IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

September 13, 2005 Session

JASON SIMMS v. INSURANCE COMPANY OF NORTH AMERICA

 Appeal from the Circuit Court for Rhea County

No. 22031 J. Curtis Smith, Judge

No. E2005-00062-COA-R3-CV - FILED OCTOBER 14, 2005

The issue in this case is whether the trial court correctly granted the Defendant Insurance Company

of North America (“ICNA”) summaryjudgment based on its finding that the claimant, Jason Simms,

failed to follow the loss provisions of the insurance policy and that ICNA’s agent did not possess

authority to waive the loss provisions. We hold there exists a genuine issue of material fact

regarding the apparent authority of ICNA’s agent, and therefore vacate the summary judgment and

remand for trial. 

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated; Case

Remanded

SHARON G. LEE, J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and

CHARLES D. SUSANO, JR., J., joined.

J. Arnold Fitzgerald and Andrew F. Tucker, Dayton, Tennessee, for the Appellant, Jason Simms.

Thomas E. LeQuire and Robert C. Denny, Chattanooga, Tennessee, for the Appellee, Insurance

Company of North America.

OPINION

I.

Mr. Simms purchased a multi-peril crop insurance policyfrom ICNA through its agent, Dean

Payne, in the spring of 2000. According to the affidavit of Mr. Simms, a drought in the year 2000

caused his tobacco crop to fail. Mr. Simms’ affidavit further states as follows:
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I have been involved in growing tobacco several years prior

to the claim for loss of [this] year 2000 tobacco crop. Every year I

have planted a tobacco crop, I have purchased tobacco crop insurance.

I have never made a crop insurance claim of any sort prior to the year

2000.

Dean Payne, an insurance agent for Defendant, Insurance

Company of North America and Mr. Payne’s supervisor, both visited

my farm in the summer of 1999 and spoke with me regarding multiperil crop insurance. On the day Mr. Payne and his supervisor visited

my farm, I agreed to sign up for multi-peril crop insurance for the

year 2000 tobacco crop with Defendant. 

In the spring of 2000, I met with Dean Payne. . .to sign crop

insurance application documents for multi-peril crop insurance for the

year 2000 tobacco crop. He personally filled out the application for

the multi-peril crop insurance. 

After his 2000 tobacco crop failed, Mr. Simms made a claim under his multi-peril crop insurance

policy. According to his affidavit,

Prior to October 5, 2000, I contacted agent Dean Payne, who

had sold me the insurance, to report this loss claim. Mr. Payne stated

that I could go ahead and bush hog the fields where the tobacco was

located and that an adjuster would come to measure acreage. Only

after receiving consent of agent Dean Payne did I bush hog the crop.

The above-quoted statements from Mr. Simms’ affidavit are not in dispute. ICNA denied Mr.

Simms’ claim on February 26, 2001, on grounds, inter alia, that he destroyed the crop without

preserving a representative sample prior to inspection and appraisal of the loss by ICNA, thus

allegedly violating the terms of the policy and voiding coverage. 

Mr. Simms filed this action on February 21, 2002, alleging ICNA wrongfully denied

coverage under the policy. ICNA moved for summary judgment, which the trial court granted. The

trial court held “there is no genuine material factual dispute that plaintiff failed to follow loss

provisions of the policy, that defendant’s agent [Mr. Payne] possessed no authority to waive the loss

provisions and the failure to follow the loss provisions absolves defendant of liability under the

policy as a matter of law.” 

II.

Mr. Simms appeals, raising the issue, which we restate, of whether the trial court erred in

granting ICNA summary judgment. 
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Our standard of review regarding summary judgment is well settled. A motion for summary

judgment should be granted when the movant demonstrates that there are no genuine issues of

material fact and that the moving party is entitled to a judgment as a matter of law. Tenn. R. Civ. P.

56.04. The party moving for summary judgment bears the burden of demonstrating that no genuine

issue of material fact exists. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). On a motion for

summary judgment, the court must take the strongest legitimate view of the evidence in favor of the

nonmoving party, allow all reasonable inferences in favor of that party, and discard all countervailing

evidence. Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993).

III.

The Tennessee Supreme Court has stated as follows regarding how our courts generally

construe insurance policies:

It is a general principle, pervading the law of all forms of insurance,

that policies shall be liberally construed in favor of the insured. This

because courts do not shut their eyes to realities; they know that the

policy is a contract of "adhesion," i.e. not one which the parties have

reached by mutual negotiation and concession, not one which truly

expresses any agreement at which they have arrived, but one which

has been fixed by the insurer and to which the insured must adhere,

if he chooses to have insurance...As such, we attempt to construe

insurance contracts so as to provide coverage.

Alcazar v. Hayes, 982 S.W.2d 845, 851-852 (Tenn. 1998)(internal citations omitted). 

The language of the insurance policy upon which ICNA relies provides as follows: 

14. Duties in the Event of Damage or Loss.

Your duties - 

(a) In case of damage to any insured crop you must: 

***

(3) Leave representative samples intact for each field

of the damaged unit as may be required by the Crop

Provisions; and

(4) Cooperate with us in the investigation or

settlement of the claim, and, as often as we reasonably

require:

(i) Show us the damaged crop;

(ii) Allow us to remove samples of the

insured crop; and
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(iii) Provide us with records and documents

we request and permit us to make copies.

(b) You must obtain consent from us before, and notify us

after you:

(1) Destroy any of the insured crop that is not

harvested;

(2) Put the insured crop to another use; 

(3) Put the acreage to another use; or

(4) Abandon any portion of the insured crop. We will

not give consent for any of the actions in sections

14(b)(1) through (4) if it is practical to replant the

crop or until we have made an appraisal of the

potential production of the crop.

In addition, the “Multiple Peril Crop Insurance Quota Tobacco Crop Provisions” portion of

the policy provides: 

12. Duties In The Event of Damage or Loss.

In accordance with the requirements ofsection 14 of the Basic

Provisions, any representative samples we may require of

each unharvested tobacco type must be at least 5 feet wide (at

least two rows) and extend the entire length of each field in

the unit. The samples must not be harvested or destroyed

until after our inspection. 

As already noted, it is undisputed that, notwithstanding the above provisions, when Mr.

Simms called ICNA agent Dean Payne to report the loss, Mr. Payne told Mr. Simms to “go ahead”

and bush hog the fields containing the failed tobacco crops. Mr. Simms argues that under these

circumstances, ICNA should be equitably estopped from denying coverage for doing that which its

agent told him to do, i.e., bush hog the fields and replant with wheat. 

ICNA’s response to this estoppel argument is twofold. First, it argues that the following

provision of the insurance policy precludes Mr. Simms from asserting such an argument:

This insurance policy is reinsured by the Federal Crop Insurance

Corporation (FCIC) under the provisions of the Federal Crop

Insurance Act, as amended (7 U.S.C. 1501 et seq.) (Act). All

provisions of the policy and rights and responsibilities of the parties

are specifically subject to the Act. The provisions of the policy are

published in the Federal Register and codified in chapter IV of title

7 of the Code of Federal Regulations (CFR) under the Federal

Register Act (44 U.S.C. 1501 et seq.), and may not be waived or
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varied in any way by the crop insurance agent or any other agent or

employee of FCIC or the company. 

[Emphasis added.] Second, ICNA argues that Mr. Payne was without actual or apparent authority

to authorize Mr. Simms to destroy the tobacco crop prior to its inspection of the fields. 

We first address the waiver argument. The policy at issue is a standardized crop insurance

policy issued in accordance with the Federal Crop Insurance Act (“FCIA”). As the Supreme Court

of Kentucky recently stated in a case similar to this one, 

The FCIA was enacted in 1938 as part of the second President

Roosevelt's "New Deal." Its main purpose was "to promote the

national welfare by improving the economic stability of agriculture

through a sound system of crop insurance and providing the means

for the research and experience helpful in devising and establishing

such insurance." 7 U.S.C. § 1502(a). The FCIA also established the

FCIC. 7 U.S.C. § 1503. Farmers can obtain crop insurance under the

FCIA by either being issued insurance directly through the FCIC, or

by receiving insurance from a private company reinsured by the

FCIC. 7 U.S.C. § 1508(a)(1). In the instant case, the policy was

obtained from a private company, American Growers. In addition, all

reinsured policies must comply with the requirements of the FCIA

and the regulations of the FCIC. 7 C.F.R. § 400.164.

Dailey v. American Growers Insurance, 103 S.W.3d 60, 64 (Ky. 2003). The Dailey Court rejected

the defendant insurance company’s argument that the United States Supreme Court’s opinion in

Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed 10 (1947) protected it

from a waiver or estoppel claim, stating: 

American Growers contends that application of this principle in the

context of crop insurance is precluded by the "Merrill doctrine." In

Federal Crop Insurance Corporation v. Merrill, supra, the FCIC had

issued insurance on a spring wheat crop that had been reseeded on

winter wheat acreage in violation of federal wheat crop insurance

regulations. Id. at 382, 68 S.Ct. at 2. Relying on the doctrine of

estoppel, the plaintiff in Merrill claimed that the FCIC should be

required to honor his claim because the FCIC's agent had advised him

prior to writing the policy that the entire crop was insurable. Id. The

United States Supreme Court disagreed, holding that the FCIC was

not bound by "the rules of law whereby private insurance companies

are rendered liable for the acts of their agents ...." Id. at 383 n. 1, 68

S.Ct. at 3 n. 1. Noting that "[m]en must turn square corners when they
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deal with the Government," the Court held that the FCIC's agent

could not bind the public treasury in contravention of federal law. Id.

at 384-85, 68 S.Ct. at 3-4 (quoting Rock Island, A. & L.R. Co. v.

United States, 254 U.S. 141, 143, 41 S.Ct. 55, 56, 65 L.Ed. 188

(1920)). American Growers claims that because it insures crops and

is regulated and reinsured by the FCIC, it enjoys Merrill protection.

Dailey, 103 S.W.3d 60, 68-69 (Ky. 2003)(Cooper, J., concurring). In a well-reasoned concurrence

joined by five members of the seven-Justice panel, the Court held that “[t]he Merrill doctrine,

however, generally does not apply to private insurers.” Id. at 69. We agree with the reasoning in the

Dailey concurrence, see id. at 69-70, and with the Court’s conclusion that “[t]he mere fact that the

FCIC provides reinsurance coverage to private crop insurance companies and heavily regulates those

companies does not entitle them to Merrill protection.” Id. at 70; accord Rain & Hail Ins. Servs. Inc.

v. Vickery, 618 S.E.2d 111 (Ga. Ct. App. 2005). Thus, the Merrill decision, holding that statements

made by agents of the FCIC cannot bind the FCIC by operation of waiver or estoppel, does not bar

Mr. Simms’ estoppel or waiver argument in this case because the Defendant, ICNA, is a private

insurer. 

In the seminal case of Bill Brown Constr. Co., Inc. v. Glens Falls Ins. Co., 818 S.W.2d 1

(Tenn. 1991), the Tennessee Supreme Court reaffirmed the “long-standing rule in Tennessee that any

contractual provision of a policy of insurance, whether part of an insuring, exclusionary, or forfeiture

clause, may be waived by the acts, representations, or knowledge of the insurer’s agent.” Id. at 13

(emphasis in original). This rule is supported by an agency statute, Tenn. Code Ann. § 56-6-115(b),

which provides in relevant part:

An insurance producer who solicits or negotiates an application for

insurance shall be regarded, in any controversy arising from the

application for insurance or any policy issued in connection therewith

between the insured or insured's beneficiary and the insurer, as the

agent of the insurer and not the insured or insured's beneficiary. This

provision shall not affect the apparent authority of an agent.

Our courts construe this statute liberally in favor of the insured in order to “prevent the insurance

company from denying responsibility for representations and actions from the agent from whom

applications are voluntarily accepted and to protect an applicant who relies on such representations

or actions.” Ralph v. Pipkin, No. W2004-0179-COA-R3-CV, 2005 WL 1220132 at *6 (Tenn. Ct.

App. W.S., filed May 17, 2005); Bill Brown Constr. Co., 818 S.W.2d at 4; see also Maryland Cas.

Co. v. McTyier, 266 S.W. 767, 769 (Tenn. 1924).

The Bill Brown Court further stated that “[a]n agent acting within the scope of his apparent

authority, though exceeding his authority, binds his principal.” Id., 818 S.W.2d at 6 (quoting Dixon
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v. Pickle, 327 S.W.2d 50 (Tenn. Ct. App. 1959)). Apparent authority in an agent is such authority

as the principal knowingly permits the agent to assume or which the agent is presented as having,

such that a reasonably prudent person, using diligence and discretion in view of the party’s conduct,

would naturally suppose the agent to possess. V.L. Nicholson Co. v. Transcon Investment and

Financial Ltd., Inc., 595 S.W.2d 474, 483 (Tenn. 1980). “Generally, to prove apparent agency one

must establish (1) the principal actually or negligently acquiesced in another party's exercise of

authority; (2) the third person had knowledge of the facts and a good faith belief that the apparent

agent possessed such authority; and (3) the third person relied on this apparent authority to his or her

detriment.” White v. Methodist Hosp. South, 844 S.W.2d 642, 646 (Tenn. Ct. App. 1992).

Turning to the facts of this case, it is undisputed that when Mr. Simms lost his tobacco crop,

he called ICNA’s agent, Mr. Payne, who was the representative that had visited his farm and filled

out the insurance application, and with whom Mr. Simms had all his prior dealings. As Mr. Simms

points out, because there is no provision in the policy, or elsewhere in the record before us,

containing specific instruction for making a claim, or directing a claimant to contact any other

person, he called the person with whom he had dealt. It is also undisputed that agent Payne, having

been told that Mr. Simms was making a crop loss claim, told Mr. Simms to “go ahead” and bush

hog his tobacco fields. Only after receiving this consent did Mr. Simms do so, in accordance with

the terms of the policy. 

ICNA filed two affidavits supporting its motion for summary judgment, those of Jeff

Malcom, a vice president of Rain & Hail, LLC, the managing general agent responsible for

administration of the policy issued by ICNA, and Wayne Lehman, the insurance adjuster for Mr.

Simms’ loss claim. Neither of these affidavits addresses the issue of either actual or apparent

authority of agent Payne to instruct Mr. Simms to destroy his crop, or to waive provisions of the

insurance policy. The affidavits state only that “[n]o written consent was provided by [ICNA] or

Rain & Hail, LLC, to Plaintiff authorizing him to destroy his crops” and “Plaintiff destroyed the crop

without written consent of [ICNA] or Rain & Hail, LLC. . .” There is no evidence in the record that

agent Payne lacked either apparent or actual authority to take the actions at issue in this case. 

Mr. Simms’ affidavit does not specifically state that he relied on agent Payne’s direction to

destroy his crops. Although it would have been better practice to include such a statement in his

affidavit, it requires no imagination to draw the logical inference that Mr. Simms’ action, taken at

agent Payne’s direction, was in reliance upon such direction. Our summary judgment standard

requires us to draw reasonable inferences in favor of the non-movant. Byrd v. Hall, 847 S.W.2d 208

(Tenn. 1993); see also White v. Methodist Hosp. South, 884 S.W.2d at 646-48 (finding genuine issue

of material fact notwithstanding “no direct proof in the record regarding plaintiff’s reliance.”).

We believe that under these facts and the authorities discussed above, the question of whether

agent Payne had apparent authority to authorize Mr. Simms to bush hog his crop should be presented

to a jury. We further find that a reasonable construction of the insurance policy in favor of providing

coverage to the insured yields the conclusion that preserving a representative sample of the failed

crop would not necessarily in all cases be required. The policy requires a farmer to “leave
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representative samples intact for each field of the damaged unit as may be required by the Crop

Provisions,” and the Crop Provisions provide “any representative samples we may require of each

unharvested tobacco type must be at least 5 feet wide. . .” (Emphasis added).

IV. 

For the aforementioned reasons, the judgment of the trial court granting ICNA summary

judgment is vacated, and the case is remanded for trial. Costs on appeal are assessed to the Appellee,

Insurance Company of North America. 

_______________________________________

SHARON G. LEE, JUDGE