Maggio v. State Farm Mut. Auto. Ins. Co.

• Court: Court of Appeal of Louisiana
• Writing for the Court: TATE
• Citation: Maggio v. State Farm Mut. Auto. Ins. Co., 123 So.2d 901 (La. App. 1960)
• Decision Date: 06 October 1960
• Docket Number: No. 4999,4999
• Parties: Mrs. Francis Turner MAGGIO, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

Page 901

123 So.2d 901

Mrs. Francis Turner MAGGIO, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

No. 4999.

Court of Appeal of Louisiana, First Circuit.

Oct. 6, 1960.

Rehearing Denied Nov. 15, 1960.

Certiorari Denied Jan. 9, 1961.

Porteous & Johnson, New Orleans, for appellant.

Jos. A. Gladney, Baton Rouge, for appellee.

Before ELLIS, LOTTINGER and TATE, JJ.

TATE, Judge.

This is a personal injury suit which, when before us upon exceptions, we remanded for trial on the merits. 102 So.2d 505. After trial the plaintiff was awarded damages in the amount of $26,814.10, and the defendant insurer appeals. The original plaintiff died following rendition of the judgment below and her legal heirs were substituted in her place by motion and order in this court. The substituted plaintiffs, the mother, brothers and sisters of the original plaintiff, have answered the appeal and seek an increase in the amount awarded.

The evidence shows that the original plaintiff, Mrs. Maggio, was a guest passenger in a 1951 Ford sedan driven by Mrs. Florence Gill, which was on November 20, 1952 involved in a serious accident. The defendant insurer had issued on October 30, 1952 a renewal of a policy covering operation of the automobile for a period of six months. The named insured in the policy was the McGehee Brothers Furniture Company, the employer of Mrs. Gill's husband.

The three principal questions raised by the present appeal are: 1) Was the policy coverage in effect at the time of the accident?; 2) Was Mrs. Gill's negligence a proximate cause of the accident in question?; and 3) Were the damages awarded either excessive or inadequate?

I.

The insurer's denial of coverage is based upon the circumstance that the named insured, McGehee Brothers, had formally transferred title to the vehicle to Mrs. Gill's husband on October 24, 1952, six days before the renewal of the policy for the term in effect at the time of the accident. Therefore it is alleged that at the time of the accident coverage of the vehicle had been terminated by its sale.

The plaintiffs contend that coverage is afforded the operation of the car by Mrs. Gill with the consent of her husband (a) because he was to the knowledge of the insurer's agent in fact the owner of the car even at the inception of the coverage as well as at its renewal, and (b) because it was the intention of the insured and the insurer, whose agent knowingly accepted premiums in part paid by Gill, that Mr. Gill be a co-insured.

L. C. Gill was a salesman employed by the McGehee Brothers Furniture Company. This firm required its employees to carry liability insurance on their personal cars for the limits of $50,000 per person and $100,000 per accident; with the consent of the employees, it took out such insurance for them from State Farm, listing both the employer and the salesman as joint named insureds. The premiums for coverage of the first $10,000/20,000 were deducted by the employer from the employees' salaries and were paid directly by the former to State Farm, together with the remainder of the premium (attributable to the coverage in excess of that amount), which was paid by the employer.

When Gill needed a new car in 1951, McGehee Brothers purchased it for him, and McGehee Brothers and Gill executed on April 27, 1951 an agreement under which title was to remain in the employer until Gill had finished paying for the car through monthly installments deducted from his salary and commissions. On October 24, 1952, title was formally transferred by McGehee Brothers to Gill.

When the automobile was purchased, insurance was taken out with State Farm listing McGehee Brothers as the named insured. As in the case of the other employees, the premiums for coverage up to $10,000/20,000 were paid by Gill through deductions from his earnings both when the policy was originally purchased and every six months when the policy was renewed. On October 30, 1952, six days After the formal transfer of title to Gill, the policy was again renewed, although the only named insured was still shown as 'McGehee Brothers'.

Gill testified that he relied upon his employer, who deducted the premiums from his pay, to secure liability insurance coverage fully protecting operation of the car by himself or his wife at all times.

Gill's employers testified that it was their intention that Gill's car be fully and completely insured by State Farm when it was used by Gill or members of his family, and that the agreement between the employer-partnership and State Farm's agent by virtue of which State Farm received the firm's entire insurance business was that State Farm was to keep the entire fleet of automobiles owned or used by the partnership's salesmen fully insured at all times. Tr. 20, 48--9. Gill's employers further stated that State Farm's agent was fully informed of the circumstances surrounding Gill's acquisition of an interest in the insured automobile. Tr. 53.

State Farm's agent denied that there was any intention that Gill be listed as a co-insured, although he readily stated that if so requested he would have so listed him. The agent further testified that he knew that the automobile in question was purchased for Gill and that Gill was going to buy the car from the partnership. State Farm's agent further stated that he was specifically instructed by Gill's employers not to list Gill as a named insured.

We find no manifest error in the resolution by the jury, the trier of fact, of any conflict between the credibility of State Farm's agent and Gill's employers in favor of the testimony of the latter, nor in its finding that under the circumstances reflected by the evidence the intention of the parties to the insurance contract and of Gill was that the policy be issued to protect Gill as a co-insured as well as McGehee Brothers, his employer, which was the only named insured actually listed.

It is to be borne in mind that without contradiction the evidence reflects that, even with McGehee Brothers listed as the only named insured, the intention of the insurer and of all parties was to afford coverage at all times to Gill and to anyone driving the insured vehicle with his consent, whether in the course of his business duties or for family or other pleasures. The formal transfer of title admittedly did not increase any risk that the insurer had assumed by the issuance of the policy. The formal transfer of title to Gill upon the completion of Gill's payment of the installments under the conditional sale agreement did not change the actual ownership of the automobile, which from the inception of the insurance coverage had been owned by Gill, even though for financing purposes only the technical title had been retained by the employer as conditional vendor. ¹

Under the jury's evaluation of credibility, the insurer's agent had full knowledge of Gill's equitable ownership of the car even at the inception of the coverage and of Gill's contribution to payment of insurance premiums, and he also had knowledge that formal title was to be conveyed to Gill upon completion of his payment of the purchase price. Following the formal transfer of title to Gill, the defendant insurer nevertheless accepted renewal premiums continuing coverage of the vehicle by the policy.

The insurer is therefore bound by the knowledge of the true intention of the parties that the insurance policy was issued for the protection also of Gill as an additional named insured. Boyd v. American Fire & Cas. Co., La.App. 2 Cir., 50 So.2d 688; Pacific Finance Co. v. Granite State Fire Ins. Co., La.App. 2 Cir., 45 So.2d 378; Monroe Air Park No. 1 v. American Aviation, etc. Ins. Co., La.App. 2 Cir., 41 So.2d 795. For if an insurance policy within the actual intention of the parties is issued for the protection of another than the named insured, the insurer may be held to have afforded such protection by the policy, or to be estopped to deny it; and the policy may be equitably reformed to show the true intention of the parties in this regard. Christo v. Eagle Star Ins. Co., 232 La. 28, 93 So.2d 682; Randazzo v. Insurance Co., etc., 196 La. 822, 200 So. 267; Dutton v. Harmonia Ins. Co., 191 La. 72, 184 So. 546; Pope-Gammill Lumber Co. v. Zurich Gen. Acc. & Liab. Ins. Co., 168 La. 422, 122 So. 278; Churchman v. Ingram, La.App. 2 Cir., 56 So.2d 297; Crowell v. New Hampshire Fire Ins. Co., La.App. 2 Cir., 147 So. 762.

It is also argued that nowhere does the policy provide that coverage shall be ipso facto terminated upon the sale of the...