Farmers Mut. Auto. Ins. Co. v. Bechard

Decision Date10 June 1963
Docket NumberNo. 9980,9980
Citation1 A.L.R.3d 1124,122 N.W.2d 86,80 S.D. 237
Parties, 1 A.L.R.3d 1124 FARMERS MUTUAL AUTOMOBILE INSURANCE COMPANY, an insurance corporation, Plaintiff and Respondent, v. Darleen BECHARD, Defendant and Appellant.
CourtSouth Dakota Supreme Court

Martens, Goldsmith, May & Porter, Pierre, for defendant and appellant.

Agor, Bantz, Siegel & Barnett, Aberdeen, for plaintiff and respondent.

BIEGELMEIER, Judge.

It has been said facetiously of insurance policies 'The front page giveth but the back page taketh away.' The facts here involve their cant phraseology.

Plaintiff insurance company brought this action for a declaratory judgment to determine the rights of the parties under the Death and Disability provisions of an insurance policy issued to George Bechard in which defendant was beneficiary. The action was tried to the court which entered findings of fact, conclusions of law and judgment favorable to plaintiff, determining no liability existed on the policy for his death.

The facts are undisputed. Plaintiff insurance company on December 6, 1956, issued an Automobile Policy to Mr. Bechard which provided insurance against liability for bodily injury, property damage, etc., covering a Ford two-ton truck described therein as used commercially. The five-month premium of $49.60 included a charge of $1.60 for coverage defined as 'Death and Disability--See Endorsement'. By the endorsement the company agreed to pay a death benefit in the event of death of insured, 'caused by accident while in or upon or while entering into or alighting from, or through being struck by, an automobile * * *'. On the back of the endorsement the following appears: 'Exclusions. This insurance does not apply: (a) to bodily injury or death sustained in the course of his occupation by any person while engaged (1) in duties incident to the operation, loading or unloading of, or as an assistant on, a public or livery conveyance or commercial automobile * * *.' 'Definitions * * * With respect to this insurance the term 'commercial automobile' means a motor vehicle of the truck type * * *.'

Max Horsley held a resident agent's certificate of authority issued by the Commissioner of Insurance pursuant to SDC 1960 Supp. 31.1302 to collect premiums, take applications for and countersign policies. In 1956 as a result of some negotiations hereafter mentioned Bechard procured a policy from defendant company. In May 1958 he arranged and paid for the extension of the insurance through this agent. The semi-annual premium on a successor Chevrolet truck had risen to $82.50; this included a 'D & D' premium of $2. The agent sent the extension certificate, which he referred to as an endorsement by mail addressed to Mr. Bechard in care of a construction company that employed him. In the letter dated May 27, 1958, he wrote:

'* * * am glad to hear that you are back to hauling again.

'Am enclosing an endorsement to be attached to your truck policy showing the renewal premium paid and the coverages. On the letter enclosed from the company you will see why they charged us the extra amount. Now this was a new one to me although now I can see why they did this. You see on the D & D coverage, it covers you regardless of what you are driving so naturally you would want that coverage to be continuous. Also on the Comprehensive coverage it takes care of wind, hail, fire & theft along with its other coverages so it would be assumed that you would want this part to continue even if you weren't using the truck.

'Therefore their premium statement was correct and there will be a balance due of $19.35 as stated in the letter. * * *'

On June 9, 1958 in the course of his employment and occupation on a gravel-hauling project and while driving the truck described in the policy, George Bechard was involved in a collision with another gravel truck and received injuries that resulted in his death.

The insurance company claims the insurance does not apply because insured's death was sustained in the course of his occupation while engaged in duties incident to the operation of a truck, it being a commercial automobile as defined in the endorsement and the exclusion clause quoted above. Defendant says the company is estopped or waived its right to assert such defense and has modified the terms and coverage of the policy by the acts of its resident agent. Mindful of the difficulty of stating general rules we approach the question presented by referring to authorities which have done so.

In Carew, etc. v. General Casualty Co., 189 Wash. 329, 65 P.2d 689, in denying reformation, however, for lack of proof, it was said:

'The general rule is that, while an insurer may be estopped, by its conduct or its knowledge or by statute, from insisting upon a forfeiture of a policy, yet, under no conditions, can the coverage or restrictions on the coverage be extended by the doctrine of waiver or estoppel.'

The court in Travelers Ins. Co. v. Eviston, 110 Ind.App. 143, 37 N.E.2d 310, in allowing recovery for death of a 72-year-old insured where the policy provided 'This insurance does not cover any person under 18 or over 70 years of age', stated:

'It is true that the doctrine of implied waiver or of estoppel is not available to bring within the coverage of an insurance policy, risks that are not covered by its terms, or that are expressly excluded therefrom. * * * But in general the doctrines * * * extend to practically every ground upon which an insurer may deny liability.' *

The court said in the law of insurance the distinction between estoppel and implied waiver is not easy to preserve and quite commonly the courts have found it unnecessary or inadvisable to make a distinction between them and have used the terms interchangeably. Quoting from an opinion from the Indiana Supreme Court, it said:

'There is nothing mysterious or peculiarly venerable about the ordinary insurance policy, with its long list of provisions and conditions of defeasance. All these and singular must be construed, like similar provisions in other written instruments, upon sound and well-established principles--principles that support the integrity of the contract, and that forbid an insurer from taking the money of another for a policy, which he knows at the time of delivery contains a provision which, under the facts, will enable him to avoid it, if a loss occurs.'

The court concluded an agent having authority to issue and collect for policies may effect a waiver despite the existence of a non-waiver clause in the policy and the usual clause limiting changes to an executive officer of the company. It appears the coverage would have been void in its inception if the age limit were given effect, the situation present and discussed in the Cassels and Hight opinions, infra.

An insurance company was held to have waived an exclusion clause in Golden Gate Motor Transfer Co. v. Great Am. Indemnity Co., 6 Cal.2d 439, 58 P.2d 374, and estopped to enforce a clause contrary to the policy ordered in Ames v. Employers Casualty Co., 16 Cal.App.2d 255, 60 P.2d 347. Both opinions cited and quoted from Raulet v. Northwestern Nat. Ins. Co. of Milwaukee, 157 Cal. 213, 107 P. 292, 298, where the court wrote:

'It must be presumed, ordinarily, that persons are familiar with the terms of written contracts to which they are parties, and in the absence of fraud they are justly bound by the provisions therein, but the rule should not be strictly applied to insurance policies. It is a matter almost of common knowledge that a very small percentage of policyholders are actually cognizant of the provisions of their policies and many of them are ignorant of the names of the companies issuing the said policies. The policies are prepared by the experts of the companies, they are highly technical in their phraseology, they are complicated and voluminous--the one before us covering thirteen pages of the transcript--and in their numerous conditions and stipulations furnishing what sometimes may be veritable traps for the unwary. The insured usually confides implicity in the agent securing the insurance, and it is only just and equitable that the company should be required to call specifically to the attention of the policyholder such provisions as the one before us. The courts, while zealous to uphold legal contracts, should not sacrifice the spirit to the letter nor should they be slow to aid the confiding and innocent. * * *'

The quotation from the Raulet opinion finds a familiar ring in the expressions of this court in Craig v. Nat. Farmers Union Auto. Ins. Co., 76 S.D. 349, 78 N.W.2d 464. There it was said failure to read the policy will not bar recovering as they 'are rarely examined by the insured and even where examined are not always enlightening to him, due to the technical and complicated language in which the contract is usually couched. Another practical factor considered * * * is that the applicant usually tells the insurer's agent of his coverage necessities and relies on the agent for a policy in accordance therewith.'

Ivey v. United Nat. Indemnity Co., 1958, 9 Cir., 259 F.2d 205, is of similar import, the court holding the representations of the insurance company made by its agent that the insurance plaintiff was procuring covered the liability he requested, would if proved, estop the company from denying the coverage. There the insurance broker occupied a dual capacity; he was the insured's agent to procure the insurance and as such negotiated with the insurance company's branch office for the policy. He procured the policy and as agent for the insurance company delivered it to Dr. Ivey, the insured. The court said under the law of California 'an insurance company may by its conduct or dealings apart from the policy itself be estopped from denying that coverage has been furnished for a risk which the insured has been led to believe is protected under the policy.'

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