Gaston-Lincoln Transit, Inc. v. Maryland Cas. Co.
Decision Date | 01 July 1974 |
Docket Number | GASTON--LINCOLN,No. 59,59 |
Citation | 285 N.C. 541,206 S.E.2d 155 |
Parties | TRANSIT, INCORPORATED v. MARYLAND CASUALTY COMPANY. |
Court | North Carolina Supreme Court |
Basil L. Whitener and Anne M. Lamm, Gastonia, for plaintiff appellee.
Harry C. Hewson of Jones, Hewson & Woolard, Charlotte, for defendant appellant.
Defendant contends that when equitable reformation of an insurance policy 'expands' the coverage, equity requires the insured to pay the proper premium for the additional coverage. Two policies were reformed in this case by eliminating endorsement 'Auto 1145' which restricted territorial coverage on plaintiff's buses to a 50-mile radius of Gastonia for some buses and a 150-mile radius for others. Defendant claims additional premiums of $816.00 on policy No. 2--3895407 (1967--70) and $4007.00 on policy No. 2--3953208 (1970--71). We allowed certiorari for the limited purpose of reviewing the decision of the Court of Appeals on the premium question only.
The trial court found, Inter alia, (1) that plaintiff is entitled to reformation of the renewal policies by deletion of the endorsement Without any further assessment of premiums, and (2) that by its conduct defendant has waived the right, if any it had, to demand additional premiums and is estopped to claim any further payment of premiums.
Defendant asserts in its petition for certiorari that the Court of Appeals, in upholding the trial court's denial of additional premiums, ignored the equitable maxim that 'he who seeks equity must do equity.' Of course, this maxim is part of the rules and procedures applicable to equitable actions in this State. Hairston v. Keswick Corp., 214 N.C. 678, 200 S.E. 384 (1939); Accord, Pinnix v. Casualty Co., 214 N.C. 760, 200 S.E. 874 (1939); Bank v. McEwen, 160 N.C. 414, 76 S.E. 222 (1912). See generally, 1 Story's Equity Jurisprudence § 69--75 (14th ed. 1918) and 2 Pomeroy on Equity §§ 385--396 (5th ed. 1941).
Generally, when an insurance contract is reformed, equity requires the insured, as a condition to the equitable relief granted, to pay the insurer any additional premium lawfully due under the policy as reformed. See Modica v. Hartford Accident and Indemnity Co., 236 Cal.App.2d 588, 46 Cal.Rptr. 158 (1965); Maier Brewing Co. v. Pacific National Fire Insurance Co., 218 Cal.App.2d 869, 33 Cal.Rptr. 67 (1963); Fireman's Fund Indemnity Co. v. Boyle General Tire Co., 392 S.W.2d 352 (Tex.1965). This equitable requirement simply applies the maxim 'he who seeks equity must do equity' to the reformation of insurance contracts. With this principle in mind, we turn to the question whether, under the facts of this case, this maxim should be applied and plaintiff required to pay additional premiums.
In the case before us, there are specific findings, supported by competent evidence, of inequitable conduct by defendant. The trial judge, sitting as judge and jury, found that defendant by its conduct 'has waived any right, if any it had, to demand additional or further payments by plaintiff and is estopped to claim or demand any further payment of premiums,' and held that 'defendant is not entitled to any recomputation of premiums for any period that it has insured the plaintiff . . ..'
Where jury trial is waived, as here, findings of fact supported by competent evidence are conclusive on appeal. Cogdill v. Highway Commission, 279 N.C. 313, 182 S.E.2d 373 (1971); Huski-Bilt, Inc. v. Trust Co., 271 N.C. 662, 157 S.E.2d 352 (1967). There is competent evidence in the record (and no evidence to the contrary) that defendant intentionally inserted endorsement 'Auto 1145' in the renewal policies at its home office in Baltimore, Maryland, and did not disclose this change to plaintiff. From the moment it learned of the acccident, defendant has contended it was not liable, taking the position that plaintiff had been given notice. At trial, however, the only evidence presented by defendant even remotely pertaining to notice was a copy of plaintiff's 1968 policy (2--3785758) with endorsement 'Auto 1145' attached, which was taken from the files of Maryland Casualty Company's Charlotte office. All the evidence presented by plaintiff showed that the George A. Jenkins Agency had no knowledge of the endorsement and that plaintiff had never been given notice of the endorsement and had no knowledge of it.
After hearing all the evidence, Judge McLean determined that as a result of its conduct, defendant was estopped, or had waived the right, to demand further payment of premiums. Although the terms Waiver and Estoppel are not synonymous, they are often used interchangeably with reference to insurance contracts, especially in cases of waiver implied from conduct. Hospital v. Stancil, 263 N.C. 630, 139 S.E.2d 901 (1965); 28 Am.Jur.2d, Estoppel and Waiver § 30 (1966). Thus the trial judge applied the doctrine of equitable estoppel, or estoppel In pais, in this case.
Boddie v. Bond, 154 N.C. 359, 70 S.E. 824 (1911) (emphasis added).
The essential elements of equitable estoppel in this jurisdiction are enumerated most precisely in Hawkins v. Finance Corp., 238 N.C. 174, 77 S.E.2d 669 (1953). We there said:
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