Summary
In Patterson v. Cotton States Mutual Insurance Co., 1968, 221 Ga. 878, 148 S.E.2d 320, 322-23, the Georgia Supreme Court held that where there was no evidence that the insurer's intent to cancel the policy or require a higher premium was communicated to the insured, a restrictive endorsement was not supported by valid and binding consideration.
Summary of this case from Blue Bird Body Co. v. Ryder Truck RentalOpinion
23362.
SUBMITTED FEBRUARY 14, 1966.
DECIDED MARCH 10, 1966. REHEARING DENIED MARCH 22, 1966.
Reformation; declaratory judgment. Walton Superior Court. Before Judge Barrow.
Smith Smith, Douglas E. Smith, for appellants.
Eugene Epting, Erwin, Birchmore Epting, D. Marshall Pollock, Marvin W. Sorrells, for appellees.
Where the only purported consideration for an endorsement restricting coverage under an automobile liability insurance policy was the uncommunicated intention on the part of the insurance company either to require a higher premium or to cancel the policy, the endorsement was without consideration and invalid.
SUBMITTED FEBRUARY 14, 1966 — DECIDED MARCH 10, 1966 — REHEARING DENIED MARCH 22, 1966.
Cotton States Mutual Insurance Company, appellee in this court, brought an action for declaratory judgment in Walton Superior Court against D. M. Patterson, Robert W. Patterson, T. B. Laseter and Marion J. Laseter. The insurance company sought a declaration that it was not liable to defend or to pay damages in a suit arising out of an automobile collision involving a car driven by Marion Laseter, brought by the Pattersons against the Laseters. Although the insurance company had issued a liability insurance policy to T. B. Laseter, it relied upon an endorsement to that policy which provided: "In consideration of the payments made by the insured and acceptance by the Company, it is understood and agreed that the Company shall not be liable and no liability or obligation of any kind shall attach to the Company for losses or damage while any automobile insured hereinunder is driven or operated by the insured's son, Marion."
The Pattersons, who are the appellants here, and the Laseters filed answers to the declaratory judgment proceeding, which answers set forth that the endorsement was an invalid modification of the policy because there was no consideration for the same and the endorsement did not speak the actual agreement of the parties. Since the endorsement was allegedly entered into by mutual mistake of the parties, the answer prayed that it be reformed to speak the true agreement as follows: that the insured's son, Marion, was to be excluded as a driver, or operator, insured under the terms of the policy while he was under 25 years of age.
By agreement of the parties, the case was tried by the court without a jury, and resulted in a declaratory judgment in favor of the insurance company, which also denied the reformation of the endorsement to the insurance policy.
The facts necessary for a clear understanding of this case are as follows. Cotton States issued an automobile liability insurance policy covering a certain Studebaker automobile to T. B. Laseter, the named insured, for a period of one year, commencing December 22, 1960. The policy was classified "1B" which for premium rate purposes specified there were no male operators under 25 years of age. It also contained the usual "omnibus" clause which provides coverage for the named insured, residents of his household, and others using the automobile with the named insured's permission.
At the time the contract was entered into T. B. Laseter and the soliciting agent for Cotton States, through whom the insurance was obtained, discussed the fact that Laseter's son, Marion, was under 25. Aware that a higher premium rate was necessary to include his son under the coverage, Laseter stated to the agent: "it was very seldom that he [Marion] drove his car and he didn't want to pay that insurance when he [Marion] had a car and insurance of his own." The agent informed the insured that the company would probably want to exclude Marion until he was 25, but wrote the policy for class "1B" (as above described). In January, 1961, the company's underwriters ascertained that Marion was driving the car on weekends and wrote the agent requesting a higher premium. The agent responded: "Marion lives in Atlanta and comes home about once a month. He has his own car..." No additional premium was forwarded so the insurance company sent the endorsement in question, which provided the company would not be liable for damages sustained while the insured automobile was operated by the insured's son, Marion. Concededly, the only basis for the endorsement was that the son was under 25.
The company's underwriter testified, over objection of counsel for the defendants, that if the company had received a notice from the agent that the insured would not sign the endorsement or pay the additional premium, a direct notice of cancellation would have been sent out the same day. There was no evidence that, at the time, the company's position was communicated to the insured, either as regards the request for a higher premium or the intention to cancel. The insured and the agent thought the exclusion would be only until Marion reached 25, the agent testifying the "old endorsements" were to that effect. However, neither read the endorsement in question which was signed by the insured and entered into on February 9, 1961. On May 19, 1961, Marion became 25 years of age. On December 15, 1961, within the policy period, Marion, while driving the insured automobile, was involved in a collision with the Pattersons' car and he and his father were subsequently sued by them.
The defendants, D. M. and Robert W. Patterson, appeal from the judgment denying them reformation of the endorsement and declaring that Cotton States was under no duty to defend nor obligation to pay damages in the action they initiated against the Laseters. The enumeration of errors specified several grounds of error. However, in their brief to this court, two major issues are raised: was the testimony of the underwriter regarding the company's intent to cancel the policy improperly admitted — this includes the vitally related question of whether there was consideration for the exclusionary endorsement; can the insurance company defeat reformation on the ground that its agent was only a soliciting agent.
We need not consider the second question posed since the first is determinative of the issues in this case.
The underwriter for Cotton States was permitted to testify that the company's position was that "if we had received a notice from the agent that the insured would not sign the endorsement or pay the additional premium a direct notice of cancellation would have been sent out the same day." This was objected to on the ground that "it called for a hypothetical conclusion and it has no bearing on the issues here whatsoever."
Testimony that if an insurance company had known certain facts it would have rejected an application for insurance amounts to a conclusion and is inadmissible. Mutual Benefit c. Assn. v. Bell, 49 Ga. App. 640, 651 ( 176 S.E. 124); Rhodes v. Mutual Benefit c. Assn., 56 Ga. App. 728 (3) ( 194 S.E. 33); Metropolitan Life Ins. Co. v. Marshall, 65 Ga. App. 696, 705-706 ( 16 S.E.2d 33). However, counsel for the appellee, Cotton States, points out that evidence to substantially the same effect was admitted without objection and urges the application of the rule that: "Though the admission of certain testimony objected to be erroneous, a reversal will not result where other testimony to the same effect and of like nature was introduced without objection." Sapp v. Callaway, 208 Ga. 805 (3) ( 69 S.E.2d 734), and cases cited. While evidence of a somewhat similar nature was admitted without objection, it is sufficient to point out that an equally well known principle of evidence is that testimony which is merely a conclusion of a witness is without probative value. Priester v. Melton, 135 Ga. 694 (1) ( 70 S.E. 646); Dougherty v. Dougherty, 153 Ga. 487 (1) ( 112 S.E. 454); Blanchard, Humber Co. v. Hagan Gas Engine c. Co., 26 Ga. App. 538, 539 ( 106 S.E. 604). Hence, the failure to object to evidence that did not amount to legal proof was not a waiver of objection to other like evidence.
It must be reiterated that this purported intention of the insurance company either to require a higher premium or to cancel the policy was not communicated to the insured. In fact, the sole notice given, which related only to a requested increase in premium, was not sent to the insured but to the agent. He testified that any discussion with the insured as to a higher premium or as to exclusion of the son took place at the time the policy was entered into. There was no evidence of any conversation between the agent and the insured concerning the matter of which the agent was notified in January, 1961.
"A consideration is necessary for the valid modification of the coverage provisions of an insurance policy, whether the effect of the modification is to extend or limit the risks against which the insurance affords protection." Dunn v. Utica Mut. Ins. Co., 108 Ga. App. 368, 369 ( 133 S.E.2d 60). See United States Fidelity c. Co. v. Watson, 106 Ga. App. 748, 754 ( 128 S.E.2d 515). "Where the indorsement restricting coverage, or the evidence, has shown that the insurer declined to exercise its right to cancel ... in consideration for the insured's agreement to a restrictive indorsement, the forbearance by the insurer has been held to be a sufficient consideration for the indorsement." Dunn v. Utica Mut. Ins. Co., 108 Ga. App. 368, 369, supra; Anno., 52 ALR2d 826. Although the endorsement provided that it would be effective retroactively to December 22, 1960, it was entered into on February 9, 1961. At that time the consideration expressed, to wit, payments made by the insured and acceptance by the company, was clearly a nullity. Hence, a determination as to what was the true consideration, if any, must be made. Anderson v. Brown, 72 Ga. 713 (3). Upon inquiry into what was the actual consideration, we find from the evidence: that the insured was allowed no reduction in premium; that there was only an uncommunicated intention on the part of the insurance company either to require a higher premium or to cancel the policy and that the insured was totally unaware of such intent. This would not constitute a valid and binding consideration for the consummation of the exclusionary endorsement.
Under the recited circumstances, we find the endorsement was without consideration and the trial judge erred in finding to the contrary.
Judgment reversed. All the Justices concur.