Employers' Liability Assur. Corp. v. Madric

• Decision Date: 19 June 1962
• Citation: 183 A.2d 182,54 Del. 593,4 Storey 593
• Parties: , 54 Del. 593 The EMPLOYERS' LIABILITY ASSURANCE CORPORATION, Limited, a British corporation, Plaintiff Below, Appellant, v. David MADRIC and James D. Madric, Defendants Below, Appellees, and Wesley Henderson, Intervening Defendant, Appellee.
• Court: United States State Supreme Court of Delaware

Page 182

183 A.2d 182

4 Storey 593, 54 Del. 593

The EMPLOYERS' LIABILITY ASSURANCE CORPORATION, Limited, a British corporation, Plaintiff Below, Appellant, v. David MADRIC and James D. Madric, Defendants Below, Appellees, and Wesley Henderson, Intervening Defendant, Appellee.

Supreme Court of Delaware.

June 19, 1962.

Herbert L. Cobin and Clement C. Wood, Wilmington, for appellant.

Max S. Bell, Jr. (of Richards, Layton & Finger), Wilmington, for appellees David Madric and James D. Madric.

Ernest S. Wilson, Jr., and William T. Lynam, III, Wilmington, for appellee Wesley Henderson.

SOUTHERLAND, Chief Justice, and WOLCOTT, Justice, and CAREY, Judge, sitting.

SOUTHERLAND, Chief Justice.

This is an action brought by Employers' Liability Assurance Corporation for a declaratory judgment determining its liability in respect of insurance coverage under a policy of automobile liability insurance on a Buick automobile owned by David Madric.

An accident occurred in January, 1959, while Madric's son was operating the car. The defendant Henderson suffered injuries and brought suit against Madric. He and Madric claimed that the risk was covered. The insurance company denied liability on the ground of a restrictive endorsement on the policy and filed this action. Henderson was permitted to intervene.

Madric asserted that the company was estopped by parol representations to deny that the policy covered the son. The court submitted the issue to the jury in the form of three questions. The jury answered them all in favor of Madric. The company appeals.

In the court below the company, at the trial and on motion after verdict, raised three questions:

1. It asserted that the court, in its rulings at the trial and in the charge to the jury erroneously held that the burden of proof was upon the insurer to disprove the estoppel.

2. It asserted that the coverage of the policy could not be expanded by parol representations of a countersigning agent in contradiction of the written policy.

3. It asserted that the evidence was insufficient to constitute an estoppel.

Contention (1) is renewed before us. As to that we entertain little doubt that the ruling was erroneous. The burden of proof of an estoppel should be upon him who asserts it, and the form of the action does not change the rule. See, Preferred Accident Insurance Co. of New York v. Grasso, 2 Cir., 186 F.2d 987, 23 A.L.R.2d 1234. But in view of our ultimate holding, it is unnecessary to consider the matter further.

Contention (2) is not urged here. It is always a difficult question. See 3 Richards on Insurance, § 492.

Contention (3) is renewed here. It will now be examined.

The claimed estoppel rests upon parol representations made to the insured by the countersigning agent of the company after the issuance of the policy and before loss. The contention is that when Madric applied for insurance coverage on his son he was told by the agent, in effect, that he was already covered.

We review the testimony in some detail.

At the times here important David Madric was a truck driver employed by Angerstein & Son, at Elsmere. In April, 1958, he acquired from his brother a Chevrolet sedan. Mr. Walter Hawke, of the Hawke Company, an agent of Employers' Liability Assurance Corporation, was frequently at Angerstein's. Madric applied to him for insurance. Hawke took the application. It received 'special treatment'. It was not written in Wilmington by the general agent, and was sent to Philadelphia for approval.

There is no dispute that Madric represented that he would be the only operator of the car, and that he used it to drive to work and to church.

After some delay the policy was issued and returned to Hawke. Hawke left it with Mr. Willard Anseaume of Angerstein's for delivery to Madric.

The policy carried a typewritten endorsement consisting of two paragraphs. This was to be signed by the insured as well as by the agent.

The first paragraph of the endorsement reads:

'It is agreed that such insurance as is afforded by the policy shall apply only while the automobile described in the policy is being operated by David Madric, and spouse'.

This was a restriction of the coverage afforded by the standard family automobile policy. The regular premium was charged--$38.40.

The second paragraph of the endorsement does not concern us.

Mr. Anseaume delivered the policy to Madric and had Madric sign his acceptance of the provisions of the endorsement.

Mr. Anseaume's testimony about the signing and delivery of the policy is in substance as follows:

He explained to Madric that Hawke had left the policy with him for Madric's signature. He told Madric not to sign anything until he had read it. Madric picked it up and looked at it. Madric said he had read it and Anseaume then read the endorsement to Madric. He explained to Madric that 'spouse' meant 'wife'. Madric then signed it.

Madric's version of this interview is somewhat confused. He first said there was no conversation at all about the policy; but on cross-examination he admitted Anseaume explained to him 'about the wife', that is, that the policy was good for him and his wife only. He knew the boy 'wasn't covered--because he explained that to me'.

Madric's son became 16 years old on July 5. On an occasion late in June or early in July, while Hawke was at Angerstein's, Madric talked to him about insurance for the son.

Hawke's version of the conversation is as follows:

Madric asked whether his policy would cover him in the event his 16 year old boy would apply for a license and would drive the car. Hawke said it would not; he would have to submit it to the company for approval and reclassification, and if the company accepted the risk, there would be an additional premium.

Madric's version is that he asked Hawke about getting insurance for his boy and Hawke said he didn't remember whether or not the company wrote insurance for 'youngsters', but he would 'check'.

Hawke said that he submitted the risk to the company, which rejected it.

Later in July Madric got a Buick car. He took the policy to Hawke and told him that he wanted to get his insurance transferred. Hawke took the policy, put the required endorsement on it and returned it to Madric. The endorsement is dated July 15 and recites a request of July 14.

About three weeks after the first interview about insurance for his boy (i. e., about a week or so after the July 15 endorsement), Madric saw Hawke again. Upon Madric's version of this interview rests his contention that he was misled to his injury.

Hawke's version is as follows:

In July he saw Madric and told him that the company had declined to write the policy. Madric asked why so many youngsters could own and operate cars. Hawke did not attempt to explain that, but told Madric that if the youth were the principal operator of the car the premium would increase even above what he had in mind for Madric when he had submitted Madric's application. The premium would then be $106. He may have given Madric the cost of the coverage if Madric's son was not the principal operator of the car; but he could not remember.

Madric's testimony about the interview is found in several places in the record. Some of the testimony must be quoted, because it is confused and difficult to understand.

On direct examination he said he saw Hawke in the yard and Hawke told him the insurance could be written but said it would cost approximately $106. Madric said he wanted it. Hawke said they could get it, but asked whether Madric would make the boy the principal driver of the car. Madric said no.

Hawke said:

'If you definitely want it, I can get it for you, but if anything would happen, which we hope it won't, you will have the same responsibility with the insurance you got as you would if you were spending $106'.

Madric replied:

'I said, 'Well, I don't have $106, and I will have to borrow it', and I said, 'if I had the same responsibility', I didn't see where it made any sense to borrow $106 * * *'.

We pause to comment on this testimony.

Mr. Hawke's testimony is reasonably clear. He submitted an application to include the son as a male under 25, not an owner or principal operator. This would require a reclassification of the risk and an extra premium, as appears from his testimony and from a reading of the policy provisions. After the company refused to expand the coverage he told Madric that if the son were the principal operator the premium would be $106, higher than if he were not the principal operator. He may have thought that this risk some company might accept.

Madric's testimony is intelligible only if we infer that Hawke was reminding him of his responsibility under the statute (21 Del C. § 6106) for his son's negligence, whether his son was covered or not. The defendants seek to read into this testimony as assurance from Hawke that Madric had the same 'coverage', whether he paid the premium or not. In effect, they contend that Hawke said 'coverage', which Madric erroneously repeated as 'responsibility'. On its face this seems absurd.

On cross-examination Madric testified as follows:

'Q Now, Mr. Madric, when you talked with Mr. Hawke about this car, he said to you that, if you purchased the insurance for $106, you would have the same responsibility as before?

'A Yes, sir, that is what he said.

'Q That is what he said to you, if you purchase insurance for $106, you will have the same responsibility as before, is that right?

'A With the insurance I had.

'Q And, since you would have the same responsibility as you had before, you decided not to buy the additional insurance, is that right?

'A So far as I know, right at the time, I didn't see where it would probably make sense to buy it, if I had to go through the same thing.

'Q But that was the main part of the conversation, wasn't it?

'A Well, the main part of the conversation, I wanted to get the boy so that he could drive the car, the insurance.

'Q But...