State Farm Fire & Cas. Co. v. Fordham

• Decision Date: 07 November 1978
• Docket Number: No. 56623,56623
• Citation: 148 Ga.App. 48,250 S.E.2d 843
• Parties: STATE FARM FIRE & CASUALTY COMPANY v. FORDHAM.
• Court: Georgia Court of Appeals

Page 843

250 S.E.2d 843

148 Ga.App. 48

STATE FARM FIRE & CASUALTY COMPANY v. FORDHAM.

No. 56623.

Court of Appeals of Georgia.

Argued Sept. 7, 1978.

Decided Nov. 7, 1978.

Beck, Goddard, Owen & Murray, Samuel A. Murray, Griffin, for appellant.

Harry A. Crawley, Thomaston, for appellee.

QUILLIAN, Presiding Judge.

This is an appeal from a judgment for plaintiff Fordham on a policy of fire insurance with defendant State Farm Fire & Casualty Company (State Farm). Plaintiff alleged that her house was totally destroyed by fire and sued for the sum of $17,643.28 "principal" and $2,400 in living expenses. The contract of insurance provided for $17,000 on the dwelling, $8,500 on personal property, and $3,400 for "additional living expense." State Farm set forth the defense of accord and satisfaction.

Mrs. Fordham and State Farm reached agreement on the amount due for the loss of personal property, leaving only the amounts due for the house and living expenses in issue.

Plaintiff Fordham contended the house was totally destroyed by the fire and submitted photographs of that portion that remained standing. Plaintiff also called a general contractor who testified that the house was a total loss and could not be repaired. He estimated the cost of rebuilding to be approximately $22,000. Lieutenant Wesley Weeks of the fire department was of the opinion that the house was a total loss. Mrs. Fordham itemized expenses incurred by her for living costs which totaled $1,157.

State Farm contended the house was not a total loss but was reparable. They sent a "local contractor" that they had used "many times" to give them an estimate on Mrs. Fordham's house. The contractor, Mr. Hammonds, made three trips to Mrs. Fordham's house and estimated the cost of repairs at $15,273.56.

Mrs. Fordham testified that the State Farm agent told her after the contractor's first visit that her house could be rebuilt for $9,000 and she refused to accept that because "they couldn't build onto that burnt lumber." After the second trip by the contractor, she said she was offered $12,000 but again refused. She was called after the third visit and told that the construction cost "had gone up to $14,000." When she refused that offer she was asked to attend a meeting in the State Farm agent's office.

When she arrived at State Farm's office she saw the holders of the two mortgages on her house were present. She testified, "my mortgages was up there, and they told me that they had to have their money." The State Farm agent "gave me the paper across the desk and I had to sign the paper before he would write the check to pay the mortgage off . . . He filled (the proof of loss) out, I guess, I didn't . . . (Q. Did he say, read this, it's a release or anything to that effect?) No. (Did he tell you that this is all you are going to get?) No . . . (Q. were you told that you were to receive more money at a later date?) Yes . . . he told us that we that they would give us 180 days to build the house back . . . I told him there was nothing to build to that we had a total loss . . . (Q. . . . when you signed the paper that he stuck in there and made the cross mark and asked you to sign it, there was no mention of a final settlement?) No . . . (Q. under what conditions did you talk with (Mr. Ed Bell, the State Farm agent)?) . . . Ed Bell told me, he says, I am on your side, he said, you will have to sign the papers to pay your mortgage off, said, thats the only way you can pay it off . . . I went back into Rex's (State Farm adjuster) and Mr. Matthew's (State Farm agent) office, Rex handed me the paper across the desk, he had it (sic) a cross mark marked on it, I signed it, and he jerked the paper back, he wrote the checks after I had signed the paper."

State Farm's evidence showed the plaintiff came to their office and executed a "proof of loss" statement. Her "rebuilding rights and the right to receive the deducted depreciation" were explained to her. That is, it was "the prerogative of the company to repair or replace" the house. They determined that the house was reparable so they did not pay the replacement value. Mr. Bell testified that the value of the house at the time the insurance was taken out was $17,000 and at the time of the fire "(t)he replacement cost would have been at least that." Since they determined the house was reparable at an estimate of $15,273.56, they deducted 20% From that amount, because "(i)t will be put back in a better condition in which it was to begin with prior to the fire . . . " The depreciated value of the house, the amount tendered to Mrs. Fordham "in compromise settlement of all claims under this policy," was the sum of $12,336.72.

State Farm's witnesses testified that Mrs. Fordham was told of this procedure. They filled out the proof of loss, but did not "stick it in her face, say, sign it, and yank it away." She was asked to read it and asked if she had any questions. She did not read it, nor did she ask any questions. They did not pressure her in any way to sign the release. They pointed out that it was the mortgage holders who talked to Mrs. Fordham about why she should sign the proof of loss and the release.

The jury found for the plaintiff in the amount of $5,863.78. State Farm brings this appeal. Held :

1. State Farm enumerates as error, denial of their motion for directed verdict made at the conclusion of plaintiff's evidence and again at the end of defendant's evidence. One basis for such motion was an accord and satisfaction.

A compromise on a disputed amount of a claim, or mutual accord and satisfaction, is binding on both parties. Code Ann. § 20-1201 (Code § 20-1201); Pierson v. Herrington, 138 Ga.App. 463(2), 226 S.E.2d 299. Plaintiff contended her house was a total loss. State Farm contended it was reparable and tendered an amount representing the cost of repairs, depreciated by 20% Because they alleged it would place the house in a better condition than it was when it was damaged by the fire. The "proof of Loss" form contained the statement, about half-way down the page: "Insured hereby claims of this company (*) and will accept from this Company in full release and satisfaction in compromise settlement of all claims under this policy the sum of . . . $12,336.72." Plaintiff's signature, witnessed by a State Farm employee, appears at the bottom.

State Farm contends that "where a person who can read signs a contract without apprising himself of the contents, other than by accepting representations of the opposite party or its agents, with whom there exists no fiduciary or confidential relationship, he is bound by the terms of the written contract, barring actual fraud which would prevent the person from reading the contract." See Ansley v. Forest Services, Inc., 135 Ga.App. 745, 748, 218 S.E.2d 914. We agree.

No fiduciary or confidential relationship exists between an insured and the insurer and his agents. Walsh v. Campbell, 130 Ga.App. 194, 202 S.E.2d 657. The plaintiff does not contend that she can not read, she merely stated that the paper she signed was "jerked" away from her After she signed it. This is not such a reason as would legally excuse plaintiff from reading the contract Before she signed it. It is not an unusual business practice for papers to be removed from a desk After they have been signed. This court cannot give effect to alleged parol provisions to a contract which clearly contravene the written provisions of the contract. Code Ann. § 38-501 (Code § 38-501). Parol evidence may be used to explain ambiguities, or aid in the construction of a contract, but it is clearly inadmissible to vary the terms of the written instrument. Contractors Mgt. Corp. v. McDowell-Kelley, Inc., 136 Ga.App. 116(4), 220 S.E.2d 473.

This court held in Maxey-Bosshardt Lumber Co. v. Maxwell, 127 Ga.App. 429, 431, 193 S.E.2d 885, 887: "We recognize that the question of fraud is one which is normally for a jury to determine including whether there has been the required exercise of reasonable diligence to ascertain the truth. Elliot v. Marshall, 179 Ga. 639, 640 (176 S.E. 770). Nevertheless, the decisions have held that one can not close his eyes but must show some fraud perpetrated by the other party which actually prevented him from knowing the provisions of the contract. (Cits.) . . . When our Supreme Court in B. E. Robuck, Inc. v. Walker, 212 Ga. 621 (94 S.E.2d 696) reversed upon certiorari this court's holding . . . it stated that the case was controlled by the unanimous ruling in Lewis v. Foy, 189 Ga. 596 (6 S.E.2d 788). It quoted with approval from page 601 . . . 'the law . . . demands of everyone that he make use of his own facilities to avoid being defrauded. No other rule could safely be adopted and enforced by the courts with reference to written instruments. It is essential to all business relationships that the validity and solemnity of written contracts, freely and voluntarily executed, be upheld.' "

" 'Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so; and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading. Nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse; . . .' " Martin v. Alford, 214 Ga. 4, 7, 102 S.E.2d...