Case Title: Gulf Ins. Co. v. Grisham

Citation: 126 Ariz. 123, 613 P.2d 283

Docket Number: 

State: arizona

Court: Arizona Supreme Court

Date: 1980-06-17T00:00:00Z

Document:
126 Ariz. 123 (1980) 613 P.2d 283 GULF INSURANCE COMPANY, a Missouri Corporation, Appellee, v. Ralph R. GRISHAM, Jr., personal representative of the Estate of Richard John Grisham, deceased; Ralph R. Grisham, Jr., and Doris Jean Grisham, husband and wife; Hazel A. Martinez and Kenneth Martinez, husband and wife; John Doe, personal representative of the Estate of Gary E. Martinez, deceased; John Roes I to X; ABC Corporations I to X, Appellants. No. 14679. Supreme Court of Arizona, In Division. June 17, 1980. *124 Beer & Kalyna, by Donald P. Roelke, Phoenix, for appellee. Aboud & Aboud, by Michael J. Aboud, Tucson, for appellants. CAMERON, Justice. This is an appeal from the granting of defendant's motion for summary judgment. We have jurisdiction pursuant to Rule 19(e), Rules of Civil Appellate Procedure, 17A A.R.S. We must answer two questions on appeal: This being an appeal from the granting of a motion for summary judgment, we will review both the facts and the record in a light most favorable to the party against whom the summary judgment was taken. Hegel v. O'Malley Insurance Co., 122 Ariz. 52, 593 P.2d 275 (1979); Faris v. Doctors Hospital, Inc., 18 Ariz. App. 264, 501 P.2d 440 (1972); Biondo v. General Motors Corporation, 5 Ariz. App. 286, 425 P.2d 856 (1967). If there is any material issue of fact upon which reasonable people might reach a different conclusion, then the judgment must be reversed. Dutch Inns of America, Inc. v. Horizon Corp., 18 Ariz. App. 116, 500 P.2d 901 (1972). In May of 1974, Kenneth Martinez and Hazel A. Martinez purchased a Cessna 150 from Sawyer Aviation Company for their 17 year old son, Gary Martinez. Title to the aircraft was taken in Hazel Martinez' name. At the time of sale, Paul Sapp, Sales Manager for Sawyer Aviation, was asked by Kenneth Martinez if insurance on the aircraft could be obtained. Mr. Sapp contacted the Simis Insurance Agency and, on 21 May 1974, Richard Simis sent a letter to Kenneth Martinez informing him of the coverage for the aircraft. The letter stated as follows: Mr. and Mrs. Martinez received this letter on or about 23 May 1974. Enclosed with the letter were pilot record forms which Gary Martinez completed and returned to Simis Insurance Agency. Kenneth Martinez called Paul Sapp and told him that he expected the passengers to be covered, and in response Paul Sapp told Kenneth Martinez that the matter would be corrected. Neither Mr. or Mrs. Martinez contacted the Simis Insurance Agency, or Gulf, International Aviation Underwriters, Inc., but instead, according to Kenneth's testimony, relied upon Paul Sapp to request coverage in addition to that described in the letter of 21 May. Richard Simis testified that, on 10 July, the policy and invoice were mailed to Mr. Martinez. The policy specifically excluded passengers while riding in the airplane piloted by a student pilot. Although Kenneth denied receiving the policy, the amount stated on the invoice as the premium was paid by the Martinezes on 7 August 1974. On 14 August 1974, Gary Martinez, 17, a licensed student pilot, took Richard Grisham, 18, for a flight in the Cessna 150 aircraft. The airplane crashed and both men died. The parents of Richard Grisham brought suit against the Martinezes. The plaintiff insurance company represented the Martinezes under reservation rights and brought this separate action for declaratory judgment seeking to relieve the insurance company of any responsibility to provide a defense. Depositions of the Martinezes were taken and affidavits filed by Mr. Sapp and Mr. Simis. The court granted the plaintiff insurance company's motion for summary judgment, and the defendants appeal. WAS THERE AN ORAL CONTRACT OF INSURANCE? It is apparent that the written contract of insurance did not cover Richard Grisham as he was a passenger specifically excluded. If there is coverage, it must be pursuant to an oral contract of insurance. The general rule is that an oral contract of insurance is valid and enforceable. 12 Appleman Insurance Law and Practice, § 7191, p. 254. However, there must be For there to have been an oral contract between Martinez and plaintiff Gulf Insurance Company, there must have been an agreement between Gulf's agent Simis Insurance Agency and Martinez. Ranger, supra. Defendants admit that there was no contract between the Martinezes and Simis. Defendants in their brief stated: And Kenneth Martinez testified: It is agreed that there was no oral contract between the Simis Insurance Agency and Martinez. The Martinezes, however, claim they relied upon their dealings with Sapp, who they believed to be Simis' authorized agent. Other than the receipt of the letter and invoice from Simis to Martinez as a result of the conversation between Martinez and Sapp, the only testimony bearing on this subject was given by Kenneth Martinez: In addition, Sapp had acted for the Martinezes to acquire their initial policy from Simis. There are two main types of agency, actual (express) and ostensible (apparent). If there is evidence that the principal has delegated authority by oral or written words which authorize him to do a certain act or series of acts, then the authority of the agent is express. Canyon State Canners v. Hooks, 74 Ariz. 70, 243 P.2d 1023 (1952). If there is no such express authority, or if intent to create such authority cannot be implied from the actions of the principal and agent, then the next question is whether there is apparent agency. We have said: Keeping in mind that the party asserting the agency relationship has the burden of proving the agency, Salt River Valley Water Users' Ass'n v. Giglio, 113 Ariz. 190, 549 P.2d 162 (1976), we note that the Martinezes have not shown Sapp to fall within either of the above-mentioned types of agency. They have not shown evidence of a written or oral agreement between Simis and Sapp or any evidence that Simis, as a principal, acted in any way so as to induce Martinez to believe Sapp was Simis' agent. All the Martinezes have shown is that Sapp's actions and representations led them to believe he was an authorized agent. We do not believe liability should be found on the basis of such a belief. Were we to allow an unauthorized agent to bind an unknown principal to liability such as is present in this case, we would encourage fraud and injustice in the future, as anyone who represented themselves as agents could bind completely innocent principals. We therefore find no material issue of fact which would require us to set aside the granting of the motion for summary judgment. Defendants, however, rely heavily on Ranger Insurance Company v. Phillips, supra, which has a fact situation close to the case at bar. In Ranger, the insured talked personally to a person who was an authorized agent of the insurance company: Defendant's reliance on Ranger Insurance Company v. Phillips, supra, is misplaced as that case involved an authorized agent and this does not. The two cases are distinguishable. We find no error. MOTION TO AMEND After the court granted the motion for summary judgment, the defendants objected to the form of judgment asking that it be limited judgment as to the written contract and that it not purport to rule on the issue of the oral contract. The defendants also moved to amend the answer to allow the defendants to plead the oral contract. Motions for leave to amend should be "freely given when justice requires." Rule 15(a), Arizona Rules of Civil Procedure, 16 A.R.S.; Cagle v. Carr, 101 Ariz. 225, 418 P.2d 381 (1966). We note, however, that Rule 56(e), Arizona Rules of Civil Procedure, 16 A.R.S., on summary judgments, provides: In the instant case, neither motion contained any new facts by "affidavits or otherwise," which would have shown a "genuine issue for trial." Based upon the pleadings, the depositions and the affidavits, it is evident that the court, in ruling as it did, found there was no contract to insure passengers, either written or oral. The bare motion to amend the objection to the form of judgment provided nothing new in the way of evidence or pleadings which would have justified the trial court in granting the relief requested. We find no error. Affirmed. STRUCKMEYER, C.J., and HAYS, J., concur.