Utica Mut. Ins. Co. v. National Indem. Co.

• Decision Date: 27 April 1970
• Parties: UTICA MUTUAL INSURANCE COMPANY and Safeguard Insurance Company v. NATIONAL INDEMNITY COMPANY and Obadiah R. Merricks.
• Court: Virginia Supreme Court

Page 855

173 S.E.2d 855

210 Va. 769

UTICA MUTUAL INSURANCE COMPANY and Safeguard Insurance Company v. NATIONAL INDEMNITY COMPANY and Obadiah R. Merricks.

Supreme Court of Appeals of Virginia.

April 27, 1970.

John L. Walker, Jr., Roanoke, James I. Moyer, Salem (O. Dalton Baugess, Salem, Woods, Rogers, Muse, Walker & Thornton, Roanoke, on brief), for appellants.

Richard C. Rakes, Roanoke (Gentry, Locke, Rakes & Moore, Roanoke, on brief), for appellees.

Before SNEAD, C.J., and I'ANSON, CARRICO, GORDON, HARRISON, COCHRAN and HARMAN, JJ.

HARMAN, Justice.

This is an appeal from a final decree in a declaratory judgment suit wherein the trial court declared void Ab initio a policy of automobile liability insurance issued by National Indemnity Company ('National'), to John Taylor Bronw, deceased, ('Brown'). The decree further provided that National had no duty to pay any part of a judgment obtained by Obadiah R. Merricks against Brown's administrator.

This case was heard by the trial court on depositions and the exhibits which were filed.

We awarded an appeal from the decree to Utica Insurance Company ('Utica') and Safeguard Insurance Company ('Safeguard'), who were made parties defendant in the court below.

The evidence discloses that Brown contacted James F. Firebaugh, an agent for Nationwide Insurance Company in Roanoke, Virginia, requesting that Firebaugh issue an automobile liability insurance policy with his company covering Brown's automobile.

Firebaugh, whose brother was married to Brown's aunt, determined from his initial conversation with Brown that he was unmarried and under twenty-five years of age.

Firebaugh advised Brown that he could not write the coverage with Nationwide Insurance Company because Brown would not qualify under the underwriting standards established by that company. He advised Brown, however, that he would attempt to place this business and obtain coverage for him through another company.

On June 2, 1964, Firebaugh obtained from Brown, on forms provided by Insurers of Virginia, Incorporated, the general agent for National, a written application for an automobile liability insurance policy. When required by the application to 'List any impairments you may have,' Brown responded 'None.'

The written application and net premium were forwarded to National's general agent and on June 3, 1964, a liability insurance policy for minimum limits was issued covering Brown's car from that date to June 3, 1965. It should be noted that this policy was a voluntary contract entered into between Brown and National and that Brown was neither a 'statutory risk' under the provisions of the Motor Vehicle Safety Responsibility Act, Code § 46.1--388 to 46.1--514, nor a 'poor risk' who obtained his coverage under the Virginia Assigned Risk Plan set up pursuant to Code § 38.1--264. ¹

When the original policy expired on June 3, 1965, it was not immediately renewed because the renewal premium had not been paid. The premium had been substantially increased due to a speeding conviction of Brown in February, 1965. Subsequently, on July 26, 1965, a renewal was requested and the premium was paid by Brown. The renewal policy, which was issued on July 26, 1965, is the policy with which we are now concerned. This policy shows on its face that it is a renewal of the policy issued on June 3, 1964.

On September 26, 1965, while operating his car in Henry County, Virginia, Brown suffered an epileptic seizure and his car collided with a car owned and driven by Obadiah R. Merricks. At no time prior to this accident, which gave rise to the claims under the policy, did National or any of its agents have actual knowledge that Brown was suffering from epilepsy.

At the time of the application, Firebaugh, because of his family connection with Brown, knew that Brown's father committed suicide in 1961 and that Brown had been the one who first discovered his father's body. Firebaugh knew that Brown had been treated by a physician for an 'emotional strain' or 'nervous disorder' following this incident. Firebaugh discussed this with Brown and from the conversation 'determined that this did not affect his driving.'

Brown did not reveal to Firebaugh that he had suffered from grand mal epileptic seizures since shortly after his father's death in 1961 and that he was receiving daily doses of Dilantin, a drug used for the treatment and control of such a condition.

The evidence establishes that Brown had suffered a grand mal epileptic seizure on February 23, 1963, which resulted in a loss of consciousness. In November, 1963, when he applied for a renewal of his operator's license, he dislcosed this information to the Virginia Division of Motor Vehicles ('D.M.V.') and his license renewal application was refused.

Brown was not licensed to drive a motor vehicle from November, 1963, until March, 1964, when a new license was issued after his physician certified to D.M.V. that he had suffered to epileptic seizures for more than one year. This license was issued on condition that Brown would file with D.M.V., at least every six months, an acceptable physician's statement about his medical condition.

National's agent, as a part of its routine procedure, after the initial policy was issued and again before the renewal policy was issued, received from D.M.V. an 'operation record' chekc on Brown. From the information furnished by D.M.V., National knew that Brown was licensed to drive, that he had been involved in no reported accidents and that he had been convicted of speeding in February, 1965. The D.M.V. reports, while showing that Brown was required to wear 'corrective lenses' while driving, did not disclose the information in D.M.V. files regarding Brown's epilepsy.

The first argument advanced by Utica and Safeguard is that Brown made no material misrepresentation of fact in the insurance application. They...