Lane v. Travelers Indem. Co.
| Decision Date | 17 April 1973 |
| Citation | 66 A.L.R.3d 740,499 S.W.2d 643 |
| Parties | Robert LANE, Jr., and Wife, Gloria K. Lane v. THE TRAVELERS INDEMNITY COMPANY. |
| Court | Tennessee Court of Appeals |
Frantz, McConnell & Seymour, Knoxville, for appellant, The Travelers Indemnity Co.
Dexter A. Christenberry, Knoxville, for appellees, Robert Lane, Jr., and wife, Gloria K. Lane.
W. Conway Garlington, Knoxville, for appellees, Evelyn J. Carter and Charles W. Carter.
This is an appeal from a decree of the Chancery Court of Knox County, Tennessee, wherein that Court held defendant, The Travelers Indemnity Company, liable under an automobile liability insurance policy which it issued to complainant, Robert Lane, Jr., for the satisfaction of judgments previously obtained against Lane and his wife, Gloria K. Lane, By Evelyn Carter and Charles W. Carter in the Circuit Court of Knox County.
The automobile accident, on which the Carter judgments were predicated, occurred on May 17, 1970. Mrs. Lane, driving her husband's automobile struck and injured the Carters, who were pedestrians. The accident and subsequent circuit court suits were reported to Travelers, who denied coverage and declined to defend the suits. Evelyn Carter secured a judgment against the Lanes in the amount of $20,000.00 as damages. Charles W. Carter was awarded a judgment of $500.00 as damages.
Robert Lane, Jr., and wife, Gloria K. Lane, then brought the present suit in the Chancery Court of Knox County seeking a declaration that The Travelers Indemnity Company was under a contractual obligation to pay the circuit court judgments secured by the Carters, and to pay expenses incurred by the Lanes in defending the Carter suits.
Travelers, in its answer, admitted it had issued an automobile liability insurance policy to Mr. Lane covering the period of time in which the Lane-Carter accident occurred but contended the policy had been effectively cancelled prior to the accident on which the Carter judgments were based. Subsequently, Travelers amended its answer to charge that Lane had made fraudulent and material misrepresentations in his application for insurance and sought to have the Chancellor declare the policy issued Lane to be void Ab initio.
On trial, which was by oral testimony, the Chancellor found that Travelers had cancelled the policy of insurance issued Lane, but, by subsequent acts, had led Mr. Lane to believe the cancellation was in error and that the policy had been reinstated. The Chancellor also found that Lane had made misrepresentations in applying for insurance with Travelers, but that the misrepresentations were not made 'with intent to deceive' and did not materially increase the risk of loss.
Based on these findings, the Chancellor concluded the policy of insurance issued by Travelers to Lane was in force on the day of the Lane-Carter accident; that Travelers was liable for payment of the judgments secured by the Carters and was liable for payment of reasonable expenses incurred by the Lanes in defending the Circuit Court suits and in prosecuting the present suit. Accordingly, the Chancellor entered a decree awarding Evelyn Carter a judgment against Travelers in the amount of $19,866.00 (the amount of the circuit court judgment less the premium due Travelers), and Charles Carter a judgment of $500.00. Travelers also was ordered to pay a fee of $2,000.00 to counsel for the Lanes.
Travelers appealed insisting the Chancellor erred: (1) in holding the policy of insurance issued Lane was reinstated after cancellation and was in force at the time of the Lane-Carter accident; and (2) in holding the misrepresentations made by Lane in securing the policy of insurance were not made with intent to deceive and did not materially increase the risk of loss.
The evidence shows that Phoenix of Hartford refused to renew the automobile liability insurance policy it had issued Robert Lane. Within the month, on March 3, 1970, Lane made application for automobile liability insurance coverage with Travelers, through the Ron Jenkins Agency. The application showed that Lane had insurance coverage against physical damage with Phoenix of Hartford. The application form also called upon Lane to answer the following questions:
Lane answered both questions 'NO.'
Based on these answers and other information set out in the application form, an automobile liability insurance policy was issued by Travelers to Lane covering the period of March 3, 1970, to June 3, 1970.
Travelers instituted a routine investigation of Mr. Lane through the Retail Credit Company. The report by the Retail Credit Company revealed that Lane had had an automobile accident within the three year period preceding his application for insurance with Travelers, and had had several citations for traffic violations, two being within the three year period preceding the application for insurance. The report also showed that Lane had been fined for shoplifting in 1962, and had been held for investigation of other criminal offenses.
On receipt of the report, Travelers had its agent, Ron Jenkins, write and ask Lane to surrender the policy issued him. When Lane did not do so, Travelers sent Lane a notice, dated April 15, 1970, that his insurance coverage was cancelled effective April 27, 1970.
On being apprised that Travelers was cancelling the policy of insurance it had issued him, Mr. Lane made inquiry of Mr. Curtis Hyatt concerning insurance coverage, and was referred by Mr. Hyatt to the P & L Insurance Agency. Incidentally, Mr. Hyatt was the agent that referred Lane to Travelers when Phoenix refused to renew Lane's automobile liability insurance policy.
Mr. Hyatt testified 'he advised Lane that if he could not get insurance there, he (Mr. Hyatt) could get him insurance through the Assigned Risk Plan.'
Mr. Lane testified he did not follow through on Mr. Hyatt's recommendation immediately, but 'was trying to wait until (I) got the money.'
Traveler's field office waited until May 7, 1970, to send notice of the Lane policy cancellation to the home office computer. By that time, Travelers, by computer, had sent Mr. Lane a 'Continuation Declaration' which extended coverage for the three month period of June 3, 1970, to September 3, 1970. The 'Continuation Declaration' contained a notice of premium due both for the extended period and the original policy period of March 3, 1970, to June 3, 1970.
Lane testified his reaction to the receipt of the 'Continuation Declaration' was:
'Well, I was happy, you know. I said,
On May 17, 1970, several days after the receipt of the 'Continuation Declaration', Mrs. Lane was involved in the accident in which the Carters were injured. Mr. Lane reported the accident to a representative of Travelers the following day, who, on checking with the agent Jenkins, informed Mr. Lane that his insurance had been cancelled and that he had no coverage against liability flowing from the May 17th accident.
That day, on advice of counsel, Mr. Lane went to the Jenkins Agency and tendered the premium called for in the 'Continuation Declaration.' Mr. Jenkins refused to accept the premium, but did accept $16.00, which represented the premium earned to the date of cancellation of the policy.
Subsequently, and after the present suit was filed by the Lanes, Travelers took the discovery...
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