Opinion ID: 1480749
Heading Depth: 1
Heading Rank: 2

Heading: Is Estoppel Allowable?

Text: Appellant contends that estoppel cannot be applied here because (this being an Arkansas contract) the law of that State denies extension of coverage by estoppel to include a coverage expressly excluded in the policy  such being the situation here. Appellant is correct in stating that the estoppel here would operate to extend the coverage to include a coverage expressly excluded in the policy. Therefore, estoppel is not here allowable if the law of Arkansas is as appellant contends. The law intended is not statutory but is sought to be found in decisions. Appellant concedes that the decision law of Arkansas permits estoppel or waiver where such is applied to prevent forfeiture under a policy. The distinction appellant seeks to make is between estoppel or waiver of forfeiture of coverage stated in the policy (thus preserving liability under the policy) and estoppel or waiver having the effect of extending the coverage beyond the clear provisions of the policy  in this instance, to coverage expressly excluded by the policy. The excellent briefs of the parties cite and discuss many cases from other jurisdictions. Such are not here helpful if the Supreme Court of Arkansas has clearly spoken on the subject. Appellees cite and discuss several Arkansas cases [3] which are purely forfeiture cases. These are not apposite to the contention of appellant. The cases mainly relied upon by appellant are Hartford Fire Ins. Co. v. Smith, 200 Ark. 508, 139 S.W.2d 411, and Miller v. Illinois Bankers Life Ass'n, 138 Ark. 442, 212 S.W. 310, 7 A.L.R. 378; with support from John Hancock Mutual Life Ins. Co. v. Henson, 199 Ark. 987, 136 S.W.2d 684; Mutual Benefit H. & A. Ass'n v. Moore, 196 Ark. 667, 119 S.W.2d 499, and State Farm Mutual Auto Ins. Co. v. Belshe, 195 Ark. 460, 112 S.W.2d 954. Appellees rely upon Western Casualty & Surety Co. v. Independent Ice Co., 190 Ark. 684, 80 S.W.2d 626. In the Smith case, the policy covered truck shipments and was expressly confined to shipments to named points, of which Joplin was not one. A shipper sued the insurer for damage in a shipment to Joplin. Insurer's agent declined responsibility until he found out whether the shipment was covered. [200 Ark. 508, 139 S.W.2d 412.] Later, the insurer declined responsibility on the ground of noncoverage. The court stated There is no question of forfeiture or estoppel in this case   . In connection with another contention the court said: The fact that Vansandt [the insured] undertook to bind appellant by issuing bills of lading to Joplin cannot have such effect, at a time when he held no such policy. The doctrine of waiver and estoppel cannot be asserted to extend coverage under a contract in which it was excluded by specific language. Miller v. Illinois Bankers' Life Ass'n., 138 Ark. 442, 212 S.W. 310, 7 A.L.R. 378; Mutual Ben. Health & Acc. Ass'n v. Moore, 196 Ark. 667, 119 S.W.2d 499; John Hancock Life Ins. Co. v. Henson, Feb. 12, 1940 [199 Ark. 987], 136 S.W.2d 684. In the Miller case, there was an express exclusion, in a life policy, of liability for death while in the service in the army or navy of the government in time of war. The principal contention was that there was a waiver of this exclusion because of a statement of the local agent to insured (two years after issuance of the policy and shortly after enlistment of the insured) that he construed this exclusion as confined to death in battle  the death here being from pneumonia while in military camp  and because of acceptance of premiums during such military service of the insured. After stating that the exclusion clause was not one of forfeiture but of coverage, the court discussed the evidence and determined therefrom that there was no waiver because either of the agent's statement or of the acceptance of such premiums. There is no statement that had the facts justified the existence of waiver, yet the coverage could not be extended. The Henson case had no issue of estoppel or of waiver. The sole matters discussed or determined were concerned with delivery of the policy and with payment of the first premium  both of which were required by the policy before it became effective. In the Moore case there was no issue of waiver or of estoppel. The issue there was one of construction of a disability policy. The policy provided there should be liability for disability from tuberculosis only if the disease originates after the policy has been in continuous force for the six (6) preceding months. [196 Ark. 667, 119 S.W.2d 501.] The policy had lapsed after the first three months for lack of premium payment. Several months later it was reinstated. During the interval the court held there was no insurance hence the six continuous months began to run with the date of reinstatement. The court stated: We have but recently discussed very similar propositions to the one under consideration, making a distinction between insurance in force and which might be defeated because of some exception stated in the policy, and a condition whereby the insurance was never, in fact, in effect because the insured was not covered under the provisions of the policy. The court cited the Belshe case as illustrative of the first class in the above quotation. The Belshe case involved no issue of estoppel or of waiver. The sole question was whether the answer of the insurer (to which a demurrer had been sustained) stated a defense. The defense so stated was that the policy expressly excluded liability for injury from a truck if the driver was operating it in violation of any law or ordinance as to    driving license [195 Ark. 460, 112 S.W.2d 955] and that the driver at the time of the accident had no such license nor had applied for such. The court held a defense sufficiently stated. A summary of the above five cases relied upon by appellant results as follows. The only case which touches the issue before us is the Smith case. In that case the only statement referring to this issue is the one quoted therefrom above. The quoted statement is in the nature of a dictum or of an added thought unnecessary to decision. The statement is very clear and unequivocal. However, even a dictum in a State decision should be followed by us unless there is positive decision to the contrary. See Texarkana v. Arkansas Louisiana Gas Co., 306 U.S. 188, 199, 620, 59 S.Ct. 448, 83 L.Ed. 598. Also, note expressions in Supreme Court opinions to the effect that it is the duty of the former [federal courts] in every case to ascertain from all the available data what the state law is and apply it (West v. American T. & T. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139, 132 A.L.R. 956) and that decisions of intermediate State courts are to be followed by federal courts as to State law unless it [federal court] is convinced by other persuasive data that the highest court of the state would decide otherwise, West v. American T. & T. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139, 132 A.L.R. 956. Certainly, a clear, unequivocal dictum in an opinion of the highest State court is available data and is sufficiently persuasive data to convince as to what it would decide. The Independent Ice Company case, relied upon by appellees, contains a positive statement to the contrary of the Smith case, as follows: Moreover, appellant assumed the defense of the Anthony case, thereby admitting that the casualty was within the terms of the policy issued by it and waived all defenses it might have had and cannot be heard to say that the policy did not cover the child's injuries. [190 Ark. 684, 80 S.W.2d 627.] A study of the issues in the Independent Ice case seems to reveal that the just quoted statement was not the basis of decision of the issue concerning which it was uttered but merely an additional consideration. There was no issue of estoppel or waiver in that case. The result of a comparison and consideration of the Smith and of the Independent Ice Company cases leads to the conclusions that their opposed statements are of equal gravity; that they are inconsistent with each other; that the last expression of the court must govern us; and that the statement in the Smith case is, therefore, controlling. If this be true, the position of appellant that estoppel and waiver cannot be applied in this case must be accepted; and the judgment reversed and remanded with instructions to set aside the dismissal of the petition and to enter judgment declaring lack of liability on the part of appellant. Whether appellant may be liable to Roberts in tort or otherwise than on this policy is not involved in this action.