Farm Bureau Mut. Ins. Co. of Arkansas, Inc. v. Milburn, 80-73

• Decision Date: 30 June 1980
• Docket Number: No. 80-73,80-73
• Citation: 269 Ark. 384,601 S.W.2d 841
• Parties: FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellant, v. James MILBURN et ux., Appellees.
• Court: Arkansas Supreme Court

Page 841

601 S.W.2d 841

269 Ark. 384

FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellant, v. James MILBURN et ux., Appellees.

No. 80-73.

Supreme Court of Arkansas.

June 30, 1980.

Laser, Sharp, Haley, Young & Huckabay, Little Rock, for appellant.

V. Henry Morgan, Arkadelphia, for appellee.

HOLT, Justice.

The appellees were involved in a one vehicle traffic accident. The court, sitting as a jury, found that an insurance binder was in effect at the time of the accident, and the appellant insurer was liable to the appellees in the amount of $4,431 plus 10% interest from the date of the judgment until paid. The sole issue presented by this appeal is whether the decision of the trial court is clearly erroneous. Ark. Rules of Civil Proc., Rule 52, July 1, 1979.

The facts are essentially undisputed. The appellant issued a 30 day oral insurance binder to the appellees effective April 17 and received appellees' check for $118 in payment of the premium. Appellant's local agent advised Mr. Milburn that additional information would be needed; namely, his wife's driver's license number and her date of birth. On May 16, appellant sent a notice of cancellation to the appellees which stated:

Jim Milburn from Joy Crafton, pickup insurance, date 5/16/77. I am returning your payment in the full amount of $118.00. We cannot continue the binder on your vehicle as we have not received the driver's license number and date of birth of your wife. If you still want the insurance, return the check along with the necessary information and we will proceed. Thanks.

We first consider appellant's argument that the evidence does not establish the requested information and the premium check were mailed before the accident. The appellant received the requested information and a check from the appellees in the morning mail of May 24. Appellees were involved in a one vehicle accident approximately 1:20 a. m. on May 24. Mr. Milburn maintained he and his wife mailed the requested information late in the afternoon of May 23, or a little bit after dark, in a letter dated May 21. According to him, receipt of the cancellation notice was delayed because of a change of address. His wife testified that she had written the letter a day or two before it was mailed. She corroborated her husband's testimony that the letter to the appellant was mailed before the accident. It was stipulated by the parties that since the envelope was postmarked May 24, it had to have been mailed between 5 p. m. on May 23 and 4 a. m. on May 24. Suffice it to say that although there are inconsistencies in appellees' testimony, we are of the view that the court's finding was not clearly in error on the issue as to when the letter was mailed.

Even so, appellant asserts the receipt of the requested information and check from the appellees was ineffective to automatically reinstate the oral binder agreement and thereby provide coverage for the May 24 accident. The determination of whether the appellees' vehicle was covered at the time of the accident turns on the meaning of the notice of cancellation which, as indicated, reads: "If you still want the insurance, return the check along with the necessary information and we will proceed." Appellant argues that this communication could not constitute an offer to automatically accept Mr. Milburn's application and premium check for a second binder since the original 30 day binder had expired several days previously; the local agent only had authority to issue a binder for 30 days; and since appellant had returned Mr. Milburn's second check or premium payment, it was justified in refusing coverage.

The resolution of the meaning of the writing in question depends upon the conditions enumerated in the writing and whether the appellees had complied. We must consider the sense and meaning of the words used by the parties as they are taken and understood in their plain, ordinary meaning. See Southern Farm Bureau Casualty Ins. Co. v. Williams, 260 Ark. 659, 543 S.W.2d 467 (1976); and American Homestead Ins. v. Denny, 238 Ark. 749, 384 S.W.2d 492 (1964). Further, a written instrument, such as a contract, binder, application or memorandum, delivered by the insurer to an applicant, is strictly construed against the insurer where the...