Aetna Cas. & Sur. Co. v. Harris, 761158
| Decision Date | 23 November 1977 |
| Docket Number | No. 761158,761158 |
| Citation | 218 Va. 571,239 S.E.2d 84 |
| Parties | The AETNA CASUALTY AND SURETY COMPANY v. Frances HARRIS. Record |
| Court | Virginia Supreme Court |
Lawrence H. Framme, III, Richmond (Henry H. McVey, III, McGuire, Woods & Battle, Richmond, on brief), for plaintiff in error.
David R. Johnson, Newport News (Samuel W. Hixon, III, Williams, Mullen & Christian, Richmond, on brief), for defendant in error.
Before CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.
The Aetna Casualty and Surety Company appeals a judgment entered against it by the lower court following a jury trial in which Frances Harris recovered a verdict for $33,289.13. The verdict represents the portion of a fire loss suffered by Harris equal to the ratio which the liability limit of an Aetna fire insurance policy bears to the total amount of fire insurance that Harris claims was in effect at the time of the fire.
Frances Harris owned and operated a restaurant near Farmville, Virginia, known as "Frankie's Alpine Restaurant". The building was of cinder block construction, 64 feet long and 24 feet wide, with a basement area, 40 feet by 24 feet. Harris obtained insurance coverage on the building and contents from Aetna through its local agent, the F. B. Hubbard Insurance Agency. Her policy was described as a standard fire policy and was originally effective for one year from July 20, 1972. It insured the building for $30,000, the contents for $18,000 and provided general liability coverage. At the same time the company wrote a policy of workmen's compensation insurance covering the employees of the restaurant.
In July, 1973, both policies were renewed for another one-year period, July 20, 1973, through July 20, 1974. The premium thereon was paid by Harris "some two or three months" after the policies were issued. On July 15, 1974, five days prior to their expiration date, Richard P. Lash, president of the Hubbard Agency, again sent renewal policies to Harris and wrote her the following letter:
Lash received no response to this letter. During the night of August 1, 1974, the restaurant building and contents were destroyed by fire. On August 10, 1974, the Hubbard Agency received a letter from Harris dated August 9, 1974, addressed to Aetna, which read:
Some time between the date the fire occurred and his receipt of Harris' letter, Lash learned that she had procured fire and workmen's compensation insurance policies from the Travelers Insurance Company. The Travelers policies covered the identical restaurant building and contents insured by Aetna and also provided Harris with duplicate liability and workmen's compensation coverage.
Responding to Harris' letter of August 9, 1974, the Hubbard Agency wrote her as follows:
After writing this letter, Lash and Hunter R. Watson, co-owner of the Hubbard Agency, went to see Harris about the loss. Lash testified that "I asked her if she did not intend to replace all of our package because I had since learned about Travelers replacing our coverage with their own package". He stated that Harris responded that "she really was not positive . . . that she had coverage, you know, just exactly what she did have". Lash said he asked to see the Travelers policies so that he could tell her what her coverage was, but that Harris told him that she could not find them. Lash said that he inquired why, if Harris felt she still had coverage with Aetna, she had not paid the premium on the policy, and her answer was that she intended to, and would bring him a check that afternoon. Lash stated that she never came to his office or paid the premium on the policy; and that "the next time I saw her was a year or so later", after Harris had sued Aetna.
Watson testified that they told Harris that "it seemed to be an irregular situation", and there was a question whether she had any insurance with Aetna because apparently she had bought complete insurance from another agency.
Harris testified that she never paid the premium because she "did not know how much to pay", and that Lash told her that she did not have to pay the entire premium. She admitted that she never submitted the inventory mentioned in her letter of August 9th. She said that she was not aware that she had to submit the inventory within 60 days; that she thought that the Hubbard Agency would get it from Travelers; and that she thought Aetna would use the same procedure as Travelers, but "they never brought nothing for me to fill out, no blanks or nothing". She also admitted that she never requested any proof of loss forms from Lash or Watson like the ones she signed for Travelers, her explanation being that "Travelers brought it to me, they came out to the house and brought it".
Scott M. Harwood, a partner in the Harwood and Son Agency in Farmville, local agent for Travelers Insurance Company, testified that his first involvement with Harris was when one of his licensed solicitors advised him that he had contacted Harris and that "she wanted us to write some insurance on her restaurant". After he inspected the property and made investigation as to its value, his company issued two policies, both effective April 1, 1974. One was a comprehensive fire insurance policy, and the other was a workmen's compensation policy. The fire policy provided $40,000 coverage on the building, $35,000 on its contents, $100,000 general liability and property damage and $5,000 medical payments. The workmen's compensation policy was the usual policy of this type.
Harris filed a proof of loss with the Travelers Insurance Company in which she represented that the total amount of insurance upon the property described in the policy was $75,000. She estimated the actual cash value of the building to be $44,957.72, and the actual cash value of the contents of the building to be $40,361.34. Travelers effected settlement with Harris by paying her $75,000, the full amount of its coverage.
The dispositive issues in the case are whether Harris accepted the renewal policy dated July 20, 1974, which Aetna, through its agent, offered to her; and if accepted, whether Harris failed to comply with the terms of the policy following the August 1, 1974 fire. If Harris purchased insurance from Travelers to replace her coverage with Aetna, which would expire on July 20, 1974, then Aetna is relieved from any obligation or liability to the appellee arising out of the August 1, 1974 fire. 1 And this is true notwithstanding that she may never have notified Aetna of her intention to make the substitution, and although she did not return the Aetna policy. It is essential to the creation of a contract of insurance that there be an offer or proposal by one party and an acceptance, express or implied, by the other. A renewal contract of insurance must also have these essentials, such as mutual assent and a new consideration. 2
Aside from the statement by Harris that she desired the additional insurance represented by the Travelers policy, we have no explanation of the unusual circumstances surrounding the purchase of duplicate coverage from Travelers, 3 or any explanation of her conduct subsequent to the fire.
Aetna argues that Harris' conduct is wholly inconsistent with a finding that she accepted the renewal policy offered her by Aetna. It deems significant the fact that, with the exception of the exchange of letters in August, 1974, and the visit thereafter paid Harris by Lash and Watson, the record is devoid of any contact between Harris and the company's agent for a period beginning in July, 1973, and extending until July 25, 1975, when this action was instituted. There had been only one renewal of the policies by Aetna, and it says that neither this nor other evidence by Harris established a course of dealings between her and Aetna. 4
Harris did not request the renewal policy from Aetna. She did not acknowledge receipt thereof. She has never paid the premium thereon or any part thereof, or given a satisfactory explanation for her failure to pay.
The formal notification given Aetna by Harris that the fire had occurred, established that she had read the policy, understood her obligations thereunder and her duty to inform the company of the loss by fire of the building and contents. More importantly, the letter demonstrated that Harris understood that "within 60 days of the loss" she was obligated to file a proof of loss and an itemized inventory of the property destroyed. At that time Harris was negotiating with the Travelers Insurance Company and filed with that company a complete, itemized and comprehensive list of the contents of the building, and estimates as to the actual value and cost of replacing the building and contents. No proof of loss and itemized list were ever filed with Aetna, and no request for any forms was ever made of it by Harris.
In the proof of loss filed with Travelers, Harris represented in writing that the total amount of...
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