Graphic Arts Mut. Ins. Co. v. Pritchett

Decision Date20 December 1995
Docket NumberNo. A95A1443,A95A1443
Citation469 S.E.2d 199,220 Ga.App. 430
CourtGeorgia Court of Appeals

Action on policy. Murray Superior Court. Before Judge Pannell.

Drew, Eckl & Farnham, Kenneth A. Hindman, Atlanta, for appellant.

Avrett, Ponder & Withrock, R. Mike Withrock, Dalton, Lokey & Bowden, Charles M. Lokey, Atlanta, for appellees.

BEASLEY, Chief Judge.

Defendant Graphic Arts Mutual Insurance Company appeals from the denial of its motion for summary judgment and the grant of partial summary judgment to plaintiffs Donald and Linda Pritchett. They seek to recover under an insurance policy for the value of property destroyed by fire, interest, and statutory penalties and attorney fees for bad faith refusal to pay the claim.

The application for insurance was executed only by Donald Pritchett, although both plaintiffs were named insureds. Graphic Arts contends the policy was void because Donald made a material misrepresentation on the insurance application. He answered "no" to the question whether he had had any insurance policy canceled within the three years preceding the application when, in fact, he had had three such cancellations, including a policy with Utica Mutual Insurance Company, the corporate parent of Graphic Arts. The insurance agency which sold the Pritchetts the Graphic Arts policy, Dean & Moore Insurance, Inc., had also sold the Pritchetts the Utica policy, although through two different agents.

1. Graphic Arts contends the court erred in ruling it was estopped from asserting the policy was void because of Donald Pritchett's misrepresentation about the canceled Utica policy. The court determined Graphic Arts had actual knowledge of the falsity because its agent, Dean & Moore, secured it. The agent must have actual knowledge in order for such knowledge to be imputed to the insurer/principal. Burkholder v. Ford Life Ins. Co., 207 Ga.App. 908, 909(1), 429 S.E.2d 344 (1993).

Graphic Arts contends that the only person with actual knowledge of the canceled Utica policy was the former agent of Dean & Moore who in fact took the Utica application. It argues that since the agent had no knowledge of the prior Utica cancellation, knowledge cannot be imputed to Graphic Arts. OCGA § 10-6-58 provides that "[n]otice to the agent of any matter connected with his agency shall be notice to the principal." The "agent," for purposes of determining whether OCGA § 10-6-58 applies, is Dean & Moore and not merely either of the individuals working for the agency: "[A corporation] cannot escape liability on the ground that the agent who actually performed the forbidden act on behalf of the corporation was entirely innocent, in that such agent lacked knowledge which was possessed by other agents of the corporation, or which is attributable to it as being a part of its documents and records. A company is chargeable with the composite knowledge acquired by its officers and agents acting within the scope of their duties. [Cits.]" Walker v. State, 89 Ga.App. 101, 105, 78 S.E.2d 545 (1953). See also Gem City Motors v. Minton, 109 Ga.App. 842, 137 S.E.2d 522 (1964). Dean & Moore's knowledge is actual, not merely constructive. See Copeland v. Leathers, 206 Ga. 280, 286-287(2), 56 S.E.2d 530 (1949), and cases cited therein. Thus Graphic Arts is estopped from declaring the policy void on account of the misrepresentation as it related to the Utica cancellation.

2. The trial court determined that whether the misrepresentations as to the State Farm and Allstate canceled policies could be used by Graphic Arts to void the policy was a jury question. Consequently, it denied Graphic Arts' motion for summary judgment. Graphic Arts asserts, correctly as to the two unknown cancellations, that it was entitled to rely on Donald Pritchett's representation in the application that "no" insurance had been declined, canceled or non-renewed in the three years prior to the date of application. Although Graphic Arts relies on OCGA § 33-24-6(c) to support this position, this Code section applies only to statements involving applications for life or accident and sickness insurance. See, e.g., Fidelity Bankers Life Ins. Co. v. Renew, 121 Ga.App. 883, 884(2), 176 S.E.2d 103 (1970). However, OCGA § 33-24-7(a) provides that statements in applications are "representations" and subsection (b) states the circumstances under which an insurer can avoid the policy for "(m)isrepresentations, omissions, concealment of facts, and incorrect statements." (Emphasis supplied.) Thus it is implicit that an insurer is entitled to rely on statements of an applicant as true, without conducting an independent investigation. Of course, it assumes a risk, because recovery on policies issued on such representations is prevented only in the three instances in the statute. The burden on the insurer is to prove one of them.

OCGA § 33-24-7(b) provides in the part invoked by Graphic Arts: "Misrepresentations ... shall not prevent a recovery under the policy ... unless ... (3) The insurer in good faith would ... not have issued the policy ... if the true facts had been known." Graphic Arts contends that it is entitled to summary judgment because the uncontroverted evidence shows that it would not have issued the policy to the Pritchetts had it known the true facts regarding the prior cancellations.

The Pritchetts do not dispute that these cancellations occurred in 1990, and according to the affidavit of James Reilly, Underwriting Manager for Utica National Insurance Group, "Under [applicable] underwriting guidelines, Graphic Arts Mutual Insurance Company would not have issued a homeowners policy to an application [sic] who had had a policy or binder declined, canceled or non-renewed." The Pritchetts agree that Reilly testified "that Appellant would not have issued the policy had it known of any one of the previous cancellations." Their apparent position, that the estoppel related to the Utica policy also estopped Graphic Arts from claiming it would not have issued the policy sued on had it known of either of the other two cancellations, is not sound. It is evident that Graphic Arts was literally unaware that it had canceled the Utica policy, but we have concluded that it knew of it as a...

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21 cases
  • Lee v. Mercury Ins. Co. of Ga.
    • United States
    • Georgia Court of Appeals
    • November 3, 2017
    ...policy. Burkholder v. Ford Life Ins. Co., 207 Ga. App. 908, 908-909 (1), 429 S.E.2d 344 (1993) ; Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga. App. 430, 432-433 (2), 469 S.E.2d 199 (1995). In a later whole court decision, this Court clarified the law in this area, but neglected to overru......
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    ...instances in the statute. The burden on the insurer is to prove one of them." (Emphasis supplied.) Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga.App. 430, 432(2), 469 S.E.2d 199 (1995). This language of the charge has been taken out of context from a fire insurance contract coverage case ......
  • Amin v. Mercedes-Benz USA, LLC
    • United States
    • U.S. District Court — Northern District of Georgia
    • December 18, 2018
    ...does exist, an agent's knowledge is imputed to the principal pursuant to Georgia law.") (citing Graphic Arts Mut. Ins. Co. v. Pritchett , 220 Ga. App. 430, 431, 469 S.E.2d 199, 201 (1995) ); Roylston v. Bank of Am., N.A. , 290 Ga. App. 556, 560, 660 S.E.2d 412, 417 (2008) ("The law imputes ......
  • Ga. Commercial Stores, Inc. v. Forsman
    • United States
    • Georgia Court of Appeals
    • August 10, 2017
    ...Forsman and Prudential were members of Pargar whose knowledge could be imputed to the company. See Graphic Arts Mut. Ins. Co. v. Pritchett , 220 Ga. App. 430, 431 (1), 469 S.E.2d 199 (1995) ("A company is chargeable with the composite knowledge acquired by its officers and agents acting wit......
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2 books & journal articles
  • Insurance - Stephen L. Cotter, Stephen M. Schatz, and Bradley S. Wolff
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 55-1, September 2003
    • Invalid date
    ...Id. 53. See Nappier v. Allstate Ins. Co., 961 F.2d 168, 169 (11th Cir. 1992). 54. Id. 55. See Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga. App. 430, 432-33, 469 S.E.2d 199, 202 (1995). 56. See Brannon v. Allstate Ins. Co., 120 Ga. App. 467, 171 S.E.2d 319 (1969); State Farm Mut. Auto. I......
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    • United States
    • Mercer University School of Law Mercer Law Reviews No. 48-1, September 1996
    • Invalid date
    ...469 S.E.2d at 304 (citing Georgia Farm Bureau Mutual Ins. Co. v. Richardson, 217 Ga. App. 201, 204, 457 S.E.2d 181, 184 (1995)). 201. 220 Ga. App. 430, 469 S.E.2d 199 (1996). 202. Id. at 430-31, 469 S.E.2d at 201. 203. Id. at 431, 469 S.E.2d at 201 (citing Walker v. State, 89 Ga. App. 101, ......

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