Alliance Ins. Co., Inc. v. Reynolds

• Citation: 494 So.2d 609
• Parties: ALLIANCE INSURANCE COMPANY, INC. v. Joshua REYNOLDS, et al. 84-1047.
• Decision Date: 27 June 1986
• Court: Alabama Supreme Court

Page 609

494 So.2d 609

ALLIANCE INSURANCE COMPANY, INC. v. Joshua REYNOLDS, et al.

84-1047.

Supreme Court of Alabama.

June 27, 1986.

Rehearing Denied Sept. 12, 1986.

David E. Allred, of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellant.

Warren S. Reese, Jr., Montgomery, for appellees.

MADDOX, Justice.

This is an appeal from a final judgment of the Circuit Court of Montgomery County holding invalid an assault and battery exclusion in the insurance contract entered into by plaintiff Alliance Insurance Company, Inc., and defendants Joshua Reynolds and Alberta V. Williams, d/b/a the Tyjuana Social Club and Paradise Club. The specific question presented is whether the insureds were adequately notified of the change in coverage provided by a substituted policy so as to exclude from coverage under that new policy claims made against them for "assault and battery." We affirm.

The trial court entered the following order:

"This action having come before the Court on a Bill for Declaratory Judgment requesting the Court, inter alia, to determine the rights, status and legal relations of the plaintiff and all of the defendants under the policy of insurance issued by the plaintiffs to the defendants, Joshua Reynolds and Alberta V. Williams, d/b/a Tyjuana Social Club and Paradise Club.

"The action was set for hearing on the merits with Attorney David Allred present representing the plaintiff, Alliance Insurance Company, Inc., and attorney Al Sansone present representing the defendants, Joshua Reynolds and Alberta V. Williams, d/b/a Tyjuana Social Club and Paradise Club. The Court, after taking testimony and reviewing the documents admitted at trial and the post trial letter brief submitted by plaintiff, makes the following findings and issues the following order.

"FINDING OF FACTS

"1. Plaintiff and Defendants contracted, through defendants' agent Nace [Varon], for a custom package policy on or about September 20, 1978. The liability portion of the policy covered assault and battery offenses to the extent that the carrier would defend the insured on an assault and battery complaint. This policy was renewed each year through September, 1981.

"2. In September, 1981, the liability portion of the policy expired and defendants retained fire and hazard coverage. In 1982, the liability portion of the policy was renewed the same as it had been from 1978 thru 1981.

"3. On or about September 24, 1983, plaintiff's agent sent defendants' agent notice of the expiration of the policy by a 'Renewal Quotation Slip' and gave defendants' agent the choice of 'renew as is,' 'renew-note changes on back,' or 'quote renewal, based on changes on back.' Information accompanying the slip was related to automobile coverage and possible change of insurance carriers. Defendants' agent returned the notice marked 'renew as is.' In response to the notice of renewal, plaintiff's agent sent defendants' agent the policy in question without any notice accompanying the policy showing that the exclusion in the original policy had been enlarged. Defendants' agent sent the policy to the defendants. Neither defendants' agent nor defendants read the policy.

"4. When this controversy arose, defendants discovered that the policy contained an exclusionary clause that is materially different from the previous policies in that it had been enlarged to exclude coverage for any assault and battery. Furthermore, it does not offer insured any defense on a complaint of assault and battery.

"AUTHORITIES IN SUPPORT OF ORDER

"In general, no particular form of renewal is necessary. The renewal may be by renewal slip as was done in this case, and unless the renewal agreement so recites or unless it provides otherwise, the terms and conditions of the existing policy are not changed, enlarged, or restricted by a renewal but are merely continued in force as binding on the parties.... 44 C.J.S. Insurance, § 285.

"If an insured [is] not notified of a change in a renewal policy, he will not be bound by [any] change; and it is immaterial that he does not examine the renewal policy until after the event insured against has occurred. [Emphasis added.] In the absence of any agreement for an alteration of the original terms, a renewal policy containing alterations may be reformed. C.J.S., supra.

"Based on a lack of evidence at trial showing that notice of the change in the exclusionary portion of the policy was given to defendants' agent by plaintiff's agent, it is the Court's opinion and ruling that the policy which is the subject of this action is to be reformed to encompass the exclusionary portion of the original policies. Additionally, the Court has formed its opinion and makes its ruling after carefully scrutinizing the evidence adduced at trial pursuant to Sexton v. Liberty National Life Ins. Co., 405 So.2d 18 (Ala.1981), the main authority relied on by plaintiff. In Sexton, the Court stated:

" 'If the policy is accepted by the insured he is bound thereby even though the policy does not correspond to the preliminary negotiations. The oral negotiations for the policy are merged into the accepted policy.'

"Sexton is a correct statement of the law; however, the discernible difference in the facts of Sexton and the case at Bar is that in Sexton there was negotiation of the policy, while in this case no negotiation was necessary. [Emphasis added.] All negotiation in this case was done at the time of the purchase of the original policy. This policy was either to be 'renewed as is' or the defendants, through their agent, were to be informed by plaintiff's agent of any changes in the policy. This was not done. Based upon the foregoing, it is hereby:

"....

"ORDERED, ADJUDGED and DECREED, that the policy in issue be reformed to reflect the exclusion contained in the original policy; therefore, the plaintiff is to defend defendants in this matter."

We begin by noting that the trial court, without a jury, heard ore tenus evidence in this case. Therefore, every presumption will be indulged in favor of the trial court's findings of fact, and its findings will not be disturbed on appeal unless they are unsupported by credible evidence or are found to be plainly and palpably wrong. Johnson v. Brewington, 435 So.2d 64 (Ala.1983); Stallworth v. First National Bank of Mobile, 432 So.2d 1222 (Ala.1983); Woodard v. City of Decatur, 431 So.2d 1173 (Ala.1983).

Alliance's primary contention on appeal is that the assault and battery exclusion in its contract with Reynolds and Williams is valid because it did not insure Reynolds and Williams until October 14, 1983, and its policy never included coverage for assault...