Gitter v. Tennessee Farmers Mut. Ins. Co.
| Decision Date | 09 September 1969 |
| Citation | 450 S.W.2d 780,60 Tenn.App. 698 |
| Parties | Mrs. Edgar GITTER, Jr., Appellee, v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Appellant. |
| Court | Tennessee Court of Appeals |
Don Owens, Memphis, for appellant.
Hall Crawford, Memphis, Harsh, Harsh & Crawford, Memphis, of counsel, for appellee.
Complainant brought suit in Chancery to recover of defendant insurer the amounts recovered by third parties as judgments against complainant growing out of an automobile collision, and to recover collision loss to complainant's automobile. The defendant had issued to complainant its liability and collision coverage policy, but denied coverage on the ground that the policy was not in force due to non payment of premium.
The Chancellor heard the case on oral testimony without a jury. The Chancellor held there was coverage under the policy and rendered judgment against the defendant insurer. The defendant has perfected its appeal to this Court.
The accident occurred on May 7, 1966. The policy held by the complainant was not introduced in evidence. However, neither party claimed that the policy contained a grace period. Premiums were payable semi-annually and it appears from the record that the payment of a premium extended this policy for an additional six months.
The questions in issue arise out of the wordage of a Final Notice of premium past due sent by the Company to the complainant, and the conduct of the parties in relation to the terms contained in this Notice.
The evidence establishes that the defendant sent to the policy holder a Semi-Annual Premium Notice. The complainant admits she received this notice several days prior to the due date, May 4, 1966. The complainant admits she did not pay the premium prior to or by May 4, 1966. This particular notice is on white paper with a green border. This notice shows on the face thereof the amount of premium due, the due date, expiration date of policy, name of policy holder, policy number and instructions to make payment to the home office of the company at P.O. Box 307, Columbia, Tennessee. This notice contains at the top left corner the following statement: 'Failure to pay your premium on or before the date due automatically cancels your policy.' The complainant's testimony establishes that she understood all provisions in this notice. Complainant had dealt with the Company under this type policy for ten years prior to the date of accident. The evidence establishes that if the premium is not paid to the home office by the due date the company will within three or four days thereafter mail to the policy holder a Final Notice of premium due. The evidence establishes that this Final Notice of premium due was mailed by the company to the complainant, and that the complainant received it after the date of the accident, May 7, 1966.
This Final Notice of Premium due is on pink paper with a green border. It contains the amount of premium, due date, expiration date of policy, policy number, name and address of policy holder, and instruction to mail premium to the same home office address. This Final Notice states at the top left corner: 'Your policy expired at 12:01 A.M. on Due Date.' The Final Notice also states in a red marked box in the center of the Notice: 'Payment within 15 days from due date will renew your policy and provide continuous protection.' The testimony of the complainant reveals that she received this Final Notice several days prior to May 19, 1966. Complainant's testimony reveals that she understood the contents of this notice.
It is undisputed that on May 23, 1966 the complainant delivered to the branch office of the company at Memphis, Tennessee, her check of that date payable to the order of the company in the amount of the premium for the purpose of that office mailing it to the home office of the company. It is to be noted that this was four days after the expiration of 15 days after due date of premium.
The copy of the Semi-Annual Premium Notice retained by the company was stamped 'Lapsed 15 days after due date.' The testimony of the company official was that this entry is made on the company's copy of the Notice immediately upon the lapse of 15 days without exception, and no extension of that policy is ever made by the company. Upon receipt of complainant's check the company issued to her a new policy for the term from May 24, 1966 to November 24, 1966 and mailed this policy to the complainant. By letter dated May 26, 1966 from the company's claim supervisor the complainant was informed that she did not have coverage on the date of the accident, May 7, 1966, because she failed to pay premium due within the 15 days after due date.
Immediately after the accident the company's adjuster contacted the complainant and proceeded with a normal investigation of the accident. According to complainant this adjuster told her: Complainant testified the adjuster also said to her: 'Don't worry about it; it will be taken care of.' This investigation resulted in the adjuster having complainant sign a Release and Subrogation Receipt by which complainant accepted $186.72 in settlement of her collision loss, however, no payment was made to complainant under the instrument which is dated May 23, 1966.
The Chancellor held the fifteen day period from May 4, 1966, date premium was due, during which the complainant could pay premium and have continuous coverage did not amount to a grace period in the sense that a loss suffered during that period would be covered whether the premium was paid or not. The Chancellor held this continuous coverage was contingent upon the payment of the premium within the fifteen days, and a failure to pay as required would result in a termination of the policy as of May 4, 1966. We agree with the Chancellor in this holding.
The Chancellor held that the company by the conduct of its agents and representatives is estopped to deny that the policy was in effect on the date of the accident. In this respect the Chancellor stated '* * * However, the Court feels that the action of the Defendant in this case, treating the insured for a period of some twenty days as if she were insured and making an investigation of the accident and accepting the payment and forwarding it to the Home Office, that this would work an estoppel; I feel this does work an estoppel.'
The essential elements of an equitable estoppel as related to the party claiming the estoppel, are, (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party estopped, and (3) action based thereon of such a character as to change his position prejudicially. Provident Washington Ins. Co. v. Reese (1963), 213 Tenn. 355, 373 S.W.2d 613.
The facts establish that the complainant had a full understanding of the import of the fifteen days during which she could pay premium and thereby have continuous coverage. She was asked and she explained what 'continuous coverage' meant to her and her explanation shows sufficient understanding on her part. Therefore, there was no lack of knowledge on the part of the complainant concerning the effect failure to pay the premium within the fifteen days would have on her coverage.
It is true the defendant's adjuster started an immediate investigation of the accident. It is undisputed that he made statements to the complainant as herein set out. However, the crux of the issue on equitable estoppel is whether the complainant relied on these statements and this conduct and thereby changed her position prejudicially. We do not find such reliance and change of position in the record. The complainant was asked on direct and cross examination at four different times to answer, why she did not make the premium payment when due or within the fifteen days. One answer was: 'At the time, the accident happened, and all the suing and stuff come in on me and everything and it was too much.' To the same question she replied: 'I thought I had paid it, but since the accident came up and the thing happened like it did, working and all, it slipped my mind but I didn't intentionally do it.' Again she answered: 'The only thing, as I said, I thought I had paid it.' * * *
Complainant's longest statement in this regard was on cross-examination as follows:--
'Q. Now will you tell the Court again why you did not pay the premium prior to the due date, having received that notice?
A. Because, as I said, I overlooked it, because of the accident...
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