Cohen v. American Home Assur. Co.

• Decision Date: 03 November 1969
• Docket Number: No. 46,46
• Citation: 258 A.2d 225,255 Md. 334
• Parties: Calvin E. COHEN, Administrator of the Estate of Josephus Brown v. AMERICAN HOME ASSURANCE COMPANY et al. AMERICAN HOME ASSURANCE COMPANY v. Frances BROWN.
• Court: Maryland Court of Appeals

Page 334

255 Md. 334

258 A.2d 225

Calvin E. COHEN, Administrator of the Estate of Josephus Brown v. AMERICAN HOME ASSURANCE COMPANY et al.

AMERICAN HOME ASSURANCE COMPANY v. Frances BROWN.

No. 46.

Court of Appeals of Maryland.

Nov. 3, 1969.

William A. Franch, Annapolis (Wray & Serio, Annapolis, on the brief), for appellant and cross-appellee.

William E. Brannan, Asst. Atty. Gen (Francis B. Burch, Atty. Gen., on the brief), for Unsatisfied Claim and Judgment Fund, appellee.

Louis G. Close, Jr. (Due, Whiteford, Taylor & Preston, Baltimore, on the brief), for appellee and cross-appellant.

Before HAMMOND, C. J., and McWILLIAMS, FINAN, SINGLEY and SMITH, JJ.

SMITH, Judge.

This is a declaratory judgment action brought to determine to what extent, if at all, coverage existed on a policy of insurance issued by appellee and cross-appellant, American Home Assurance Company (American Home).

Cross-appellee, Frances Louise Brown, on December 9, 1965, owned a 1958 Chevrolet sedan. On that day it was involved in an accident while operated by her son, Josephus. He was killed subsequent to that accident. The administrator of his estate is an appellant.

On September 22, 1965, Mrs. Brown says she applied to Basin and Basin Insurance Agency, Inc., for an automobile liability policy, the office of this firm being located on Ritchie Highway across the road from the Department of Motor Vehicles in Glen Burnie. There was filed in evidence an application made to Basin and Basin purportedly signed by 'Francis Brown' dated September 22, 1965. At the top of the application it is indicated that the name of the insured is 'Francis Louise Brown'. The driver information shown is listed with reference to 'Frances', a 'female' born on the date of birth of Mrs. Brown and holding a Maryland motor vehicle operator's license with number identical to Mrs. Brown's. The application was for a 1958 Chevrolet four door sedan. Policy #'3104629' appears at the top of the application. Also in evidence is what purports to be policy #3104629 in the name of Francis Louise Brown covering what is described in one place as a 1958 Chevrolet with serial number corresponding to that of Mrs. Brown's car, while in anotheer place the indication is that the policy coverage is on a 1961 Chevrolet with an entirely different serial number.

The insurance application, in response to a requirement to list all drivers, listed only Mrs. Brown. She denied authorizing anyone to sign her name, denied ever having signed her name 'Francis Brown' and introduced a number of documents with her first name spelled 'Frances'. Her testimony indicated no knowledge as to the circumstances under which the signature 'Francis Brown' was affixed. Also filed in evidence were various invoices from Basin and Basin directed to Frances Brown or Frances L. Brown. The first of these specified its application to 1958 Chevrolet four door sedan with serial number corresponding to that owned by Mrs. Brown.

Josephus Brown resided with his wife in a trailer near his mother and father. He was not a member of the same household as his mother. Mrs. Brown's husband had a back injury about two years prior to the time when insurance was obtained, being bedridden at times. Mrs. Brown said she needed the automobile for transportation to and from work. She testified that when she applied for the insurance it was her intention that she be the sole driver of the car.

On December 9, 1965, Mrs. Brown drove Josephus and his wife to her place of employment in Odenton. She stated that at that time she believed her son's motor vehicle operator's license which had been previously suspended had been reinstated. Her son had led her to believe this because he had been driving a truck for a company that was building a motel near Laurel. On December 9 he was unemployed.

Mrs. Brown said that on the day in question her son, Josephus, had a series of conversations with her in which he asked for the keys for her car. He wanted, so it is said, to travel to the Sierra Bar for the purpose of marking transportation arrangements with regard to contemplated employment. She ultimately delivered the keys to Josephus with the understanding that a friend, Scott, was to drive the car. She testified on direct examination, 'I made it definitely clear to (Josephus) that he was not to drive that car * * *.' A similar statement was made on cross-examination. Unfortunately, Josephus did not heed the admonition of his parent and was driving the car at the time of the accident. Scott was not then around. There is no evidence relative to the nature of the 'actual use' at the time of the accident, as to the location of the accident nor of the point of beginning and point of destination of the trip in progress when the accident occurred.

Suit was brought in the Circuit Court for Anne Arundel County against Frances L. Brown and the estate of Josephus Brown as a result of the accident.

American Home declined to defend either Mrs. Brown or the administrator of her son's estate. This suit for declaratory judgment was then brought. Judge Childs in the Circuit Court for Anne Arundel County held American Home bound to defend Mrs. Brown, but not responsible for the defense of the suit against the estate of Josephus Brown, thus producing the appeal and cross appeal here presented. We shall affirm the decision of Judge Childs.

Questions presented to us are (1) was a policy of insurance issued to Frances Brown?; (2) was there material misrepresentation to American Home by Frances Brown?; (3) did the insuring agreements contained in the American Home policy extend coverage to both defendants in the damage suit?; (4) are counsel fees and expenses to be allowed to the counsel of record for Frances Brown and the estate of Josephus Brown in the damage suit?; and, (5) is the attorney of record for the plaintiff in the declaratory judgment proceeding entitled to be reimbursed for attorney's fees and disbursements for the prosecution of the declaratory judgment action? Further facts will be developed as the questions are discussed.

I and II

Apparently American Home concedes, as indeed it must, that the misspelling of 'Frances' as 'Francis' would not in itself be grounds for contending that a policy of insurance was not issued to Frances Brown. See Erie Insurance Exchange v. Lane, 246 Md. 55, 227 A.2d 231 (1967). American Home here contends that the policy was not validly issued because Mrs. Brown did not sign the application and it claims that there was misrepresentation because in her application she said the car would be used only by her. The trial judge in his opinion said:

'American Home in its answers to interrogatories admitted that Basin and Basin was its agent in procuring the policy in question, but contended that the policy was void ab initio because it further argued that the application contained a material misrepresentation in that it includes the statement that the use of the car would be one hundred percent that of Frances Brown. American offers no authority for this legal proposition, therefore the court must assume it could find none. The argument would seem somewhat specious on its face for if it were the intent of the parties that the car would be operated entirely by Mrs. Brown, there would be no reason to include provision III under Insurance Agreements wherein the company agreed that the word 'insured' includes-the spouse, if a resident of the same household, and any person while using the automobile with permission of either spouse. Moreover, there is a recognized difference between the term 'use' and the term 'operate.' Melvin v. American Auto(mobile) Insurance Co., 232 Md. 476, (194 A.2d 269).

'There is no merit to the contention that American was not liable because Mrs. Brown did not actually sign the application. She went to American's agent, made a deposit, answered all questions asked of her, honestly it appears, and undoubtedly would have signed the application had she been requested to do so. If anyone were misled by this procedure, the moving party was American's own agent. It cannot at this point blame Mrs. Brown for an irregularity in its own procedure.'

American Home cites no authority for its position relative to signing. The general rule relative to necessity and sufficiency of signing of an application is set forth in 43 Am.Jur.2d, Insurance § 209 (1969) where it is said:

'Generally if a signed application is a condition precedent to inception of the risk and the applicant is charged with knowledge of that requirement, failure to sign the application precludes the making of a binding contract because of the lack of a meeting of the minds. But if the contract does not require a signed application, acceptance of an unsigned application and delivery of the policy complete the contract and bind both the insured and the insurer.

'It is not always essential that a proposed insured personally sign the application in order to create a binding insurance contract. In several cases where the application was signed by another for the insured with the knowledge of the insurer's agent, the policies issued have been sustained, notwithstanding provisions of the contract requiring that the application be signed by the insured personally. Such is the rule where the application has been signed by a third person at the direction of the insured or by his authority and he has ratified the act. The insurer cannot avoid the obligation of the policy on the ground that the application was not signed by the insured, where the insurer's agent signed it for the insured as authorized by him, or where the insurer's agent assured the plaintiff beneficiary that signature of the application by the insured would not be necessary. Indeed, an insurer is liable on a policy issued on an application signed only by its agents in their own names, notwithstanding false representations in the application, where the insured is not responsible for...