Colwell v. Voyager Cas. Ins. Co.

• Decision Date: 05 December 1983
• Docket Number: 39879,Nos. 39873,s. 39873
• Parties: COLWELL v. VOYAGER CASUALTY INS. CO. VOYAGER CASUALTY INS. CO. v. COLWELL.
• Court: Georgia Supreme Court

Page 617

309 S.E.2d 617

251 Ga. 744

COLWELL v. VOYAGER CASUALTY INS. CO.

VOYAGER CASUALTY INS. CO. v. COLWELL.

Nos. 39873, 39879.

Supreme Court of Georgia.

Dec. 5, 1983.

Kenneth M. Henson, Jr., Kenneth M. Henson, Henson & Henson, P.C., Columbus, Millard D. Fuller, Fuller & McFarland, Americus, for Shirley Colwell.

Kenneth B. Hodges, Jr., William A. Erwin, Hodges, Erwin & Smith, Albany, for Voyager Cas. Ins. Co.

John E. James, Alfred L. Allgood, Andrew W. Estes, Lamar Sizemore, Gene MacWinburn, James E. Butler, William S. Stone, amici curiae.

HILL, Chief Justice.

We granted these parties' cross applications for certiorari on the following questions: "Whether the holdings in Johnson v. Rheney, 245 Ga. 316(4) (1980), and Wight Hardware Co. v. American Lubricants Co., 91 Ga.App. 339 (1954), were properly applied to the facts of this case" (Case No. 39873), and "In light of this court's opinion in GEICO v. Mooney, 250 Ga. 760, 300 S.E.2d 799 (1983), was the jury improperly allowed to consider the refusal to pay optional PIP benefits in assessing the penalty, punitive damages, and attorney fees." (Case No. 39879). Voyager Cas. Insurance Co. v. Colwell, 166 Ga.App. 17, 303 S.E.2d 152 (1983).

Alphonzo Colwell was killed in an accident while a passenger in an automobile driven by the son of the owner/insured of the car, on January 24, 1981. In February, Voyager Casualty Insurance Co., which carried minimum no-fault coverage on the car, was notified of the claim, and in April a letter was sent by the attorney for Colwell's widow, Shirley Colwell, the plaintiff in this case, with information to establish the loss. The insurance company's claim form was returned to the company on June 1, 1981.

In September, suit was filed seeking minimum no-fault benefits and the 25% statutory penalty and attorney fees for failing to pay the benefits due within 30 days of filing proof of loss under OCGA § 33-34-6(b) (Code, § 56-3406b), ¹ and punitive damages for failing to pay the benefits within 60 days of the filing under OCGA § 33-34-6(c), (Code, § 56-3406b). ²

In December, 1981, additional premiums were tendered to Voyager under Jones v. State Farm Mutual Auto Insurance Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980) (cert. dismissed, July 7, 1981), which held that where the application for insurance coverage had not been properly signed to indicate rejection of each optional coverage available, demand for such optional coverage could be made upon tender of the premiums due. See also Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 712, 300 S.E.2d 673 (1983). In January, 1982, Colwell's suit was amended to seek these optional benefits along with the 25% penalty, attorney fees and punitive damages for refusing to pay them.

At trial in February, 1982, the agent who had processed the claim for Voyager was called as a witness for the plaintiff. No announcement was made that the defendant's agent was being called for the purpose of cross examination, but shortly after the questioning began defense counsel objected to leading questions, and plaintiff's counsel stated that the agent had been called for cross examination as an adverse witness. Over further objections by Voyager, the trial court permitted the continued cross examination of this witness, and later refused to allow Voyager to cross examine its agent. ³

The trial court directed a verdict for Colwell's PIP claims and the jury awarded Colwell an additional $4,570 in statutory penalties, $6,000 attorney fees, and $30,000 in punitive damages. Voyager appealed to the Court of Appeals.

1. The Court of Appeals held that the trial court committed harmful error in refusing to allow Voyager's attorney to cross examine its agent after the agent had been called as a witness for the plaintiff without a timely announcement that he was being called as an agent of the adverse party.

OCGA § 24-9-81 (Code, § 38-1801) allows a party in a civil case to call the adverse party or an agent of an adverse party for cross examination. It provides in material part that "in the trial of all civil cases, either plaintiff or defendant shall be permitted to make the opposite party ... or officer or agent of a corporation when a corporation is such party ... a witness, with the privilege of subjecting such witness to a thorough and sifting examination and with the further privilege of impeachment, as if the witness had testified in his own behalf and were being cross-examined."

In its ruling, the Court of Appeals relied on Wight Hardware Co. v. American Lubricants Co., 91 Ga.App. 339, 346, 85 S.E.2d 507 (1954). In Wight, the Court of Appeals reversed a judgment for the plaintiff because the defendant was not allowed to cross examine the president of the defendant corporation after the plaintiff had called the president without an announcement that he had been called pursuant to OCGA § 24-9-81 (Code, § 38-1801), supra. ⁴

In the case before us, the announcement was made, but was not timely made, and the defendant was not allowed to cross examine its agent. The Court of Appeals, citing Wight, reversed.

The existing rules respecting OCGA § 24-9-81 (Code, § 38-1801), supra, are as follows: (1) If the adverse party or agent as specified in OCGA § 24-9-81 (Code, § 38-1801) is called, and a timely announcement is made by the calling party that the witness is being called for cross examination, the calling party may cross examine the witness and the adverse party may question him only by direct examination. (2) If the adverse party or agent as specified in OCGA § 24-9-81 (Code, § 38-1801) is called, and no announcement is made during the calling party's direct examination, the calling party may question the witness only by direct examination and the other party may cross examine the witness unless some special reason exists for the trial court, in the exercise of its discretion, to not allow the adverse party to cross examine the witness. Wight Hardware Co., supra, 91 Ga.App. at 346, 85 S.E.2d 507.

In order to further the purpose of OCGA § 24-9-81 (Code, § 38-1801), supra, to make provision for situations not covered by the existing rules (above), and to avoid the harshness of an inflexible rule, we hold: (3) If the adverse party or agent as specified in OCGA § 24-9-81 (Code, § 38-1801) is called, and an announcement is made by the calling party that the witness is being called for cross examination, but that announcement is not timely made, the calling party may cross examine the adverse witness and the other party may or may not be allowed to cross examine the witness, in the discretion of the trial court, depending upon when in the course of the witness's testimony the announcement was made, the relationship and attitude of the witness to the parties and the nature of the testimony given or sought to be elicited. One reason for adopting this rule allowing a belated announcement by the calling party is that it would appear that a party who failed to make the announcement at the outset could excuse and then recall the witness for cross examination. The reason for placing discretion in the trial court to require direct or allow cross examination of the witness is to allow the trial court to treat all parties fairly depending upon the circumstances of each case. ⁵

The case before us falls under the third rule, and the defendant was not allowed to cross examine its agent. Because we have determined that a new trial must be granted (see below), we need not determine whether the trial judge exercised its discretion, or ruled as a matter of law, and if so whether its ruling was harmless (see fn. 3).

2. The Court of Appeals also held that the trial court correctly refused to admit evidence offered by Voyager to show that the insured had in fact orally rejected optional PIP coverage in discussions with the agent who sold the insurance, even though Voyager's form did not comply with the no-fault law as pointed in Flewellen, supra.

In Flewellen, supra, 250 Ga. at 714, 300 S.E.2d 673, we agreed with the Court of Appeals decision in Jones v. State Farm, supra, "that the intent of OCGA § 33-34-5 (Code Ann. § 56-3404b) is to ensure 'that insurers offer optional coverages to applicants for no-fault insurance and that an applicant's waiver of his privilege to obtain optional coverages be made knowingly and in writing,' Jones, [94 Ga.App.] at p. 232 . The purpose of the statute is to resolve conflicts...