McDuffie v. Criterion Cas. Co.

• Court: Georgia Court of Appeals
• Writing for the Court: BIRDSONG
• Citation: McDuffie v. Criterion Cas. Co., 449 S.E.2d 133, 214 Ga.App. 818 (Ga. App. 1994)
• Decision Date: 26 September 1994
• Docket Number: No. A94A1423,A94A1423
• Parties: McDUFFIE et al. v. CRITERION CASUALTY COMPANY.

Page 133

449 S.E.2d 133

214 Ga.App. 818

McDUFFIE et al. v. CRITERION CASUALTY COMPANY.

No. A94A1423.

Court of Appeals of Georgia.

Sept. 26, 1994.

Reconsideration Denied Oct. 11, 1994.

Certiorari Denied Feb. 9, 1995.

Sorenson & Haskell, George O. Haskell III, Macon, for appellants.

Chambless, Higdon & Carson, Joseph H. Chambless, Emmitte H. Griggs, Jon C. Wolfe, Macon, for appellee.

BIRDSONG, Presiding Judge.

James B. McDuffie et al. appeal from the order of the superior court granting summary judgment to appellee Criterion Casualty Company (Criterion) in a declaratory judgment suit.

Defendant Juanita Price applied for an insurance contract with appellee Criterion and was issued an insurance binder, dated December 31, 1991. Price tendered a check, equivalent to the first policy premium installment as part of the transaction, and also contemporaneously signed and dated an insurance application. This application pertinently provided "checks, drafts, and money orders are accepted subject to collection only," and Price subsequently agreed therein that "if my premium remittance is not honored by the bank, no coverage will exist." However, a certificate of insurance binder was issued to Price bearing the typed notation "HELD COVERED AS OF 12-31-91 11:35 a.m." This same certificate provides that the effective date of the binder is January 1, 1992, as of 12:01 a.m., standard time, with an expiration date of February 1, 1992, 12:01 a.m., standard time. In italicized print, the certificate of insurance binder expressly states: "This is to certify that the coverage designated by checkmark has been placed in force for the insured named above [Juanita Price]"; thereafter, an "x" check appears on the binder certificate as to certain bodily injury and property damage liability coverage.

On January 3, 1992, an automobile driven by Price collided with a taxicab driven by appellant James B. McDuffie. On January 9, 1992, Criterion received a property damage claim from the taxicab company, which it paid on January 16, 1992. On February 18, 1992, Price's premium check was presented for payment and dishonored by her bank due to insufficiency of funds; Criterion notified Price by letter dated February 28, 1992, that her policy was therefore null and void and demanded reimbursement for the property damage claim previously paid to the taxicab company.

On April 15, 1992, Criterion received notice of McDuffie's personal injury claim and responded by letter that a policy was not in force or effect at the time of the collision. Subsequently, appellants McDuffie filed suit against Price for damages arising from the collision; Criterion agreed to defend Price with reservation of rights until a judicial determination was made as to the issue of coverage. Criterion then filed a declaratory judgment suit. Price did not file an answer but the McDuffies did timely answer. Thereafter both Criterion and the McDuffies filed a motion for summary judgment in the declaratory action suit. The trial court concluded that the honoring of the check presented for payment was a condition precedent to the existence of a contract of insurance and that the return of the check for insufficient funds rendered the contract of insurance void ab initio for failure of the condition precedent. The trial court granted summary judgment to appellee Criterion and denied summary judgment to appellants McDuffie. Held:

An insurance binder is a statutorily recognized form of contract for temporary insurance. OCGA § 33-24-33. Binders, which are issued on an application for insurance, are usually sketchy agreements, in comparison to the typical insurance policy, and are intended to provide temporary protection pending an investigation of the insured or pending issuance of the formal written policy providing the coverage requested by the insured. The insurance binder is a contract created for the convenience of the insured to provide immediate insurance coverage without subjecting the insured to risk of loss occasioned by a delay in effecting coverage. Fort Valley Coca-Cola etc. Co. v. Lumbermen's Mut. Cas. Co., 69 Ga.App. 120, 124(1), 24 S.E.2d 846; Jenkins & Miller, Ga. Auto. Ins. Law Including Tort Law (1993 ed.), § 1-1. The only language or conduct necessary to create an insurance binder contract is that which shows a meeting of the minds. Peterson v. Liberty Mut. Ins. Co., 188 Ga.App. 420, 423, 373 S.E.2d 515. As a general rule an insurance binder, being recognized by law as a legal vehicle for providing immediate, temporary insurance coverage, "must be a contract in praesenti [cit.] and the actual payment of premium is not a condition precedent to its validity. [Cit.]" Greene v. Commercial Union Ins. Co., 136 Ga.App. 346, 347(1), 221 S.E.2d 479; see Jourdan v. First Nat. Ins. Co., 203 Ga.App. 155, 156, 416 S.E.2d 162; Howell v. United States Fire Ins. Co., 185 Ga.App. 154, 155(2), 363 S.E.2d 560; Cincinnati Ins. Co. v. Stuart, 139 Ga.App. 80, 81, 227 S.E.2d 771; but compare Rowell v. Ga. Cas. etc. Co., 109 Ga.App. 631, 633(2), 136 S.E.2d 917.

However, an insurance company may fix the terms of its policies and binders as it wishes, provided such provisions are not contrary to law. See Ga. Farm Bureau Mut. Ins. Co. v. Musgrove, 153 Ga.App. 690, 692, 266 S.E.2d 228. Accordingly, we must examine in light of the circumstances here attendant, and in their totality, both the application for insurance and the certificate of insurance binder to determine the contractual intent of the parties. An insurance binder contract, like an insurance contract, is governed by the ordinary rules of contract...