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

• Citation: 294 Ala. 451,318 So.2d 687
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation v. Martin N. ANDERSON. SC 1106.
• Decision Date: 21 August 1975
• Court: Supreme Court of Alabama

Page 687

318 So.2d 687

294 Ala. 451

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation v. Martin N. ANDERSON.

SC 1106.

Supreme Court of Alabama.

Aug. 21, 1975.

Rehearing Denied Sept. 11, 1975.

Rives, Peterson, Pettus, Conway & Burge, and Edgar M. Elliott, Birmingham, for appellant.

Sirote, Permutt, Friend & Friedman and William G. West, Jr., Birmingham, for appellee Martin N. Anderson.

William M. Warren, Jr., Birmingham, for appellee The Travelers Ins. Co.

Collins & Johnston, Birmingham, for Alva E. Killian.

MERRILL, Justice.

This appeal is from a decree in a declaratory judgment proceeding in which the trial court held that State Farm Mutual Automobile Insurance Company is liable to defend Dr. Martin N. Anderson in a law suit arising out of a collision of Anderson's Lincoln Continental with another automobile on November 1, 1973.

Dr. Anderson's bill of complaint alleged as a basis for finding that there was coverage the fact that the defendant, with knowledge that the accident had occurred, negotiated and deposited plaintiff's check for a premium admittedly drawn and mailed after the expiration of the policy and received after the loss. Such conduct, it asserted, constituted a waiver of defendant's right to deny coverage.

The answer of defendant State Farm admitted the existence of a policy, that the accident occurred, that plaintiff gave notice of the same to the defendant, that the check was negotiated and deposited after knowledge of the accident and after the expiration of the policy, but denied that the premium was mailed prior to the accident or that it was accepted in payment of a past due premium. It further averred that the check was accepted to reinstitute the lapsed policy as of November 2, 1973, subsequent to the accident.

Most of the facts are not disputed. Dr. Anderson's policy was to expire on October 10, 1973 and he received a premium notice in early September. The gross premium was $112.90, but with a dividend of $6.80, the amount due was $106.10. Dr. Anderson decided not to pay it then because he did not 'have any money in the bank.' He 'presumed' he had a 30-day grace period but the policy did not so provide. A check dated October 29 in the amount of $106.10 was mailed to State Farm. (The date of mailing is in dispute.) The accident occurred in the evening of Thursday, November 1. The envelope containing the check was postmarked November 2nd and received by State Farm on November 3. State Farm had been notified of the accident. On November 7, State Farm negotiated and deposited the check and later in the month sent Dr. Anderson a new policy effective from November 3, and billed him for the $6.80 dividend which had reduced the premium. Premiums are due each six months and they are not paid to the agent but are mailed to the regional office in Birmingham.

Kenneth Dean, a witness for Dr. Anderson and a resident of Snead, Alabama, testified that he was stopped at a red light in Homewood, that Mr. Killian (the plaintiff in the damage suit against Dr. Anderson), was just behind him and the Anderson car hit Killian's, and the Killian car rammed the rear of Dean's car. The next morning, Dean called State Farm and talked with a man named George--(he was not sure of the last name) and asked if Dr. Anderson's car was insured and, after some minutes, the man stated that 'Dr. Anderson was covered.' He said he was told to take it to Jim Skinner Ford and have it fixed. He later called the Roebuck office of State Farm and was again told that Dr. Anderson was covered, to take his car to Jim Skinner Ford and to 'rent you a car if you need to.' Dean had not sued Anderson because his damages, $10,000.00 personal injuries and $2,000.00 automobile, had been paid under the uninsured motorist provision of his own policy.

Mrs. Anderson, who operates a nursing home with her husband, testified that she signed the check on October 29, and mailed it that afternoon at Five Points South George Gomperts testified that he was agency manager for State Farm and had been for 17 years; that he had twelve agents under his supervision, one of whom was Leon Waters, who handled the Anderson policy; that he and Dr. Anderson had been personal friends for more than 10 years; that Dr. Anderson had notified him of the accident on the morning of November 2; and that he had never talked to Kenneth Dean.

The trial court, in its opinion, stated in part:

'* * * The pivotal question for determination by the Court is that of whether or not the negotiation and depositing of Plaintiff's check by State Farm constituted a waiver or estoppel which would effect a binding obligation on State Farm as provided in its policy. Under the attendant facts set forth in the trial of this cause, this Court finds that the acceptance by State Farm of the policy premium after the aforesaid loss occurred does constitute a waiver of the delinquency in payment and amounted to an intentional relinquishment of any right which State Farm might have had to the denial of coverage under its policy.'

A motion for a new trial was overruled.

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