Harrington v. Aetna Cas. & Sur. Co.

• Decision Date: 29 December 1972
• Docket Number: No. 5198,5198
• Citation: 489 S.W.2d 171
• Parties: Nell HARRINGTON, Appellant, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 171

489 S.W.2d 171

Nell HARRINGTON, Appellant, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.

No. 5198.

Court of Civil Appeals of Texas Waco.

Dec. 29, 1972.

Rehearing Denied Jan. 18, 1973.

Brown, Brown & Bowen, Inc., Fred R. Brown, Garland, for appellant.

Lawrence R. Maxwell, Jr., Dallas, for appellee.

VICHALL, Justice.

H. L. Harrington brought this action against the Aetna Casualty and Surety Company to recover attorney's fees incurred by him in the defense of a lawsuit which he claims Aetna improperly refused to defend under the terms of a liability insurance policy issued to him by Aetna. Before trial, Mr. Harrington died and his wife, Mrs. Nell Harrington, was duly substituted as plaintiff. Following a trial without a jury, judgment was rendered that plaintiff take nothing. We reverse and render.

On July 29, 1966, H. L. Harrington executed an application for automobile liability insurance under the Texas Motor Vehicle Assigned Risk Plan, with Aetna's agent. Harrington sought coverage on a 1964 Chevrolet one-half ton pickup and a 1964 Oldsmobile 4-dr. sedan. He stated under oath, in reference to both vehicles, that 'the automobile is not used for business but it is driven to and from work.' Thereupon, Aetna issued a standard 'Family Automobile Policy' insuring both vehicles for the one-year term from August 13, 1966, until August 13, 1967. Thereafter, without further application or request by Harrington for renewal, and without request by Aetna for another application, Aetna renewed the policy for the one-year term from August 13, 1967 until August 13, 1968. Excepting the stated year of coverage, the terms and conditions of the original and the renewal policies are identical. Under the heading 'DECLARATIONS,' the renewal policy names Harrington as the insured, and describes his pickup and 4-dr. sedan as 'Owned Automobiles.'

The pertinent portions of the policy provide as follows:

'* * * Aetna * * * agrees with the Insured, named in the declarations made a part hereof, in consideration of the payment of the premium and in reliance upon the statements in the declarations and subject to all of the terms of this policy: To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of * * * 'bodily injury' * * * or * * * 'property damage' arising out of the ownership, maintenance or use of the owned automobile * * * and the Company shall defend any suit alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy * * *.

'DEFINITIONS:

"Owned automobile' means a private passenger * * * or utility automobile described in this policy for which a specific premium charge indicates that coverage is afforded * * *;

"private passenger automobile' means a four wheel private passenger, station wagon, or jeep type automobile;

"utility automobile' means an automobile * * * of the pick-up body type * * * not used for business or commercial purposes.

'DECLARATIONS:

'By acceptance of this policy, the Insured agrees that the statements in the declarations are his agreements and representations, that this policy is issued in reliance upon the truth of such representations and that this policy embodies all agreements existing between himself and the Company or any of its agents relating to this insurance.'

On June 27, 1968, Harrington was driving his pickup to his home for lunch when he was in collision with a motorcycle operated by Steve Hackett. Harrington reported the collision to Aetna's agent on July 1, 1968, and gave him the following written statement:

'My name is H. L. Harrington. I * * * work for the Cooper Concrete Company * * *. My capacity with that company is as an equipment buyer. In connection with my job I drive my own 1964 1/2 ton Chevrolet pickup truck. In an average year I will put between 38,000 and 40,000 miles on the truck while performing my duties as a buyer for the Cooper Concrete Co. I rarely if ever use the pickup for my personal use as I have a 1964 Oldsmobile that I use for other than business purposes. The Cooper Concrete Company allows me $100 a month in compensation for my using my own truck for business purposes. In addition to the $100 the company buys approximately 2/3's of the gasoline used in the truck.'

Answering questions during a recorded interview with Aetna's investigator on July 10, 1968, Harrington made the following statements 'concerning the accident':

'* * * Q. What is your connection with Cooper Concrete Company? A. I'm--I do--well, I hustle parts. Q. O.K. You're employed by them? A. Yes, sir. Q. You drive a '64 Chevy 1/2 ton pickup? A. That's right. Q. Is that your car? Your vehicle? A. Yes, sir. Yes, sir. Q. Is that the one that you used to hustle parts for the concrete company in? A. Yes, sir. Q. Do you also use that as your personal car? A. No, sir. * * * Q. On your pickup truck, do they pay you mileage on that? A. Yes, sir. Q. O.K. To use it? A. Yes, sir. * * * Q. All right, and you understand that we made a recording of this interview, don't you? A. Yes, sir. Q. And do you acknowledge everything you told me is true and correct? A. I sure do. Yes, sir.'

Hackett sued Harrington in April, 1969, alleging that Harrington's negligence caused the collision and caused him bodily injuries, and sought $5,600 damages. Aetna refused to defend Hackett's suit on the ground that the accident 'does not come within the terms of (the renewal) policy and does not qualify for coverage under the policy' because the pickup 'is used mainly for business and commercial purposes.' Harrington then secured legal counsel and successfully defended the suit. Hackett recovered nothing, his suit was dismissed with prejudice, and costs were assessed against him.

In this suit, Harrington pleaded the renewal policy, its liability provisions, the accident with Hackett, Hackett's suit, Aetna's refusal to defend the suit, his employment of a lawyer and successful defense against Hackett, and that he has obligated himself to pay his attorney a reasonable fee of $2,500. He prayed for a recovery of that amount.

Aetna answered Harrington's suit with a general denial, and, pleading the renewal policy, expressly denied liability on the following two grounds:

1. '* * * that (Harrington) used the pickup truck exclusively for business and commercial purposes and, therefore, by the definitions in said policy, (the) pickup truck was not within the policy coverage.' 2. '* * * that within the sworn application for the policy (Harrington) made numerous misrepresentations as to his actual and intended use of the pickup, that (Aetna) relied upon the representations, that such reliance was reasonable and in accord with reasonable standards of business practice within the insurance industry, and that such misrepresentations were material and substantial in nature. Said representations were incorporated into the terms of said policy and became a part thereof. * * * that (Aetna) would not have issued said policy for the stated premium if the true facts as to use of the pickup truck had been made known to (Aetna).'

Plaintiff called upon the court to make and file findings of fact and conclusions of law. This was done, and the findings and conclusions and a complete statement of facts were brought forward in the record.

In summary, the court's conclusions that Harrington was not afforded liability coverage under the provisions of the renewal policy at the time of his collision with Hackett are based upon findings (1) that his Principal use of the insured pickup during the policy period was for business purposes; and (2) that Aetna issued the renewal policy in reasonable reliance upon the statement made by Harrington in his application for the original policy that the pickup 'is not used for business,' which was a 'material misrepresentation of fact'; and Aetna would not have issued the second policy 'at the stated premium' therein if it had known of the misrepresentation at the time of the renewal.

Plaintiff questions the trial court's actions in eighteen points of error, contending:

(1) Inasmuch as the uncontradicted evidence shows, and the court found, that at the time of the accident Harrington was using the pickup to go home from work for lunch and not for business purposes, the court erred in holding that policy coverage was not provided at the time of the accident.

(2) Inasmuch as the undisputed evidence shows, and the court found, that Harrington did not make an application for the policy sued upon, the court erred in holding that coverage was not provided by the policy at the time of the accident.

(3) The judgment is erroneous because it is not supported by the findings of fact and conclusions of law.

(4) The court erred in holding that the policy did not provide coverage for the accident.

(5) The court erred in holding that Aetna was under no duty to defend Hackett's suit.

(6) The court erred in holding that the statement of intended use of the pickup made in the application for the 'earlier, expired contract of insurance, if false, would void coverage' on the renewal policy.

(7) The court erred in admitting the application into evidence over plaintiff's objection because it was 'an application for a previous policy covering an earlier period of time.'

(8) The court erred in admitting the application into evidence because there was no pleading by Aetna that a misrepresentation had occurred in the application for the first policy.

(9) The judgment is erroneous because there is no pleading by Aetna that plaintiff made a misrepresentation in the application for the first policy and that Aetna relied upon a misrepresentation contained in the application for the first policy in issuing the policy sued upon.

(10) The judgment is erroneous because there is no pleading that Harrington owed a duty to inform Aetna 'when he started to use the pickup for business purposes and breached that duty.'

(11) ...