Kieran v. Commercial Union Ins. Co. of New York

• Decision Date: 15 January 1973
• Docket Number: No. 5175,5175
• Citation: 271 So.2d 889
• Parties: Joan Morel KIERAN, wife of/and John J. Kieran, Jr. v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK et al.
• Court: Court of Appeal of Louisiana — District of US

Page 889

271 So.2d 889

Joan Morel KIERAN, wife of/and John J. Kieran, Jr. v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK et al.

No. 5175.

Court of Appeal of Louisiana, Fourth Circuit.

Jan. 15, 1973.

Sidney W. Provensal, Jr., New Orleans, for third party plaintiff and appellant, James Wellington Hughes.

Lemle, Kelleher, Kohlmeyer, Matthews & Schumacher, H. Martin Hunley, Jr., and William S. Penick, New Orleans, for third party defendant and appellee, Gillis, Hulse & Colcock.

Before SAMUEL, CHASEZ and STOULIG, JJ.

SAMUEL, Judge.

This matter involves a third party demand by James Wellington Hughes, d/b/a Pel Hughes Letter Service, against Gillis, Hulse & Colcock, Inc., an insurance agency, by which Hughes seeks to recover $20,000, the difference between the actual amount of automobile public liability insurance obtained for him by the third party defendant and the sum of $25,000 claimed by him to be the amount of coverage which that defendant allegedly negligently led him to believe he had.

The original suit was for serious personal injuries incurred by Mrs. Joan Kieran on February 1, 1968 when she was struck by a station wagon driven in the course and scope of his employment by an 18 year old employee of Pel Hughes Letter Service. Prior to trial of the main demand the original plaintiffs accepted a $115,000 compromise and dismissed their suit, reserving to Hughes the right to proceed on his third party demand. After trial there was judgment dismissing the third party demand. Hughes has appealed.

The basic facts are undisputed. The Hughes family consisted of Mr . Hughes, a full-time railroad employee, his wife, Mrs. Alice Hughes, who actively managed the family business, a son Victor, under 25 years of age, an older son and a daughter. Mrs. June Cassard handled the Hughes insurance account for the defendant agency. The account consisted of a family automobile policy on two cars and a fire insurance policy on family real estate. Business insurance for the Letter Service was handled by another agency. The accident occurred while a male, other than Victor Hughes, under 25 years of age and employed in the business, was driving one of the cars covered by the family liability policy.

For many years the automobile insurance had been placed with Travelers because Mr. Eddie Cambre, a close friend of the Hughes family, was assistant claims manager. On December 2, 1966 Mrs. Cassard wrote to Mrs. Hughes informing her Travelers required a renewal application for the automobile policy which would expire on January 5, 1967. Receiving no answer, Mrs. Cassard phoned January 17, 1967 and mailed another application to Mrs. Hughes who apparently had lost or misplaced the original. When returned, the application stated Victor Hughes, the under 25 year old son, drove one of the insured automobiles approximately 60% Of the time. Because Victor had a history of traffic accidents and citations, the Travelers underwriter imposed a lower liability limit of $5,000 per person, $10,000 per accident on the policy. Knowing of Cambre's friendship with the Hughes, Mrs. Cassard informed him of that action and asked his advice. He returned her letter with the notation 'June, you give them the news.'

Mrs. Cassard wrote to Mrs. Hughes informing her of Travelers position and stating excess insurance was available if they desired the same. Prior to the issuance of the renewal, Cambre wrote to the Travelers' underwriter requesting that if the $5,000 restriction was necessary it would apply only to Victor Hughes 'and not other members of the household.'

Subsequently Mrs. Cassard obtained the policy and sent it to Mrs. Hughes on May 30, 1967 with a transmittal letter which forms the primary basis of Hughes' claim. In pertinent part, the letter reads:

'. . . on the face of the policy the coverage shows $5/10,000 Bodily Injury . . .. This applies only while your son is driving, as the higher limits of $25/50,000 . . . apply when you, Mr. Hughes or your daughter is driving. . . .

'As you remember, Travelers wanted to restrict the limits to $5/10,000 and $5,000 on the car your son drives and they offered to write the excess limits. After Eddie spoke to them they came back with this which is better, of course.'

The family automobile policy accompanying the letter afforded $5/$10,000 bodily injury liability coverage on two automobiles with a Special Increase Limits Endorsement providing liability limits of $25,000 for each person and $50,000 for each occurrence 'except with respect to occurrences which take place while the automobile is being operated by a male person under 25 years of age'.

The Hughes family kept the policy in their possession without complaint during the remainder of 1967. When the expiration date arrived on January 5, 1968 Mrs. Cassard obtained a policy with identical terms from Commercial Union...