Walker v. Tennessee Farmers Mut. Ins. Co.

• Decision Date: 19 July 1977
• Parties: Ronald G. WALKER, Plaintiff-Appellee, v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendant-Appellant.
• Court: Tennessee Court of Appeals

Page 103

568 S.W.2d 103

Ronald G. WALKER, Plaintiff-Appellee, v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendant-Appellant.

Court of Appeals of Tennessee, Eastern Section.

July 19, 1977.

Rehearing Denied Aug. 12, 1977. ^*

Paul Campbell, Jr., Chattanooga, for defendant-appellant.

Jack R. Brown, Chattanooga, for plaintiff-appellee.

OPINION

GODDARD, Judge.

Tennessee Farmers, Defendant-Appellant, appeals a judgment rendered by the Circuit Court for Hamilton County, upon a jury verdict, making award for both breach of Defendant's insurance contract in connection with the theft of a truck owned by Ronald G. Walker, Plaintiff-Appellee, and a bad faith penalty because of Defendant's refusal to pay.

There are 12 separate assignments of error; however, they fall into three categories: (1) failure of the Court to direct a verdict in favor of the Defendant, (2) failure of the Court to direct a verdict as to the bad faith penalty, and (3) errors in the Court's charge to the jury.

There is little conflicting evidence regarding the material facts. The Plaintiff obtained a standard liability insurance policy from the Defendant covering a 1972 Chevrolet truck. The policy also included coverage for loss by theft. According to Plaintiff's testimony his vehicle was stolen from the Northgate Shopping Center on August 11, 1975, (the correct date is August 20, as shown by the police report) about 7:30 p. m. while he had been shopping. He reported the theft to the police department of the City of Chattanooga, and on the next day his wife also reported it to the insurance carrier's local agent. A few days later he gave a signed written report relative to the incident, as well as a taped statement. Although he complied with all the requests and completed all the papers initially required by the company, no payment was forthcoming. About five weeks after the theft one of the Defendant's adjustors called him and requested that he take a polygraph test relative to the loss of the vehicle. This request was made notwithstanding the fact that the Defendant had no information at that time which would indicate that the Plaintiff was in any way involved in the loss of the vehicle, although it was later learned by discovery depositions taken some two weeks prior to trial that he had submitted to two separate charges of receiving stolen property. The first an automobile, and the second a boat and trailer. At first the Plaintiff agreed to take the test but later recanted. The Defendant again requested in a formal letter to Plaintiff in care of his attorney that the examination be taken and contended in the letter that his failure to submit to the examination was a violation of the policy and a condition precedent to recovery. Subsequent to the theft and prior to suit being filed, there were a number of contacts, generally initiated by the Plaintiff, between him and the Company. These conversations consisted only of inquiries relative to the whereabouts of the truck.DP The policy, in pertinent part, provides:

Named Insured's Duties When Loss Occurs Coverages D, E, G, H, and P. When loss occurs, the named insured also shall:

(b) upon the company's request, exhibit the damaged property to the company and submit to examinations under oath by anyone designated by the company, subscribe the same, procure and produce for the company's examination all pertinent records, receipts and invoices, or certified copies, if originals be lost, permitting copies thereof to be made, all at such reasonable times and places as the company shall designate.

As to the first category of assignments of error, we cannot agree with Defendant's counsel that the language of the policy is sufficiently broad to require the policy holder to submit to a polygraph examination. As has often been said, the cardinal rule in construing contracts is to determine the intent of the parties. Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578 (Tenn.1975); Petty v. Sloan, 197 Tenn. 630, 277 S.W.2d 355 (1955); Trailmobile, Inc. v. Chazen, 51 Tenn.App. 576, 370 S.W.2d 840 (1963), and words expressing such intent are to be given their usual, natural, ordinary meaning. Seeley v. Pilot Fire & Casualty Co., 222 Tenn. 33, 432 S.W.2d 58 (1968); Moore v. Life & Casualty Co., 162 Tenn. 682, 40 S.W.2d 403 (1931); Ansley v. Travelers Ins. Co., 27 Tenn.App. 720, 173 S.W.2d 702 (1940). In our view, upon applying the foregoing rules, the words " submit to examinations under oath by anyone designated by the company, subscribe the same," cannot admit of the construction insisted upon by Defendant.

Additionally, we note, as shown by the cases annotated in 23 A.L.R.2d at 1306, that under the general rule, polygraph examinations, because of their unreliability, may not be used in evidence. Our Supreme Court has specifically so held in criminal cases. Grant v. State, 213 Tenn. 440, 374 S.W.2d 391 (1964); Marable v. State, 203 Tenn. 440, 313 S.W.2d 451 (1958).

The second category directs itself to the awarding of a bad faith penalty.

As pertinent here, T.C.A. 56-1105 provides:

The insurance companies of this state, and foreign insurance companies and other persons doing an insurance business in this state, in all cases when a loss occurs and they refuse to pay the same within sixty (60) days after a demand shall have been made by the holder of the policy on which said loss occurred, shall be liable to pay the holder of said policy, in addition to the loss and interest thereon, a sum not exceeding twenty-five per cent (25%) on the liability for said loss; provided, that it shall be made to appear to the court or jury trying the case that the refusal to pay said loss was not in good faith, and that such failure to pay inflicted additional expense, loss or injury upon the holder of said policy; and, provided, further, that such additional liability, within the limit prescribed, shall, in the discretion of the court or jury trying the case, be measured by the additional expense, loss, and injury thus entailed.

Under the holdings...