Leigh Winham, Inc. v. Reynolds Ins. Agency, 82-305

• Decision Date: 31 May 1983
• Docket Number: No. 82-305,82-305
• Parties: LEIGH WINHAM, INC. and Leigh Winham, Individually, Appellants, v. REYNOLDS INSURANCE AGENCY et al., Appellees.
• Court: Arkansas Supreme Court

Page 74

651 S.W.2d 74

279 Ark. 317

LEIGH WINHAM, INC. and Leigh Winham, Individually, Appellants, v. REYNOLDS INSURANCE AGENCY et al., Appellees.

No. 82-305.

Supreme Court of Arkansas.

May 31, 1983.

Friday, Eldredge & Clark by Michael G. Thompson and Timothy C. Dudley, Little Rock, for appellants.

Davidson, Horne, Hollingsworth, Arnold & Grobmyer, Little Rock by Allan W. Horne and Virginia R. Williams, Rule XII Law Student, for Reynolds Ins. Agency.

Laser, Sharp & Huckabay, P.A., Little Rock, for Nat. American Ins. Co. of New York.

DUDLEY, Justice.

Appellants, Leigh Winham, Inc., an interstate trucking company, and Leigh Winham, individually, filed suit alleging that appellees, Reynolds Insurance Agency, Inc. and National American Insurance Company of New York, wrongfully denied insurance coverage and refused to pay a valid claim. Appellants in the alternative pleaded that appellee Reynolds Insurance Agency negligently failed to acquire the insurance. The trial court granted summary judgment in favor of both appellees. We affirm. Jurisdiction is in this Court pursuant to Rule 29(1)(o ).

A summary judgment is granted if there is no genuine issue as to any material fact that would preclude judgment in favor of the moving party as a matter of law. ARCP Rule 56(c). A summary judgment is an extreme remedy; consequently, any proof submitted with the motion must be viewed most favorably to the party resisting the motion and any doubts and inferences must be resolved against the moving party. Talley v. MFA Mutual Ins. Co., 273 Ark. 269, 620 S.W.2d 260 (1981).

The facts, construed against the movants for summary judgment, are as follows. Appellant Leigh Winham, a California resident, and appellant Leigh Winham, Inc., a California corporation, leased six trucking units to B.J. McAdams, Inc., an interstate hauler with offices in North Little Rock. An employee of McAdams suggested that appellants purchase their insurance through appellee Reynolds, a Little Rock agency. In late December of 1978, appellant Leigh Winham contacted John Reynolds, the principal of appellee Reynolds Agency, by telephone. The two did not know each other and had had no prior business dealings. Winham inquired about insurance, and Reynolds stated that he would calculate the premium and call him back. On January 2, 1979, Winham again contacted Reynolds and, according to Winham, Reynolds told him the total amount of the full year's premium, the extent of coverage, and the cost of the first installment on the premium. Winham stated that he informed Reynolds that he had to have coverage immediately and Reynolds told him that the insurance coverage would "be bound effective the day of the postmark." Winham mailed a check drawn on the corporate account to Reynolds on January 3, 1979. Upon receiving the check Reynolds had his bank contact the payor bank and, in so doing, discovered that appellant had insufficient funds in its account to clear the check. Reynolds then deposited the check in his own bank. On January 16 Winham was given notice by his bank that his corporation's check would not clear. On January 20 Winham learned that one of his trucks had been involved in an accident. He called Reynolds to inform him of the claim and to tell him the check would be returned for insufficient funds. Winham asked Reynolds to redeposit the check. Reynolds was hesitant and Winham wired him the money which Reynolds refused to accept. Winham again phoned and stated that, "[Reynolds] told me that he was going to have to check with the insurance company to see when they wanted the insurance, when they wanted it dated, the date of the policy. And I said, You mean you haven't bound my coverage? And he said well, he's got to check with them to see when they want the date of the policy dated. And then in the course of that week he also asked me, he said something about he was going to have to get a signed application, would I allow [an employee of McAdams] to sign the application for me."

In late January, 1979, Winham was informed that the claim was denied. In May 1979, Winham settled the claim against the tortfeasor who caused the accident.

The appellees moved for summary judgment on two grounds: (1) no insurance coverage was ever in force since appellants' check was dishonored; and (2) even if insurance was in force, the release admittedly given by appellants in settling their claim was a breach of the subrogation clause of the policy.

Appellants first contend that prepayment of the premium is not a condition precedent to coverage. However, our general rule is that "payment of the premium is ordinarily a condition necessary to the operation of a policy of insurance, and usually a provision to that effect is made in the policy." Home Fire Ins. Co. of Okla. v. Stancell, 94 Ark. 578, 127 S.W. 966 (1910). Of course, we have exceptions to our general rule. For example, we recognize that effective oral binders are often issued prior to payment of the premium. See Ark.Stat.Ann. § 66-3219 (Repl.1980); Home Ins. Co. v. Moyers, 252 Ark. 51, 477 S.W.2d 193 (1972). Also, policies are often sold on credit. King v. Cox, 63 Ark. 204, 37 S.W. 877 (1896); Mann v. Charter Oak Fire Ins. Co., 196 F.Supp. 604, 609 (E.D.Ark.1961).

The trial judge, after viewing the facts most favorably to the appellants found that there was no dispute of a material fact and that all of the material facts were in favor of appellees' contention that Reynolds, the insurance agent, did not waive the ordinary condition precedent of payment of the premium by stating that "the insurance would be effective the day of the postmark," and then accepting the check.

The appellants contend that, even though the fact of Reynolds' statement and acceptance of the check is undisputed, reasonable men may reach different conclusions from those facts and so summary judgment was not proper. Summary judgment should be denied if under the evidence reasonable men might reach different conclusions from undisputed facts. Runyon v. Reid, 510 P.2d 943 (Okl.1973); Lang v. Cruz, 74 N.M. 473, 394 P.2d 988 (1964). However, here reasonable men could not reach different conclusions.

Reynold's statement establishes that there was no intention to extend credit to appellant Winham, an unfamiliar person. Had an intent to extend credit existed, Reynolds would have put a binder for insurance in effect immediately after the telephone conversation rather than when the check was mailed. See Home Ins. Co. v. Moyers, 252 Ark. 51, 477 S.W.2d 193 (1972). Therefore, it was not error for the trial court to grant summary judgment on the basis that prepayment of the premium was a condition precedent to coverage.

Appellants next contend that even if prepayment of the premium was a...