Peirson v. American Hardware Mut. Ins. Co.

• Decision Date: 16 April 1958
• Docket Number: No. 173,173
• Citation: 102 S.E.2d 800,248 N.C. 215
• Court: North Carolina Supreme Court
• Parties: S. PEIRSON v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY.

Page 800

102 S.E.2d 800

248 N.C. 215

S. PEIRSON v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY.

No. 173.

Supreme Court of North Carolina.

April 16, 1958.

Dickens & Dickens, Scotland Neck, for plaintiff, appellant.

Battle, Winslow & Merrell, by J. Brian Scott, Rocky Mount, for defendant, appellee.

PARKER, Justice.

Prior to the trial of this case the parties stipulated and agreed as follows:

One. The defendant in this case is American Hardware Mutual Insurance Company, formerly Hardware Mutual Insurance Company of Minnesota: the American Hardware Mutual Insurance Company is the proper defendant to this action and before the court, and it has not been prejudiced or misled by reason of any improper identification.

Two. On 10 April 1953 there was outstanding a valid policy of defendant's garage liability insurance providing for the payment of medical bills up to a limit of $2,000, which might be incurred within one year from the date of accident. The name of the insured shown in the policy is as follows: 'S. Peirson and N.G. Neville DBA: Peirson-Neville Co. and S. Peirson and Co.,' and the named insured is 'Partnership.'

Three. On 10 April 1953 the plaintiff S. Peirson, while driving a Ford Station Wagon, was involved in an accident in which his wife sustained injuries for the treatment of which he paid $807.90. These expenses were incurred within one year after the accident.

Four. This Ford Station Wagon was the individual property of S. Peirson, and registered in his name. The accident occurred while plaintiff, his wife, and their daughter were leaving a social gathering at Woodlawn Lake Club.

Five. If S. Peirson was an insured under the terms of the policy and within the protection afforded by the policy, in reference to the accident alleged in the complaint, then the defendant is liable to him in the amount of $807.90.

These are the material findings of fact by the Trial Judge:

One. John H. Bland was a salaried employee of defendant with authority to submit written applications of persons desiring insurance, which applications were to be approved or rejected by defendant. While so employed, and about 14 October 1952, Bland took a written application for insurance from S. Peirson for S. Peirson and N. G. Neville, doing business as Peirson-Neville Co. and S. Peirson and Co. the application was mailed to the defendant, who forwarded the policy to Bland, and by him it was delivered to the plaintiff. The policy is in evidence.

Two. At all times relevant to this action S. Peirson was a partner with N. G. Neville, doing business as Peirson-Neville Co. S. Peirson did business under the name of S. Peirson and Co. These facts were known to Bland, who submitted the application for insurance. There was no evidence that the defendant was informed that S. Peirson individually did business as S. Peirson and Co.

Three. On 10 April 1953 plaintiff, while driving a Ford Station Wagon, was involved in an accident in which his wife sustained injuries for the treatment of which plaintiff paid $807.90 within one year after the accident.

Four. The Ford Station Wagon was the individual property of S. Peirson, and registered in his name. It did not belong to any partnership named as an insured in the policy, and was not being operated for business connected with any such partnership.

Upon these findings of fact the court being of the opinion that, in respect to the medical payments made by plaintiff, he was not insured within the terms of the policy, entered judgment that the plaintiff recover nothing.

While plaintiff has nine assignments of error in the record, he has directed his argument in the brief to only five: the first four assignments of error he discusses in his brief deal with the exclusion of evidence, and the fifth challenges the correctness of the judgment that the plaintiff recover nothing, for the reason that in respect to the accident to his wife he was not insured within the terms of the policy.

Plaintiff contends that the court erred in excluding the testimony of S. Peirson that the Ford Station Wagon was used primarily and principally in his business known as S. Peirson and Co., and that he was the sole owner of S. Peirson and Co. The defendant objected to the questions that would have elicited this testimony, the objection was sustained, and plaintiff excepted. The answers were written into the record.

Plaintiff excepted to the exclusion of the following testimony by John H. Bland, which was placed in the record: 'That at the time this policy was sold to Mr. Peirson he knew Mr. Peirson owned one 1952 Ford Station Wagon; that he knew that this automobile was used primarily and principally in the business of S. Peirson and Co.; that at that time he knew of one 2-ton truck that was used by Mr. S. Peirson in the operation of S. Peirson and Co.; that to his knowledge these automobiles were registered in the name of S. Peirson, and that he knew of no automobiles registered in the name of S. Peirson and Co.; that at the time this policy was written it was being written to cover the operation of two businesses, one business being the partnership of S. Peirson and N. G. Neville, t/a Peirson-Neville Co., and S. Peirson doing business as S. Peirson and Co., being a sole proprietorship owned by S. Peirson; that he knew the 1952 Ford Station Wagon was used primarily in the business of S. Peirson and Co.; that these were the intentions of S. Peirson and John H. Bland, but that he cannot testify that such were the intentions of the defendant company in regard to the policy issued. ' Plaintiff further excepted to the exclusion of testimony of Bland to the effect that, at the time he went over the provisions of the policy with Peirson, the understanding was that the vehicle registered in the name of S. Peirson was covered.

The policy in the instant case is designated by the defendant as a 'National Standard Garage Liability Policy,' and does not specify any particular automobile. The distinction between such a policy and an ordinary automobile liability policy is pointed out in Hardware Mutual Casualty Co. v. Wendlingser, 4 Cir., 146 F.2d 984, 986, as follows: 'The policy is called an 'automobile garage liability policy'; and it will be noted that the primary risk assumed by the policy is the liability of the assured for operations of the garage business. Automobiles are included because they are necessary features of the business; but the policy does not specify or describe any particular automobile. In this respect this form of policy is to be sharply differentiated from the ordinary automobile liability policy which covers libaility for loss and damage resulting from the operation of a particularly named and described automobile anywhere in the United States and Canada. ' By reason of the risks in a Garage Liability Insurance Policy, and its purpose, it seems essential that the insurance company know the identity of the insured so as to determine the nature and extent of its risks and the premiums to be charged.

Plaintiff contends that there is an ambiguity in the name of the insured, and that the court erred in not permitting him to show the identity of S. Peirson and Co. as being a sole proprietorship owned by him, and that S. Peirson being the sole owner was a party insured.

Plaintiff's suit is upon the policy as written. Wright v. Mercury Ins. Co., 244 N.C. 361, 93 S.E.2d 438; Burton v. Life & Casualty Ins. Co., 198 N.C. 498, 152 S.E. 396. His complaint has no allegation that the contract of insurance should be reformed because of fraud or mutual mistake, and he prays for no such relief.

This Court said in Floars v. Aetna Life Ins. Co., 144 N.C. 232, 56 S.E. 915, 916: 'It is also accepted doctrine that when the parties have bargained together touching a contract of insurance and reached an agreement, and in carrying out, or in the effort to carry out, the agreement, a formal written policy is delivered and accepted, the written policy, while it remains unaltered, will constitute the contract between the parties, and all prior parol agreements will be merged in the written instrument; nor will evidence be received of prior parol inducements and assurances to contradict or vary the written policy while it so stands as embodying the contract between the parties. Like other written contracts, it may be set aside or corrected for fraud or for mutual mistake; but, until this is done, the written policy is conclusively presumed to express the contract it purports to contain.'

In Graham v. Mutual Life Ins. Co., 176 N.C. 313, 97 S.E. 6, 8, this Court said: 'The written policy accepted by plaintiffs stands as embodying the contract, and the rights of the parties must be determined by its terms until the contract is reformed by the court.'

This Court said in Burton v. Life & Casualty Ins. Co., supra [198 N.C. 498, 152 S.E. 397]: 'The question, then, is whether a contract of insurance can be reformed and enforced as reformed without appropriate allegation, issue, or prayer for relief. The identical question was considered by this court in Britton v. Metropolitan Life Insurance Co., 165 N.C. 149, 80 S.E. 1072, 1074. The court said: 'But the reformation is subject to the same rules of law as applied to all other instruments in writing. It must be alleged and proven that the instrument sought to be corrected failed to express the real agreement or transaction because of mistake common to both parties, or because of mistake of one party and fraud or inequitable conduct of the other."

Plaintiff offered in evidence the policy of insurance. The policy provides that the declarations are made a part of...