Johnson v. Nationwide Mutual Insurance Company

• Decision Date: 21 March 1960
• Docket Number: No. 8019.,8019.
• Citation: 276 F.2d 574
• Parties: James T. JOHNSON, Sr., Administrator of the Estate of James T. Johnson, Jr., deceased, et al., Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

276 F.2d 574 (1960)

James T. JOHNSON, Sr., Administrator of the Estate of James T. Johnson, Jr., deceased, et al., Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee.

No. 8019.

United States Court of Appeals Fourth Circuit.

Argued January 19, 1960.

Decided March 21, 1960.

Paul Whitehead and J. Frank Shepherd, Lynchburg, Va., for appellants.

William W. Sweeney, Lynchburg, Va. (Caskie, Frost, Davidson & Watts, Lynchburg, Va., on brief), for appellee.

Before SOBELOFF, Chief Judge, and HAYNSWORTH and BOREMAN, Circuit Judges.

BOREMAN, Circuit Judge.

Nationwide Insurance Company instituted this declaratory judgment proceeding under 28 U.S.C.A. §§ 2201, 2202, in the United States District Court for the Western District of Virginia. Nationwide asked that the court determine whether or not there was coverage under a liability insurance policy issued by it to one Charles Wills at the time of the accident in which the insured vehicle was involved, resulting in death to three persons, including the insured, Charles Wills, who were occupants of the car, the four other occupants being seriously injured. Nationwide claimed that it had effectively canceled the policy before the accident. The appellants, who were the defendants below, included the four injured parties, the personal representatives of the persons killed and the father and mother of the insured.

Nationwide moved for summary judgment on the pleadings, depositions, exhibits and the record as a whole, which motion was granted. The court denied a similar motion made by the parties defendant. This appeal followed. The facts hereinafter stated appear to find ample support in the depositions, exhibits and record before the District Court.

Prior to February 20, 1958, Frank Wills, the father of Charles Wills, owned a 1950 Ford automobile which was insured by Nationwide. For all practical purposes, this automobile belonged to Charles Wills; he used it to travel to and from his work, and for his own personal pleasure in the evenings and on week ends; he paid most of the maintenance and upkeep and sometimes paid the insurance premiums.

The premium on the liability policy covering the Frank Wills 1950 Ford was due on July 12, 1957, but was not paid on the due date or within a seventeen-day grace period allowed by Nationwide and, by the terms of the cancellation notice, this policy expired. On August 10, 1957, Charles Wills went to Nationwide's agent, W. S. McConnell, and caused a new policy to be issued on the 1950 Ford in the name of Frank Wills, which policy was dated August 10, 1957, effective for six months or until February 10, 1958. Charles Wills paid the premium in advance and he was listed as the principal driver of the insured vehicle The policy was delivered to Charles but apparently he did not tell his father of the cancellation of the old policy or that a new policy had been issued with different effective dates.

On or about February 20, 1958, Charles Wills, who was then of legal age, purchased his own automobile, a 1951 Ford, and on February 22, 1958, went to agent McConnell to procure liability insurance coverage on the car. McConnell, thinking that the premium due on February 10, 1958, on the 1950 Ford had not been paid, began writing the policy application on a form intended for use in applying for a new policy rather than on a form intended for use when insurance was to be transferred from one vehicle to another. If the application is for a new policy, such policy will be effective from the date of issue but, in case of a transfer of insurance, the transferred policy is for the period stated in the policy.

McConnell wrote the application as effective February 22, 1958, for a term of six months but before he completed the application, Charles Wills informed him that he, Charles, had paid, within the grace period of seventeen days, the premium due on February 10, 1958, on the 1950 Ford at Nationwide's office in Lynchburg, Virginia. Realizing his mistake but having been informed that Charles was in haste, McConnell told Charles that the application would be voided, a transfer application would be prepared in order to transfer the insurance from the 1950 Ford to the 1951 Ford, and if there were any errors, the company would correct them. McConnell then prepared an application for transfer but neglected to change the policy period from February 22, 1958-August 22, 1958, to February 10, 1958-August 10, 1958. Under Nationwide's operating method, each policy holder becomes a company member but such membership can be transferred among members of the same family and, upon such transfer, payment of the prescribed membership fee is waived. Since this was a transfer, Charles was not charged the new membership fee of $6.00. The 1950 Ford, the vehicle insured under the earlier policy in the name of Frank Wills, has not been used or insured since February 1958.

When Nationwide discovered McConnell's error, it mailed to Charles Wills a check for $2.20 and it was stated on an attached rider that this amount represented an overpayment of premium on his policy. At or about the same time, Nationwide mailed to McConnell a form of endorsement which allegedly changed the effective date of the policy back to February 10, 1958, the endorsement intended for delivery to Charles Wills. Charles received and cashed the check for the returned portion of the premium but McConnell, through oversight or neglect, failed to deliver the endorsement to him. However, Nationwide's records were changed to show the period of coverage effective for a period of six months from February 10, 1958.

Pursuant to a provision in the insurance contract requiring it to mail to its policy holder a notice of premium due before expiration of the policy,¹ Nationwide, on July 20, 1958, mailed a notice to Charles Wills notifying him that his premium was due on August 10, 1958. Not having received payment, on August 15, 1958, Nationwide sent to Charles Wills, by registered mail, a past due premium notice which provided: "Because we haven't received your premium payment, due on the date shown above, we must cancel the policy numbered below. THE CANCELLATION WILL BECOME EFFECTIVE AT 12:01 A.M. ON THE 17TH DAY AFTER THE ABOVE DATE. If we receive the payment before that time, however, the cancellation will be withdrawn." The notice specified the amount due, the policy number, the make of car insured and the name of the insured. At the top of the notice there was a block space over which appeared the words, "DATE DUE", and in this space the date August 10, 1958, had been written. The "ABOVE DATE" referred to in the quoted language of the notice obviously referred to the "DATE DUE" shown as August 10, 1958. Both notices were found in the effects of Charles Wills after his death.

On August 30, 1958, Charles Wills was operating the insured vehicle when it collided with a stationary object, the accident resulting in the aforementioned deaths and injuries. Appellants contend that the policy of insurance held by Charles Wills was effective for a period of six months beginning February 22, 1958, and ending August 22, 1958, and that the grace period, within which the company would accept payment of premium and before cancellation, was seventeen days after August 22, 1958. Following the accident, within the seventeen-day period subsequent to August 22, 1958, and thereafter, the father of Charles Wills made repeated efforts to pay the premium on this policy but Nationwide refused to accept payment. The court held that the policy had been effectively canceled by Nationwide as of August 27, 1958, that being the seventeenth day after August 10, 1958.

The record contained depositions of agents of Nationwide who stated that the premium on this policy had not been paid. In pre-trial discovery depositions taken by Nationwide, various members of Charles Wills' family testified that Charles told them that he had paid the renewal premium on his automobile policy on or about August 22, 1958. Appellants contended that testimony concerning the alleged statements of Charles was admissible under the Virginia "Dead Man's Statute", Code of Virginia Title 8, § 8-286 (1950).² The District Court held that these declarations were hearsay, that they were not rendered admissible under the statute and further held, as a matter of law, that Charles Wills had not renewed his policy of insurance by timely payment of the renewal premium. We perceive no error in these rulings of the court.

The object of the "Dead Man's Statute" is stated in Ratliff v. Jewell, 1929, 153 Va. 315, 149 S.E. 409, 411, 67 A.L.R. 1541, to be twofold:

"* * * that is, to provide, first, that there shall be no judgment in favor of an adverse or interested party founded on his uncorroborated testimony, and, second, in case an adverse party testifies, then to admit as evidence the memoranda and declarations of the opposite party, incapable of testifying. * * *"

The court then defined an adverse party as "a party to the record, against whom or in whose favor a judgment is sought"; and an interested party as one who "has a pecuniary interest in the recovery, although not a party to the record".

The District Court was of the opinion that, since the only witnesses who testified that Charles Wills had not made payment of his renewal premium were merely agents of Nationwide, the depositions of members of the Wills' family were not rendered admissible by this statute to refute the testimony of the agents. As is stated in Robertson's Ex'r v. Atlantic Coast Realty Co., 1921, 129 Va. 494, 106 S.E. 521, 524:

"* * * The parties to this litigation are the Atlantic Coast Realty Company, on the one side, and Robertson\'s executor, on the other. Burke, the agent of the plaintiff, is not a party to the action, is not an officer of the plaintiff, and has no manner of pecuniary interest in the results of the litigation. * * * He is simply the plaintiff\'s agent, competent

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