Canal Ins. Co. v. Hartford Ins. Co., AG-157

• Decision Date: 04 June 1982
• Docket Number: No. AG-157,AG-157
• Citation: 415 So.2d 1295
• Parties: CANAL INSURANCE COMPANY, Appellant, v. HARTFORD INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 1295

415 So.2d 1295

CANAL INSURANCE COMPANY, Appellant, v. HARTFORD INSURANCE COMPANY, Appellee.

No. AG-157.

District Court of Appeal of Florida First District.

June 4, 1982.

Rehearing Denied July 22, 1982.

James N. McConnaughhay of McConnaughhay & Roland, P. A., Tallahassee, for appellant.

Paul F. Hartsfield, Jr., and R. Jeremy Solomon, of Booth & Conner, P. A., Tallahassee, for appellee.

WIGGINTON, Judge.

This appeal involves the tortuous question of which insurance company bears the burden of indemnity following a settlement by the insurers on behalf of party defendants involved in wrongful death actions. Although the points raised on appeal are several and suitable for permutation, our determination of one leads inexorably to our reversal of all.

The controversy stems from a lease agreement entered into between Robert Saint, a resident of Americus, Georgia, and Americus Steel Fabricators, Inc., also of Americus, in February, 1975. The agreement provided that Saint would lease his tractor and trailer to Americus for purposes of hauling steel in interstate commerce. Complying with the rules and regulations promulgated by the Interstate Commerce Commission, specifically 49 C.F.R., Section 1057.12(1)(d), the lease provided that Americus, as the authorized carrier lessee, would have the exclusive use and control of the equipment. However, by the agreement, Saint and Americus sought to shift the responsibility arising from negligent operation of the tractor and trailer from Americus to Saint. The alleged intent of the parties was that Saint would procure a policy of public liability insurance, including Americus as an additional insured.

Pursuant to the agreement, Saint, through an independent insurance agent, obtained a policy issued by Canal Insurance Company. However, the policy named only him as the insured, and, unknown to either Saint or his agent, neither of whom read the policy, it included an endorsement specifically excluding from coverage "any person, firm or organization using the described automobile pursuant to any lease ..." In the event the vehicle was so used, the policy would afford the named insured, Saint, only excess coverage. Americus, on the other hand, was already insured by Hartford Insurance Company.

In the early evening of January 15, 1976, McArthur Whitehead, an employee of Americus, was directed by the company to travel into Florida to deliver some materials. Driving the leased tractor and trailer, Whitehead proceeded south on U.S. 19 into Florida via Monticello. South of Perry, Whitehead was involved in an accident with another automobile resulting in the deaths of two Florida residents.

During the course of the resultant lawsuits, hearings were held for the purposes of determining whether Hartford or Canal afforded primary coverage and also whether Canal afforded insurance coverage over the defendant, Whitehead. It was determined by the trial court that Canal did afford coverage to Whitehead but that Hartford provided primary coverage for the alleged damages suffered by the plaintiffs as a result of the accident.

Following that determination, a settlement was reached between the parties totalling $195,000, Canal contributing $25,000 and Hartford contributing $170,000. Both Canal and Hartford had policy limits of $100,000 per person and $300,000 per accident.

The case then proceeded on the issues framed in the cross claims between the two insurance companies. Hartford filed two cross claims for indemnity. The first one was against Saint, alleging that Hartford was a third party beneficiary to the lease contract between Saint and Americus. The second claim was against Whitehead, on the basis of Whitehead's alleged active negligence.

Canal also filed two cross claims for indemnity against Americus and Hartford. The first claim was founded on Saint's alleged vicarious liability. The second one arose from Canal's defending Hartford's insured, McArthur Whitehead. Canal also filed a motion for summary judgment regarding Hartford's cross claims, contending that Hartford was not a third party beneficiary to the lease agreement and further, that Hartford could not sue its own insured, Whitehead.

The trial court orally ruled in favor of Canal but on rehearing, denied the motion for summary judgment. A final hearing was held, and based upon the issues and arguments raised in the cross claims, the court announced its intention to recede from its earlier order and determine that Canal was the primary carrier. The trial court was able to make that determination by reforming the insurance policy to reflect the alleged intent of the parties to include Americus as a named insured.

There is little doubt that Saint and Americus intended for Americus to be a named insured. However, in reforming the insurance contract, the court erred in finding Saint and Canal to be mutually mistaken over that intent. The policy must stand as issued, thereby unequivocally excluding Americus and Whitehead from its coverage.

It is universally held that in order for a trial court to reform a contract, the evidence must clearly and convincingly show a mutual mistake of fact. Otherwise, the court will not be able to overcome the strong presumption that the contract expresses the intent of the parties. Boston Old Colony Insurance Company v. Popple, 305 So.2d 877, 879 (Fla. 1st DCA 1974). Moreover, the mutual mistake must be determined to have existed at the time the contract was reduced to writing. Old Colony Insurance Company v. Trapani, 118 So.2d 850, 852 (Fla.2d DCA 1960). Viewing the facts and all reasonable inferences that may be drawn from them in a light most favorable to the insured, it is clear that as a matter of law reformation was not warranted.

The evidence indicates that Saint contacted James Bowen, a Nationwide insurance agent, advising Bowen that he needed insurance. Bowen, who was never at any time an agent for Canal, completed the application requesting Saint to be the named insured and likewise indicating that no "certificates" were required. Neither Americus nor Whitehead were named as additional insureds on the application nor did the application reflect...