STOCK V. ADCO GEN. CORP., 1981-NMCA-075,
96 N.M. 544, 632 P.2d 1182 (Ct. App. 1981)
FLOYD STOCK, dba Four Corners Rental
& Sales,
Plaintiff-Appellee, THE PIERCE AGENCY, INC., a
corporation, Defendant-Appellee,
vs.
ADCO GENERAL CORPORATION, A corporation, and STUYVESANT
INSURANCE COMPANY, a corporation,
Defendants-Appellants.
COURT OF APPEALS OF NEW MEXICO
1981-NMCA-075, 96 N.M. 544, 632 P.2d 1182
Appeal from the District Court of San
Juan County, Brown, Judge.
Petition for Writ of Certiorari Denied
August 5, 1981
ROBIN D. STROTHER, RICHARD L. GERDING,
TANSEY, ROSEBROUGH, ROBERT & GERDING, P.C., Farmington, New Mexico,
Attorneys for Plaintiff-Appellee Floyd Stock.
PAUL L. BUTT, DEBORAH S. DAVIS, SHAFFER,
BUTT, THORNTON & BAEHR, Albuquerque, New Mexico Attorneys for
Defendant-Appellee The Pierce Agency, Inc.
DAMON L. WEEMS, Farmington, New Mexico,
Attorney for Defendant-Appellant ADCO General Corporation.
RAY H. RODEY, RODEY, DICKASON, AKIN &
ROBB, Albuquerque, New Mexico, Attorneys for Defendant-Appellant Stuyvesant
Insurance Company.
Walters, J., wrote the opinion. I Concur:
Joe W. Wood, J., Chief Judge B. C. Hernandez (Dissenting).
{1} Floyd Stock owned a fleet
of tractor-trailer units, one of which was destroyed in an accident on May 8,
1978. Following denial of his claim for collision loss, he instituted this suit
against his insurance agent, Pierce Agency (Pierce); Pierce's broker and
Stuyvesant's general agent, ADCO General Corporation (ADCO); and the insurer,
Stuyvesant Insurance Company (Stuyvesant). This appeal by ADCO and Stuyvesant
followed the trial court's award of damages in favor of Stock against all three
defendants, with judgment over in favor of Pierce against ADCO and Stuyvesant
on Pierce's cross-claim for indemnity and reformation of the policy, and
recovery of Pierce's attorney's fees.
{2} The facts upon which
plaintiff complained are these: Stock, in August 1977, sought physical damage
insurance for his fleet. After requesting and receiving bid proposals from
several different insurance agencies, he obtained an application for insurance
from Pierce, which had been furnished to the agency by ADCO. Stock completed it
and submitted it to Mary Finley at Pierce Insurance Agency, Inc., providing
with it a list of the drivers who would be operating the units. Subsequently,
Pierce obtained coverage from two separate companies, Canal Insurance Company and
Stuyvesant Insurance Company. The Stuyvesant policy was the one acquired
through ADCO. Pierce had no agency agreement with Stuyvesant and had had no
prior dealings with that company; in this transaction it dealt only with ADCO
and had no direct contact with Stuyvesant.
{3} The Stuyvesant policy, as
issued, was not what was quoted to Pierce nor was it what the insured
reasonably expected from the quotation. It contained a "named driver"
endorsement which had not been requested or discussed, and the application form
did not indicate the endorsement would be included in the contract of
insurance. Knowing that the named driver endorsement is a departure from the
usual provisions in policies, Stuyvesant furnished ADCO with a supply of
special red stickers to be attached to the face page of the policy, which
warned of the endorsement and its limited coverage. The sticker was not
attached to Stock's policy.
{4} When the policy was
received in the mail, neither Mary Finley nor Stock read it. Finley examined
the declarations on the face sheet, and Stock simply placed the unopened policy
in his office file. The premium for coverage was based on the value of the
insured vehicles, not upon the driving records of the named drivers; therefore,
neither Finley nor Stock was alerted to the endorsement by the amount of the
premium charge. Consequently, neither Pierce nor Stock were aware of the named
drivers limitation, nor that the name of one of Stock's drivers, Joe
Wisenbaler, was not added to the list of drivers. It was a tractor driven by
Joe Wisenbaler that was destroyed, and upon which this suit arose.
{5} By the date of the
accident Stock had had the policy for approximately seven months. Following the
loss, he read the policy and
{*546} clearly
understood the provisions of the named driver endorsement. Suit was filed after
Stuyvesant refused to pay for loss of the unit because Wisenbaler's name was
not listed on the policy.
{6} Stuyvesant and ADCO
assert that the trial court erred in refusing to adopt requested findings
relating to Stock's acceptance and retention of the policy and his contributory
negligence; in finding that Pierce acted as the agent-broker of Stuyvesant; and
in finding Stuyvesant negligent. Stuyvesant appeals the judgment entered
against it on Pierce's cross-claim for attorney's fees.
{7} Appellants, relying on
Western
Farm Bureau Mut. Ins. Co. v. Barela,
79 N.M. 149,
441 P.2d 47 (1968), argue
that Stock received the policy prior to the accident, and had an opportunity to
examine it for a reasonable time. Therefore, he had accepted its terms. They
contend that the policy provisions were plain, clear, and free from ambiguity,
and by his contributory negligence he is barred from recovery.
{8} In
Pribble, supra,
plaintiff's employer obtained an accident-health policy from defendant company.
After the plaintiff was seriously injured, company executives met with the
insurer's agent and were assured that the insurance policy would cover excess
hospitalization and medical expenses beyond the workmen's compensation benefits
available to Pribble.
{9} When plaintiff sought to
recover medical and hospital expenses for treatments he would not have
undertaken without this assurance, it was learned that the policy excluded
occupational injury coverage. The company asserted that plaintiff had the
obligation to read the policy. The Supreme Court refused to "mechanically
charge" plaintiff with the duty of reading and understanding a contract of
insurance, holding, instead, that under the facts of that case the insured was
... only bound to make such examination of such documents as
would be reasonable for him to do under the circumstances; that he will only be
held to that which he would be thereby alerted; and if the language is such
that a layman would not understand its full impact were he to attempt to plow
through it, the documents will yield the maximum protection consistent with
their language and the reasonable expectation of [the insured].
{10} Stock, like the
plaintiff in
Pribble, did not reasonably expect the insurance policy to
contain a named driver provision. He thought he would receive a physical damage
insurance contract like those he had received previously from other agents and
other companies. He was not advised by Pierce that the Stuyvesant policy was
different from policies he had received in the past. He was not bound to read
the policy word for word.
Accord Olszak v. Peerless Insurance Company,
119 N.H. 686, 406 A.2d 711 (1979);
Batesville Insurance & Finance Co.,
Inc. v. Butler, 248 Ark. 776, 453 S.W.2d 709 (1970);
Rider v. Lynch,
42 N.J. 465, 201 A.2d 561 (1964).
See Stoes Brothers, Inc. v. Freudenthal,
81 N.M. 61,
463 P.2d 37 (Ct. App. 1969), and
White v. Calley,
67 N.M.
343,
355 P.2d 280 (1960). "An insured has a right to presume that the
policy received by him is in accordance with his application, and his failure
to read it will, under this rule, not relieve the insurer or its agent from the
duty of so writing it." 17 Appleman, Insurance Law & Practice 32, §
9406.
{11} The trial court could
properly refuse to adopt requested findings that Stock's failure
{*547} to read the policy constituted
contributory negligence.
{12} Stuyvesant attacks
Finding 7, that Pierce acted as agent and broker for ADCO and Stuyvesant. It
argues that since there was no agency relationship between Stuyvesant and
Pierce, liability could not be passed on to Stuyvesant.
{13} We consider Finding 7
superfluous when all of the findings are read together. Findings 3 and 4
reflect negligence independent of any agency concept, i.e., ADCO failed to
follow company practice to notify of a restrictive endorsement by red-flagging
the policy, and Stuyvesant issued a policy different from the one quoted to
Pierce.
{14} ADCO's liability rests
upon its breach of an agent's duty to "obey all reasonable instructions
[of its insurer] and... [to] exercise reasonable care in carrying out its
orders."
National Grange Mut. Ins. Co. v. Wyoming County Ins. Agency,
156 W.Va. 521, 195 S.E.2d 151, 154 (1973). Stuyvesant's negligence resulted
from the issuance of a policy at variance with the policy quoted; thus it
breached company policy itself in failing to attach a red sticker or notifying
ADCO of its obligation to do so.
See Appleman,
supra.
{15} The liability of ADCO
and Stuyvesant, therefore, need not be considered under agency concepts. Their
liability is sufficiently rooted in negligence to support the court's decision
regardless of Finding 7.
{16} As a kindred argument to
the one above, Stuyvesant contends the trial court imposed a "duty to
warn" upon the appellants. ADCO, in its brief, does not contest liability
to Stock on any ground other than Stock's contributory negligence. That issue
was decided against defendants when the trial court refused their requested
findings on contributory negligence, and we have found no error in the court's
denial of those instructions. The attack on Findings 2 and 4, therefore,
relates only to Stuyvesant's liability.
{17} Stuyvesant's argument
necessarily is based on Findings 2 and 4:
2. Issuing an insurance policy covering vehicles which
contains a "named driver endorsement" is such a departure from the
usual provisions of policies and is so restrictive that a warning or flag
should have been used to call attention to the "named driver
endorsement," not only to alert or warn the insured, but to warn the
insured's agent of the restrictive endorsement.
4. The policy as issued was not what was quoted to the
Defendant, The Pierce Agency, Inc., nor was it what the insured reasonably
expected from the quotation. It did not conform to the policy issued by Canal
Insurance Company. Such a variance should have been called to the attention of
The Pierce Agency, Inc., or Floyd Stock, by ADCO General Corporation or
Stuyvesant Insurance Company.
{18} When these findings are
considered in the context of other findings, it becomes clear that rather than
prescribing an affirmative duty to warn, the findings enunciate the appellants'
negligent conduct in issuing a policy which deviated from the one applied for,
and in failing to follow the insurer's policy of attaching the red-flag
notification of the restrictive endorsement. See our discussion in Part II
above. The practical effect of findings of negligence in this area of the law
will be to encourage warnings of some kind when an insured is issued a policy
different from that which he reasonably expects; it is not a specific duty
which these findings establish or impose.
{19} Stuyvesant also objects
to the award of attorney's fees made to plaintiff. The basis for such an award
is found in §
39-2-1, N.M.S.A. 1978:
In any action where an insured prevails against an insurer
who has not paid a claim on any type of first party coverage, the insured
person may be awarded reasonable {*548} attorney's
fees and costs of the action upon a finding by the court that the insurer acted
unreasonably in failing to pay the claim.
The trial court entered a finding that "Stuyvesant was
at all times directly involved in decisions to deny payment of plaintiff's
loss, which decisions were unreasonable and unconscionable." Stuyvesant
contends the finding is totally unsupported and that it reasonably and in good
faith interpreted its policy provisions.
The trial court could properly have found denial unreasonable
and unconscionable. Stuyvesant was informed by Pierce Agency, both in a
telephone call and by letter, that Pierce and Stock believed the policy covered
the loss; that Pierce had never seen a named driver endorsement attached to a
policy in its 27 years in the insurance business; that insurers should "by
all means" point out [such restrictive endorsements] to the agent by
"letter or by stamping in RED on the face of the policy that IT IS
LIMITED--PLEASE READ." Thus Stuyvesant was specifically informed that the
policy issued was not what Stock or Pierce ordered or expected. Stuyvesant knew
also that the red sticker alerting its insured of the endorsement was not
attached, contrary to its instructions, by its general agent ADCO. Under
principles of agency, ADCO's negligence was Stuyvesant's. Stewart v. Potter, 44
N.M. 460, 104 P.2d 736 (1940).
{20} Whether or not the trial
court was correct in finding that Pierce was Stuyvesant's agent and broker is
not material. There was ample evidence to show that Stuyvesant adamantly
refused coverage after learning it had issued a policy at variance with its
insured's wishes and without notice to the insured by it or its general agent
of the variance. There is also sufficient evidence of the communications
between plaintiff and the Pierce agency regarding the policy to support the
finding that Stuyvesant's denial was unreasonable and unconscionable.
{21} The trial court did not
err in assessing attorney's fees for plaintiff against Stuyvesant.
{22} Both ADCO and Stuyvesant
point to the finding of Pierce's negligence as a proximate cause of plaintiff's
loss as a bar to the indemnity allowed Pierce on its cross-claim.
Rio Grande
Gas Company v. Stahmann Farms, Inc.,
80 N.M. 432,
457 P.2d 364 (1969),
recognizes the propriety of permitting indemnity to one tort-feasor against
another who is primarily liable. The issue of indemnity is not concerned with a
tortfeasor's liability to the plaintiff; it is a remedy solely concerned with
the equities existing among the tortfeasors.
See discussion in
Dessauer
v. Memorial General Hosp.,
96 N.M. 92,
628 P.2d 337 (Ct. App. 1981). Dean
Leflar, in his article entitled "Contribution and Indemnity Between
Tortfeasors," at 81 U. of Pa.L. Rev. 130, catalogs a series of cases
wherein a tortfeasor held proximately liable for his own negligence in failing
to discover and remedy a dangerous condition created by another has been
allowed indemnity. That result follows from a determination that the wrongdoers
were not
in pari delicto, that is, negligent in an equal degree, even
though all may have been guilty of wrongdoing toward the plaintiff.
See
Harmon v. Farmers Market Food Store,
84 N.M. 80,
499 P.2d 1002 (Ct. App.
1972), for an analysis of indemnification in circumstances of negligence in
creation of a dangerous condition vis-a-vis negligence in failing to discover
and remedy that condition.
{23} Thus, we acknowledge
there exists in the law the principle of indemnity in certain instances. The
frailty in this case is the absence of findings which indicate the basis relied
on by the trial court for the indemnity award. We must remand that portion of
the judgment for findings on that matter.
{24} Finally, we consider
Stuyvesant's challenge to the court's conclusion that the contract of insurance
should be reformed to include the driver of the destroyed truck in the named
driver endorsement. Stuyvesant refers us to
Kimberly, Inc. v. Hays,
88
N.M. 140,
{*549} 537 P.2d 1402 (1975),
wherein reformation was held proper if (1) there has been a mutual mistake, or
(2) a mistake by one party accompanied by fraud or other inequitable conduct by
the other party.
Kimberly cited
Wright v. Brem,
81 N.M. 410,
467
P.2d 736 (Ct. App. 1970), and
Morris v. Merchant, 77 N.M. 411,
423 P.2d
606 (1967), but overlooked
Buck v. Mountain States Inv. Corp., 76 N.M.
261,
414 P.2d 491 (1966), which has never been overruled. That case held that
where evidence disclosed that the policy issued did not conform to the order
placed by the insured and the insured was never advised that the policy
differed from which he expected, the evidence would be evaluated as
establishing clear, convincing and satisfactory proof of inequitable conduct by
one party accompanying the other party's mistake. (76 N.M. at 265,
414 P.2d
491.)
{25} Since, however, the
policy was issued for only a one-year period, and expired long before this suit
was tried, we see no prejudice to Stuyvesant in the judgment, which includes by
reference the matter of reformation.
{26} The judgment, in all
respects except the award of indemnity to Pierce, is affirmed. That issue is
remanded to the trial court for entry of findings showing the basis for the
award, which findings, of course, are subject to further appellate proceedings
in the discretion of the litigants.
{27} Since § 39-2-1,
supra,
permits the award of attorney fees, and the statute does not appear to limit
the allowance to success at trial only, Stock is awarded an additional fee for
his attorneys' defense on appeal in the amount of $2,500.00, against
Stuyvesant.
Chief Judge B. C. Hernandez (Dissenting).
HERNANDEZ, Chief Judge (Dissenting).
{29} I respectfully dissent.
{30} In addition to the facts
set forth in the majority opinion I think it necessary to mention the
following: Pierce had never had any business dealings with Stuyvesant prior to
the time that it submitted Stock's application for insurance. The application
was on a Stuyvesant form and was signed by Stock and was dated August 4, 1977.
The form consisted of one printed page with spaces for the insertion of the
information requested. One of the questions asked was "Years experience in
this business." The type written answer was 36 years. There were a series
of boxes asking the type of coverage requested and another series listing the
vehicles to be insured. There was a section entitled "Driver Information
(complete for all operators)", and the names of three drivers were listed.
On an attached sheet the names of five other drivers were listed with notations
as to any traffic citations they had received. Also attached to the
application, on a separate sheet, was a list of the trucks to be insured and a
copy of the lease form used by Stock in renting his trucks. Aside from
furnishing the information requested on the form and that on the attachments
Stock did not submit any questions as to the type of coverage, nor did he
submit any special requests as to coverage.
{31} Stuyvesant's first point
of error is that the trial court erred in refusing to adopt the following
requested findings of fact:
12. Plaintiff received the policy and on receipt, did not
examine, read or review the policy but, rather, placed it in a file drawer with
other insurance papers.
13. Plaintiff accepted and retained the policy without
objection to its terms for a period of seven months.
14. Plaintiff did not examine, read or review the policy at
any time until a loss occurred on or about March 16, 1978, when for the first
time, Plaintiff reviewed, examined and the read the policy.
15. Upon the reading, review and examination of the policy,
Plaintiff understood the language thereof and all provisions of the policy, including
the named-driver endorsement and all terms were clear and unambiguous to him.
{*550} 21. Plaintiff
was negligent in his failure to examine, read and review the policy.
{32} Stock admitted that he
did not read the policy and neither did Mary Finley, the person at Pierce who
received the policy from ADCO and mailed it on to Stock.
[W]e are firmly committed to the principle that receipt and
retention of the policy without objection, by one who has had no opportunity to
examine it for a reasonable time, is regarded as an acceptance of its terms * *
*. It is no excuse that the insured neglected to read the policy or to
familiarize himself with its terms * * *.
[T]he application bears the signature of the applicant and it
must be presumed that he read the agreement and was aware of its contractual
import. Mofrad v. New York Life Ins. Co., 206 F.2d 491 (10th Cir. 1953).
It is usually considered that when the insured applies for a
contract, he has a reasonable time after receipt thereof to examine its terms
and to return it if unsatisfactory. Particularly is this true where the company
sends a contract which is substantially different from the one applied for. 1
Appleman, Insurance Law and Practice, § 172, p. 272.
The application was dated August 4, 1977. The policy was
mailed to Stock in August of 1977 and the accident occurred on March 16, 1978.
Stock had ample time to read the policy and to determine if it was what he had
applied for. He had never bought insurance from Stuyvesant before so there can
be no question of reliance on past dealings. The majority rely on Pribble v.
Aetna Life Insurance Company, supra, to support their conclusion in this
regard. This reliance, in my opinion, is misplaced. The factual situation in Pribble
was far different than in the instant case. The corporation that Mr. Pribble
worked for had a group policy with Aetna. After Mr. Pribble was injured the
General Agent for Aetna, when asked, stated that the $10,000.00 hospitalization
benefit would be available to Mr. Pribble. The policy which covered 50 pages
had a provision that only non-occupational injuries were covered. Mr. Pribble's
injuries were work related. Mr. Pribble did not receive a copy of the policy;
he and the other employees were given a certificate which stated the coverage
in general terms. The certificate covered 29 pages. Aetna denied coverage and
Pribble sued to recover hospital and medical expenses. The trial court granted
Aetna's motion for summary judgment and our Supreme Court reversed. The
principal issue was the General Agent's authority to waive or change a
provision of the policy. Our Supreme Court held that the issue of the authority
of the General Agent was one fact. Aetna argued that Mr. Pribble was charged
with a duty to read the policy and thereby become chargeable with notice of its
content upon his acceptance and retention. It was in this context, that our
Supreme Court stated the following:
We will not simply mechanically charge Mr. Pribble with the
duty of reading and understanding the policy and certificate and then bar him
from recovery by a literal application of its terms and provisions. Rather,
based on the facts before us, we hold that Mr. Pribble, himself or through his
authorized representatives was only bound to make such examination of such
documents as would be reasonable for him to do under the circumstances; that he
will only be held to that which he would be thereby alerted; and if the
language is such that a laymen would not understand its full impact were he to
attempt to plow through it, the documents will yield the maximum protection
consistent with their language and the reasonable expectation of Mr. Pribble.
The Stuyvesant policy consisted of three pages and three half
pages one of which was the Named Driver Endorsement which reads as follows:
It is understood and agreed that while the vehicle(s) are
being operated, coverage {*551} only
applies when being operated by a driver listed herein, or any new driver hired
subsequent to the effective date of this policy subject to the name of such
driver being reported to the Company or its agent prior to his date of
employment. The acceptance of new drivers shall be evidenced by the issuance of
an endorsement naming such drivers. The non-acceptance of any new driver or any
drivers listed herein, will also be evidenced by the issuance of an endorsement
excluding such drivers granting ten days advance notice.
{34} I also take issue with
the following statement made by the majority: "The policy as issued was
not what was quoted to Pierce." The person in the Pierce Agency who
obtained the quotation from ADCO and who filled out the application furnished
by Stuyvesant was Mary Finley, and her testimony in this regard was as follows:
Q. Is there any reason why you didn't take Mr. Stock's
application and policies through one of the other general agents other than --
A. We had received the cheapest quotation from ADCO.
Q. So you were just seeking to find him the cheapest deal; is
that right?
Q. Now, so as to obtain the insurance from Stuyvesant through
ADCO, did you fill out an application form for Mr. Stock?
Q. Where did that come from?
Q. As I understand it, during the time you were involved with
this particular policy you had no direct contact with Stuyvesant; is that
right?
Q. All your dealings were with --
Q. I take it when you were discussing with ADCO the quote
that they were going to give you, or did give you, that there was no
conversation pertaining to a Named Driver Endorsement?
The only part of the application relating to coverage was the
follows.
Premium
Coverage Limits of Liability Unit 1 etc.
Comprehensive ACV or $ Less $ Ded. $
Collision or Upset ACV or $ Less $1000 Ded. $
Theft, CAC 250. Ded. $
Downtime $
Mobile Equipment $
Total
Premium $
An application for insurance is a mere offer which does not
ripen into a contract until accepted by the insurance company. If the company
issues a policy materially different from that applied for, in the eyes of the
law, the policy is a rejection of the offer and is a counter-offer which
becomes a binding contract only when accepted by the original offeror -- the
would-be insured.
Life Insurance Company of Georgia v. Miller, 292 Ala.
525, 296 So.2d 900 (1974).
It is a well recognized rule that, where one applies for a
policy of insurance, he is presumed to apply for the form of policy in use by
the company and that the parties so contract. When the policy was issued, the
rights of the parties became fixed by it and its definite contents and meaning
are controlling.
Dawson v. Metropolitan Life Ins. Co., 9 So.2d 252 (La.
Ct. App. 1942).
{35} In my opinion
Stuyvesant's first point of error is well taken.
{36} Stuyvesant's second
point of error is that the trial court erred in finding that Pierce acted as
agent-broker for Stuyvesant. I agree.
An insurance broker, like other brokers, is primarily the
agent of the first person who employs him, and is therefore ordinarily the
agent of the insured....
III Couch On Insurance 2d, § 25:94, p. 405.
{37} One who procures another
to obtain insurance for him thereby makes such person
{*552}
his agent and assumes full responsibility for his acts performed pursuant
to the agency thus created.
Adams v. Manchester Insurance & Indemnity
Company, 385 S.W. 2d 359 (Mo. Ct. App. 1964).
{38} In my opinion, under the
facts of this case Pierce was the agent of Stock. Pierce placed the order for
the insurance policy for Stock and had the duty to inspect it to see that it
was what Stock wanted.
Butler v. Scott, 417 F.2d 471 (10th Cir. 1969).
{39} Mr. White, the general
manager of the Pierce Agency, testified in part as follows:
Q. Had you at any time prior to August of 1977 dealt with or
written any insurance through the Stuyvesant Insurance Company?
Q. Do you as an agency contract with those companies to write
their insurance for them?
A. Well, we broker policies.
Q. Was the business which was written with Stuyvesant the
kind that you would enter into a contract with or broker through someone else?
A. That would be a brokered business.
Q. For Stuyvesant in this particular instant.
A. No, sir, not a licensed agent for them, no.
Q. After writing a policy, and assuming its (sic) [it's]
delivered to the insured, do you consider your job as an agent over?
Q. Do you consider yourself a continuing representative for
that insured?
{40} Stuyvesant's fifth point
of error is that the trial court erred in imposing upon it a duty to warn. This
point has reference to the two following findings made by the trial court:
2. Issuing an insurance policy covering vehicles which
contains a "named driver endorsement" is such a departure from the
usual provisions of policies and is so restrictive that a warning or flag
should have been used to call attention to the "named driver
endorsement," not only to alert or warn the insured, but to warn the
insured's agent of the restrictive endorsement.
4. The policy as issued was not what was quoted to the
Defendant, The Pierce Agency, Inc., nor was it what the insured reasonably
expected from the quotation. It did not conform to the policy issued by Canal
Insurance Company. Such a variance should have been called to the attention of
the Pierce Agency, Inc., or Floyd Stock, by ADCO General Corporation or
Stuyvesant Insurance Company.
{41} In my opinion, the
assertion in finding No. 2 that "a warning or flag should have been used
to call attention to the named driver endorsement, not only to alert or warn
the insured, but to warn the insured's agent of the restrictive
endorsement" constitutes a conclusion of law and not an averment of fact.
A declaration of a right or duty arising from certain facts is a conclusion of
law. As a conclusion of law it is subject to independent review by this court.
In the absence of a statutory requirement regulating the size
and other characteristics of the type employed to state the policy contract or
prescribing the color of the printing, an insurance policy or application may
be printed in any size of type or color of printing.
Southern Guaranty Insurance Company v. Gipson, 275
Ala. 538, 156 So.2d 630 (1963).
{42} Section
59-16-14 (A),
N.M.S.A. 1978, provides:
On and after the effective date of this act no policy of
life, annuity, casualty, fidelity, surety, fire, marine, vehicle and title
guaranty shall be delivered or issued for delivery in this state, nor shall any
endorsement, rider or application which becomes a part of any such policy be {*553} used, until a copy of the form and the
classification of risks pertaining thereto have been filed with the
superintendent of insurance.
This section was enacted in 1961. The record shows that
Stuyvesant's "named driver endorsement" was approved by the
Superintendent of Insurance for the State of New Mexico on February 22, 1977.
The only duty imposed by an insurer as to the language, form and arrangement
that a policy of insurance should take, absent some statutory requirement, is
that:
The policy should be read as a layman would read it and not
as it might be analyzed by an attorney or an insurance expert. [Citations
omitted.] An exclusionary clause must be conspicuous, plain and clear
[Citations omitted] and must be construed strictly against the insurer and
liberally in favor of the insured.
Crane v. State Farm Fire and Casualty Company, 5 Cal.
3d 112, 485 P.2d 1129, 95 Cal. Rptr. 513 (1971).
{43} "Insurance
contracts have been characterized as adhesion contracts whose terms often are
unintelligible to the insured. [Citations omitted.] Insurance companies have a
duty to make policy provisions plain and prominent, especially those relating
to coverage."
Wells v. Wilbur B. Driver Company, 121 N.J. Super.
185, 296 A.2d 352 (Law Div. 1972).
{44} Mr. Stock admitted, that
if he had read the policy, he would have readily understood the driver
endorsement provision. The fact that Stuyvesant had prepared red warning
stickers to be attached to a policy when the named driver endorsement was incorporated
did not enlarge the duty imposed upon them by the citations quoted above or
create a new duty. Consequently, ADCO's failure to attach this sticker to
Stock's policy was without legal consequence.
{45} As to the trial court's
finding No. 4, I have previously discussed it and find it completely without
evidentiary support in the record.
{46} For all of these various
reasons I would reverse the judgment of the trial court entered on June 23,
1980, and remand this cause with instructions to vacate said judgment and to
enter judgment in favor of ADCO and Stuyvesant, both as to the claim of Stock and
the cross-claim of Pierce and that costs be assessed against Pierce.