Corbin Douglass, Inc. v. Kelley

• Court: Colorado Court of Appeals
• Writing for the Court: PIERCE
• Citation: Corbin Douglass, Inc. v. Kelley, 472 P.2d 764, 28 Colo.App. 369 (Colo. App. 1970)
• Decision Date: 07 July 1970
• Docket Number: No. 23123,23123
• Parties: CORBIN DOUGLASS, INC., a Colorado corporation, Plaintiff in Error, v. James KELLEY, d/b/a Longmont Mooney, or Longmont Mooney, Inc., Defendant in Error. . II

Page 764

472 P.2d 764

28 Colo.App. 369

CORBIN DOUGLASS, INC., a Colorado corporation, Plaintiff in Error, v. James KELLEY, d/b/a Longmont Mooney, or Longmont Mooney Inc., Defendant in Error.

No. 23123.

Colorado Court of Appeals, Div. II.

July 7, 1970.

Stevens Park Kinney II, Denver, for plaintiff in error.

John H. Bisbee, Boulder, for defendant in error.

PIERCE, Judge.

This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

The parties appear here in the order they appeared in the trial court and will be referred to hereinafter by their appropriate designation. Also involved, but not parties to the instant action, are the Insurance Company of North America and Federal Insurance Company, referred to hereinafter as 'INA' and 'Federal.'

This case arises out of a complicated factual situation. Defendant operated a flying service in Longmont, Colorado, and owned several aircraft in connection therewith. Plaintiff is an insurance agency specializing in aircraft insurance, through which, for a number of years, defendant procured his insurance. In November of 1963, plaintiff obtained for defendant a policy from Federal covering certain of the latter's aircraft, including a Mooney Super 21; this policy was in effect on June 1, 1964. The Federal policy was 'non-reporting'--i.e., it insured only aircraft specifically designated and described in the policy for specific values in consideration of a fixed annual premium.

Sometime prior to June 1, 1964, defendant, concerned over the high amount of his premiums, contacted plaintiff about the possibility of reducing them by changing to a policy under which they were charged commensurate with the hours his aircraft were flown rather than by fixed rate. Such policies are known as 'reporting' policies; they cover all aircraft owned or leased by an insured at the inception of his policy, or acquired during its effective period, without specific designation in the policy. The insured is allowed to include under, or delete from, coverage whatever aircraft he desires, simply by reporting their inclusion or deletion on periodic reports submitted through his insurance agent to the insurer. These reports additionally inform the insurer of the value of each aircraft reported (as assigned by the insured) and the number of hours each has flown during the reporting period. The insurer then calculates total premiums due for coverage on each reported aircraft during that reporting period, based upon its value and the number of hours it has been flown. A premium 'deposit' is collected at the inception of the policy.

As a result of these discussions, plaintiff (through its Vice President, Howell) undertook to obtain a 'reporting' policy for defendant. Although plaintiff obtained a policy from INA, effective on June 1, 1964, and sent a copy thereof to defendant on or about June 17, 1964, defendant did not receive the copy until approximately August 20, 1964, and was accordingly unfamiliar with the terms of the policy until that date. Plaintiff cancelled the existing Federal policy, retroactive to June 1, 1964, apparently without defendant's authority and without prior notice to him. Required premium deposits on the INA policy were paid by plaintiff, in part by advancing its own funds, as it had done in the past, and in part from returned, unearned premiums on the cancelled Federal policy.

The INA policy provided, among other things, that if an insured aircraft were Totally destroyed, an additional premium was collectible; this was to be calculated in a manner we are unable to determine since the text of the applicable provision as it appears in the copy of the INA policy offered into evidence has been partially obliterated.

On June 9, 1964, the Mooney in question crashed, sustaining a controverted amount of damage. Some six weeks thereafter, INA issued a check for $16,901.40 (on July 27, 1964) in settlement, which defendant accepted. INA apparently determined the settlement amount by (1) treating the aircraft as a total loss with an actual cash value of $17,401.40; and (2) deducting $500 under a deductible provision in the policy. The record shows, however, that the actual cost of the aircraft to defendant had been $18,420. There was testimony that its retail value was $22,000 to $23,000 and that it had been flown approximately 140 hours. The record also shows defendant had never assigned a value to the aircraft for purposes of the INA 'reporting' policy--having, first, been unaware that the policy had been obtained, and having, second, received no forms on which to report its value until well after the accident. It is undisputed, however, that when defendant finally did receive his copy of the policy and the necessary 'reporting forms,' he did not report the value of the aircraft, instead instructing Howell to report it 'as per' the previous Federal policy (which reflected a $21,000 value); but that somehow INA's records reflected the aircraft's value to be $17,500--a valuation which INA evidently unilaterally assigned without defendant's knowledge.

By treating the aircraft as a total loss, the 'additional premium for total loss' provision became effective. The total loss premium was not charged, however, until September of 1964, some four months after the accident and some two months after the settlement. It was not paid until December of 1964, when plaintiff, without defendant's knowledge, advanced its own funds to pay it. Plaintiff then billed defendant who refused to pay, resulting in the suit which is the subject of this appeal. Plaintiff sought to recover the total loss premium of $696.29, in addition to $202.21 in other miscellaneous advances made by it on defendant's behalf.

Trial was held to the court, which found generally for defendant and made several specific findings, among which were the following:

'* * *

'4. On June 1, 1964, the plaintiff, without express authority, without first showing the policy to defendant, and without prior notification to defendant, purchased (the INA reporting policy) to replace coverage of (the Federal policy) on (a) 1964 Mooney Super 21. Said policy did not specify any value for (the) 1964 Mooney Super 21.

'* * *

'9. Defendant would not have accepted (the INA reporting policy) or its paragraph 8 entitled 'Additional Premium for Total Loss' had he not been informed that it was his sole coverage for his airplane damage loss, and there was no meeting of the minds between plaintiff and defendant about cancelling the old policy and putting the new one in force, and defendant never authorized plaintiff to put any policy in force which would value the said plane at other than.$19,000.

'* * *

'12. The airplane was not totally destroyed, and in that plaintiff acted without the authority and knowledge of defendant and placed defendant in a position where he lost at least $1,500 by plaintiff's unauthorized acquisition of a new policy and cancellation of an old, defendant is entitled to setoff of the $898.50 claimed and further was not bound and required to pay the $696.29 thereof that constituted total loss premium.'

Based on these findings, the court entered judgment of dismissal on plaintiff's entire claim. Plaintiff's motion for new trial was denied and error taken.

Plaintiff makes several assignments of error which we have consolidated under the following headings:

1. The court's finding no. 4, quoted Supra, was erroneous because not supported by the evidence;

2. The court erred in not finding plaintiff to be an agent of defendant, the principal, thereby prohibiting the latter from denying the propriety of the former's actions in purchasing the policy.

3. The court erred in not finding defendant bound by the settlement which he accepted, and in finding that defendant was improperly forced to accept the benefits of the INA policy;

4. The court erred in permitting defendant to accept the benefits and protection of the policy, and the loss paid of $16,901.40, while permitting him to escape repayment of premiums advanced by plaintiff;

5. The court erred in permitting defendant to set off the $1,500 it found defendant to have lost by plaintiff's unauthorized purchase of the subject policy against plaintiff's claim.

THE COURT'S FINDINGS

Plaintiff first asserts that the trial court's finding no. 4, quoted Supra, is not supported by the evidence, and is contrary thereto.

Bearing in mind that this finding was addressed to the specific INA policy purchased, we find, after a careful review of the record, no evidence that defendant knew of its purchase or of its specific terms. Any knowledge of the purchase was obtained after the accident; any definitive knowledge of the policy's terms was obtained approximately two months after the accident and one month after the settlement, when defendant first received his copy of the policy. At best, plaintiff's evidence showed only authority to try to solicit an offer for the issuance of A reporting policy--not authority to obtain this specific policy. That the policy obtained did not ascribe a value to the Mooney aircraft until well after the accident, and then a unilaterally determined value of which defendant was unaware, is clear from the record.

The matter of plaintiff's authority to cancel the existing Federal policy was hotly...