Court Opinion

ID: 9673239
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:08:57.301865+00
Date Added: 2024-06-11T18:16:21.127587
License: Public Domain

Gillespie, J.,
dissenting:
I respectfully dissent:
1.
Oral contracts of insurance are valid, but I am of the opinion that when the evidence in this case is viewed in the light most favorable to appellees (insured), and assuming the agency of Whitsett, no oral contract was ever consummated.
In considering whether the evidence established an oral contract to extend the coverage of the policy to hired trucks, the law concerning oral contracts of insurance must be considered.
In 29 AM. JUR., Insurance, Sec. 1922, the text is as follows: ‘ ‘ Since oral contract of insurance, although generally held to be valid apart from the provisions of statute or the charter of the insurance company, are rarely made, and are outside the ordinary course of business, such a contract must be established by clear and convincing evidence, full and clear proof, etc., and it must be shown that each party understood its terms in the same light. Evidence which shows merely an incomplete, indefinite, conditional, and tenative arrangement for insurance is insufficient to establish a valid oral contract.”
The authorities seem to be unanimous in holding that oral contracts of insurance must be established by clear and convincing evidence or, as sometimes stated, by full and clear proof. 15 A.L.R. 1004; 69 A.L.R. 565; *11092 A.L.R. 236. Our own Court is in accord. American Bankers Ins. Co. v. Lee, 161 Miss. 85, 134 So. 836. Thus we find that an oral contract of insurance must be established with the same clarity and as convincingly as required to establish fraud, and that ‘ ‘ an incomplete, indefinite, conditional, and tentative arrangement for insurance is insufficient to establish a valid oral contract. ’ ’
In determining whether the evidence established an oral contract to cover the hired trucks the court should also consider why the courts have upheld the validity of oral contracts of insurance and what are the situations giving rise to valid oral contracts in this field.
Most of the cases upholding the validity of parol contracts of insurance involve either (1) a contract for temporary or preliminary insurance until the formal policy can be written, or (2) renewal of an existing policy. The first category is aptly illustrated by the case cited in the majority opinion, New England Ins. Co. v. Cummings, 164 F. Supp. 553, a Mississippi case, where the proof showed that the agent told the insured as follows: “He told me I was covered for $9,000.” In that case the agent undertook and did provide coverage effective in praesenti, not in the future. The second category is aptly illustrated by another case cited by the majority, Liverpool & London & Globe Ins. Co. v. Hinton, 116 Miss. 754, 77 So. 652, in which case the proof showed that the agent assured the insured that his property would continue to be protected. Insured had a policy already and requested its renewal. Later, the agent told insured the policy had been renewed. In that case the proof was directly to the point that the insurance was in force and the property covered. No case has been cited, and I have not found one, where an oral contract was held valid, to extend the coverage of an existing policy so as to bring in property or coverage not provided by the' existing* policy. Our recent *111cases say this cannot be done, and this will be shown in another.part of this dissent.
One other matter should be considered in measuring the evidence by the law to determine if a parol contract for additional coverage was established by clear and convincing proof. The appellee, Bush and King, is a partnership composed of James Bush and Eras King. It is a contracting firm. Eras King seems to be the operating partner but James Bush looked after the insurance matters. Mr. Bush is obviously an educated man. He-is a banker and hotel owner. His testimony showed that he is intimately familiar with insurance policies and that he read the policy in question and every endorsement thereon. He never testified that Whitsett told him the coverage was in force as to the hired trucks. The testimony merely showed that he “needed and wanted” or “had to have” the hired truck coverage, but in the letter from Whitsett to Bush and King, dated May 14, 1959, which seems to have been the last communication between them regarding the hired truck coverage, it is said: “As soon as we have heard from the company as to the exact premium charge for this amendment, I will let you know.” He enclosed a bill which did not include any premium for the hired truck ‘ ‘ amendment.” Mr. Bush, who carefully read every endorsement to the policy, never received any amendment or endorsement providing coverage on hired trucks or bill for the premium for such coverage until a month after the accident involving- a hired truck. The endorsement was issued effective December 10, 1959, while the loss had occurred on November 10, 1959.
The policy in .question covered 34 vehicles, mostly •trucks, all of which were described therein by name and motor number. Bush had kept that .policy and received several endorsements which were added from time to time, one changing the operating radius, from the time he received it about May 1, 1959 until November 10, *1121959, when the accident occurred involving a hired truck. When the accident occurred to the hired truck on November 10, 1959, Mr. Bush had had possession of the policy issued by appellant for' about six months. By his own testimony, he had carefully read this policy, together with all endorsements thereon. Therefore, he knew that he did not have any coverage on the hired trucks as far as the policy was concerned. Moreover, he did not report the accident involving the hired truck until after he discovered the hired truck owner had only collision insurance and had not provided liability coverage. Bush frankly so stated in his letter reporting the accident. The inference is very strong, in fact, -almost compelling, that since Bush knew he did not have hired truck coverage he received assurances from the lessors of such trucks that they were covered by insurance, and that appellees were depending on protection from that source rather than from the policy issued by appellant. That seems to be the reason the accident of November 10, 1959 was not reported to Whitsett until after appellees discovered that the hired truck owner had failed to provide liability coverage.
I find no clear and convincing evidence that the parties ever entered into any oral contract for hired truck coverage. Nothing showed the parties understood the coverage was provided in praesenti. They merely talked about such coverage. I cannot agree with the majority when the inference is forced that “Bush evidently felt that his partnership was protected.” In my opinion, there was nothing moré than an ‘‘incomplete, indefinite, and tentative arrangement” to provide coverage of the hired trucks. There was no consummation. There was no common assent. No one told Bush and King that the coverage was in force, nor were they justified in believing such coverage had been provided. Therefore, the chancellor’s finding that there was an oral contract was manifestly wrong.
*1132.
The second reason why this case should be reversed is that the policy issued by appellant contained a valid provision that no agent could change the policy, nor could the policy be changed except by endorsement.
The policy dated April 10, 1959 did not provide any coverage on hired trucks. An endorsement attached to the original policy specifically excluded such coverage. Section 16 of the policy provided as follows:
“16. CHANGES. Notice to any agent or knowledge possessed by any agent or by any other person shall not effect a waiver or a change in any part of this policy or estop the company from asserting any right under the terms of this policy; nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy.”
“Parties to an insurance contract may stipulate that its terms cannot be waived or changed, except in writing. Provisions that no waiver or alteration in the policy terms should be effective unless made in writing and attached to or endorsed upon the policy are, therefore, generally considered valid and binding upon the insured, in the absence of contrary provisions of a statute.” 16 Appleman, Sec. 9208, page 757.
As already noted, Mr. Bush had read the policy and knew all its terms. In New York Life Ins. Co. v. O’Dom, 100 Miss. 219, 56 So. 379, the Court was dealing with a provision in policy providing: “No agent is authorized to waive forfeitures, or make, modify or discharge contracts, or extend the time of paying a premium.” The agent in that case was held to be a collecting agent without power to modify the contract of insurance. The Court said: “We see no reason why a corporation, which necessarily contracts through agents, but may have ag’ents of superior or inferior authority, should not stipulate, in any contract executed in its behalf, *114that its provisions can be varied by no notice or representations not brought home to the actual knowledge of one of its principal officers, nor any waiver not authorized by them. The stipulation in the policy that ‘no agent has power to modify the terms of the contract, or waive its conditions, is notice to the insured of the limited authority in these respects, and under such a stipulation the insured cannot rely upon any actual conduct of the agent as constituting a modification or waiver.’ ” This quotation was repeated in the recent case of American National Ins. Co. v. Walters, 230 Miss. 616, 93 So. 2d 616. This rule is firmly a part of the law of this State. It does not conflict with the rule upholding oral contracts of insurance.
It is shown in another part of this dissent that Whit-sett was not a general agent. In connection with the application of the two cases cited above, the courts recognize that there is a fundamental difference between a waiver of forfeiture and the extention of the coverage of a policy after it is written and delivered. A statutory agent cannot extend the coverage once the policy is written so as to vary the terms of the policy, except, of course, by written endorsement. The landmark case of Saucier v. Life and Casualty Ins. Co., 189 Miss. 693, 198 So. 625, recognized the validity of provisions of an insurance policy limiting the authority of an agent.
Even a statutory agent cannot extend the coverage of the policy contrary to its terms. New York Life Ins. Co. v. O’Dom, supra, has been cited in the following cases: Home Mutual Fire Ins. Co. v. Pittman, 111 Miss. 420, 71 So. 739; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609, wherein the Court said, “In the absence of any fraud in the making- of any insurance policy, the insured must be held to the knowledge of conditions of his policy, as he would be in the case of any other contract or agreement. It certainly would be inequitable and inconsistent with every safe, sound rule *115of conduct to permit one party to a contract to accept without examination a written contract, and to lay it aside for a long period of time, and then, when the period of termination is about to expire, to for the first time inform himself of its terms. It shocks the conscience and is at variance with every known rule of business. ’ ’ (Since Bush knew every detail of the policy in the present case, he is bound more firmly by the terms of the policy than if he had merely laid it aside); in Hartford Fire Ins. Co. v. Clark, 154 Miss. 418, 122 So. 551, which is interesting because it clearly points up the difference between the authority of an agent to waive provisions of the policy in the process of consummating the transaction and the authority of agents to waive or alter the provisions of the policy after the policy has been delivered and the contract has been consummated, a question at the very heart of this case; in Springfield Fire & Marine Ins. Co. v. Nix, 162 Miss. 669, 138 So. 598, and in White v. Standard Life Ins. Co., 198 Miss. 325, 22 So. 2d 353, wherein the Court said: “The effort here is to create, by oral representation, a liability expressly excepted in the policy, and base recovery on the liability so created. This cannot be done, as here attempted.”
3.
A third reason why this case should be reversed and rendered is that the acts, statements, promises, or knowledge of an agent, even a general agent, cannot extend the coverage of an insurance policy or create a primary liability.
There has been a great deal of misunderstanding as to the authority of an agent. Since this Court decided Saucier v. Life & Casualty Co., supra, in 1940, this Court has recognized that once the policy has been issued and the contract of insurance consummated the statute does *116not authorize an agent to change the terms of a policy or to create new liability.
In the case at bar nothing was said about coverage on hired trucks prior to the issuance of the policy in question, and the policy was issued without providing such coverage, as heretofore stated. The negotiations referred to in the majority opinion and in this dissent for hired truck coverage came after the policy had been issued by the company and countersigned as required by Code Sec. 5719 and delivered to the insured, the appellee. What the appellee sought by this suit was to extend the coverage of this policy to hired trucks which were specifically excluded from the terms of the policy. And they seek to do this by means of statements of an alleged agent, resting in parol. We have three recent cases holding directly to the contrary. In Frank Gardner Hdw. & Supply Co. v. St. Paul F. & M. Ins. Co., 148 So. 2d 190, the Court said: “First, the doctrines of waiver and estoppel cannot be used to extend the coverage of an insurance policy or create a primary liability but may only affect rights reserved in it. An insurance contract, under the guise of waiver, cannot be reformed to create a liability for a condition or employee excluded by the specific terms of the policy.”
In the case of Employer’s Fire Ins. Co. v. Speed, 242 Miss. 341, 133 So. 2d 627, this Court held that waiver and estoppel can only be applied when the subject matter is within the terms of the existing policy and cannot operate to cover additional property. In that case the Court pointed out that waiver and estoppel cannot operate so as to bring within the coverage of the policy, property or loss, or a risk, which by the terms of the policy, was expressly excepted or otherwise excluded. That case, as do the others, recognize that an insuror may be estopped by its conduct or knowledge from insisting* on a forfeiture of a policy, but the coverage or *117restrictions on the coverage cannot be extended by the doctrines of waiver or estoppel.
Probably the most significant case in this connection is Hartford Accident & Indemnity Co. v. Lockard, 239 Miss. 644, 124 So. 2d 849. In that case the automobile liability policy was issued January 26, 1959. The insured owned a 1953 Ford truck which was covered by'Hartford’s liability policy. The insured used this truck to pull a log trailer also owned by insured. When the policy was issued, the duly authorized agent of Hartford told the- insured that the policy covered his trailers that would be attached to the trucks insured under the policy. Actually the policy as issued specifically excluded any vehicle while towing any trailer owned or hired by insured and not covered by like insurance in the company.
This Court reversed the action of the trial court and held that the demurrer of the defendant should have been sustained. Actually there is no difference in principal in the case at bar and the Lockard case,- except that the Lockard case is much stronger on the facts because there was no question there but that the agent assured Lockard that the policy covered the truck while towing the trailer. In the present case, able counsel for appellees used the word “estoppel” only once in the declaration and do not rely on waiver and estoppel by name, but if appellees have a case it must be based on the doctrines of waiver or estoppel. The policy on which they sued specifically excluded coverage of hired trucks. Appellees, in substance, contend that appellant is estopped from relying on the terms of the policy because of statements, acts, and knowledge of the alleged agent. That is the same situation that existed in the Lockard case, where the Court said:
“ It is well settled that conditions going to the coverage or scope of a policy of insurance as distinguished from those furnishing a ground for forfeiture may not be waived by implication from conduct or action. The rule *118is that while an insnror may be estopped by its conduct or its knowledge from insisting upon a forfeiture of a policy, the coverage or restrictions on the coverage cannot be extended by the doctrine of waiver or estoppel.....
“This is a case where the coverage is sought to be extended. The doctrine of waiver cannot be invoked to create a primary liability and bring within the coverage of the policy risks not included or contemplated by its terms.”
The above quotation from the Lockard case first appeared in Carnes & Co. v. Employers Liability Assurance Corp. (C.C.A. 5th), 101 F. 2d 739. It should be recalled that the agent in the Lockard case was a general agent.
The whole line of cases cited in this part of the brief follow the leading case of Maryland Casualty Co. v. Adams, 159 Miss. 88, 131 So. 544, a case which has been cited, quoted from, and approved by the Lockard case and other recent cases. In the Adams case, the insured informed the general agent of the company “that he desired to obtain a policy which would protect him against accidents on his outfit, a new 3/4 Ton International truck and trailer, ’ ’ and told the agent that he was going to use the outfit to haul logs and lumber. The agent drew up a policy and handed it to the insured, saying, ‘ ‘ This is what you want, and this will protect you against damage to third persons on account of injuries that may accrue in the operation of this outfit.” The policy in question specifically excluded any vehicle covered thereby while used for towing or for propelling any trailer or any vehicle used as a trailer. The truck with - the trailer attached became involved in an accident and the question was whether because of the oral assurance of the agent, the insurance company was estopped to set up the provisions of the policy which we.re in direct conflict with the oral promises of the agent. In holding there was no liability under the policy, and that the *119truck described therein was not covered while drawing the trailer, the Court said:
“There is not here involved merely a forfeiture provision of the policy contract, which it is sought to avoid by reason of the acts of an agent of the insurance company constituting a waiver thereof, but it is sought to make by waiver, a contract for the parties which they never made themselves, and by waiver to extend the contract to cover vehicles not covered thereby. J >
The proposition asserted in this part of this dissent is not inconsistent with the validity of an oral contract of insurance. Apparently the majority have not considered the fact that no matter what authority the agent has his statements, acts or promises cannot vary the terms of the policy so as to bring within the coverage of the policy property or risks not included in the policy. Of course, an agent can waive forfeiture, but the fundamental problem here is the difference between the waiver of a forfeiture and the extension of the coverage of the policy. Our authorities are unanimous in holding that the oral promises, statements or acts of an agent cannot extend the coverage of a policy. Whatever else it may be called by the appellees, that is what the appellees sought to do in this case. The alleged oral promises of Whitsett is the sole basis of extending the coverage of the policy to cover vehicles specifically excluded therefrom.
The majority opinion says that Maryland Casualty Co. v. Adams', supra, is not applicable because no complaint was made of the absence of the promised coverage under the policy until four months later, after the accident had occurred. The majority says that in the Lockard case there was also a similar delay. But the same thing is true in the case at bar. The policy was issued in the present case on April 10, 1959, and delivered to the insured about May 1, and the last dis*120cussion about hired car coverage was on May 14, 1959. Bush, the partner who looked after the insurance for appellees, admittedly having carefully read the policy and all endorsements attached thereto as they were later received, kept the policy without complaint more than five months, knowing all the time that the hired truck coverage was not provided therein but was, in fact, specifically excluded.
4.
A fourth reason why this case should be reversed and rendered is the fact that there is no proof that Whitsett or Multiple Peril Underwriters, Inc., had any authority to make an oral contract of insurance on behalf of appellant. It is necessary to dispose of any inference that might be drawn that either Whitsett or Multiple Peril was an agent within the meaning of Code Sec. 5706. Counsel for appellees, in their brief, state that “We did not rely upon Sec. 5706, Miss. Code of 1942, in the lower court as stated by counsel, . . . . nor do we rely upon it here.” The statute being disposed of, the agency must be established according to the principles of common law. Old Colony Ins. Co. v. Pagan Chev. Co., 150 So. 2d 172.
In my opinion, there is not a scintilla of evidence that Whitsett or Multiple Peril had any actual authority to enter into an oral contract of insurance. The burden to prove agency was on appellees. The President of Multiple Peril testified that Multiple Peril did not have the authority to issue policies, much less oral policies. Isolated statements of his testimony do not serve to establish an agent. It must be conceded, of course, that if Multiple .Peril was an agent, it followed that Whitsett was also, and our cases so hold.
Since there is no proof of actual authority ■ on the part of Multiple Peril to enter into any alleged oral contract, then the only way to establish agency is to *121show apparent authority to make a special contract of insurance. In American Bankers Ins. Co. v. Lee, 161 Miss. 85, 134 So. 836, this Court said:
“In this case the burden of showing some reasonable basis for the plaintiff that Lee had a right to think that the agent, Hunt, had apparent authority to make a special contract of insurance must be met.
“(4) ‘No presumption exists, however, that the company’s agents have authority to make a parol contract to insure; such authority must be proved affirmatively. Of course, a parol contract to issue or renew a policy must be clearly established.’ See 2 Couch. Cyc. of Ins. Law, 1929, 1586; also, Joyce on Insurance, vol. 2, p. 1298, sec. 525; 2 Couch. Cyc. of Ins. Law, 1485; 32 C. J. 1067, 1116.
“ (5) Appellee suggests to the court that section 5196, Code of 1930, defining who is an agent in this state, might be applied to the case at bar. However, he realizes that this court has said, in effect, that this statute does not alter the general law of agency, and has always recognized the distinction between a special agent, or merely soliciting agent, and an agent clothed with such authority as by implication the principal was bound by his acts. The O’Dom and Hall cases were decided in the light of the substance of this statute, which, so far as material here, has been in force in this state since the Code of 1892. See Section 2327, Code 1892.......
“ (3) In the case of Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609, 613, this court said: ‘The powers possessed by agents of insurance companies, like those of any other corporation or of an individual principal, are to be interpreted in accordance with the general law of agencies. No other or different rule is to be applied to a contract of insurance than is applied to other contracts. ’.....
“(2).....The burden of proof is upon him who asserts it to show either a direct authorization of *122an agent, or by proving snch facts or circumstances, or such a course of conduct, as by implication it can be presumed that tbe agent was acting within the real or apparent scope of his authority. If one invests another with real authority, he is bound by reason of the actual power conferred. If, however, he clothes him with apparent authority, he is bound, because he has induced others to deal with him as an agent. The one rests upon a fact; the other upon a supposed fact. But before the alleged principal is precluded from denying the existence of the supposed fact, it is necessary that the other party should show that he was misled, not by the alleged agent, but by the principal. See New York Life Ins. Co. v. O’Dom, 100 Miss. 219, 56 So. 379, Ann. Cas. 1914A, 583.”
On the question of whether Whitsett and Multiple Peril had apparent authority, much is said about some of the endorsements attached to the policy being countersigned and issued at Jackson, Mississippi, and -signed by either Whitsett or Multiple Peril. This did not appear on the policy itself, which shows only that it was countersigned at Jackson. In my opinion, the fact that some of the endorsements had “Countersigned and Issued at Jackson, Mississippi,” thereon is no justification for the appellees assuming therefrom that the agent had special authority to enter into an oral contract of insurance. Sec. 5719, Miss. Code of 1942, requires that every policy of insurance be countersigned by a local agent. Actually, the policy in this case appears conclusively to .have been written by the home office of appellant because the cover letter of transmittal is in the record.
Another reason why appellees cannot contend that they were justified in supposing that Whitsett had authority to enter into an oral contract is the fact that the record does not justify any finding that appellees were misled by any appearance of authority on the part *123of said alleged agents. In fact, appellees did not attempt to prove directly or inferentially that they were misled by any alleged apparent authority of the agents.
Kyle and Ethridge, JJ., join in this dissent.