Farmers Ins. Group v. Merryweather

• Citation: 214 N.W.2d 184
• Decision Date: 16 January 1974
• Docket Number: No. 55936,55936
• Parties: FARMERS INSURANCE GROUP, Appellant, v. Keith MERRYWEATHER and Eloise Merryweather, and Allstate Insurance Company, Intervenor, Appellees.
• Court: United States State Supreme Court of Iowa

Page 184

214 N.W.2d 184

FARMERS INSURANCE GROUP, Appellant, v. Keith MERRYWEATHER and Eloise Merryweather, and Allstate Insurance Company, Intervenor, Appellees.

No. 55936.

Supreme Court of Iowa.

Jan. 16, 1974.

Rehearing Denied March 18, 1974.

A. Fred Berger, Sr., and A. Fred Berger, Jr., Davenport, for appellant.

Betty, Neuman, McMahon, Hellstrom & Bittner and Thomas F. Daley, Jr., Davenport, for appellee Allstate Ins. Co.

Considered en banc.

McCORMICK, Justice.

This appeal involves an insurance coverage dispute. Plaintiff Farmers Insurance Group (Farmers) brought a declaratory judgment action alleging it had canceled its motor vehicle liability insurance policy on a Chevrolet pickup truck owned by defendant Eloise Merryweather prior to April 20, 1969, when the truck, driven by defendant Keith Merryweather, was involved in an accident with another vehicle. Intervenor Allstate Insurance Company (Allstate) entered the action in Merryweathers' behalf because it provides uninsured motorist coverage of that other vehicle.

The case was tried to the court at law. Trial court held the Merryweather truck was insured by Farmers at the time of the accident. We affirm.

Several established principles fix the scope of our review. Since this is a law action our review is not de novo but only on errors assigned; trial court's findings of fact are equivalent to the special verdict of a jury; if supported by substantial evidence they will not be disturbed; we view the evidence in its light most favorable to the judgment, whether contradicted or not; the findings of the trial court are to be broadly and liberally construed, rather than narrowly or technically, and in case of ambiguity, they will be construed to uphold, rather than defeat, the judgment. Frantz v. Knights of Columbus, 205 N.W.2d 705, 708 (Iowa 1973); Reichle v. Zeman, 204 N.W.2d 636, 637 (Iowa 1973); Dobson v. Jewell, 189 N.W.2d 547, 550 (Iowa 1971).

These principles do not preclude inquiry into whether trial court applied erroneous rules of law which materially affected its decision. We are not bound by trial court determinations of law. Frantz v. Knights of Columbus, supra; Hensley v. Aetna Casualty and Surety Company, 200 N.W.2d 552, 553 (Iowa 1972).

The evidence will be outlined here in its light most favorable to the judgment. The events could fairly be described as a comedy of errors, were it not for their serious consequences. In August 1968 the Merryweathers maintained residence in Provo, Utah, though Mr. Merryweather was working in other states. Mrs. Merryweather held title to two vehicles, a Ford car and a Chevrolet pickup truck. She applied through Farmers' agent in Provo for liability coverage on the vehicles, giving him their Utah address and her husband's employment address. She did not then know they were going to change their place of residence.

The agent told Mrs. Merryweather the policies would have a six-month premium period. If she paid one-third of the premium with her application they would have 60 days in which to pay the balance. The total premium was $69.70. Mrs. Merryweather paid $23 and was told the balance due was $46.70. The agent did not tell her how he applied the payment or what the premium balance was on the individual policies. In fact the premiums were $47.20 on the Ford policy, to which the agent applied $15, leaving a balance on it of $32.20, and $22.50 on the Chevrolet policy, to which the agent applied $8, leaving a balance on it of $14.50.

About Labor Day in 1968, with one week advance planning, Mrs. Merryweather and the children moved to Moline, Illinois, to join Mr. Merryweather in establishing residence there. A sister of Mrs. Merryweather moved into the Provo home the next day. She had instructions to forward the Merryweather mail to their Moline address. Forwarding instructions were not given directly to the post office until later. Farmers' agent in Provo testified he mailed the policies to the Merryweathers' Provo address about September 10, 1968, by regular mail, and they were returned by the post office. He filed them away.

After her arrival in Moline in September Mrs. Merryweather went to Farmers' agent in Moline, notified him of their move to Moline, and requested that he check into the fact their policies had not been delivered.

Farmers claims it mailed a notice to Merryweathers at their Provo address by regular mail September 19, 1968, that their Chevrolet policy would be canceled October 3, 1968, unless they paid the entire $14.50 balance by that date. Merryweathers did not receive it, but Farmers assert it was not returned by the post office.

On September 26, 1968, not knowing the individual policy premium balance and not remembering the total premium balance, Mrs. Merryweather, using her Moline return address, mailed a payment of $20 to the Provo agent of Farmers without specifying how it was to be applied. The agent on his own initiative applied only $4.50 to the Chevrolet policy, even though it was purportedly in default, leaving a balance on it of $10.00. He applied the remaining $15.50 to the Ford policy, leaving a balance on it of $16.70. On October 4, 1968, Farmers considered the Chevrolet policy canceled. On October 20, 1968, Mrs. Merryweather again using her Moline return address, mailed another $17 directly to Farmers in Pocatello, Idaho, thinking that amount approximated the total premium balance. She believed if she was mistaken she would receive either a refund or bill for the difference.

Shortly thereafter Merryweathers received a check for $3.39 from Farmers and assumed it was a refund from the $17 payment. In fact it was a refund of unearned premium on the Chevrolet policy. It had been mailed to their former residence in Provo by Farmers about October 15, 1973, and was forwarded to them. The envelope also contained a printed form notifying them the Chevrolet policy had been canceled October 3, 1968, but could be reinstated by payment of $13.39 within 60 days of October 3, effective the date payment was received. They read the document as showing what they owed prior to the $17 payment.

By the time the $17 payment actually was processed by Farmers its computer showed only the Ford policy in the Merryweather name, and the payment was applied to its $16.70 premium balance. The 30 cents extra was credited toward the next policy period.

On December 4, 1968, Farmers mailed a notice to Merryweathers at the Provo address that they owed $5.22 because of loss of 'two-car discount.' When they received it Merryweathers construed this amount to be an additional premium owed because of change of location of the vehicles. They paid the $5.22 to Farmers' Moline agent on December 28, 1968.

Farmers' records were changed to show Merryweathers' new address on December 16, 1968, when the Moline agent received the policy on the Ford. Merryweathers paid the renewal premium on the Ford February 19, 1968. Mrs. Merryweather asked the Moline agent to check on why she had not received a bill for the renewal premium on the Chevrolet policy. She wrote two letters to Farmers' Aurora office with the same inquiry. Before she received and response the Chevrolet was involved in the accident of April 20, 1969.

Trial court found Farmers did not meet its burden to prove effective cancellation of the Chevrolet policy and also found the policy was not in default on September 19, 1968, when Farmers said it mailed notice of cancellation to Merryweathers.

Farmers assigns three errors, (1) the court's order denying permission to amend the petition on the first day of trial, (2) the court's finding the policy had not been effectively canceled, and (3) the court's finding the policy was not in default on the date cancellation was attempted. Since our answers to the first two assignments are determinative, we do not reach the third.

I. The amendments. Farmers' petition for declaratory judgment was filed August 6, 1969. Pleadings were initially complete December 18, 1969. Discovery ensued. Farmers' counsel was ill for some time. The case came on for trial December 17, 1971. At that time Farmers asked leave to amend its petition to add two new divisions, one alleging fraud by Mrs. Merryweather in not telling the agent in Provo at the time she applied for the policies that they were going to move, and the other alleging expiration of the Chevrolet policy for failure to renew it.

After an extensive hearing during which evidence was taken, the trial court denied the amendments as untimely.

We have said allowance of an amendment is the rule, not the exception; however, an amendment on the eve of trial should be denied as untimely if it materially changes the issues involved; and a trial court has broad discretion in permitting or denying amendments; unless that discretion is abused we will not interfere. Board of Adjustment of City of Des Moines v. Ruble, 193 N.W.2d 497, 507 (Iowa 1972).

As to the amendment alleging fraud there is some basis in the record for Merryweathers' contentions that Farmers had the information on which that theory was pleaded well before trial and that Merryweathers would need additional discovery to prepare themselves to defend against it. Farmers suggests the case could have been continued. However, there comes a time in a lawsuit when the parties should try their case in order to settle their rights and obligations and make way for other cases to be tried, and we believe trial court was justified in finding the time had come for trial of this case.

It appears from the record the theory of policy expiration was also available to Farmers long before. Even though that theory may not have required additional or different evidence, it did present a materially new issue, and the delay in tendering it may well have affected Merryweathers' ability to raise and pursue appropriate legal defenses. See Smith v. Village Enterprises, Inc., 208 N.W.2d 35, 37 (Iowa 1973).

Although Farmers' counsel...