Allstate Ins. Co. v. First of Georgia Ins. Co.
| Decision Date | 27 June 1988 |
| Citation | 753 S.W.2d 672 |
| Parties | ALLSTATE INSURANCE COMPANY, Plaintiff/Appellant, v. FIRST OF GEORGIA INSURANCE COMPANY, Defendant/Appellee. 753 S.W.2d 672 |
| Court | Tennessee Supreme Court |
James S. MacDonald, Jenkins & Jenkins, Knoxville, for plaintiff/appellant.
Archie R. Carpenter, Carpenter & O'Connor, Knoxville, for defendant/appellee.
The issue on appeal is whether a Homeowner's policy issued by First of Georgia Insurance Company provided coverage to Lloyd Lawson and his wife, Beulah Lawson, at the time their house was destroyed by fire. If so, the parties concede that Allstate Insurance Company is entitled to recover from First of Georgia one-half of the payment made by Allstate, who had coverage under a binder issued by them before the fire loss. 1 The chancellor found the First of Georgia policy to be in force on March 10, 1985, the date the fire loss occurred. The Court of Appeals agreed with the trial court's finding that the First of Georgia policy had not been cancelled in either of the two ways set forth in the policy, but found that the "policy was validly cancelled by the agreement of the parties as of the date the Allstate policy became effective," and reversed the judgment of the trial court. On reviewing the record, we have concluded that the evidence does not support the finding of the Court of Appeals, and reverse the judgment of that court.
The James E. Taylor Agency had provided insurance coverage for the Lawsons through one of its listed companies for more than twenty years. In January, 1985, INA informed the Agency that it did not wish to renew the policy it had issued the Lawsons. Thereafter, the Agency placed the insurance with another of its companies, First of Georgia, for a period of one year, beginning February 1, 1985. After the Agency had issued the policy, First of Georgia determined it did not wish to remain on the risk. The Agency was notified of this determination by letter dated February 4, 1985, and was instructed to:
Please make other arrangements for this risk and return our policy for cancellation. In the event the policy is not returned within the next twenty (20) days, we will assume you have no objections to our releasing a Direct Notice of Cancellation.
On February 20, 1985, the Agency wrote the Lawsons informing them that they had attempted to place (the Lawsons') insurance in one of the Agency's other companies, without success. At about the same time, Mr. Taylor verbally told the Lawsons that they would have coverage under the First of Georgia policy for a time to enable them to get other insurance on their own. The Agency never at any time requested the Lawsons to return the policy issued them.
Later, an employee of the Agency discovered the original First of Georgia policy in the Agency's files. (The policy sent the Lawsons was a copy.) On February 27, 1985, without notice to the Lawsons, or any explanation to First of Georgia, the employee wrote "Cancelled Flat" across the face of the policy and mailed it to First of Georgia. "Cancelled Flat" means the policy was cancelled as of its inception date, February 1, 1985. The employee explained that she marked the policy in this way to keep the Agency from being liable for payment of any premium to First of Georgia.
On February 28, 1985, First of Georgia mailed a "Cancel Notice" to the Lawsons informing them that the "cancellation of [their] policy is effective as of 03/12/85." Also on February 28, 1985, the Lawsons contacted Allstate and were issued a binder of coverage, effective March 1, 1985.
On March 1, 1985, the Agency sent an invoice to Home Federal Savings and Loan Association, the mortgagee who paid property insurance premiums owing by the Lawsons, billing the Lawsons for premium due for the period of February 1, to March 12, 1985.
The Lawsons' home was extensively damaged by fire on March 10, 1985. Mrs. Lawson testified she did not think her home was insured under the binder issued by Allstate, since no policy had issued. Consequently, she reported the fire loss to the James E. Taylor Agency. Mr. Taylor then inquired of her as to whether she had secured a binder of coverage with any other insurance company. On learning that a binder had been issued by Allstate, Mr. Taylor told Mrs. Lawson she had no coverage under the First of Georgia policy and to file her claim with Allstate.
On March 15, 1985, the Agency sent a second statement to Home Federal billing the Lawsons for premium due for the period of February 1 to March 12, 1985. The premium paid by Home Federal subsequently was returned.
Unless there is a policy provision to the contrary, there is no unilateral cancellation of coverage merely by an insured's obtaining a second...
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