Mid-Century Ins. Co. v. Miller

MID-CENTURY INSURANCE CO. v. Anthony D.
MILLER

CA 96-74                                           ___ S.W.2d ___

                  Court of Appeals of Arkansas
                          Division III
               Opinion delivered December 18, 1996


1.   Appeal & error -- when findings of circuit judge are set aside
     -- clearly erroneous standard discussed. -- The findings of
     fact by a circuit judge sitting as a jury are not set aside
     unless they are clearly erroneous; a finding is clearly
     erroneous when, although there is evidence to support it, the
     reviewing court on the entire evidence is left with a definite
     and firm conviction that a mistake has been committed.

2.   Insurance -- policy renewed upon receipt of overdue payment --
     trial court erroneously found that policy was reinstated. -- 
     Appellant's contention that the trial court erroneously found
     that the policy was reinstated to its original term when
     payment of the premium was made after cancellation was correct
     where the policy had been canceled for nonpayment effective
     July 21, 1991, and the receipt evidencing the payment made on
     October 7 by appellee clearly recited that the policy was
     "renewed"; the trial court's reasoning that the payment
     reinstated, not renewed, the policy because no application was
     required, the policy number had not changed, and no second
     policy was issued was equally consistent with the renewal of
     a policy; moreover, there was no indication that the procedure
     for reinstatement as outlined in the cancellation notice was
     ever accomplished; the trial court's decision was clearly in
     error; the matter was reversed on this issue.  


     Appeal from Union Circuit Court; David F. Guthrie, Judge;
reversed.
     Compton, Prewett, Thomas & Hickey, P.A., by:  William I.
Prewett, for appellant.
     James B. Bennett, for appellee.

     Judith Rogers, Judge.
     This is an appeal from a declaratory judgment in which the
trial court held that an insurance policy issued by appellant to
appellee was in full force and effect at the time of appellee's
loss, even though the policy had been canceled due to the
nonpayment of the premium.  Appellant raises two issues for
reversal.  It contends that the trial court erred in finding that
the policy had been reinstated and in failing to find that appellee
had perpetrated a fraud.  We find merit in the first point raised
and reverse.
     On April 19, 1991, appellee purchased automobile liability
insurance from appellant through its agent Lewis Allen Edrington on
a 1983, four-door Cadillac Sedan DeVille.  For a premium of $150,
the policy extended coverage for a six-month period ending on
October 19, 1991.  Appellee remitted $80 at once, leaving a balance
on the premium of $70.  On June 4, 1991, appellant mailed a
reminder notice to appellee advising him that payment of the
remaining balance was due on June 18.  Appellee failed to pay the
balance due and a notice of cancellation was mailed on July 8
informing him that the policy would be canceled as of July 21,
1991, if payment were not received.  Payment was not made, and a
final notice of cancellation was mailed to appellee stating that
the policy was canceled on July 21.  This notice further advised
that, if reinstatement were desired, appellee was to send the full
amount due "now" and that he would be informed "whether [the]
policy has been reinstated, and if so, the exact date and time of
reinstatement."
     On October 5, 1991, appellant was involved in an automobile
accident in the Cadillac.  Two days later, on October 7, appellee
went to Edrington's office and remitted $70.  In July of 1993, suit
was filed against appellee for damages arising out of the October
5 collision.  Appellee then filed this suit for declaratory
judgment seeking a determination of whether coverage existed under
the policy for the accident.  In the complaint, appellee alleged
that he had not received any notices of cancellation and that
appellant had accepted payment on the premium both before and after
the accident.  After a hearing, the trial court ruled that
appellant had presented sufficient proof of the mailing of the
cancellation notices to satisfy the requirements of Ark. Code Ann. 
 23-89-306 (1987), but found, however, that appellee's payment of
$70 on October 7, 1991, was for the balance of the term ending on
October 19, 1991, and thus effected the reinstatement of the
policy.   Consequently, the court ruled that the policy was in full
force and effect at the time of the accident and that it was,
therefore, a covered event. 
     We do not set aside the findings of fact by a circuit judge
sitting as a jury unless they are clearly erroneous.  Ark. R. Civ.
P. 52(a); American States Ins. Co. v. Tri Tech, Inc., 35 Ark. App.
134, 812 S.W.2d 490 (1991).  A finding is clearly erroneous when,
although there is evidence to support it, the reviewing court on
the entire evidence is left with a definite and firm conviction
that a mistake has been committed.  Henry, Walden & Davis v.
Goodman, 294 Ark. 25, 741 S.W.2d 233 (1987).  Appellant contends
that the trial court erroneously found that the policy was
reinstated to its original term when payment of the premium was
made after cancellation.  We agree.
     There is no question but that the policy was canceled
effective July 21, 1991.  The receipt evidencing the payment made
on October 7 by appellee clearly recites that the policy was
"renewed," not reinstated.  As was said by Mr. Edrington, the
policy was carried forward from that day to January 2, 1992, when
it again lapsed because the payment was not sufficient to provide
coverage after that date.  Despite this evidence, the trial court
reasoned that the payment reinstated, not renewed, the policy
because no application was required, the policy number had not
changed and no second policy was issued.  However, with all due
respect to the trial court, we are not persuaded by its reasoning
because those circumstances are equally consistent with the renewal
of a policy.  Moreover, there is no indication that the procedure
for reinstatement as outlined in the cancellation notice was ever
accomplished.  Based on the evidence, we are convinced that the
trial court's decision was clearly in error, and we reverse on this
issue.  Consequently, it is not necessary for us to reach
appellant's second argument that appellee perpetrated a fraud by
failing to inform its agent of the accident when the October 7th
payment was made.
     Reversed.
     Robbins and Griffen, JJ., agree.