Georgia Mut. Ins. Co. v. Ragan

• Decision Date: 12 May 1970
• Docket Number: No. 1,No. 45073,45073,1
• Citation: 122 Ga.App. 56,176 S.E.2d 230
• Parties: GEORGIA MUTUAL INSURANCE COMPANY v. E. L. RAGAN, Jr. et al
• Court: Georgia Court of Appeals

Page 230

176 S.E.2d 230

122 Ga.App. 56

GEORGIA MUTUAL INSURANCE COMPANY v. E. L. RAGAN, Jr. et al.

No. 45073.

Court of Appeals of Georgia, Division No. 1.

May 12, 1970.

Rehearing Denied June 17, 1970.

Certiorari Denied Sept. 15, 1970.

Syllabus by the Court

Where an insurer had no right to cancel an insurance policy, its forbearance to cancel furnished no consideration for a modification in coverage signed by the insured.

This is an appeal from the grant of plaintiffs' motion for summary judgment as to defendants' liability. The material facts are not in dispute. Defendant issued an automobile insurance policy on July 27, 1968 to one of the plaintiffs, Eddie Lee Ragan, which contained no restrictions as to the age of any driver. On September 16, 1968, defendant mailed a notice of cancellation to plaintiff and obtained a certificate of mailing from the United States Post Office Department. The effective date of cancellation was September 27, 1968. As a reason for cancellation, the notice contained a statement, 'Exclusion of named driver endorsement not returned signed.' At his deposition Ragan denied receiving this notice and there is no evidence of actual receipt. On October 1, 1968, Ragan called at defendant's agent's office and made a payment on his premium which had been financed by the agent. The agent, on this date, requested that he execute an endorsement excluding coverage afforded by the policy as to any claims arising from accidents while the vehicle was operated by all drivers under 25 years of age. Ragan was advised by defendant's agent at the time that the policy would be canceled if he did not agree to and sign the exclusionary endorsement. This was the first notice Ragan had received concerning this matter and he executed the endorsement. No premium refund or reduction in premium was given to him for his acceptance of the endorsement or for any cancellation of the policy. On October 7, 1968, defendant company issued a notice that the cancellation effective on September 27, 1968 was rescinded and the policy 'remains in full force and effect.' On October 28, 1968, plaintiff permitted one of the other plaintiffs, a sixteen-year-old girl, to drive his car and she was involved in an accident with a third party causing damage to both vehicles. Defendant denied collision and liability coverage to plaintiffs on the basis of the endorsement excluding claims arising from accidents of drivers under twenty-five.

Landau, Davis & Farkaas, Leonard Farkas, II, Albany, for appellant.

Vann & McClain, J. Dudley McClain, Camilla, Burt & Burt, H. P. Burt, D. D. Rentz, Albany, for appellees.

BELL, Chief Judge.

The single issue in this appeal is whether the subsequent endorsement modifying the terms of the original policy was valid. Plaintiffs contend that it was null and void as it reduced the risks under the policy without any consideration to plaintiff, Ragan. Defendant argues that the endorsement was supported by a consideration to Ragan, i.e., its forbearance to cancel the policy. A consideration is necessary for the valid modification of the coverage provisions of an insurance policy. Adair v. American Liberty Ins. Co., 116 Ga.App. 805, 159 S.E.2d 174. Foebearance to cancel the policy has been held to be a sufficient consideration for a modifying endorsement restricting the risks covered. Patterson v. Cotton States Mut. Ins. Co., 221 Ga. 878, 148 S.E.2d 320. Plaintiffs maintain that on October 1, 1968, when the endorsement was tendered to Ragan by defendant's agent, defendan...