State Farm Mut. Auto. Ins. Co. v. Anderson, 39790
| Citation | 130 S.E.2d 144,107 Ga.App. 348 |
| Decision Date | 25 January 1963 |
| Docket Number | No. 1,No. 39790,39790,1 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. v. ANDERSON |
| Court | Georgia Court of Appeals |
Syllabus by the Court
1. One who signs an application for insurance in a completed state (in absence of fraud upon the part of the insurance agent) is bound by the answers to the questions appearing on it.
2. Where a plaintiff sues an insurance company to enforce a judgment obtained against one claiming to be its insured under a liability policy, an admission in judicio by the claimed insured that the insurer defended the action under a reservation of rights will preclude the plaintiff from asserting that the insurer is estopped to deny liability.
3. Where a material misrepresentation is made in an application for a liability insurance policy which authorizes the insurer to rescind the policy, the insured is bound by the material misrepresentation, and the insurer may avoid the policy.
This is the second appeal of this case to this court. The plaintiff sued the defendant on an alleged liability insurance policy for the amount of a judgment the plaintiff held against the defendant's insured. The plaintiff's action in which he obtained judgment against the alleged insured had been defended by the present defendant, the insurer. On the insurer's appeal after the first trial of the present case, this court held that the trial court had erred in sustaining the plaintiff's general demurrer to the insurer's answer, in which the insurer had alleged that it defended its alleged insured pursuant to agreement and notice to the insured which reserved the right in the insurer to deny liability for a judgment on the ground that the alleged contract of insurance was void. The facts there alleged in the answer, including the contents of the alleged agreement and notice to the insured, are set out more fully in the opinion in State Farm Mutual Auto. Ins. Co. v. Anderson, 104 Ga.App. 815, 123 S.E.2d 191.
Upon retrial of the present case the plaintiff again obtained a verdict against the insurer for the full amount of his judgment against the insured. The insurer has excepted to the overruling of its amended motion for new trial and its amended motion for judgment notwithstanding the verdict.
Pittman & Kinney, L. Hugh Kemp, H. E. Kinney, Dalton, for plaintiff in error.
Mitchell & Mitchell, D. W. Mitchell, D. W. Mitchell, Jr., Dalton, for defendant in error.
This case will be more easily comprehended if it is kept in mind that three cases are involved in this opinion. The first is the unappealed trial where the plaintiff secured a verdict and jndgment against a defendant who, so the plaintiff asserts, was insured for liability. To a large degree the legal rights of the parties to the next two actions were established in the first trial. The next two trials involved an attempt by the plaintiff to collect from the insurance company the judgment obtained in the first trial which determined liability and awarded damages. These latter cases were appealed to this court. The first is cited in this the last opinion. Obviously, where the word 'insured' appears, it is used merely in the descriptive sense to identify the first defendant whom the plaintiff claims to have been insured.
1. The underlying basis for State Farm's asserted reservation of rights to deny liability is that the insured had made a false and material statement in procuring the policy. The insurer contends that the insured in answering the question whether or not he had ever had a liability policy canceled replied in the negative, and that this was a false statement which made the policy void ab initio. The insured denied that the question was ever asked him and that he had made any false statements concerning it.
The first issue to be decided is whether the insured was bound by the answers contained in the application for insurance. While the insured denied that he read the application, he admitted that he signed it. The application was introduced in evidence and revealed that there was a negative answer to the question which included, inter alia, whether the insured had ever had any insurance canceled. The evidence without dispute showed that a previous liability policy held by the insured had been canceled.
'One who signs a written document without reading it, unless prevented from doing so by some fraud or artifice * * * is chargeable with knowledge of its contents.' Musgrove v. Musgrove, 213 Ga. 610, 612(3), 100 S.E.2d 577; and Saddler v. Cotton States Life and Health Insurance Co., 101 Ga.App. 866, 115 S.E.2d 398.
The plaintiff contends that it was a question for the jury to decide whether or not the insured made the false statement on the application and cites in support Tallent v. Safeco Insurance Co. of America, 99 Ga.App. 11, 107 S.E.2d 331. However, on the facts Tallent is distinguishable from the present case. In Tallent the applicant signed an application in blank while here the applicant signed the form in a completed state and is bound by the answers to the questions appearing on it.
The case of Stillson v. Prudential Ins. Co. of America, 202 Ga. 79, 42 S.E.2d 121, is distinguishable on the facts from the case before us as in Stillson, p. 80, 42 S.E.2d p. 123, 'The beneficiary named in the policy and another person called as a witness testified that they were present when the application was written; that, as the questions were propounded to the insured by the agent, the insured gave to the agent complete information about his high blood pressure and enlarged heart, and gave him the names of the doctors who had been, and were then, treating him; that the agent then read back to the insured the answers as he pretended they were answered in the application; that the answers to the questions as read by the agent contained complete information about the physical condition of the insured and the doctors who had been, and were then, treating him; that after thus reading the answers the agent presented the application to the insured with all portions of the application covered with his hands, except the place for the signature, and the insured signed the application.' (Emphasis added.)
It follows that the insured here is bound by the false answer in the application. Any other holding would vitiate the validity of written instruments.
2. It is the law of this case, conforming to the previous opinion (State Farm Mutual Auto. Insurance Co. v. Anderson, 104 Ga.App. 815, 123 S.E.2d 191, 193), that the notice to the insured alleged in the insurer's answer was 'timely and sufficient to fairly inform the insured of the insurer's position' that the alleged insurance policy was void and that, notwithstanding its defense of the action, it disclaimed liability and did not waive the defense available to it against the insured. State Farm, supra 819, 123 S.E.2d 194. We stated in that opinion: 'In none of the cases cited by the plaintiff and none examined by this court is it held that when an insurer defends an action after giving the insured timely and sufficient notice that it is not waiving its right to deny liability, and the insured does not reject the insurer's defense under this condition, the insurer is nevertheless estopped to deny liability for a judgment against the insured.' (Emphasis added.) State Farm, supra.
In the second trial (the one we are now considering) plaintiff had seized upon the emphasized portion of the quote and asserts that its meaning is that an insured may reject and insurer's defense under a reservation of rights, in which event the insurer would be estopped to deny liability if it continued to defend despite the rejection. We readily agree with plaintiff in this view of the meaning of the emphasized language, for that is precisely what we intended to convey with the use of the particular words in the previous opinion. However, since the question of rejection by the insured of the defense of the insurer under the conditions imposed in the reservation of rights was not before the court in the former case, the language expressing our view of the effect of such a rejection does not constitute a holding.
The plaintiff now attempts for the first time to assert that the insured, prior to the trial of the case between the plaintiff and the insured, did indeed reject the right of the insurer to defend his case under the reservation of rights imposed. If in truth such a rejection was made at that time, in conformity with our expressions in State Farm, supra, we would here hold that the insurer would be estopped to deny liability in this case where the plaintiff, having gained a verdict and judgment against the insured, is endeavoring to enforce the judgment against the insurer.
In this case also we are again precluded from entering a formal holding on the point as we do not consider that such a rejection was made since there was in the trial of the case between the plaintiff and the insured a colloquy which, as we view it, constituted an admission in judicio. This colloquy producing the admission as it appeared in the first trial and as introduced in evidence in this case is as follows:
'Counsel for plaintiff: 'Your Honor, please, I think this ought to be gotten on the record here what we are talking about.' Counse...
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