English & Am. Ins. Co. v. Swain Groves, Inc.

• Decision Date: 13 January 1969
• Docket Number: Nos. 1229--1239,s. 1229--1239
• Citation: 218 So.2d 453
• Parties: ENGLISH AND AMERICAN INSURANCE COMPANY Limited; Orion Insurance Company Limited--'T' Account; Orion Insurance Company Limited; Excess Insurance Company Limited; Employers' Surplus Lines Insurance Company; Edward Ernest Nelson, an Underwriter at Lloyd's London; World Auxilliary Insurance Company Limited; Andrew Weir Insurance Company Limited; London and Overseas Insurance Company Limited; Sphere Assurance Company Limited; and Fidelity General Insurance Company, Appellants, v. SWAIN GROVES, INC., Appellee.
• Court: Florida District Court of Appeals

Page 453

218 So.2d 453

43 A.L.R.3d 557

ENGLISH AND AMERICAN INSURANCE COMPANY Limited; Orion Insurance Company Limited--'T' Account; Orion Insurance Company Limited; Excess Insurance Company Limited; Employers' Surplus Lines Insurance Company; Edward Ernest Nelson, an Underwriter at Lloyd's London; World Auxilliary Insurance Company Limited; Andrew Weir Insurance Company Limited; London and Overseas Insurance Company Limited; Sphere Assurance Company Limited; and Fidelity General Insurance Company, Appellants, v. SWAIN GROVES, INC., Appellee.

Nos. 1229--1239.

District Court of Appeal of Florida, Fourth District.

Jan. 13, 1969.

Rehearing Denied Feb. 24, 1969.

John T. Brennan, of Carlton, Brennan & McAliley, Fort Pierce, for appellants.

Richard V. Neill, of Fee, Parker & Neill, Fort Pierce, for appellee.

OWEN, Judge.

A suit on insurance policies resulted in eleven judgments for the plaintiff insured. The eleven appellants were unauthorized insurers who shared in varying percentages in two insurance contracts involving surplus lines coverage, in this case, hurricane insurance on citrus. Appellants, through a licensed surplus lines agent, issued the two policies to appellee insuring against loss by hurricane to grapefruit in appellee's grove No. 12 in St. Lucie County, Florida. In August, 1964, hurricane Cleo visited appellee's Grove No. 12. Appellee estimated the cost of entertaining this lady at 50,000 boxes of grapefruit, but appellants thought 40,000 boxes was a more likely figure. Appellants also felt that appellee should pick up a part of the tab by virtue of a co-insurance clause in the policies. These areas of disagreement were resolved by a jury which determined that appellants were correct in their estimate of the amount of loss but were incorrect in asking that appellee bear any part of it. By stipulation the parties had agreed that the court would determine, subsequent to verdict, the question of whether interest and attorneys' fees were allowable. At hearing on such motion the court allowed (and set the amount of) attorneys' fees and interest, following which the aggregate recovery to appellee was apportioned among the eleven insurers according to the percentage of risk which each had undertaken and eleven separate judgments entered accordingly. This is a consolidated appeal from such judgments.

Appellants present four points on this appeal. The first two concern the co-insurance clause of the policies. Appellants contend that the court erred in permitting into evidence certain parol testimony concerning conversations and transactions between appellee and the insurance agent which occurred prior to or at the time of the issuance of the policies, and that the court also erred in determining that a co-insurance clause of an insurance contract was subject to waiver and estoppel. By the last two points appellants question appellee's right to interest and attorneys' fees under the circumstances of this case. Although each of these points merit discussion, we are of the opinion that the court did not commit reversible error and we therefore affirm the judgments.

Appellants' surplus lines coverage was available through Alto Adams and Associates, Inc. of Miami as licensed agents. The latter designated Burney-Cox Insurance, Inc., a Fort Pierce insurance agency, as exclusive sales agent within a four-county area including St. Lucie County. Burney-Cox sold appellee the insurance contracts involved in this case.

The contracts contained a co-insurance clause in the following language:

'The insured shall maintain contributing and collectible insurance on each item included under the heading 'Citrus Fruit Insured' in the Schedule hereof of not less than 80% Of the total amount of the value thereof; and, failing to do so, the Insured shall be an Insurer to the extent of such deficit and bear such proportionate part of loss on each such item.'

There was no contractual provision as to how the 'total amount of the value thereof' should be determined or by whom the determination was to be made. The contract did provide that grapefruit was to be valued at $1.75 per box. Appellee submitted an application for the citrus insurance on the grapefruit in Grove No. 12, using as a basis for valuing the crop, the previous year's production of 49,967 boxes. 80% Of this figure at $1.75 per box yielded an adjusted value of $69,953.80, for which the policies were issued on August 15, 1964. Hurricane Cleo loss occurred 12 days later. No change was made in the crop valuation during the interval.

Following Hurricane Cleo the loss of grapefruit was estimated by appellants at approximately 40,000 boxes. However, at that time it was also determined that the total crop which had been on the trees prior to the hurricane loss was at least 80,000 boxes, which at $1.75 per box would have represented a total crop value of $140,000.00 minimum. The polices provided for a deductible equal to 10% Of the total insurance stated in the polices. Although appellants initially denied the claim, approximately two months after the loss they offered to compromise on the basis of applying the co-insurance clause to the loss as estimated by them.

At the trial the court permitted, over appellants' objections, testimony from Burney and from officers of appellee corporation of an oral agreement made at or prior to the issuance of the policies concerning the procedure for establishing a valuation of the crop. The testimony disclosed that on July 31, 1964, the last day for binding such coverage, Burney was told by appellee's manager, Mr. Williams, that even though the appellee's officials understood the 80% Co-insurance requirement, they had not estimated the current crop and consequently the compliance with such requirement presented a problem. Mr. Burney then suggested that the prior year's production figures be used for the initial binding of coverage and the issuance of the policies, and that subsequently an estimate of the crop could be made jointly by a representative of the insurance companies and Mr. Williams, at which time the amount of insurance and the amount of premium would be adjusted accordingly. The court also permitted, over appellant's objection, introduction into evidence of a letter Mr. Burney had written to Mr. Williams on June 24, 1964, which suggested that in order to determine the value of the crop, the prior year's production figures should be used and after the policy was issued arrangements could be made with General Adjustment Bureau (to go into the grove prior to any loss occurring) to determine the proper value with adjustments to be made accordingly.

The insurers could act only through agents. Their licensed surplus lines agent was Alto Adams and Associates, Inc., which in turn had to act through one or more agents. The application for the insurance contained a notation indicating that Burney-Cox Insurance Agency, Inc. was Exclusive agents representing Alto Adams and Associates, Inc. The solicitation for the insurance made reference to 'the latest information concerning Our citrus insurance.' Burney was certainly an agent of Alto Adams and Associates, Inc. and hence a sub-agent of the insurers. Whatever Burney's real authority may have been, he had the apparent authority to solicit and sell the insurance, take applications, collect the premiums payable, bind coverage...