Court Opinion

ID: 9575831
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:17:38.007611+00
Date Added: 2024-06-11T12:50:11.870391
License: Public Domain

Birdsong, Judge,
dissenting.
The issue in this case before a jury was whether appellee Sharif, in filing application for automobile insurance with the appellant Sentry Indemnity Co. made material misrepresentations of fact which, pursuant to Code Ann. § 56-2409, would prevent a recovery under the policy or coverage. I would rule the trial court erred in refusing to direct the verdict in favor of the appellant.
1. I disagree with the majority’s conclusion that this case is controlled by the recent decision in Pearce v. Southern Guaranty Ins. Co., 246 Ga. 33 (268 SE2d 623).
The Supreme Court, after giving its rationale concluded “that an automobile insurance policy providing basic third party liability insurance and basic [no fault] benefits . . . cannot be voided retrospectively under Code Ann. § 56-2409.”
From legal antiquity, it has always been the law of contracts, generally, that a contract procured by fraud or wilful misrepresentations of material facts is voidable at the instance of the defrauded party (Code Ann. § 20-502; § 20-906). Gibson v. Alford, 161 Ga. 672, 685-686 (132 SE 442), and cases cited; Life & Cas. Ins. Co. v. Davis, 62 Ga. App. 832, 836 (10 SE2d 129). In the insurance code, at Code Ann. § 56-2409, it is provided that “[misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless: (1) Fraudulent; or (2) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or (3) The insurer in good faith would either not have issued a policy or contract... in as large an amount, or at a premium rate as applied for ... if the true facts had been known to the insurer. . .” Under this statute, the insurance policy which was procured by fraud or misrepresentation of a material fact, which was material to the insurer’s acceptance or degree of risk, is voidable at the election of the insurer. McGhee v. Independent Life & Acc. Ins. Co., 146 Ga. App. 310, 311 (246 SE2d 349); and see United Family Life Ins. Co. v. Shirley, 242 Ga. 235, 238 (248 SE2d 635).
Under some of the precursors to Code Ann. § 56-2409, the policy procured by material fraud which changed the nature of the risk was not merely voidable, but void. This principle was firmly stated in at least three separate insurance statutes. Preston v. National Life & Acc. Ins. Co., 196 Ga. 217, 221, 226-229 (26 SE2d 439). See also Life & *832Cas. Ins. Co. v. Davis, supra, p. 835.
In Pearce, supra, it was proposed to the Supreme Court, and agreed to by the court, that automobile insurance policies providing basic third party liability and no-fault coverage can no longer be avoided after an injury has occurred on the basis of such risk-changing fraud or misrepresentation in their inducement, because the Georgia No-Fault Act (Georgia Motor Vehicle Accident Reparations Act, Chapter 56-34B) at Code Ann. § 56-3412b (a) requires an insurer who cancels insurance required by the chapter (no-fault and liability; Code Ann. § 56-3403b) to notify the Department of Public Safety of such cancellation within five days after the effective date of the cancellation. The reasoning of Pearce is that, therefore, no policy is cancelled unless the Department of Public Safety has had proper notice of it, which can logically not occur “retrospectively” so as to avoid the policy from its inception under Code Ann. § 56-2409.
The underlying — and only — purpose of Code Ann. § 56-3412b is to provide notice and proof of insurance to the Department of Public Safety and to provide sanctions against the motor vehicle owner who does not prove insurance. When policies are cancelled (i. e., when extant, viable policies are rescinded) the Department of Public Safety must have notice of the same. Explicit penalties enforceable by the Department of Public Safety are provided in Code Ann. § 56-3412b against the car owner who fails to comply with the requirements as to proof of insurance. No corollary penalty is provided against the insurer who fails to send such notice to the Department of Public Safety, although at Code Ann. § 56-9915.2 it is provided that “... any person who knowingly authorizes another to operate a motor vehicle without effective insurance thereon ... shall be guilty of a misdemeanor. . .”
It seems that the main objective of Pearce is to protect innocent third parties. This objective is surely laudable. Moreover, I do not doubt that, as pointed out in Pearce, the Georgia No-Fault law fully intends to make liability insurance (and no-fault) compulsory. However, I do not believe this result ought to be reached by abolishing Code Ann. § 56-2409 through the employment of a purely technical statute which, in my opinion, was designed simply to enable the Department of Public Safety to keep tabs on who has insurance and who does not. Whether insurance companies shall he guarantors of insurance instead of mere insurers under contract, and whether the legislature, by enacting Code Ann. § 56-3412b of the No-Fault Act, intended to abolish Code Ann. § 56-2409, and centuries of common law, are matters that ought to be addressed by the legislature.
A too-generous application of Pearce will compel private *833insurance companies to become the guarantors of insurance coverage. It will encourage fraud, and reward the defrauder. Naturally, as the risk increases unbounded, so will the premiums that the general public must pay. More likely, however, it will utterly defeat the ultimate purpose of the statutory provisions which make liability and no-fault insurance compulsory, since rather than issue policies or even binders, on the basis of an applicant’s representations, the insurers will tend, I think, to issue nothing at all until thorough investigations can be made of all applicants. I simply do not believe the legislature or the Supreme Court intended such far-reaching results to arise from a construction of Code Ann. § 56-3412b.
We are bound by Pearce, but I do not believe it is applicable to this case. Pearce was a case where the insurer sought declaratory judgment that it was not liable to the third party because of the fraud or misrepresentations of the insured. The Supreme Court held that the company was liable to the unsuspecting third party, who had no part in the fraudulent or misrepresented procurement of insurance by the “owner.”
In this case the policy owner, who made the misrepresentations, sued the insurance company to compel payment to himself for the claim made against him by the third party. No liability to the third party has been established, and no payment has been made to the third party by the owner. While the insurance company may be liable to the third party under Pearce, it is on no account liable to the policy owner on behalf of the third party. If we protect the innocent third party under Pearce, nevertheless as between the insurance company and the policy “owner” who obtained coverage by fraud or misrepresentations, the insurance company may have an action over against the “owner” for any sums it is compelled to pay a third party by reason of the “owner’s” misrepresentations. Hence, it can have no obligation to pay the “owner” for the claim of the third party.
Accordingly, I believe Pearce does not control a case where the owner seeks for himself payment of a claim on behalf of a .third party.
I also disagree with the majority that the decision in Pearce applies to binders of insurance as well as to policies of insurance; and since in this case a binder was issued on the basis of misrepresentations made by the appellee, the company should be entitled to avoid its operation under Code Ann. § 56-2409.
I would reverse the judgment below and render judgment for the appellant insurance company.
2. The undisputed evidence shows that the appellee Sharif *834submitted an application for insurance which responded “no” to the question, “Has any member of [your] household in the past five years been convicted of or forfeited bail for any traffic violation, criminal or civil offense, or been involved in a traffic accident?” The insurance agent filled out the form application while taking information from Sharif, but Sharif signed the form under a printed declaration that the facts stated were correct. Sharif contended that the agent asked him only whether his son had had any violations, to which he responded “no.” In fact, the family members had been involved in several automobile incidents, including violations and accidents, within the five years previous to the date of application.
Sharif, a native of Afghanistan, stated that he has been in this country since 1968 and is now a United States citizen; he has owned several cars and carried several policies of insurance; he was aware that premium cost may be affected by or may increase with the number and type of violations and accidents; he is a medical technician, is educated, can read and is conversant in English. Sharif did not deny the falseness of the “no” answer; nor was there alleged any fraud against the agent who filled in the application from the answers given by Sharif. He contended, however, that he did not understand the questions put to him by the agent With regard to “dates” and “violations” because (although he has been in this country 12 years) he thinks in Persian and because his calendar is Middle Eastern; and his error in understanding dates as he said, was “just an error of computation of the dates from exchanging from one to the other.” He testified variously that he did not read the application to be sure it was correct when he signed it, or if he did read it, he did not understand the question concerning violations and accidents within the past five years; or that he did not remember reading that question because it was totally confusing to him, and being a medical technician, he read only his name, his son’s name, and the vehicle identification number.
The appellant’s witnesses testified that they would not have accepted the application had they known the truth, or that if the application had been accepted the truth concerning Sharif’s automobile history would have affected the premium amount. Appellee did not refute this testimony.
The direction of a verdict is proper where there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict. Code Ann. § 81A-150 (a); Lanier Petroleum v. Hyde, 144 Ga. App. 441, 442 (241 SE2d 62). Quite aside from the fact that Sharif s testimony is equivocal, inconclusive and ambiguous, and should thus be judged against him (see Johnson v. Curenton, 127 Ga. App. 687, *835690 (195 SE2d 279)), there is no conflict in the evidence in this case that misrepresentations, omissions and incorrect statements were made; that they were material to the acceptance of the risk by the insurer and that the insurer either would not have issued the policy or accepted the application or would not have issued it at the premium rate as applied for if the true facts had been known to the insurer as required by the policy application, and the insured did not show otherwise. Code Ann. § 56-2409.
No fraud or other legal excuse is or can be asserted by Sharif under this evidence. He does not allege any falsification by the agent of his application or of the information he gave and verified when he signed the application. While there might otherwise have been an issue whether the misinformation was induced by the agent who may have misstated the questions to Sharif, the prevailing fact is that Sharif signed and verified the application under a printed declaration that all facts therein were true and correct. The undisputed evidence shows that the insured could read and write; that he could have read the application or, as he equivocally says, did read it; that he signed it; that nothing was said or done by the agent of the company to prevent him from reading the application, and no fraud perpetrated on him to induce him to sign the application. In these circumstances the plaintiff is charged with the misrepresentations and the knowledge of them. It is very well settled that one who can read must read, and no advantage can be taken of the failure to do so without legal excuse, nor can there be any question that as a matter of law the misrepresentations were Sharif s and chargeable to him. See Musgrove v. Musgrove, 213 Ga. 610, 612 (100 SE2d 577); Tillman v. Byrd, 211 Ga. 918, 920 (89 SE2d 479); Stokes v. Humphries, 152 Ga. 621, 624-625 (111 SE 36); Life & Cas. Ins. Co. v. Davis, supra; Miller v. Quaker Savings Assn., 53 Ga. App. 703, 706 (186 SE 885); Morgan v. Denton, 28 Ga. App. 88, 89 (110 SE 328). The appellant Sentry was entitled to a directed verdict in the case. Sentry Indemnity Co. v. Brady, 153 Ga. App. 168 (264 SE2d 702); Jefferson Standard Life Ins. Co. v. Bridges, 147 Ga. App. 5 (248 SE2d 5); Life & Cas. Ins. Co. v. Davis, supra. Denial of it being in our opinion error, we would reverse the judgment below.
I respectfully dissent. I am authorized to state that Judge Shulman and Judge Sognier, join in this dissent.