is no dispute in the facts and the case was tried on a stipulation of facts.
On January 3, 1952, Southern Farm Bureau Casualty Insurance Company issued to Arvin Hubbard an automobile liability policy covering a Ford automobile and insuring Hubbard against liability for injuries to others. The policy provided:
"The unqualified word insured, wherever used in Coverages A and B and in other parts of this policy, when applicable to such coverages, includes the named insured and, except where specifically stated to the contrary, also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is with the permission of the named insured."
After the issuance of the policy, Hubbard become a member of the armed forces of the United States, and Southern Farm Bureau Casualty Insurance Company, upon learning of this fact, requested a restrictive endorsement be made a part of the policy. The company had the right under the terms of the policy to cancel the policy at anytime upon giving Hubbard five days notice. Hubbard agreed to the restrictive endorsement, signed it, and it was attached to the policy in the following language:
"Subject to all other terms and conditions of the policy to which this endorsement is attached it is understood and agreed by and between the Company and the Named Assured that as a part of the consideration for the issuance or continuance of this policy, in addition to the premium charged, it is hereby understood and agreed that the policy to which this endorsement is attached shall not be in force and effect while any motor vehicle which would be covered by this policy is being operated by any driver other than the named insured or member of his family.
"This endorsement shall not in any way penalize or effect the interest of a lien-holder under any mortgage or lien on the motor vehicle described in the policy providing the company has prior notice of such interest.
"All provisions of said policy in conflict with this endorsement are hereby modified to conform to this endorsement. All other provisions shall remain the same. Nothing herein contained shall alter, vary, waive, or extend any provision or condition of the policy except as herein provided.
"Attached to and forming part of policy number 232504 issued to Arvin Hubbard of Harrisburg, Arkansas.
"Effective date of this endorsement 9-2-53.
"Southern Farm Bureau Casualty Insurance Company
"Joe C. Hardin, President
"Countersigned at Jackson, Miss. on 9-2-53
"I hereby agree to the terms of this endorsement.
"/s/ Arvin Hubbard"
No premium adjustment or change in the amount of the premium was made as a result of the restrictive endorsement.
While the policy was in force with the premium paid and after the effective date of the restrictive endorsement, the automobile described in the policy was being operated by a person, with the permission of Arvin Hubbard, the insured, who was not the named insured and who was not a member of the family of the named insured, when said automobile was involved in an accident in which the appellant, Mrs. Bernadette Ellis, received personal injuries. Mrs. Ellis filed suit against Arvin Hubbard, who thereafter died, and judgment was rendered against the legal representative of Arvin Hubbard, deceased, in the sum of $20,000. Southern Farm Bureau Casualty Insurance Company did not defend said suit, relying upon the restrictive endorsement which excluded coverage of the policy when the automobile was being operated by any driver other than the named insured or a member of his family. The judgment against the legal representative of Arvin Hubbard was by default.
Mrs. Bernadette Ellis, holder of the judgment aforementioned, sued out a writ of garnishment against Southern Farm Bureau Casualty Insurance Company, who answered denying liability to the legal representative of Arvin Hubbard, deceased. The stipulation of facts provided in part as follows:
"It is stipulated and agreed that the above facts are admitted as true and correct as between the parties hereto and that the matter may be submitted to the Court upon this stipulation of fact as to the applicability and validity vel non of the exclusionary endorsement referred to aforesaid and attached to the policy of insurance; that if this endorsement can be given legal effect, then judgment should be entered for the garnishee, that if said endorsement cannot be given legal effect as contended by the plaintiff, then judgment should be entered against the garnishee, to the extent of applicable policy limits."
It was also stipulated that the restrictive endorsement which constituted a modification or restriction upon the original coverage of the policy would have to be supported by a proper and sufficient consideration; that plaintiff, Mrs. Bernadette Ellis, contends that there was no sufficient consideration and garnishee, Southern Farm Bureau Casualty Insurance Company, contends that there was sufficient consideration. The issues thus made on the contest of the answer of the garnishee, Southern Farm Bureau Casualty Insurance Company, was resolved in favor of the garnishee and the court dismissed the garnishment proceedings. From this judgment, Mrs. Bernadette Ellis appeals to this Court.
The question is whether the restrictive endorsement excluding from the coverage of the policy persons other than the named insured and members of his family, was invalid as being without consideration.
There is some conflict of authority on this question, the few reported cases involving facts somewhat different from those present in the instant case. See Wackerle v. Pacific Employers Insurance Company, 219 F.2d 1, 52 A.L.R. 2d 815, and annotation following.
(Hn 1) Since there is nothing ambiguous in the restrictive endorsement, it should be construed according to the usual rules of law applicable to contracts. This Court has held that "any new agreement between the parties to an existing executory contract, made in substitution or modification of the elder compact and bilateral in benefit or burden, has, like the primary contract, a sufficient consideration in the mutual advantages or obligations which it confers or imposes." Producers Gin Association v. Beck, 215 Miss. 263, 60 So.2d 642. This rule is applicable to insurance contracts. In Hartford Fire Insurance Company v. Aaron, 147 So. 628 (Ala.), the Court said:
"There is no doubt that a general agent with authority to enter into such contracts may make alterations to the same extent as the insurer could make, while such authority continued. Such contract could be altered or amended by a subsequent parol agreement. 26 Corpus Juris, 284. It is conceded that an alteration of the contract by subsequent agreement must be based on a consideration. Great Am. Ins. Co. v. Dover, 219 Ala. 530, 122 So. 658.
"But, so long as the contract remains executory and continuing, reliance upon its binding effect thus altered and continued by such agreement is a sufficient consideration, for thereby the insured is lulled into security by the assent of the company to such alteration, when otherwise he could have taken other steps for his protection. Ala. State, etc., Ins. Co. v. Long Clothing Shoe Co., 123 Ala. 667, 676, 26 So. 655.
"It is not different from the general rule which pertains to the right to modify any other written executory contract not governed by the statute of frauds. Such rule is that, if the contract is bilateral in its advantages and obilgations, it may be modified by mutual agreement before a breach without any other consideration than the mutual assent of the parties, to its continued binding effect upon both of them. Moore v. Williamson, 213 Ala. 274, 104 So. 645, 42 A.L.R. 981; Gray Sons v. Satuloff Bros. 213 Ala. 526, 105 So. 666; May v. Robinson, 221 Ala. 570, 130 So. 81."
(Hn 2) When Hubbard entered the armed forces the appellee had the unquestioned right to cancel the policy. There was no restriction of the right to cancel. The appellee requested the restrictive endorsement and Hubbard agreed thereto and signed the endorsement. The parties agreed that the endorsement modifying the policy as to the persons covered was in consideration of the continuance of the policy. This was sufficient consideration. In order to save cancellation of the policy, an advantage to Hubbard, he agreed to the endorsement, signed it, and it became a part of the contract. It is difficult to see how it can be argued that the new situation was not supported by a consideration. We hold that the endorsement was supported by adequate consideration and was valid.
The other assignments of error present no question justifying discussion.
Affirmed. Roberds, P.J., and Lee, Ethridge and Gillespie, JJ., concur.