FILED

April 3, 1996

Cecil Crowson, Jr.

Appellate Court Clerk

 I N THE COURT OF APPEALS OF TENNESSEE

EASTERN SECTI ON

ALLSTATE I NSURANCE COMPANY, ) C/ A NO. 03A01- 9512- C - 00426

)

Pl a i ntif f - Appe lla nt , ) CLAI BORNE LAW

)

v. ) HON. CONRAD TROUTMAN,

) J UDGE

MARY LOUI SE DAVI S, J OHN )

RASNI C, CAROLYN RASNI C, a nd )

TENNESSEE FARMERS MUTUAL )

I NSURANCE COMPANI ES, ) REVERSED

) AND

De f e nda nt s - Appe l l ees . ) REMANDED

PAUL E. DUNN, DUNN MACDONALD & COLEMAN, P. C. , Knoxvi l l e , f or

Pl a i ntif f - Appe lla nt .

J AMES D. ESTEP, I I I , ESTEP & ESTEP, Ta z e we l l , f or De f e nda nt -

Appe l l ee, Te nne s s ee Fa r me r s Mut ua l I ns ur a nce Compa ni e s .

O P I N I O N

Fr a nks . J .

I n t hi s de c l a r a t or y j udgme nt a c t i on, pl a i nt i f f ,

i ns ur a nc e c ompa ny, s ought a de c l a r a t i on t ha t i t s i ns ur e d, J ohn

H. Ra s ni c , wa s not a n i ns ur e d unde r i t s pol i c y f or t he

a c c i de nt oc c ur r i ng be t we e n t he Ra s ni c a nd Da vi s mot or

ve hi c l e s . Spe c i f i c a lly, the c ompl a i nt a lle ge d tha t Ra s ni c ha d

vi ol a t e d t he pol i c y pr ovi s i on:

?We mus t be not i f i e d pr ompt l y of how, whe n a nd

whe r e t he a c c i de nt or l os s ha ppe ne d. Not i c e s houl d
2

a l s o i nc l ude t he na me s a nd a ddr e s s e s of a ny i nj ur e d

pe r s ons a nd of a ny wi t ne s s . ? Alls t a t e woul d a s s e r t

t ha t whi l e t he acci de nt occur r e d on Decembe r 1,

1993, t he y di d not r e c e i ve not i c e unt i l J une 24,

1994.

The i s s ue wa s t r i e d be f or e a j ur y, a nd a t t he c onc l us i on of

a l l t he pr oof , t he Cour t ?di r e c t e d a ve r di c t i n f a vor of t he

de f e nda nt s ? a nd ?f ound t ha t t he c ont r ol l i ng i s s ue wa s a s t a t e

of mi nd of t he i ns ur e d, J ohn Ra s ni c . Wi t h r e ga r d t o s uc h

i s s ue , t he Cour t f ound t ha t Mr . Ra s ni c r e a s ona bl y be l i e ve d

t ha t the c ollis i on in que s tion wa s a tr i vi a l ma tte r a nd tha t ,

ba s e d upon s uc h be l i e f , Mr . Ra s ni c wa s j us t i f i e d i n not

i mme di a t e l y r e por t i ng the a c c i de nt t o Al l s t a t e . The Cour t

f ur t he r f ound t ha t , due t o hi s s t a t e of mi nd, Mr . Ra s ni c ’ s

de l a y in r e por ting the a c c i de nt to Alls t a t e until a f t e r he ha d

be e n s ue d, c ompl i e d wi t h t he pr ompt not i c e pr ovi s i ons of

Alls t a t e ’ s ins ur a nc e polic y. ?

On a ppe a l , Al l s t a t e doe s not que s t i on t he Tr i a l

Cour t ’ s t a ki ng t he i s s ue a wa y f r om t he j ur y, but i ns i s t s t ha t

a s a ma tte r of la w it is e ntitle d to a judgme nt in its f a vor .

I t is c l e a r f r om the Tr i a l Cour t ’ s a na l ys i s tha t it

e r r one ous l y a ppl i e d a s ubj e c t i ve t e s t r a t he r a n obj e c t i ve

t e s t , whi c h i s whe t he r a r e a s ona bl e a nd pr ude nt pe r s on woul d

be l i e ve t ha t t he acci de nt mi ght gi ve r i s e t o a cl a i m f or

da ma ge s . Nat i onwi de Mut ual I ns ur anc e Company v . Shannon, 701

S. W. 2d 615 ( Te nn. App. 1985) . 

Ra s ni c te s tif i e d tha t he ?bumpe d? t he r ear of t he

Da vi s car and t ha t t he occupa nt s ans we r e d ?no? whe n a s ke d i f

t he y we r e hur t. He te s tif i e d tha t he a dvi s e d if the ve hi c l e

wa s da ma ge d to le t hi m know. Mr s . Da vi s ins i s t e d tha t the y

s houl d ?c a ll the la w?. A pol i cema n came af t e r t he ve hi c l e s ha d
3

be e n move d, a nd r e f us e d t o pr e pa r e a wr i t t e n a c c i de nt r e por t .

?Two t o s i x we e ks l a t e r ? t he owne r of t he ot he r ve hi c l e t ol d

Ra s ni c at a conve ni e nce s t or e t ha t ?t he y t ot a l e d t he car ? whi c h

Ra s ni c unde r s t ood t o me a n t he i ns ur a nc e c ompa ny. Ra s ni c ma de

no r e por t of t he a c c i de nt unt i l J une 23, 1994, a f t e r he

r ecei ve d s ui t pa pe r s f r om t he Da vi s e s . The mos t t e l l i ng

a dmi s s i on by Mr . Ra s ni c c a me on c r os s - e xa mi na t i on a f t e r he ha d

t e s t i f i e d t ha t he ha d ma de pi c t ur e s of t he f r ont e nd of hi s

ve hi c l e , s ome t wo weeks af t e r t he acci de nt :

Q. Mr . Ra s ni c , i f you di dn’ t c ons i de r t hi s

a c c i de nt wor t h r e por t i ng wha t woul d be your

oc c a s i on f or t a ki ng phot ogr a phs of t he f r ont of

your ve hi c l e t wo weeks af t e r t hi s acci de nt t o

s how t he r e wa s no da ma ge t o i t ? I di dn’ t

unde r s t a nd.

A. I t c oul d’ ve be e n f our we e ks , but I s a i d I

bought a ne w came r a , Pol a r oi d I ns t a ma t i c , and

t ha t ’ s the f i r s t pi c t ur e s I ’ ve ta ke n wi t h it . 

And I ’ ve got s ome ot he r ve hi c l e s I t ook

pi c t ur e s of I c a n s how you.

. . .

Q. I s n’ t it a f a c t, s i r , tha t you jus t ma de the

de c i s i on t o t r y t o ha ndl e t hi s your s e l f a nd go

out s i de your i ns ur a nc e c ompa ny a nd ha ndl e i t ?

A. I t hought t he da ma ge wa s mi nor e nough. Ye s ,

s i r .

The ma t e r i a l f act s ar e not i n di s put e and t he i s s ue i s a

que s t i on of l a w. Ra s ni c ha d a dut y t o gi ve not i c e t o hi s

i ns ur a nc e c ompa ny of t he a c c i de nt , c e r t a i nl y no l a t e r t ha n t he

t i me t he owne r of t he ot he r ve hi c l e a dvi s e d hi m t ha t t he

ve hi c l e ha d been ?t ot a l e d?. Our la w is c l e a r tha t the

c ont r a c t ua l r e qui r e me nt of not i c e t o t he i ns ur e r i s a

c ondi t i on pr e c e de nt t o r e c ove r y unde r t he pol i c y. Lee v. Le e ,

732 S. W. 2d 275 ( TN 1987) ; Phoe ni x Cot t on Oi l Company v . Roy al

I nde mni t y Company , 140 Te nn. 438, 205 S. W. 128 ( 1918) .
4

Thi s i s e s s e nt i a l l y a di s put e be t we e n t wo i ns ur a nc e

c ompa ni e s , a nd we not e t ha t a n i ns ur a nc e c ompa ny woul d

s ome t i me s be ne f i t if thi s ine qui t a bl e r ul e wa s c ha nge d, i.e . ,

de c l a r e f or f e i t ur e s of pol i c y c ove r a ge s onl y i n c a s e s whe r e

t he l a t e r e por t i ng of t he acci de nt r e s ul t e d i n act ua l

pr e j udi c e t o t he i ns ur a nc e c ompa ny. As we obs e r ve d i n Nor t h

Ri v e r I ns ur anc e Company v . J ohns on, 757 S. W. 2d 334 ( Te nn. App.

1988) , i ns ur a nc e pol i c i e s , unl i ke ot he r c ont r a c t s , a r e not

pur e l y pr i va t e a gr e e me nt s but a f f e c t t he publ i c ge ne r a l l y. 

Our r ul e r e pr e s e nt s t he mi nor i t y vi e w. Se e

Hos pi t al Unde r wr i t i ng Gr oup, I nc . , v . Summi t He al t h Lt d. , 63

F. 3d 486 ( 6t h Ci r . 1995) . Cons ume r s a nd i ns ur a nc e c ompa ni e s

a l i ke woul d be ne f i t i f t he Supr e me Cour t woul d ove r t ur n t he

mi nor i t y r ul e i n f a vor of t he e qui t a bl e ma j or i t y vi e w.

We a r e c ons t r a i ne d t o r e ve r s e t he j udgme nt of t he

Tr i a l Cour t a nd t he c a us e i s r e ma nde d f or e nt r y of a j udgme nt

f or a ppe l l a nt , i n a c c or da nc e wi t h t hi s opi ni on.

The cos t of t he appeal i s as s e s s e d t o appe l l ees .

________________________

He r s c he l P. Fr a nks , J .

CONCUR:

___________________________

Hous t on M. Godda r d, P. J .
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___________________________

Cl i f f or d E. Sa nde r s , Sp. J .