Gulf Am. Fire & Cas. Co. v. McNeal

• Decision Date: 24 February 1967
• Docket Number: No. 3,Nos. 42417-42420,s. 42417-42420,3
• Citation: 115 Ga.App. 286,154 S.E.2d 411
• Parties: GULF AMERICAN FIRE & CASUALTY COMPANY v. Carolyn McNEAL. Carolyn McNEAL v. GULF AMERICAN FIRE & CASUALTY COMPANY. GULF AMERICAN FIRE & CASUALTY COMPANY v. Wendell McNEAL, by Next Friend. Wendell McNEAL, by Next Friend v. GULF AMERICAN FIRE & CASUALTY COMPANY
• Court: Georgia Court of Appeals

Page 411

154 S.E.2d 411

115 Ga.App. 286

GULF AMERICAN FIRE & CASUALTY COMPANY v. Carolyn McNEAL.

Carolyn McNEAL v. GULF AMERICAN FIRE & CASUALTY COMPANY.

GULF AMERICAN FIRE & CASUALTY COMPANY v. Wendell McNEAL, by Next Friend.

Wendell McNEAL, by Next Friend v. GULF AMERICAN FIRE & CASUALTY COMPANY.

Nos. 42417-42420.

Court of Appeals of Georgia, Division No. 3.

Feb. 24, 1967.

Syllabus by the Court

1. Plaintiffs' petitions stated causes of action for a declaratory judgment.

2. Issuance of an endorsement which designates an additional automobile to be covered by automobile liability insurance under the provisions of a policy previously issued effects insurance with respect to the additional automobile and therefore constitutes the issuance of a policy within the meaning of the terms of Code § 56-407A.

3. The uninsured motorists insurance required by Code § 56-407A provides coverage to 'the named insured and, while resident of the same household, the spouse of any such named insured, and relatives of either, while in a motor vehicle or otherwise.' These persons are covered when they are occupying an automobile other than the 'insured automobile.'

4. (a) In a policy providing insurance coverage subject to Code § 56-407A, a provision orequiring arbitation of any claim under the coverage is void.

(b) A provision for forfeiture of the uninsured motorists coverage if the insured should, without written consent of the insurer, settle with or prosecute to judgment any action against any person who might be legally liable for the insured's injuries, is also repugnant to Code § 56-407A and therefore void.

5. Before suit can be brought against the insurer to recover benefits under this kind of coverage, it is a condition precedent that suit must first be brought and judgment recovered against the known uninsured motorist.

6. The facts alleged in these cases showed that plaintiffs were subject to the risk of taking undirected action, and therefore these cases fall within the purview of Section 1(b) of the Declaratory Judgments Act (Ga.L.1945, p. 137).

7. There was no error in sustaining special demurrers to defendant's allegations of a mere conclusion of law.

8. The trial court erred in declaring that plaintiffs were entitled to limits of coverage in excess of the limits clearly stated in Code § 56-407A.

The error discussed in this division of the opinion was harmless to defendant.

Carolyn McNeal and Wendell McNeal separately brought suit against Gulf American Fire and Casualty Company. The petitions in the two cases showed the following facts:

On June 28, 1963, defendant issued to Carlton McNeal, as the named insured, an automobile liability insurance policy for a policy period from July 11, 1963, to July 11, 1964. The original policy declarations designated as owned automobiles a 1959 Ford (Car 1) and a 1963 Volkswagen (Car 2), and provided that the policy afforded insurance only with respect to coverages indicated by specific premium charges. No premium charge was made for uninsured motorists coverage. Defendant thereafter issued an endorsement, dated March 20, 1964, amending the policy declarations so as to afford insurance with respect to an additional automobile. The endorsement also indicated a change in coverage so as to add uninsured motorists coverage with respect to 'Car #3 Only'. On July 4, 1964, while driving Car 2, the named insured collided with an automobile operated by Elton Austin, an uninsured motorist. The plaintiffs, who are the wife and son of the named insured and who reside in the same household as the named insured, were passengers in the McNeal vehicle and were injured in the collision.

By virtue of the endorsement of March 20, 1964, the policy undertook: (Part IV) 'To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury,' sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile, provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.' The policy also provided: 'This policy does not apply under Part IV * * * to bodily injury to an insured, or care or loss of services recoverable by an insured, with respect to which such insured * * * shall, without written consent of the company, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor.'

Defendant denied liability to plaintiffs 'on the ground that said policy did not provide uninsured motorists protection in connection with the 1963 Volkswagen.' (Car number 2.)

Both petitions prayed for declaratory judgment adjudicating that the policy provisions for uninsured motorists coverage were subject to and were to be construed in accordance with an Act approved March 10, 1964 (Code § 56-407A; Code Ann. § 56-407.1); that the provisions requiring agreement or arbitration as to claims arising under this coverage were null and void; that the provisions for forfeiture of coverage if the insured should, without written consent of the insurer, settle with or sue to judgment any person who might be liable for the insured's injuries, were null and void; and that the policy afforded uninsured motorists coverage with respect to the alleged injuries. Both petitions prayed that the court require defendant to give its written consent for plaintiff to prosecute to judgment any action which might be appropriate against any person who might be legally liable to plaintiff on account of the alleged injuries. Both petitions also sought to recover against defendant the benefits provided by the uninsured motorists coverage plus a penalty for bad faith and attorney's fees.

Defendant filed demurrers and answers to the petitions and plaintiffs filed demurrers to defendant's answers. The trial court overruled all demurrers.

Plaintiffs thereafter made motions for summary judgment. The trial court rendered judgments declaring that plaintiffs could not recover directly against the insurer without first obtaining judgment against the uninsured motorist and could not recover damages and attorney's fees for bad faith. As to all other issues the court granted summary judgments for plaintiffs, declaring the rights of the parties according to plaintiffs' theory.

Martin, Snow, Grant & Napier, George C. Grant, Hendley V. Napier, Macon, for appellants.

G. L. Dickens, Jr., Milledgeville, for appellee.

BELL, Presiding Judge.

These cases were originally carried to the Supreme Court of Georgia, which transferred them to this court, holding that plaintiffs' prayers seeking equitable relief were surplusage as it did not appear from the petitions that the legal relief sought was not full and complete. Gulf American Fire, etc., Co. v. McNeal, 222 Ga. 454, 150 S.E.2d 685.

1. Plaintiffs' petitions stated causes of action for declaratory judgment. Thus the trial court did not err in overruling defendant's demurrers 1 through 5 in both cases. (See Division 6 of this opinion.)

2. Code § 56-407A(a) (Code Ann. § 56-407.1(a)) provides: 'No automobile liability policy * * * shall be issued or delivered in this State to the owner of such vehicle, or shall be issued or delivered by any insurer licensed in this State, upon any motor vehicle then principally garaged or principally used in this State, unless it contains an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle * * *.' The insurer contends that since the original policy was issued prior to the effective date of the Act, the Act is not applicable here. So far as the coverage on car No. 3 is concerned, we cannot agree with this argument. "Policy' means the written contract of or written agreement for or effecting insurance, and includes all clauses, riders, endorsements and papers attached or issued and delivered for attachment thereto and a part thereof.' Code Ann. § 56-2402. The owrds of the Code section 'effecting insurance' have special significance in this case. While the issuance of an endorsement may not in every case constitute the issuance of a policy, nevertheless in this case the 'endorsement,' together with the original policy, effected insurance as to car No. 3. Thus under the Code definition of 'policy,' issuance of the endorsement here constituted issuance of a policy. Thus the insurance coverage on car No. 3 is subject to provisions of the Act of 1964 (Code § 56-407A).

(Note that under the Constitutional prohibition against impairing the obligation of contracts, the 1964 Act did not and could not affect the pre-existing insurance coverage as to car No. 1 and car No. 2.)

The trial court did not err in sustaining plaintiffs' demurrers 2 and 6 to defendant's answer in both cases.

3. 'The (uninsured motorists) coverage applies not only to the owner of an insured automobile but to his spouse and relatives of either if they live in his household. It covers them while riding in the insured car, in any other automobile or while pedestrains if the injury is caused by an uninsured motorist.' Mitchell, on Insurance (1965 Ed.) § 120-102, p. 703.

Unless the uninsured motorists coverage is rejected by the insured, Code § 56-407A broadly requires that policies contain provisions 'undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle * * *.' The Act does not restrict coverage...