Commercial Cas. Ins. Co. v. Columbia Cas. Co.

• Decision Date: 24 September 1938
• Parties: COMMERCIAL CASUALTY INS. CO. v. COLUMBIA CASUALTY CO. et al.
• Court: Tennessee Court of Appeals

125 S.W.2d 493

22 Tenn.App. 656

COMMERCIAL CASUALTY INS. CO. v. COLUMBIA CASUALTY CO. et al.

Court of Appeals of Tennessee, Middle Section.

September 24, 1938

Certiorari Denied by Supreme Court March 4, 1939.

Appeal from Chancery Court, Davidson County; James B. Newman Chancellor.

Suit by the Commercial Casualty Insurance Company against the Columbia Casualty Company to recover $5,050.90 and interest thereon. From a decree dismissing the bill, the complainant appeals.

Affirmed.

Manier & Crouch, of Nashville, for appellant Commercial Casualty Co.

C. Wade Wilkes and Bass, Berry & Sims, all of Nashville, for appellee Columbia Casualty Co.

CROWNOVER Judge.

This is a suit by the Commercial Casualty Insurance Company against the Columbia Casualty Company to recover $5050.90, and interest thereon, the amount paid by the Commercial Casualty Insurance Company in settlement of a damage suit arising out of an automobile accident, where the insured, George W Carter, had procured a policy of liability insurance in the Commercial Casualty Insurance Company, and the local agent of the Commercial Casualty Insurance Company had attempted to cancel the policy and substitute for it a policy in the Columbia Casualty Company.

The Columbia Casualty Company insisted that it had never entered into or consummated any contract with Carter, the insured and that no contract had been entered into between it and the complainant, and it denied liability.

The Chancellor found and decreed:

"1. That the complainant, Commercial Casualty Insurance Company, issued and delivered a policy of insurance to one George Carter, and that said policy was in full force and effect and had not been cancelled at the time of the accident in which Carter's automobile covered by said policy was involved.

"2. That the defendant Columbia Casualty Company never issued and delivered a policy of insurance in favor of the said George Carter and no contractual relation existed between the said defendant company and the said Carter at the time of said accident.

"3. That no contract was made or existed between the complainant and the defendant Columbia Casualty Company whereby the said defendant company was obligated to indemnify or reimburse the complainant for any sums paid by complainant on behalf of the said George Carter or on account of said accident.

"And the court being of the opinion that the allegations contained in the bill have been fully met by the allegations in the answer, and that the allegations in the bill are not supported by the proof, and the complainant through its counsel stating in open court that it did not insist on a decree against the defendant E. B. Sulzbacher.

"It is ordered, adjudged and decreed by the Court that complainant's bill be, and the same is, dismissed."

The complainant excepted to the decree of the Chancellor and appealed to this court and has assigned errors, which are, in substance, as follows:

(1) The Chancellor erred in holding that the Carter policy in the Commercial Casualty Insurance Company was in force and had not been cancelled at the time of the accident in which Carter's automobile, insured by said policy, was involved.

(2) The Chancellor erred in holding that the Columbia Casualty Company never issued and delivered a policy of insurance in favor of the said Carter, and no contractual relation existed between that Company and Carter at the time of said accident.

(3) The Chancellor erred in holding that no contract was made or existed between complainant and defendant.

(4) The Chancellor erred in failing to hold that an agreement was made between the Columbia Casualty Company and Sulzbacher for the benefit of the Commercial Casualty Company.

In June, 1928, E. B. Sulzbacher was general agent for the State of Tennessee for the Commercial Casualty Insurance Company, and carried on the business in the name of the Sulzbacher Insurance Service.

Victor B. Hartman was an insurance solicitor, or broker, in Sulzbacher's office. He solicited automobile liability insurance from George W. Carter and obtained his application.

The Commercial Casualty Insurance Company, through the Sulzbacher Insurance Service, issued, on June 5, 1928, to George W. Carter a policy of insurance covering his automobile, wherein the Commercial Casualty Insurance Company agreed to indemnify Carter against loss for personal injury and property damage to others.

Hartman delivered the policy to Carter, who requested him to take it back to the office and put it in the safe, which was done.

Carter paid the premium of $35 in two payments of $17.50 each, one on July 3rd and one on August 3rd.

On August 8, 1928, the Commercial Casualty Insurance Company wrote Sulzbacher a letter giving him thirty days' notice of cancellation of his agency contract. In this letter it was suggested that Sulzbacher make a connection with some other insurance company and endeavor to substitute policies of that company for Commercial Casualty Insurance Company policies issued by Sulzbacher. The letter stated: "We want to cooperate with you in every way we can and would suggest that when you make your new connection you arrange to reinsure the business you have with us in your new company. We will gladly cancel the business you have in force with us on a pro rata basis, so that your business will all be in one company, which you can appreciate will be to your best interests."

On September 10, 1928, Sulzbacher entered into a written general agency contract with the Columbia Casualty Company to represent it as general insurance agent in Nashville.

On September 27, 1928, Sulzbacher wrote the Commercial Casualty Insurance Company that he was cancelling as of September 26, 1928, a number of its policies and rewriting them in the Columbia Casualty Company, and enclosed a list of them, which included the policy issued to Carter.

Sulzbacher issued a policy in the Columbia Casualty Company, dated September 26, 1928, insuring Carter's automobile for one year.

The policy was put in Salzbacher's safe.

It appears that the Commercial Casualty Insurance Company's policy insuring the same automobile was left in the safe or kept somewhere else in Salzbacher's office.

Nothing was said to Carter about the transaction. He did not agree to the issuance of the Columbia Casualty Company's policy or that it should be substituted for the Commercial Casualty Insurance Company's policy, or accept the same, or agree to the cancellation of the Commercial Casualty Insurance Company's policy.

Sulzbacher's office records show that he transferred the credit for the premium of $35, on his books, from the Commercial Casualty Insurance Company to the Columbia Casualty Company.

He testified that in cancelling the Commercial Casualty Insurance Company's policy he did not pay that company the earned premium for the period of June 5th to September 26th, about $9, or ask Carter to pay it.

On October 5, 1928, George W. Carter was involved in an automobile accident, where one man was killed and three were injured, and property was damaged.

The Sulzbacher agency reported the accident first to the Columbia Casualty Company and then to the Commercial Casualty Insurance Company.

Suits were filed against Carter.

The Commercial Casualty Insurance Company defended the suits, notifying the Columbia Casualty Company that it was doing so with full reservation of its rights, and paid the sum of $5,050.90 in settlement of same.

1. The evidence is uncontroverted that the policy in the Commercial Casualty Insurance Company was not cancelled. There was no agreement between Carter and the Commercial Casualty Insurance Company to cancel the policy, and no notice had been given him. He had no notice or knowledge of the transfer of the premium on Sulzbacher's books.

"Where a valid contract of insurance has been effectuated, the company cannot cancel the policy without the consent of the insured, except where it may be permitted to do so by statute or by a reservation in the policy itself." 32 C.J. 1245-1246, sec. 431.

The burden of proving that there has been a cancellation of a policy rests on the party asserting it. 32 C.J. 1262, sec. 458.

2. It appears that a policy covering this automobile was issued by the Columbia Casualty Insurance Company, but the evidence is unsatisfactory as to whether it was issued before the accident or afterwards. But whether a policy was ever issued, is not material in this case, as the evidence is uncontroverted that Carter did not apply for the policy, had no knowledge of its issuance, never accepted it; that he was insured in the Commercial Casualty Insurance Company, which policy he had not cancelled; and that he refused to ratify the issuance of the policy in the Columbia Casualty Company after the accident. There was, therefore, no contract between Carter and the Columbia Casualty Company, even if a policy was issued dated September 26,1928.

The contract of insurance is purely a personal contract between the...