Fuller v. Lloyd

• Decision Date: 17 June 1986
• Docket Number: No. WD,WD
• Citation: Fuller v. Lloyd, 714 S.W.2d 698 (Mo. App. 1986)
• Parties: Donald FULLER and Nancy Fuller, Plaintiffs, v. Darrell J. LLOYD, Third Party Plaintiff-Respondent, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Third Party Defendant-Appellant. 37525.
• Court: Missouri Court of Appeals

Page 698

714 S.W.2d 698

Donald FULLER and Nancy Fuller, Plaintiffs, v. Darrell J. LLOYD, Third Party Plaintiff-Respondent, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Third Party

Defendant-Appellant.

No. WD 37525.

Missouri Court of Appeals Western District.

June 17, 1986.

Motion for Rehearing and/or Transfer to Supreme Court Denied

July 24, 1986.

Application to Transfer Denied Sept. 16, 1986.

Wendell E. Koerner, Jr., Brown, Douglas & Brown, St. Joseph, third party defendant-appellant.

Thomas O. Pickett, Pickett & Raynes, for Darrell J. Lloyd, Trenton, for third party plaintiff-respondent.

Donald & Nancy Fuller, plaintiffs pro se.

Before MANFORD, P.J., and PRITCHARD and TURNAGE, JJ.

TURNAGE, Judge.

The Fullers brought suit against Darrell Lloyd for damages resulting from an automobile collision. Darrell filed a third party petition against USF & G for damages for failure to defend the Fuller suit. The suit by Fuller against Darrell was reduced to judgment and no appeal has been taken from that judgment.

The court held a separate bench trial on Darrell's suit against USF & G and entered judgment in favor of Darrell for $10,000 actual damages, $10,000 punitive damages, $14,500 in attorney fees, and ordered USF & G to hold Darrell harmless on the judgment for $25,000 entered in favor of the Fullers. USF & G contends Darrell was not covered by insurance for the Fuller judgment, the award of punitive damages was erroneous, the award of actual damages was unsupported by the evidence, and the award of attorney fees was excessive. Affirmed in part and reversed in part.

There is little dispute as to the facts. Darrell Lloyd and Louise Wilson were married in September of 1978. Darrell was a used car salesman in St. Joseph and Louise owned a beauty shop in Albany. After they were married they lived in Louise's home in Albany.

Soon after their marriage, the Lloyds started a used car business in Albany. Louise supplied the capital and Darrell was responsible for operating the business. The Lloyds purchased cars under a floorplan financing agreement obtained from a bank in Albany. In July of 1980 the Lloyds purchased an insurance policy from USF & G for the term of one year. The policy was titled "garage policy" and listed the named insured as Darrell J. Lloyd and Louise I. Lloyd. No business name was listed. The coverage column on the face of the policy listed, by symbol, coverage under the policy for any auto. No provision in the policy provided that covered vehicles must be owned by the garage business or must carry dealer tags. A premium was paid at the time the policy was issued, but the final premium was to be determined after an audit.

In August of 1980 Darrell became upset because Louise's daughter was driving one of the automobiles and fired a gun at the car while the daughter was in it. No one was injured but the bullet hit the fender of the car. Thereafter, the Lloyds separated and Darrell was charged with assault. The assault charge received publicity in the local paper. The agent who had written the USF & G policy read about the incident and placed a copy of the newspaper article in the Lloyd's file. As a result of the separation and criminal charge, Darrell left the Albany area. Louise closed the used car business by selling the remaining cars and trucks. Darrell took one of the trucks and had a title issued to himself and purchased the license tag.

On October 7, 1980, Louise asked the local insurance agent to cancel the garage policy. The agent sent the original policy which Louise had given him to the USF & G office in Kansas City and requested that the policy be cancelled. It is conceded that neither the local agent nor USF & G gave any notice to Darrell that the policy was being cancelled. The next premium on the policy was due four days after it was cancelled. As a result of the cancellation Louise received a $94 credit on an insurance policy covering automobiles taken from the business and which she and her daughter had titled in their names.

Louise testified that she told Darrell after the policy was cancelled that he was driving an automobile which was not covered by insurance. Darrell denied that Louise had told him that the insurance had been cancelled and the trial court by its findings found that Louise had not told Darrell that the insurance had been cancelled.

In February of 1981 Darrell was involved in an automobile accident with the Fullers. As a result the Fullers filed suit against Darrell. Darrell requested USF & G to defend but USF & G stated that the policy had been cancelled and there was no coverage at the time of the accident. Thereafter, Darrell obtained an attorney who filed an answer to the Fuller suit and a third party petition against USF & G in which it was claimed that USF & G had wrongfully cancelled the policy. The petition sought actual and punitive damages and a judgment that USF & G hold Darrell harmless from the Fuller law suit.

The Fuller's claim against Darrell was severed from Darrell's claim against USF & G. On the Fuller claim the court entered judgment after a bench trial in favor of the Fullers against Darrell in the amount of $25,000.

USF & G first contends that its policy did not cover Darrell for the Fuller accident because such policy had been cancelled by Louise. As noted above the named insured in the policy was Darrell and Louise. The general rule is that insurance on jointly owned and jointly insured property cannot be cancelled by one owner without the consent of the other. 17 Couch on Insurance 2d § 67:118 (1983). In Broquedis v. Employers Mutual Liability Insurance Company of Wisconsin, 45 A.D.2d 591, 360 N.Y.S.2d 735 (1974), the policy insuring an automobile named both the husband and wife as insureds. The parties separated and the husband thereafter requested a policy endorsement to delete the automobile which had been given to the wife and to delete her as a named insured. The wife was not notified of this action. The court held that the policy remained in effect as to the wife. Among its reasons for so holding, the court cited the public policy of preventing cancellation of insurance without notice to the insured in order to protect innocent victims of automobile accidents from financial loss. In short, because of the possibility of an automobile causing injury or damage to others an automobile liability insurance policy protects not only the owner but the public as well.

Missouri has a similar public policy embodied in § 379.118, RSMo 1978, which requires an insurer who proposes to cancel a policy of automobile liability insurance to send notice by certified mail to the insured of its intended action at least thirty days prior to the cancellation. It is conceded in this case that USF & G did not send Darrell any notification that it was cancelling the policy. Darrell was a named insured and as such is clearly covered by § 379.118. USF & G under that section was required to send him notice by certified mail at his last known address of the proposed cancellation. Both under the...