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

• Decision Date: 25 June 1996
• Docket Number: No. A96A0326,A96A0326
• Citation: 474 S.E.2d 64,222 Ga.App. 196
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. DRURY.
• Court: Georgia Court of Appeals

Page 64

474 S.E.2d 64

222 Ga.App. 196

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. DRURY.

No. A96A0326.

Court of Appeals of Georgia.

June 25, 1996.

Reconsideration Denied July 11, 1996.

Greer, Klosik & Daugherty, Robert J. McCune, Atlanta, for Appellant.

Savell & Williams, Edward L. Savell, Atlanta, for Appellee.

BEASLEY, Chief Judge.

State Farm appeals the denial of its motions for directed verdict and judgment notwithstanding the verdict, OCGA § 9-11-50(a), after a jury verdict in Drury's favor.

Drury was involved in an automobile collision on the evening of November 7, 1989, and filed a claim for coverage. State Farm denied coverage on the ground that it had cancelled Drury's policy effective 12:01 a.m. that very day for non-payment of premium.

In August 1984, State Farm issued an automobile policy to Drury, who successively renewed the policy every six months. The policy period in question began July 27, 1989, and was to continue for six months through January 27, 1990. Drury had elected a premium payment plan whereby he was to pay half of the six-month premium in July and the other half in October, plus a $2 fee for splitting the premium. It was State Farm's practice to generate a notice when each payment was coming due. Drury did not make the July payment on time, and State Farm cancelled his policy on August 21, 1989. Nine days later, Drury made payment in the amount of $185.93, which represented half of the premium for that policy period, plus the $2 fee, and the policy was reinstated on August 30, 1989.

State Farm contends it generated and mailed the next premium due notice for the October payment on September 5, but Drury maintains he never saw this bill. State Farm received no payment for the October installment and issued a cancellation notice on October 25, 1989, specifying a cancellation date of November 7, 1989, at 12:01 a.m. Drury was not living at the address State Farm had on file at the time the notice of cancellation would have been delivered because he and his wife had separated on October 22, and he had not notified State Farm of the address change. Drury's estranged wife testified by deposition that she forwarded all of Drury's mail to him.

Drury's policy provided, "The coverages you chose apply to accidents and losses that take place during the policy period. The policy period is shown under 'Policy Period' on the declarations page and is for successive periods of six months each for which you pay the renewal premium. Payments must be made on or before the end of the current policy period. The policy period begins and ends at 12:01 A.M. Standard Time at the address shown on the declarations page." The declarations page is not in evidence.

1. A directed verdict is proper only where there is no conflict in the evidence as to any material issue and the evidence and all reasonable deductions or inferences therefrom demands a particular verdict. Carden v. Burckhalter, 214 Ga.App. 487(1), 448 S.E.2d 251 (1994). The same is true for a motion for j.n.o.v. OCGA § 9-11-50(a); St. Mary's Hosp. etc. v. Cohen, 216 Ga.App. 761(1), 456 S.E.2d 79 (1995). The standard of review of a trial court's denial of a motion for a directed verdict is the "any evidence" standard, and the evidence is construed most favorably toward the party opposing the motion. Mattox v. MARTA, 200 Ga.App. 697(1), 409 S.E.2d 267 (1991).

In order to create a presumption that the insured received the premium due notice, the law requires proof that the notice was placed in an envelope properly addressed to the insured's last known address, with correct postage affixed, and duly mailed in the United States Post Office. Watkins Products v. England, 123 Ga.App. 179, 181, 180 S.E.2d 265 (1971). State Farm offered no evidence that the September 5 notice was in fact so mailed, and thus it was not entitled to the benefit of the favorable presumption. American Express etc. Co. v. Berlye, 202 Ga.App. 358, 360(2), 414 S.E.2d 499 (1991). The closest evidence was from the deposition of an operations supervisor for State Farm who was not present at trial, the following portion of which was read to the jury: "We generated a balance due [on Drury's policy] on September 1st, 1989. It would have been mailed September 5, 1989, because there was a long weekend involved that particular weekend. It would have been mailed the next working day, which was September 5th, 1989, and the balance due date was October 5th, 1989." This testimony does not prove that State Farm mailed the notice to Drury, or when. No witness testified from personal knowledge of such facts. Nationwide Mut. Ins. Co. v. Barnes, 108 Ga.App. 643, 134 S.E.2d 552 (1963). Nor did any properly admitted business record show it.

State Farm contends a "Premium History" for Drury's policy submitted into evidence is further proof that State Farm generated a September 1 notice and mailed it on September 5. Although State Farm never properly identified this document as a business record or made any attempt to lay a foundation for it, and it would have been properly excluded as hearsay under OCGA § 24-3-14, the trial court admitted it over Drury's objection. Nothing in the document suggests that a notice was generated or mailed, and neither September 1 nor 5 is mentioned.

Evidence of nonreceipt of the notice is admissible as a circumstance as to whether the notice was mailed. New Amsterdam Cas. Co. v. Russell, 102 Ga.App. 597, 601(2), 117 S.E.2d 239 (1960). State Farm contends Drury gave equivocal testimony about receiving the premium balance due notice at issue, and thus the rule in Prophecy Corp. v. Charles Rossignol, Inc., 256 Ga. 27, 28(1), 343 S.E.2d 680 (1986), should apply: "[T]he testimony of a party who offers himself as a witness in his own behalf at trial ' "is to be construed most strongly against him when it is self-contradictory, vague or equivocal." ' [Cits.] Where the favorable portion of a party's self-contradictory testimony is the only evidence of his right to recover or of his defense, the opposing party is entitled to a directed verdict. [Cit.]" Id.

Two months after the accident, in response to questioning by a State Farm adjuster as to whether he received the premium notice, Drury had replied, "I never saw it, no." Drury responded to State Farm's questioning on cross-examination at trial that when he said during deposition he may have received the September notice, he was merely speculating. This statement could be regarded as contradictory or equivocal. But even applying the rule in Prophecy Corp., the testimony that he might have received it does not establish that State Farm sent the notice by proof it was received.

Drury testified he had come to rely on the notices of previous balance due, regularly sent, to tell him when the premium was due. "[A]n insurance company which by a course of dealing leads an insured to rely upon notice from the company as to the due date of premium payments is estopped to complain of a late payment caused by its failure to give such notice in a particular instance." Forrester v. State Farm Mut. Ins. Co., 97 Ga.App. 618, 619(3), 103 S.E.2d 619 (1958), citing Grant v. Alabama Gold Life Ins. Co., 76 Ga. 575, 583(5)(c) (1886). The effect of the failure of the insurer to give notice precludes cancellation of the policy if the insured's premium payment is late. Id. at 583(5)(b). "The rule should be rigidly applied where the result of not coming up to the exact date works a forfeiture of all past payments as well as of the entire contract." Id. Drury's policy was thus not cancelled as a matter of law at the time State Farm attempted to cancel it. Since State Farm submitted no conclusive evidence it sent Drury the September premium balance due notice, the trial court did not err in denying State Farm's motion for a directed verdict on this issue or in refusing j.n.o.v.

2. Contrary to State Farm's contention, it was not error for the court to instruct the jury that "where an insurance company by a course of dealing leads an insured to rely upon notice from the company as to the due date of premium payments the company is estopped to complain of a late payment caused by its failure to give notice in a particular instance." The charge, taken from Grant, supra, and Forrester, supra, is a correct statement of the law and, as demonstrated in Division 1, is applicable.

3. State Farm contends that it presented uncontroverted evidence that it followed the requirements in OCGA §§ 33-24-44 and 33-24-45 for cancellation of the insurance policy with respect to the cancellation notice issued October 25, which was to be effective November 7. See Bituminous Cas. Co. v. Renfroe, 130 Ga.App. 621, 623(1), 204 S.E.2d 317 (1974). But State Farm was not entitled to cancel the policy without first having given Drury notice that his premium payment was due. Grant, supra. Although similar to Timely Entertainment Intl. v. State Farm etc. Co., 208 Ga.App. 467, 469, 430 S.E.2d 844 (1993), cited by State Farm, the case is distinguishable because those parties did not dispute that State Farm mailed the premium notice and that a premium due date had been established by custom and practice.

"[A]n insurance policy may be cancelled by the insurer for failure of the named insured to discharge 'when due' any of [his] obligations in connection with the payment of premiums for the policy." Pennsylvania Nat. etc. Ins. Co. v. Person, 164 Ga.App. 488, 489, 297 S.E.2d 80 (1982). In Person, 297 S.E.2d 80, the Court held: "[N]otice of cancellation was given before the premium was due. There was no reason to cancel the policy until after the premium became due and payable. Thus, the insured is entitled under statute to notice of cancellation for failure to pay [his] premium when due and at least a ten day grace period prior to the effective date of the cancellation. [Cit.]." (Emphasis omitted.) Id. at 489 (1), 297 S.E.2d 80. As in Person, the notice of...