State Farm Mut. Auto. Ins. Co. v. Anderson
| Decision Date | 02 November 1961 |
| Docket Number | No. 1,No. 39056,39056,1 |
| Citation | 104 Ga.App. 815,123 S.E.2d 191 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. Edward ANDERSON, Jr |
| Court | Georgia Court of Appeals |
Syllabus by the Court
A Liability insurer, which with knowledge of a ground of forfeiture or noncoverage under an insurance policy assumes and conducts the defense of an action brought against the insured, is thereafter estopped in an action upon the policy from asserting such forfeiture or noncoverage. However, the insurer may avoid the estoppel giving timely notice fairly informing the insured that, notwithstanding its defense of the action, it disclaims liability and does not waive the defenses available to it against the insured.
This case arose out of the following facts: On October 8, 1959 the defendant (plaintiff in error) issued an automobile liability insurance policy to Henry C. Parks. During the period covered by the policy the insured while driving the insured vehicle had a collision in which the plaintiff (defendant in error) was injured. The plaintiff made a claim and later sued and obtained a verdict and judgment against Parks. The defendant refused to pay the judgment. The plaintiff then sued the defendant for the amount of the judgment against Parks.
The defendant filed an answer to plaintiff's petition denying liability to the plaintiff, in which it alleged: Parks had induced the defendant to issue the policy by representing on his application therefor that no insurer had within the past three years canceled or refused to issue automobile insurance to him. This representation was stated in the policy as a warranty. The representation was false and fraudulent, was known by Parks when he made it to be false; and the defendant would not have issued the policy had it known the truth. On May 31, 1960, the plaintiff signed an 'Authorization for Claim Service and Non-waiver of Rights' authorizing the defendant '* * * to investigate, negotiate, settle, deny or defend any claim arising out of an accident occurring on or about 1-10-1960,' and stating: 'It is agreed that such actions shall not waive any of the rights of the undersigned or of the Company under any contract of insurance.' On May 31, 1960, the defendant notified Parks that any defense undertaken by it 'shall not be construed as a waiver of the right * * * to deny liability at any time under any policy * * * issued to' Parks. The defendant filed an answer in the suit on June 7, 1960. Defendant wrote plaintiff's attorney on June 7, 1960, that it was handling the defense '* * * under a Reservation of Rights because of a possible misrepresentation of the part of Henry C. Parks at the time he made application for a policy of insurance to cover his 1959 Rambler automobile which was involved in this accident'; that no action taken by defendant should be construed as a waiver of its right to deny liability; that defendant reserved '* * * the right to deny liability whether by reaason of the above mentioned possible coverage questions or any other violation or coverage question which may have come to our knowledge or shall hereafter come to our knowledge.' The defendant rescinded the policy and returned the premium to Parks as soon as it learned of the misrepresentation. In its letter of rescission, dated June 8, 1960, the defendant notified Parks that it had knowledge of the misrepresentation, and stated that it would treat the policy as void from inception, and that any defense of the suit undertaken by the defendant should not be construed as a waiver of the defendant's right 'to refuse payment of any judgments, claims or to otherwise become obligated' under the rescinded policy. The defendant refused to settle plaintiff's claim against Parks. Parks
The plaintiff's general demurrer to the answer was sustained 'for the reason that said answer does not set forth any defense.' The case proceeded to trial, and the plaintiff introdued evidence of his judgment against Parks and that it had not been paid. The court granted a directed verdict for the plaintiff and entered judgment thereon. The defendant filed a motion for new trial and an amendment thereto. The court denied the motion for new trial as amended. On the rulings of the court sustaining plaintiff's general demurrers to its answer, directing a verdict for plaintiff, and...
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