American Fidelity Fire Ins. Co. v. Johnson

• Decision Date: 15 June 1965
• Docket Number: No. F-546,F-546
• Citation: 177 So.2d 679
• Parties: AMERICAN FIDELITY FIRE INSURANCE COMPANY, a foreign Insurance Company, Appellant, v. Andrew J. JOHNSON and William Hill, Jr., a/k/a Willie Hill, Jr., Appellees.
• Court: Florida District Court of Appeals

Page 679

177 So.2d 679

AMERICAN FIDELITY FIRE INSURANCE COMPANY, a foreign Insurance Company, Appellant, v. Andrew J. JOHNSON and William Hill, Jr., a/k/a Willie Hill, Jr., Appellees.

No. F-546.

District Court of Appeal of Florida, First District.

June 15, 1965.

Rehearing Denied Aug. 30, 1965.

Fuller & Brumer and Kenneth L. Ryskamp, Miami, for appellant.

William R. Davenport, Pensacola, for appellees.

MURPHREE, JOHN A. H., Associate Judge.

This appeal is by American Fidelity Fire and Insurance Co., from a final judgment holding it liable under a renewal of an automobile liability policy held by one Johnson. Liability was determined by the trial judge upon Johnson's motion for summary judgment and damages by trial without a jury.

Essentially there are two questions. Did the trial judge err in holding as a matter of law upon the motion for summary judgment that Clayton Insurance Agency of Pensacola was the agent of American Fidelity, the insurer, rather than the agent of Johnson, the insured, with respect to renewal of the policy of insurance? Assuming liability, did the trial judge err in awarding damages against American Fidelity in excess of the policy limits?

The undisputed facts before the trial judge when he considered the motion for summary judgment as to liability may be summarized as follows: Johnson held an automobile liability policy with American Fidelity for the period of November 9, 1962 to November 9, 1963. He obtained this policy through Clayton Insurance Agency of Pensacola, a broker in the sense that Clayton was not authorized to countersign policies for American Fidelity. Clayton dealt through Baker Insurance Agency of Tallahassee, the general agent for American Fidelity.

The arrangement between Clayton and Baker as to new insurance was that Clayton would collect the premium from the applicant, deduct its share of the commission and remit the balance to Baker; and that the application would be deemed accepted as of the date it was postmarked for delivery to Baker, if accompanied by the proper premium.

The arrangement between Baker and Clayton as to renewal was that no formal application was required of the insured but merely a payment of the renewal premium and a written request for renewal; and that the application for renewal would be deemed accepted as of the date it was postmarked for delivery to Baker if accompanied by the proper premium.

Shortly before the policy expired Baker suggested to Clayton that Johnson be contacted as to renewal of said policy. Clayton did so and as the result Johnson paid to Clayton the proper renewal premium, according to the rate sheet supplied by American Fidelity, and submitted his written request for renewal. This was on October 31, 1963, or about 10 days before the policy was to expire. Through mishandling in Clayton's office, the application for renewal did not reach Baker until November 11, 1963, which was after the expiration date of the policy on November 9, 1963.

On November 17, 1963, Johnson's automobile, driven by Willie Hill, was involved in an accident in which a 13 year old boy was killed and a 10 year old boy was injured. The accident was promptly reported to Clayton who in turn notified American Fidelity. About a week later Baker returned Johnson's renewal premium advising that he was not acceptable for renewal because his driver's license had been suspended on November 12, 1963, which was several days after the renewal was to become effective in usual course.

On December 3, 1963, Johnson and Hill were sued for damages growing out of the accident. Without delay Johnson notified American Fidelity and called upon it to defend but coverage was denied.

Under the facts recited, which are not in dispute as we have indicated, the trial judge properly found that Clayton acted as the agent of American Fidelity with respect to the renewal of the policy, so the entry of summary judgment as to liability should be sustained.

We turn now to the question of whether or not the trial judge erred in rendering judgment in excess of the policy limits in favor of Johnson.

In the course of the initial litigation, an offer to settle within policy limits was made by the plaintiffs but Johnson having insufficient funds and American Fidelity having denied coverage, a judgment in the amount of $21,063.50 was entered. The offer to settle was not communicated by Johnson or his attorney to American Fidelity.

Johnson then filed suit against American Fidelity claiming unjust denial of coverage and refusal to defend, and that Johnson had been forced to employ his own counsel and had sustained a judgment in excess of the $10,000.00 policy limits, being unable financially to avail himself of the settlement offer which was made.

In his judgment against American Fidelity the trial judge said: '* * * The defendant is responsible because of its unjustifiable refusal to recognize liability under its policy of renewal insurance, which actions * * * could have been settled within the limits of the renewal policy of insurance. * * *' (Emphasis supplied.)

It is now settled in Florida that a liability insurance carrier which undertakes to defend and in bad faith refused to settle a claim within policy limits will thereby subject itself to liability for any excess which may be recovered. See our opinion in American Fire and Casualty Company v. Davis, Fla.App., 146 So.2d 615, and the authorities cited therein.

But this is not the Davis case again and we find no Florida decision on all fours with the factual situation before us. There is, however, considerable other authority which supports the ruling of the trial judge in...