Virginia Farm Bureau Mut. Ins. Co. v. Saccio

• Decision Date: 02 December 1963
• Docket Number: No. 5648,5648
• Citation: 133 S.E.2d 268,204 Va. 769
• Court: Virginia Supreme Court
• Parties: VIRGINIA FARM BUREAU MUTUAL INSURANCE COMPANY v. MARY ANNE SACCIO. Record

Page 268

133 S.E.2d 268

204 Va. 769

VIRGINIA FARM BUREAU MUTUAL INSURANCE COMPANY v. MARY ANNE SACCIO.

Record No. 5648.

Supreme Court of Appeals of Virginia

December 2, 1963.

Harry D. Sizemore and G. Kenneth Miller (Bean, Sizemore & Harper; May, Garrett, Miller, Newman & Compton, on brief), for the plaintiff in error.

Robert J. Dimond (George M. Giammittorio; Garnett, Hunter & Dimond; Bendheim, Fagelson, Bragg & Giammittorio, on brief), for the defendant in error.

JUDGE: CARRICO

CARRICO, J., delivered the opinion of the court.

Mary Anne Saccio, on September 22, 1960, recovered a judgment in the Circuit Court of Arlington County against Ronnie Gene Smith for the sum of $14,000.00 for personal injuries sustained by her as the result of the negligent operation of a motor vehicle by Smith. Execution on this judgment was issued and was returned by the sheriff of Arlington county marked, 'No property found out of which to make a levy.'

On February 9, 1961, Miss Saccio, who will be referred to as the plaintiff, filed a motion for judgment against Virginia Farm Bureau Mutual Insurance Company, the defendant. This motion alleged that the defendant was liable to the plaintiff for the amount of her judgment against Ronnie Gene Smith by reason of an assigned risk automobile liability insurance policy issued by the defendant to Edward Ray Smith, covering a 1953 Chevrolet automobile owned by Edward Early Smith. The motion alleged that the policy covered Edward Ray Smith in his operation of the vehicle and those operating it with his permission. It was further alleged that Ronnie Gene Smith was, at the time of the accident, operating the vehicle with the permission of Edward Ray Smith and Edward Early Smith.

The defendant filed a plea in abatement, asserting that the action could be maintained against it only in the city of Richmond. This plea was overruled and thereafter the defendant filed its grounds of defense, denying liability to the plaintiff and asserting that the policy in question was procured by Edward Ray Smith through fraud and misrepresentation and that the policy had been cancelled as of the date of its issuance.

When the case was called for hearing, the plaintiff moved for summary judgment against the defendant. After argument, this motion was granted and final judgment was entered against the defendant for $14,000.00. The defendant is here on a writ of error.

The questions to be determined are:

1. Did the court err in overruling the defendant's plea in abatement?

2. Did the court err in granting summary judgment in favor of the plaintiff?

In its plea in abatement, the defendant alleged that it was a Virginia corporation; that its principal office and registered office were in the city of Richmond; that neither its chief officer nor any of its other officers resided in Arlington county; that the cause of action sued upon arose in the city of Richmond, and that, therefore, the Circuit Court of Arlington County, 'should not have or take further cognizance of the action.'

The defendant relied on Code, § 8-38(2) which provides that an action against a corporation may be brought where, 'its principal office or registered office is, or wherein its mayor, rector, president, or other chief officer resides.'

It is true that Code, § 8-38(2) establishes, generally, the venue of actions and suits against corporations, but the venue there provided is not exclusive. Code, § 8-39 provides that, '[an] action or suit may be brought in any county or city wherein the cause of action, or any part thereof, arose, although none of the defendants reside therein. ' This latter statute is applicable to actions or suits against corporations as well as those against individuals.

Code, § 38.1-380 provides that:

'No policy or contract insuring against liability for injury to or the death of any person, or against liability for injury to or destruction of property, shall be issued or delivered in this state unless it contains in substance the following provisions or provisions which are equally or more favorable to the insured and to judgment creditors so far as such provisions relate to judgment creditors:

. . .

'(2) A provision that in case execution on a judgment against the insured or his personal representative in an action brought to recover damages for injury sustained or loss or damage occasioned during the life of the policy or contract shall be returned unsatisfied, then an action may be maintained against the insurer under the terms of the policy or contract for the amount of such judgment not exceeding the amount of the applicable limit of coverage under the policy or contract. ' [Emphasis added].

The defendnat's policy contained a provision substantially complying with the statutory requirement.

In Norfolk & W. R. Co. v. Crull, 112 Va. 151, 154, 70 S.E. 521, we said, quoting from Bank v. Lacombe, 84 N.Y. 367, 384, 38 Am.Rep. 518:

'The cause of action arises when that is not done which ought to have been done; or that is done which ought not to have been done. But the time when the cause of action arises determines, also, the place where it arises, for when that occurs which is the cause of action, the place where it occurs is the place where the cause of action arises.'

In her motion for judgment, the plaintiff alleged that her damages had been sustained during the life of the defendant's policy. It was stipulated that she had recovered judgment therefor against the defendant's insured in Arlington county and that execution thereon had been returned unsatisfied in that county.

Thus, the plaintiff's cause of action arose when the execution was returned unsatisfied and it arose where the execution was so returned -- in Arlington county. The defendant's plea in abatement was properly overruled.

When the motion for summary judgment was argued before the trial court, the defendant offered, but was not allowed, to present evidence in support of the contentions in its grounds of defense. The court, in granting summary judgment, ruled, as a matter of law, that:

1. An insurance company, which has issued a liability policy under the Virginia Automobile Assigned Risk Plan, cannot declare that policy void ab initio on the ground of fraud in the procurement.

2. The filing, by an insurance company, of a form SR-21 estops the company from denying coverage under its policy listed in such form.

The admissions in the pleadings, the stipulations and the exhibits before the trial court, upon the motion for summary judgment, show that on October 29, 1959, Edward Ray Smith, who was then 18 years of age, applied for automobile liability insurance under the Virginia Automobile Assigned Risk Plan. The application was taken by Harold H. Harper, a licensed insurance agent or broker, and forwarded to the manager of the Plan in Richmond. The application was then sent by the manager to the defendant, which issued the policy on November 6, 1959.

In his application, Edward Ray Smith stated that he was, or soon would be, the registered owner of the automobile upon which he sought coverage; that he had no convictions for traffic violations other than for operating without a Virginia permit and passing a stop sign in August, 1959; that he was the only male operator of the vehicle resident in his household under the age of 25, and that he would operate the vehicle 100% of the time.

On November 29, 1959, the vehicle listed in the application and described in the policy was involved in the collision in which the plaintiff sustained her injuries. Ronnie Gene Smith, the brother of Edward Ray Smith, was operating the Smith vehicle at the time of the accident.

The defendant was given immediate notice of the accident and on December 7, 1959, it filed an SR-21 form with the Division of Motor Vehicles stating that its policy, issued to Edward Ray Smith, was 'in effect' on the date of the accident and applied to the owner, Edward Ray Smith, and the operator, Ronnie Gene Smith.

The defendant claimed that it had discovered, through an investigation conducted subsequent to the filing of the SR-21 form, that the vehicle was not owned by its insured, Edward Ray Smith, but by his father, Edward Early Smith, and that there was no intention that Edward Ray Smith would soon become the owner; that Edward Ray Smith had been convicted of speeding within six months of the date of the application, although he had stated in the application that he had not been convicted of speeding; that Ronnie Gene Smith was a resident in the same household as Edward Ray Smith, was under 25 years of age, was an operator of the insured vehicle, had a record of traffic convictions and had had his operator's license revoked, all of which Edward Ray Smith failed to disclose in his application.

On December 23, 1959, the defendant, with the approval of the manager of the Assigned Risk Plan, gave Edward Ray Smith notice that the policy was cancelled effective as of the date of its issuance, November 6, 1959, for the reason that the applicant was, 'not eligible for assignment.' The defendant refunded the full premium to Edward Ray Smith, which he accepted.

On September 15, 1960, the defendant wrote to the Division of Motor Vehicles and requested permission to withdraw the SR-21 form which it had filed. Such permission was refused because, 'the ninety day period during which this Division could act has long since passed.'

When Miss Saccio filed her motion for judgment against Ronnie Gene Smith, the defendant refused to defend the action, denying liability under its policy.

We now turn our attention to the question of whether an insurer, for fraud in the procurement, may declare void ab initio a policy issued pursuant to the provisions of the Virginia Automobile Assigned Risk Plan.

Code, § 38.1-336 provides as follows:

'All statements, declarations and descriptions in any application for a policy of insurance or for the reinstatement thereof shall be deemed...