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Gurley v. State Farm Mut. Automobile Ins.





APPEAL from the Circuit Court of Madison County; the Hon. GEORGE J. MORAN, JR., Judge, presiding.


Defendant, State Farm Mutual Automobile Insurance Co. (State Farm), appeals from a declaratory judgment entered by the circuit court of Madison County. In entering the judgment that court ruled that at the time plaintiff, Louis Gurley, was struck by a motorist, an insurance policy issued by defendant, containing an uninsured motorist clause, was in full force and effect. On appeal defendant contends (1) plaintiff's policy had lapsed by its express terms because of failure to pay the premium within prescribed time limits and (2) there was insufficient evidence to establish that the motorist striking defendant was "uninsured."

It is undisputed that on April 7, 1969, defendant issued automobile liability insurance policy number 663 162-DO7-13 (the policy) to plaintiff. The policy term was from April 7, 1969, through October 7, 1969, and for those succeeding six-month periods for which the required renewal premium was paid. In addition to providing uninsured motorist protection of $10,000, the policy contained clauses which in pertinent parts provided:

"Cancellation * * * The company agrees as to each coverage in force on such effective date:

A. to continue such coverage in force until the expiration of the current policy, and

B. to renew the policy for the succeeding policy period * * *.

These agreements shall be void and of no effect * * * if the named insured fails to discharge when due any of his obligations in connection with the payment of premium * * *.

Changes — The terms of this policy may not be waived or changed except by policy endorsement attached hereto, signed by an executive officer of the company."

It is also undisputed that plaintiff did not pay the October 7, 1974, renewal premium by that date. Thereafter defendant sent, and plaintiff received, a notice which stated that his policy had expired on October 7, 1974, at 12:01 a.m. The notice further provided that "payment within 10 days after expiration date reinstates this policy as of the expiration date for six months, if paid thereafter, you will be advised if payment has been accepted for reinstatement." Despite receiving that notice plaintiff did not make the premium payment until plaintiff's wife delivered the payment to defendant's agent on October 19, 1974, which was 12 days after its due date. This payment was made one day after plaintiff, as a pedestrian, sustained injuries when struck by a car driven by Deborah S. Francis. In return for the premium payment plaintiff's wife was given what plaintiff characterizes as an "Unconditional Receipt." That receipt, signed by defendant's agent, stated:

"Receipt is hereby acknowledged by: State Farm Auto Seventy-five ____ 93/100 Dollars ($75.93) From Louis H. Gurley Pol. No. 6663 162 DO7-13."

At the time of the injury plaintiff had also been issued from defendant policy number 6670 644 F23 13B (the other policy) for another automobile which plaintiff owned, and that policy was in force. This other policy also contained $10,000 of uninsured motorist protection. Arbitration proceedings as provided for in the other policy were held and resulted in an award to plaintiff of the full amount of the uninsured motorist coverage provided by the other policy. Defendant paid that award to plaintiff, with plaintiff expressly reserving his rights to claim coverage under the policy now under consideration. Following payment of the first award, plaintiff instituted the declaratory action now before this court.

In his complaint plaintiff alleged that despite the late premium payment the policy remained in full force because defendant had induced plaintiff to make a late payment by establishing a course of conduct of allowing late payments or, in the alternative, defendant waived the requirement that a timely payment be made. In its answer defendant denied all material allegations of the complaint, and the cause proceeded to a bench trial.

Plaintiff's wife testified that at 6 p.m. on Friday, October 18, 1974, she telephoned the office of defendant's agent, Tom Cox. Mrs. Gurley stated that she had asked if she could come right over and pay the premium. In response she was told everyone would be gone from the office but that it would be all right to come in and pay it the next morning. The plaintiff, Mr. Gurley, was struck and injured two hours later. Mrs. Gurley further testified that the next morning she took the expiration notice with her to Cox' office and after making a cash payment she received the previously described receipt. Mrs. Gurley stated that she was worried about her husband and related his injury to Cox as he wrote out the receipt. However, she admitted that nothing was said about a potential claim, nor were any assurances given that coverage was in effect at the time of the injury. Mrs. Gurley also testified that while her husband was still in the hospital a check for $5.25 was received from defendant. She stated that although the only notation on the check itself was "includes dividend" she concluded it was for overpayment of premium. Mrs. Gurley could not remember the accompanying notice which stated:

"Unless continuous coverage is indicated, this policy was not in force between 12:01 a.m. on the termination date and the time the policy was reinstated on the reimbursement date as provided under established ...

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