Title: American Cas. Co. v. Wright

State: alabama

Issuer: Alabama Supreme Court

Document:

554 So. 2d 1015 (1989)
AMERICAN CASUALTY COMPANY
v.
Calvin W. WRIGHT, d/b/a Wright & Sons Trucking Company, et al.
88-253.

Supreme Court of Alabama.
November 9, 1989.
Rehearing Denied December 22, 1989.
A. Courtney Crowder of Roberts, Davidson, Wiggins & Crowder, Tuscaloosa, for appellant.
Ritchie Tipton of deGraffenried, Tipton & Donaldson, Tuscaloosa, for appellees.
*1016 HOUSTON, Justice.
American Casualty Insurance Company, Inc. ("American Casualty"), filed a declaratory judgment action against Calvin W. Wright, d/b/a Wright & Sons Trucking Company ("Wright"), Ralph Williams & Associates ("Williams"), and John Green ("employee"), seeking to have its workmen's compensation insurance policy construed to determine whether there was coverage for Wright during an alleged period of lapse in that coverage. The trial court heard ore tenus evidence and found that American Casualty, by its conduct after knowledge of all the relevant facts, had waived its right to claim forfeiture of coverage under the policy for nonpayment of the renewal premium. American Casualty appealed.
Under the ore tenus rule, the trial court's decision, where supported by the evidence, is presumed correct and should be reversed only if the judgment is found to be plainly and palpably wrong, after a consideration of all the evidence and after making all inferences that can logically be drawn from the evidence. See City of Birmingham v. Sansing Sales of Birmingham, Inc., 547 So. 2d 464 (Ala.1989); King v. Travelers Ins. Co., 513 So. 2d 1023 (Ala. 1987); Robinson v. Hamilton, 496 So. 2d 8 (Ala.1986). The trial court's judgment will be affirmed if there is credible evidence to support the judgment. City of Birmingham v. Sansing Sales of Birmingham, Inc., supra; McCrary v. Butler, 540 So. 2d 736 (Ala.1989); Jones v. Jones, 470 So. 2d 1207 (Ala.1985).
The issue before us is whether the trial court's finding that American Casualty's conduct, after it had received late payment of the renewal premium, constituted a waiver of its right to claim forfeiture was plainly and palpably erroneous. We hold that the trial court's finding was not plainly and palpably wrong.
Judge J.B. Baird's order concisely presented the reasons for his decision; therefore, we adopt his order as part of our opinion:
American Casualty contends that, because it accepted the renewal payment before it learned that the loss had occurred, it could not have waived its right to claim forfeiture of coverage, regardless of its subsequent conduct. Wright contends that American Casualty's conduct, after it had knowledge of all pertinent facts concerning the employee's injury, manifested an intent not to exercise its right to claim a forfeiture of coverage.
Whether there was a waiver by American Casualty is a matter of intent.
Washington National Insurance Co. v. Scott, 231 Ala. 131, 132, 164 So. 303, 305 (1935); see Alabama Farm Bureau Mutual Casualty Ins. Co. v. Hicks, 272 Ala. 574, 133 So. 2d 221 (1961).
Ford v. Jackson Square, Ltd., 548 So. 2d 1007 (Ala.1989).
In Central National Insurance Group of Omaha v. Grimmett, 340 So. 2d 767 (Ala.1976), we recognized the rule set out in Hicks, supra, that when an insurance company accepts payment for a premium on a lapsed policy with knowledge that an accident has occurred during the period of lapse, three options are available to the insurer. The insurer may: 1) return the premium for the lapsed period; 2) apply the premium from the date received forward; or 3) retain the premium and cover the loss. Before an insurance company can avail itself of the second option, however, the intent to apply the premium prospectively must be clearly conveyed to the insured before the premium is accepted. In both Grimmett and Hicks, we were dealing with cases in which the insurer had knowledge of the injury at the time it accepted payment of the past-due premium. In the instant case, however, it is undisputed that American Casualty did not have knowledge of the injury at the time it accepted the past-due premium.
As distinguished from Grimmett and Hicks, the insurance company in Inter-Ocean Insurance Co. v. Banks, 268 Ala. 25, 104 So. 2d 836 (1958), had no knowledge of the injury when it accepted payment of the past-due premium. In that case, we held that the acceptance of premiums after an injury, the nonpayment of which worked *1018 a forfeiture, does not of itself waive the delinquency if the insurer had no knowledge of such injury, since in such a case any waiver would not have been intentional.
Ultimately, however, the substance of the doctrine of waiver as applied in the law of insurance is that, if the insurer, with knowledge of facts that would bar liability, recognizes such liability by treating the policy as in force, it will not thereafter be allowed to plead such facts to avoid liability. Blue Cross-Blue Shield of Alabama v. Ramsey, 43 Ala.App. 496, 193 So. 2d 149 (1966). In the law of insurance, a waiver may be founded on estoppel, but it does not necessarily have to be. Although the conduct of the insurer may not have actually misled the insured to his prejudice or to an altered position, if, after knowledge of all the facts, the insurer's conduct has been such as to reasonably imply that it will not insist upon a forfeiture, the law, disfavoring forfeitures, will apply the doctrine of waiver and will hold the insurer irrevocably bound by an election to treat the insurance contract as if no forfeiture had occurred. American Ins. Co. v. Millican, 228 Ala. 357, 153 So. 454 (1934).
The facts presented to the trial court were as follows:
Wright contacted Williams, an independent insurance agent (not an agent of American Casualty), requesting workmen's compensation coverage. Wright obtained workmen's compensation insurance coverage from American Casualty. The initial policy period was August 19, 1986, to August 19, 1987. Prior to the expiration of this initial policy, American Casualty issued a renewal notice to Wright by letter dated June 22, 1987. The letter reads in pertinent part as follows:
It is undisputed that Wright's renewal premium was not received at the home office of American Casualty in Reading, Pennsylvania, by August 19, 1987. Rather, the premium was postmarked on August 31, 1987, and was received in the Reading office on or about September 1, 1987. The check was deposited by American Casualty on September 10, 1987.
On August 25, 1987, six days after the premium payment was due in the Reading office, one of Wright's employees was injured in an accident. The injury report was not received by American Casualty until September 22, 1987; this report was the first notice that American Casualty had of the August 25 accident. The case was assigned to an American Casualty claims specialist, who secured a rehabilitation consultant to supervise Wright's injured employee's medical care. The rehabilitation consultant visited the employee several times, consulted with the medical staff, coordinated information between the various providers of medical services, counseled with the employee and his family, and reported to the claims specialist on three separate occasionsSeptember 20, 1987; October 8, 1987; and October 16, 1987detailing in each report the treatment she had arranged for the employee. The claims specialist received these reports and testified that the treatments were "precisely" the services that the rehabilitation consultant was hired to perform.
*1019 After securing the first report of injury, the claims specialist informed Ms. Wright[1] that American Casualty would not pay workmen's compensation benefits to the employee if the employee continued to receive his salary. Thereafter, Ms. Wright, based on the conversation with the claims specialist, discontinued all future payments, except one for which a check had already been written.
On or after October 21, 1987, American Casualty mailed a letter to Wright notifying Wright for the first time that American Casualty had elected to treat the policy as lapsed between August 19, 1987, and September 1, 1987 (hereinafter referred to as "the defaulting period"), and that it had renewed the policy as of September 1, 1987, for the period extending to September 1, 1988. A new policy was not issued. On November 4, 1987, American Casualty notified Wright that it would defend Wright in the workmen's compensation suit filed by the injured employee, but that it was reserving all policy defenses under the conditions and terms of the policy. On November 17, 1987, Wright was notified by American Casualty that there was no coverage under the workmen's compensation policy and that American Casualty would file this declaratory judgment action.
The trial court could have found from the evidence that American Casualty's retention of the past-due premium payment covering the defaulting period, with knowledge of the August 25 accident and with knowledge that a workmen's compensation claim had arisen during that defaulting period, concomitant with its providing medical services over an extended period of time to the employee injured during the defaulting period and its delay in notifying Wright of its intent to treat the premium payment as providing prospective coverage only, was inconsistent with its intent to deny coverage during the defaulting period.
Therefore, we hold that the judgment of the trial court, holding that American Casualty by its conduct, after knowledge of all the relevant facts, waived its right to claim forfeiture of coverage under the policy for nonpayment of the renewal premium, was not plainly and palpably erroneous.
AFFIRMED.
HORNSBY, C.J., and JONES, SHORES and KENNEDY, JJ., concur.
[1]  Ms. Wright worked in the office of Wright & Sons Trucking Company.