Wallace v. Virginia Surety Co. Inc.

55 S.E.2d 259, 80 Ga. App. 50, 1949 Ga. App. LEXIS 770

• Court: Court of Appeals of Georgia
• Decided: September 23, 1949
• Docket: 32586.
• Status: Published

Opinions

Worrill, J.

In this case the question for determination is, did the plaintiff, Wallace, have a contract of insurance with the defendant, Virginia Surety Company Inc., under which the Surety Company was obligated to defend him against suits arising from a collision which occurred 275 miles from Atlanta where the vehicle involved, being one listed as insured under the policy, was returning from a trip to Miami, Florida, where Miami is admittedly a distance of 725 miles from Atlanta?

“Contracts of insurance, like other contracts, are subject to the rule of law that the intention of the parties must be ascertained. ‘The cardinal rule of construction is to ascertain the intention of the parties. If that intention be clear, and it contravenes no rule of law, and sufficient words be used to arrive at the intention, it shall be enforced, irrespective of all technical or arbitrary rules of construction.’ Code, § 20-702. See, in connection with interpretation of contracts, Code, § 20-704 (2), as follows: ‘Words generally bear their usual and common signification . .’ ‘Insurance is a matter of contract. An insurance policy is a contract of indemnity for loss, and the intention of the parties, if it can be ascertained, must determine the sense in which the terms employed are used. This intention of the parties must be sought for in accordance with the true meaning and spirit in which the agreement was made and expressed in the written instrument, and the ordinary and legal meaning of the words employed must be taken into consideration.’ North British & Mercantile Insurance Co. v. Tye, 1 Ga. App. 380 (58 S. E. 110).” American Casualty Co. v. Fisher, 195 Ga. 136 (23 S. E. 2d, 395, 144 A. L. R. 533). “Contracts of insurance, like other contracts are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous, their terms are to be taken and understood in their plain, ordinary and popular sense.” United States Fidelity &c. Co. v. Guenther, 281 U. S. 34 (50 Sup. Ct. 165, 74 L. ed. 683, 72 A. L. R. 1064).

It is elementary that an insurance company is discharged from liability under its policy if the risk is materially increased. See Black v. Fidelity Phenix Fire Ins. Co., 14 Ga. App. 510 (81 S. E. 584), and cases cited on page 514. In Southern Mutual Ins. Co. v. Hudson, 113 Ga. 434, 440 (38 S. E. 964), the court recognizes the principle that a change in use which materially increases the hazard of the insurance releases the insurance company from liability on a loss directly resulting as a consequence of such increase in risk.

We think that the terms of the covenants of the insurance policy are plain and unambiguous. The plaintiff agreed in the first paragraph of the quoted “commercial radius endorsement” not to drive the automobile beyond the 500 mile radius. This agreement showing on its face a consideration therefor constituted a promissory warranty on the part of the plaintiff, which when violated by him in sending his vehicle covered by the policy on a trip to Miami, Florida, beyond that radius, entitled the defendant to declare the policy, for the purposes of that trip, or operation, in its entirety, void. Such action by the plaintiff constituted a breach of the contract which released the defendant from the obligation to perform its covenants under the contract of insurance in so far as that particular trip was concerned.

We cannot say as a matter of law that a trip of 1450 miles does not subject the vehicle involved to greater hazards and risks over the entire trip than would one of only 1000 miles, or less. We think it is clear that it was the intention of the parties that the vehicles insured be not used as long-haul carriers, and that under the rules of law set forth above the liability of the insurance company under the policy was at an end when the plaintiff sent his truck beyond the 500 mile radius of Atlanta, thus increasing the hazard and risks that the truck was subject to, and that the company was not obligated to take any action to defend the plaintiff from the suits arising from a collision which occurred as a direct and proximate result of this long-haul trip. We, therefore, conclude that the evidence authorized the finding of the trial judge with respect to the right of the plaintiff to have the relief prayed for in the petition for a declaratory judgment, and the judge did not err in overruling the motion for new trial based on the general grounds only.

This case was considered by the whole court as provided by the act approved March 8, 1945 (Ga. Laws, 1945, p. 232).

Judgment affirmed.

Sutton, C. J., MacIntyre, P. J., and Gardner, J., concur. Felton and Townsend, JJ., dissent.