Alabama Farm Bureau Mut. Cas. Ins. Co. v. Adams

• Decision Date: 28 September 1972
• Docket Number: 2 Div. 542
• Citation: 267 So.2d 151,289 Ala. 304
• Parties: ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, a corp. v. Jack ADAMS et al.
• Court: Alabama Supreme Court

Page 151

267 So.2d 151

289 Ala. 304

ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, a corp. v. Jack ADAMS et al.

2 Div. 542.

Supreme Court of Alabama.

Sept. 28, 1972.

McDaniel, Hall & Parsons, Birmingham, for appellant.

William L. Utsey, Butler, for appellees Jack Adams and Ralph Taylor adams.

SOMERVILLE, Justice.

This is an appeal from a final decree of the Circuit Court of Choctaw County, in Equity, in a declaratory judgment suit filed by appellant-complainant Alabama Farm Bureau Mutual Casualty Insurance Company against appellees-respondents Jack Adams, Ralph Taylor Adams, a minor, Ted Kirksey, Rance Downey, a minor, Grover J. Allen, a minor, and Grover Jerome Allen, Sr.

The bill of complaint seeks construction of a written automobile liability insurance policy bearing policy number A214559, alleged to have been issued to respondent Jack Adams on May 22, 1969, affording liability coverage within the policy limits on a 1969 Chevrolet 1/2 ton pickup truck. A copy of the policy designated 'Antomobile Family Protector Policy' with a separate declaration slip hereinafter shown is attached as an exhibit to the complaint.

Appellee-respondent Jack Adams is employed as a life insurance salesman but owns and operates a farm. In connection with such operation he contracted to furnish, deliver, and plant grass on the property of a Mr. Carlisle. He was to do this work for a fixed price and was to furnish all required labor. He hired the minor respondents Richard Allen Kirksey, Rance Downey, and Grover Jerome Allen to assist his sons in this venture and on July 22, 1969, while said employees were being transported to the job site in a hay trailer attached to the insured Chevrolet truck driven by respondent Ralph Taylor Adams, minor son of Jack Adams, the trailer became unhitched and crashed into a tree, killing employee Richard Allen Kirksey and injuring employee-respondents Rance Downey and Grover Jerome Allen. The bill of complaint was amended to include Grover Jerome Allen, Sr. as a respondent and as amended alleges the pendency in the Circuit Court of Choctaw County, Alabama of a suit at law by Ted Kirksey against Jack Adams and Ralph Taylor Adams for damages for the death of Richard Allen Kirksey and the pendency of suits by Grover Jerome Allen, Sr. for bodily injury sustained by his son in said accident and the pendency of a claim by Rance Downey for injuries suffered by him in said accident.

The bill of complaint alleges that Ralph Taylor Adams was employed by his father and with the father's permission was driving the truck at the time of the accident. As amended the bill further alleges that the insurance policy does not afford coverage to the insured Jack Adams, appellee-respondent, or to his minor son Ralph Taylor Adams. The denial of coverage is based on exclusory clauses (d), (e), and (o) in the section of the policy entitled 'EXCLUSIONS-INSURING AGREEMENTS I AND II'. The pertinent portions of the Insuring Agreement, the 'Exclusions' section and a section entitled 'DEFINITIONS--INSURING AGREEMENTS I AND II' are as follows:

'INSURING AGREEMENT I--THE AUTOMOBILE

'Coverages A and B--

(A) Bodily Injury Liability and

(B) Property Damage Liability.

'(1) To pay all damages which the insured shall become legally obligated to pay because of (A) bodily injury sustained by other persons, and

'(2) As respects the insurance afforded under coverages A and B and in addition to the applicable limits of liability:

'(a) to defend any suit against the insured alleging such bodily injury * * * and seeking damages on account thereof, even if such suit is groundless * * *.

'DEFINITIONS--INSURING AGREEMENTS I AND II

'Automobile--means the private passenger automobile, utility automobile, or trailer described in the declarations and includes a temporary substitute automobile and a newly acquired automobile, and under Coverages A, B, C, and C--1 a trailer owned by the named insured, when attached to an insured automobile. * * *

'EXCLUSIONS--INSURING AGREEMENTS I AND II

'This insurance does not apply under:

'(d) Coverage A, except as to the named insured, to any employee with respect to bodily injury of another employee of the same employer, injured in the course of such employment arising out of the maintenance or use of the automobile in the business of such employer '(e) Coverage A, to bodily injury of any employee of the insured arising out of and in the course of the insured's employment, except domestic and not then if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law.

'(o) under Coverages A and B, while the automobile is towing or propelling another automobile not covered by like insurance in the Company; * * *.'

The bill of complaint further alleges that on January 13, 1970 the appellee Jack Adams was sent by certified mail a letter, copy of which is attached to the bill as Exhibit 'C'. This letter stated that the appellant's investigation disclosed that there was apparently no coverage under the policy due to the exclusions; that the appellant would defend the pending lawsuit until such time as it could get a court declaration as to whether or not there was coverage and reserved all rights to deny coverage and withdraw from the defense at any time.

The appellees-respondents Jack Adams and Ralph Taylor Adams filed an answer to the bill admitting the allegations with reference to the issuance of the insurance policy with exclusory provisions but denying that Ralph Taylor Adams was an employee of his father, Jack Adams, as alleged in the bill. By amended answer and cross bill said appellees-respondents deny the issuance of a written policy of insurance as alleged in the bill and aver that appellant insurer made an oral contract to insure Jack Adams' pickup truck and that such contract contained no exclusions. The amended answer further alleged that appellant had waived its policy defenses or in the alternative was estopped from asserting its policy defenses because of representations to appellee Jack Adams after the accident that he was covered by the policy, which representation Jack Adams relied on to his detriment, and because of appellant's delay in notifying Adams that it denied coverage. The cross bill prays that the court decree that the appellant-complainant is responsible for defending the appellees-respondents and paying any claims or judgments rendered against them in connection with the accident and paying court costs in connection therewith up to the limits of the policy.

The appellant-complainant filed an answer to the cross bill denying the issuance of an oral policy of insurance or an agreement to insure or any waiver of defenses, and the cause was heard by the court on October 13, 1970. On August 19, 1971 the court rendered a final decree holding that at the time of the accident the appellees-respondents were insured by the appellant-complainant insurer and that said insurer is obligated to pay all sums which the appellees-respondents Jack Adams and Ralph Taylor Adams shall become legally obligated to pay as damages in the pending actions at law against them as described in the bill of complaint as amended and that appellant-complainant is likewise obligated to pay any sums which Jack Adams and Ralph Taylor Adams shall become legally obligated to pay as damages as a result of any claim made by Rance Downey for injuries or damages sustained by him in said accident, subject to the policy limits of $10,000 for each person injured and $20,000 for each accident. The decree also dissolved a temporary injunction previously issued by the court staying the prosecution of said suits at law and taxed the costs of court against the appellant-complainant.

From such decree the appellant duly appealed to this court, contending by proper assignments that the decree was in error.

The testimony at the hearing was given ore tenus. The appellee Jack Adams denied receiving any insurance policy on his 1969 truck or on his predecessor truck but admitted making an application to transfer the insurance from the old to the new vehicle on the same terms applicable to to the old coverage. He also admitted having received a policy of insurance issued to him by appellant covering a passenger automobile owned by him and having received a number of declarations as to the 1969 truck including appellant's Exhibit 2 which is reproduced below.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

This declaration identifies by number the policy to which it applies, and the insured vehicle, the limits of liability and the coverages and states 'The limit of the Company's liability against each such coverage shall be as stated herein, Subject to all terms of the policy having reference thereto.' (Emphasis supplied.)

On direct examination the appellee Jack Adams testified that he formerly owned a 1966 pickup truck which was insured by appellant through its agent, a Mr. Singley, and which appellee traded for a new 1969 pickup truck and that he then notified said agent of said trade and requested transfer of his insurance to the new truck. With reference to the coverage he testified in pertinent part as follows:

'Q. When you went to Mr. Singley * * * to transfer coverage to the new pickup truck, did you tell him you wanted basic, or standard, automobile liability insurance?

'A. I did not.

'Q. What did you ask him for?

'A. I just told him I had traded vehicles and gave him the motor number and type car or truck I had got.

'Q. When you went to get the coverage transferred on the new truck did you tell him you wanted the same coverage?

'A. I did. And when we went to talk about the coverage, he told me he thought I should raise it.

'Q. When you went and told him you wanted the coverage transferred, you told him you wanted the same coverage on the new truck you had on the old truck, and wanted it transferred to the new truck?

'A. If I told...