Inland Mut. Ins. Co. v. Hightower

• Decision Date: 21 June 1962
• Docket Number: 6 Div. 411
• Citation: 274 Ala. 52,145 So.2d 422
• Parties: INLAND MUTUAL INSURANCE COMPANY v. J. M. HIGHTOWER, Jr., et al.
• Court: Alabama Supreme Court

Page 422

145 So.2d 422

274 Ala. 52

INLAND MUTUAL INSURANCE COMPANY v. J. M. HIGHTOWER, Jr., et al.

6 Div. 411.

Supreme Court of Alabama.

June 21, 1962.

Rehearing Granted Oct. 4, 1962.

Wiggins & Wiggins, Jasper, Young & Young, Vernon, Rushton, Stakely & Johnston, Montgomery, for appellant.

Fite & Fite, Hamilton, Tweedy & Beech, Jasper, for appellees.

COLEMAN, Justice.

This is an appeal by an insurer from a declaratory decree whereby the insurer was held liable, under an automobile liability policy, to defend and protect its insured against the claims of a third party who had been injured in a motor vehicle accident.

This suit for declaratory relief was commenced by the insured against the insurer and the injured third party as respondents. The appellant is the insurer. The appellees are the insured and the injured party.

The insured owned a tractor which was towing a trailer, also owned by insured, at the time of collision. Tractor and trailer were then being operated by insured's employee who was acting within the line and scope of his employment. The tractor collided with an automobile then being operated by the injured third party, who will sometimes be referred to as the plaintiff.

By the policy, insurer agreed, 'subject to the limits of liability, exclusions, conditions and other terms of this policy:' under Coverage A, to pay on behalf of insured all sums the insured shall become obligated to pay as damages for bodily injury; and, under Coverage B, to pay such sums for injury to property; caused by accident and arising out of use of the automobile described in the policy.

The automobile is described as follows:

                                                                              Serial
                "Year Model Trade Name       Body Type;      Motor Number     Number
                                             Truck Size
                                             Tank Gallonage
                                             Capacity; or
                                             Bus Seating
                                             Capacity
                "1. 1955 International 190   Tractor         M-4304-70335
                "2. 1954 Dorsey Tandem       Trailer                       SC-18-S26078"
                

The policy contains the following endorsements:

"EXCLUSIONS

"This policy does not apply:

* * *

* * *

'(c) under coverages A and B, while the automobile is used for the towing of any trailer owned or hired by the insured and not covered by like insurance in the company; or while any trailer covered by this policy is used with any automobile owned or hired by the insured and not covered by like insurance in the company;

* * *

* * *

'EXCLUSIONS

'Paragraph (c): It is agreed that this paragraph is amended as follows, under coverages A and B, while the automobile is used for the towing of any trailer or any other vehicle and not covered by like insurance in the company; or while any trailer covered by this policy is used with any automobile and not covered by like insurance in the company.'

The insured 'had six trailers.' He owned an additional Dorsey trailer like the one described in the policy. The insurer contends that the trailer, which was being towed by the tractor at the time of the collision, was not the trailer described in the policy, was 'not covered by like insurance in the company,' and, therefore, that the insurer is not liable. The insurer says the court erred in holding to the contrary.

The tractor in the collision was the tractor described in the policy.

The evidence, as it seems to us, requires a finding that the trailer being towed was not the trailer described in the policy. Insurer, apparently, had issued no other policy to this insured. The insured testified that at the time of the accident he did not know which trailer was involved, but, on cross-examination, he testified as follows:

'Q. I am asking you if the trailer that was being towed by the tractor involved in the accident, was that the same trailer which is covered by this insurance policy?

'A No, sir.'

The record indicates that the trial court regarded the testimony as showing that the uninsured, and not the insured trailer, was in the accident. The record shows the following colloquy:

'THE COURT: The way I heard the evidence there is no dispute about the fact that the trailer insured by the policy wasn't attached to the tractor mentioned in the policy at the time of the accident.

'MR. YOUNG: There was no dispute about that.

'MR. FITE: Yes, there was a dispute about it.

'THE COURT: That is the way I heard the evidence.'

It is obvious that if the trailer in the accident were a trailer insured by appellant, the appellant (insurer) could not avoid liability under the uninsured trailer exclusion and that would be the end of this opinion. As we have indicated, however, we do not think that the evidence will support a finding that the trailer in the accident was insured by appellant, and we proceed, as we think the trial court proceeded, on the premise that the trailer, which the insured tractor was towing at the time of the accident, was not a trailer covered by like insurance in the appellant company.

The appellees, however, contend that the insurer cannot avoid liability under the uninsured trailer exclusion because the insurer has waived, or is estopped to assert, that provision of the policy as a defense.

Waiver.

The insurer insists that the uninsured trailer exclusion 'is a valid limitation on coverage--not a forfeiture provision--which cannot be nullified by waiver or estoppel.'

We agree that said exclusion cannot be nullified by implied waiver. We think there is a distinction between implied waiver and estoppel.

'* * * Though a waiver may be in the nature of an estoppel, and maintained on similar principles, they are not convertible terms. * * * A waiver may be created by acts, conduct, or declarations insufficient to create a technical estoppel. * * *' Queen Insurance Co. v. Young, 86 Ala. 424, 430, 5 So. 116, 118. '* * * Waiver involves the acts and conduct of only one of the parties; estoppel involves the conduct of both. * * *' Sovereign Camp, Woodmen of the World v. Newsom, 142 Ark. 132, 219 S.W. 759, 14 A.L.R. 903, 919.

The distinction between waiver and estoppel is to be observed in the instant case. This distinction appears in Belt Automobile Indemnity Ass'n v. Ensley Transfer & Supply Co., 211 Ala. 84, 99 So. 787, in an action on an automobile liability policy. The insurer sought to defend on a plea that the liability imposed on and discharged by the insured, for which insured sought to recover from insurer, was a liability 'expressly excluded from the indemnity obligation of the policy.' This court said:

'It is settled by the decisions of this court that a liability not covered by an indemnity insurance policy will not be ingrafted on the policy by the mere act of the insurer in assuming control of the litigation and conducting the defense when the beneficiary is sued upon such a liability. (Citations Omitted.) In such a case there is no field for the application of any doctrine of waiver or election, for original, primary obligations are not created in that way. (Citations Omitted.)' (211 Ala. 84, 87, 99 So. 787, 790)

This court held, however, that the allegations of insured's replication were a sufficient answer to the plea setting up the policy exclusion. The court said:

'It is clear, therefore, that plaintiff's replications to defendant's special plea 3 must be grounded upon an estoppel the essential constituents of which must be alleged. We think the replications do show the elements of a complete estoppel: (1) A position of authority assumed by defendant under color of right; (2) submission to and reliance upon that assumption, by plaintiff; and (3) injury suffered by plaintiff as a proximate consequence of such submission and reliance. That such an estoppel is sufficient, and is a valid answer to such a defense has been affirmed by a number of well-considered decisions. * * *' (211 Ala. 84, 87, 88, 99 So. 787, 790)

We agree with appellant that the uninsured trailer exclusion of the instant policy is a provision which is not subject to implied waiver by the insurer, as distinguished from estoppel. A liability of the insured occurring while the tractor was towing an uninsured trailer was not within the coverage of the policy. The language of the policy says that it '* * * does not apply * * * (c) under converages A and B, while the automobile is used for the towing * * * ' of an uninsured trailer. We are of opinion that insured's right to succeed in the case at bar cannot rest on the doctrine of implied waiver. There is no express waiver.

Estoppel.

Insurer insists that even if the uninsured trailer exclusion be '* * * subject to being nullfied by waiver, there would be no liability for there can be no such thing as a waiver of a ground of forfeiture by an insurance company until it knows that such ground exists or until it is in possession of facts which, if pursued, would result in knowledge of the forfeiture.' This proposition has been stated with approval in Southern States Fire Ins. Co. of Birmingham v. Kronenberg, 199 Ala. 164, 74 So. 63, at paragraph [8, 9].

We have already said that the uninsured trailer exclusion was not subject to nullification by implied waiver.

We think, however, that the same rule, with respect to the knowledge of the insurer, which applies to waiver applies also to estoppel in the instant case; that is to say, the insurer, by doing an act which is relied on by the insured to his prejudice, does not estop itself, the insurer, from asserting the uninsured trailer exclusion as a defense, if at the time of doing the act the insurer does not know that an uninsured trailer was being towed and does not have knowledge of facts which, if pursued, would result in knowledge that the trailer being towed was an uninsured trailer.

Conversely, if the insurer did an act which was relied on by the insured to his prejudice and at the time of doing the act the insurer did know that an...