Nationwide Mut. Ins. Co. v. Conley

• Decision Date: 21 December 1972
• Docket Number: No. 13101,13101
• Citation: 156 W.Va. 391,194 S.E.2d 170
• Court: West Virginia Supreme Court
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY v. Curtis Lee CONLEY et al.

Page 170

194 S.E.2d 170

156 W.Va. 391

NATIONWIDE MUTUAL INSURANCE COMPANY v. Curtis Lee CONLEY et al.

No. 13101.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 27, 1972.

Decided Dec. 21, 1972.

Syllabus by the Court

1. Where it is proved that a person made misrepresentations of material facts on an application for insurance and the insurer, relying on such false statements, issued a policy and where it is further proved that the insurer would not have issued the policy had it been aware of the true facts, then such insurance policy is void from its inception and is of no legal effect.

2. An insurance policy issued voluntarily and not under the compulsion of an assigned risk of financial responsibility law, which has been declared void Ab initio is of no force or effect and cannot have life breathed into it for any purpose.

George L. Partain, John C. Valentine, Logan, for appellant.

Barrett & Chafin, James F. Barrett, Huntington, for appellees.

CAPLAN, Judge:

In a declaratory judgment action instituted in the Circuit Court of Logan County by Nationwide Mutual Insurance Company, a corporation, said company sought to have the rights of the parties, in relation to an insurance policy issued by it, determined and adjudicated. Its ultimate objective was to have said policy declared void Ab initio.

Upon the pleadings and after considering the evidence, the court, in compliance with the requirement of Rule 52, West Virginia Rules of Civil Procedure, made certain findings of fact and noted its conclusions of law. It held that the subject insurance policy was void Ab initio in all respects as between Nationwide and Curtis Lee Conley, the purchaser of the policy, but further held that Nationwide was estopped to deny the validity of the policy as to the other defendants who alleged rights to benefits thereunder. From this decision and the judgment entered pursuant thereto Nationwide prosecutes this appeal.

On December 28, 1966 defendant Conley purchased an automobile liability and collision insurance policy from Nationwide through its agent, Stanley H. Ferguson. From the record of this proceeding it appears that Conley, desiring to purchase an automobile, requested Lester Perry to assist him in borrowing the necessary money by co-signing his note. Mr. Perry agreed to do so on the condition that Conley would obtain a liability policy covering the operation of such vehicle. Pursuing this plan, Conley, together with his wife, Judith, and Mr. Perry, went to Ashland Finance Company to obtain the desired loan. Upon informing Jerry Hainer, the manager of Ashland, that it was necessary for him to obtain liability insurance in order to get Mr. Perry to co-sign his note, Mr. Hainer called Mr. Ferguson, an agent of Nationwide.

When Mr. Ferguson arrived at Ashland, he, with Mr. and Mrs. Conley and Mr. Perry, retired to a small booth where he began to fill out the insurance application for Mr. Conley. Admittedly, the answers on the application form were written by Mr. Ferguson. There was much conflicting evidence as to the information on the application and the manner in which such information was obtained, all of which gave rise to this controversy.

Among other questions on the application, Conley was asked to list any criminal arrests, if other than traffic, for the owner or any driver. The answer thereto was 'Not in last 5 years.' It is alleged in the complaint that this answer was untrue, false and fraudulent and that Conley knew it was untrue. Nationwide also alleged that Mr. Ferguson believed such answer to be true. A further question on the application asked: 'Have you or any drivers of your automobile had an accident or been charged with a traffic violation in last 5 years?' In answer thereto an X was marked in the box designated 'No.' Nationwide alleges this to be false; alleges that Conley knew it was false; and that Mr. Ferguson believed the reply to be true.

Upon completion of the application it was signed by Mr. Conley, who thereby purportedly declared the statements therein to be true. Mr. Ferguson testified that he afforded Conley an opportunity to read the completed application and that he believed that he did read it. Mr. Conley and Mr. Perry, appearing on behalf of Mr. Conley, testified that Mr. Ferguson merely told Conley to sign the application; that he did not permit him to read it; and that Conley did not read it. On the same afternoon of the day on which this application was completed December 28, 1966, Mr. and Mrs. Conley obtained the policy from Mr. Ferguson's office. The application was sent to Nationwide by the agent and, as was its practice, an investigation of Mr. Conley was begun.

On January 13, 1967, Conley was involved in an automobile accident with two other vehicles wherein all of said vehicles were damaged and the occupants, including Conley, ware injured. These injured persons are the other defendants referred to above.

In its complaint Nationwide alleges that, by reason of the false and fraudulent statements and representations on the application, the subject insurance policy is void and that it is not liable under the provisions thereof, either to Conley or to the other defendants for any claims they may assert against Conley. For these and other reasons stated in its complaint, Nationwide sought to have the subject insurance policy judicially determined to be void.

It is the position of the defendants that Nationwide did not sustain the burden of proof necessary to show that Conley gave false answers to questions on the application or that if misrepresentations were made that Nationwide believed or relied thereon. They further assert that Nationwide was negligent in issuing the policy to Conley and were therefore estopped to deny its validity. The court, agreeing in part...