*1 445 A.2d TONKOVIC, III, Appellant, John
v. FARM AUTOMOBILE INSURANCE MUTUAL STATE COMPANY, Appellee. Pennsylvania.
Supreme Court Argued May 1986. March 1987.
Decided 6,May 1987. Reargument Denied *2 Melillo, Angino, Joseph Harrisburg, Richard C. M. appellant. Wix, Harrisburg, appellee.
Richard H. NIX, C.J., LARSEN, FLAHERTY, Before and zappala McDermott, hutchinson, PAPADAKOS, JJ. OF THE COURT
OPINION PAPADAKOS, Justice. presented Appellant, this is whether appeal
The issue Tonkovic, III, exclusionary an is bound clause John contract, in- unilaterally where such clause was Insur- Farm Mutual by Appellee, State Automobile serted application *3 Company, subsequent Appellant's ance through its being accepted Appellee, premium payment exclu- coverage insurance agent, disability for without to, sion; neither explained and where exclusion was such accepted Appellant. nor by, following facts: controversy The under the present arose policy 1979, Appellant applied In of for insurance July is coverage by Appellee. It providing disability offered coverage applied for that would undisputed Appellant that in him his the event mortgage payments enable to make occur, injury might such regard his without where injury, for com- might eligible worker’s Appellant or whether Appel- from agent The insurance whom pensation benefits. on cross-examination: purchased lant testified you you in see Q. came ... [Appellant] When he insurance, isn’t that disability knew he wanted why true? in, he to me that he wanted
A. he came stated When mortgage for on his home. insurance disability you filled out home, on his and when Q. mortgage The with the under- application, it was original for that were standing you applying that would him cover eligible whether not he was for compensation benefits, workmen’s isn’t that true? 86.) (N.T., pp. 85, A. That’s correct.
It also undisputed that at the time application for the policy, Appellee’s agent explained significance occupational only classifications terms of premium costs, scope coverage. agent so testified: Q. also, you Now it’s true that never told him [Appel- the effects of the various at classifications
lant] time, that if except you were classified as a Class 2 something else, rather than it would him cost less money, isn’t that true? correct,
A. That’s we were as applying Class 2. Q. So you that if later told him that his classification
had changed, been would only mean to him that it would cost him a money, different amount of isn’t that true? (N.T., p. 86).
A. That’s correct. Appellant injured job on the on October compensation received workers’ He benefits. filed claim for disability Appellee benefits with and this claim was Appellee explained denied. it had issued to Appellant a Appellant classified as a specifical- Class and ly coverage excluded injuries place incurred the work compensation which workers’ benefits were available. Appellant had never seen this nor had Appellee ever communicated to he had or- paid dered and for had not been furnished.
Appellant in assumpsit instituted an action to recover pursuant benefits claimed to the pur- he had chased. trial,
At Appellant testified that he never received the policy presented written support and substantial evidence to his Appellant claim. also averred that he was never advised of the variation between the applied which he and containing that which was issued Appellee’s exclusion. agent testified that he copy delivered a the amended on Valley Road home on Potatoe Appellant’s to contract signed receipt by Appel- introduced a and August agent 1979. The August bearing the date and lant Appellant policy with that he went over the testified also modifications and 23, 1979, into” the and “went August However, he asked whether when policy. in the restrictions if he were telling Appellant that recall specifically could compensation could receive worker’s on the and job hurt eligible not benefits would be benefits, replied: he policy, under the stated. No, you just I not that —what did state
A. you did state? Q. What him I the exclusions with over
A. went (N.T., p. compensation. include workmen’s which 87). testimony his contradicted that Appellant and wife
Both to which the home showing they purchase did in it until policy, nor live he delivered the agent claimed identi- Further, although Appellant mid-September of 1979. own, any he receipt as his denied signature on the fied the of the receiving copy or a signing receipt recollection of other, Following the conclusion that, time. policy at jury, to the the case was submitted testimony, when as follows: charged jury judge trial upon is the burden This is what the cases have said: Farm, it the burden insurer, would be that would be State insured’s, this would to the insurer establish upon exclu- Tonkovic, understanding of the Mr. awareness is in this case So, though initial burden even sions. indeed, plaintiff, it stays with plaintiff with in this case company upon a the insurance there is burden evidence, that prove you by preponderance to the exclusion and understood Mr. Tonkovic was aware here____ existed single and is the one you before question completed this unique issue: was presented it then Company, Farm State Insurance case, made he, Tonkovic, particular in this and was Mr. *5 450
aware, and did he understand that if he had Workmen’s Compensation then he was excluded from disability provided benefits for in this policy. And that is the issue course, you. before Of of most this testimony did deal (R. 155a). it. with
Following charge jury, counsel for Appellee excepted charge to the Court’s which placed the burden of proof upon the insurer as to the enforceability of the exclusionary clause contained the disability insurance by issued Appellee. The case was submitted to the charge, jury with above and jury returned a verdict in favor of the Appellant against Appellee, Insurance Company. There no specific findings were requested or made the jury.
Appellee’s
Judgment
Motions for
and for
N.O.V.
a New
Trial were denied.1 A
panel
Court,
divided
of
Superior
123,
512,
337 Pa.Super.
486 A.2d
judgment
reversed the
trial,
remanded for a
relying
new
on our decision in Stan-
dard Venetian Blind v.
Empire
Co.,
American
Insurance
300,
503 Pa.
(1983).
A.2d 563
appeal
This
followed and
granted
we
discretionary review.2
Initially we note that we need not decide the issue of
Blind,
supra, requires
Venetian
whether
appli-
retroactive
cation
because
our determination that it is not applicable
to the instant case. The
of Appellant’s argument
essence
that this case is factually
Venetian
different from
very
Blind, and is not within the
scope
that decision. We
agree
Blind is clearly
with
Venetian
distin-
1. These motions were based on a claim that the trial court erred in
charging
jury concerning Appellee's
proof
burden of
under Hionis
Co.,
511,
Pa.Super.Ct.
v. Northern Mutual Insurance
The insurance general be, purchased, insured a and what the ported to liability policy is general of a purpose liability policy. for parties third from made protect an insured claims to resulting from the property injuries person to their case, is patently it In such a negligence. policyholder’s that he should insured to contend for an unreasonable damage liability loss from a property for his own paid nor type negotiations benefits Neither policy. a to lead insured believe coverage sought would coverage on one’s provide liability policy would circumstances, we on these facts and own Based property. the conse- could not avoid the insured determined that he asserting that provision by quences of the exclusion he it. policy, or that did understand failed to read Appellant argues that where one applies and pays certain coverage advance, and the insurance carrier then reduces and unilaterally excludes the coverage desired, then the insurer should still the responsibility have advise coverage insured that paid desired and for has been policy. the facts in Ve limited the final Contrary Blind, netian here specifically requested type a of coverage protected that would him instance, have in this issued policy quite but was different from that which he Blind, to Venetian requested. contrary Also Appellant’s claim is that he never received a copy of the policy and had change never been advised of a in the that he had not that he received for, originally applied it, but failed to read it.
Finally, Appellant asserts
that
since he applied for a
policy
compensation
without a workers’
exclusion, and had
understanding
an express
with the
agent
to this
effect, he had
right
expect
a
that
the actual written
agreement
contract would not
modify
unless he was
explicitly
of
advised
such modification.
In support of this
Na
Rempel v.
proposition, Appellant cites our
in
decision
Co.,
tionwide
Insurance
404,
471 Pa.
Appellee, hand, Venetian on the other relies solely Blind, and contends holding that our there is totally disposi- tive of the in issues this case. Based on the clear and
453 clause, Appellee exclusionary unambiguous language of grant- should judgment n.o.v. its argues that motion Blind. Appellee Venetian Alternatively, of in light ed granted trial should be for a new its motion asserts charge jury erroneous the trial court’s upon based proof to establish that insurer’s burden it is the the exclusion of and understood aware insured was to the in issued disability forth coverage set disagree on forth below we reasons set For the Appellant. grounds. both Blind, although Superior
In Venetian
rejected
we
Mutual Insurance
v. Northern
holding Hionis
in
Court’s
(1974),
that:
decision Hionis, we note reject on this record we Although power bargaining inequality light of the manifest of insur- purchaser company and between an insurance deviating justified ance, on occasion be may a court See of a insurance. plain language contract from the enforce contract (court refuse to may 13 Pa.C.S. § *8 a of law if court as matter of contract clause contract to have been or clause deems the contract made’). This record time it at the was ‘unconscionable only We hold an occasion. present does not such here, by where as relied limitation conspic- coverage clearly is worded deny to insurer conse- not avoid the may the insured uously displayed, to read that he failed by proof of that limitation quences (emphasis it. not understand or that he did the limitation added). at 567. Pa. 469 A.2d at holding not that our
Thus, made it clear we con- factual regard without mechanically applied in which the Venetian text claim arose. Blind simply applicable to the facts of the instant case. Neither did in our decision Venetian Blind to overrule or we intend a conflict with our decision in Rempel v. Nationwide create Insurance, supra, which is clearly controlling on the Life a instant We find crucial distinction between cases factsv applies one specific type where a of coverage and the unilaterally insurer limits that coverage, in a resulting policy quite different from what the insured requested, and where cases the insured precisely received the coverage requested that he but failed to read the to discover clauses that are the coverage usual incident of the applied for. When the insurer elects to issue a policy differing for, from requested paid what insured there is a clearly duty to advise the insured changes of the so made. The burden is not on the insured to read the policy to changes, discover such or not it read at his peril. Moreover, the claim in the instant case is that Appellant copy trial, never received the policy. At Appellant presented substantial support evidence to this claim. Ap- pellant also averred that he was never advised of the variation between the for which he applied and containing which was issued the exclusion. While there conflicting as testimony, jury, was their province, resolved this in credibility Appel- issue favor lant, general as evidenced their verdict his favor. However, Appellee Superior contends and indeed the Court court, held that the trial in its charge to the jury, failed to clarify the two presented, i.e., discrete issues whether Ap- pellant a copy policy, received and whether Appellee proved was made aware of and understood language. the exclusionary Since the question presented for the jury’s merged issues, consideration these Superior Court determined it could not be discerned whether the jury determined that Appellant never received the question, or whether it held that failed Appellee to sustain Thus, its burden proof. Superior Court remanded case for a new trial.
455
that Venetian Blind
is not
of our determination
light
In
case,
charged
the trial court
we find that
to this
applicable
If, indeed,
law.
Pennsylvania
with
conformity
in
jury
the
harmless,
issues,
it was
merging
in
the two
error
there
on either issue would have
finding
for
because
jury’s
to
the
verdict.
support
sufficient
been
that Ap
at a minimum
verdict established
jury
discrepan
of the substantial
made aware
was never
pellant
applied
for which he
and
between
cy
is a
This
sufficient
actually provided.
which
Appellant.
jury’s
verdict
which
affirm
upon
basis
n.o.v.,
for judgment
a motion
review of the denial of
In our
trial,
only
the trial court
when we
will reverse
a new
we
law
con
or an error of
find
abuse
discretion
Martin v. Johns-Man
See,
the outcome of
case.
trolled
(1985);
508 Pa.
Corporation,
154,
We
the insurer
coverage,
specific
prepays
without
change
coverage provided
unilaterally
may not
of, and
was notified
showing
the insured
an affirmative
the insured
understood,
of whether
change, regardless
inis
accord with
holding
note that this
policy.
read the
We
Insurance
v. Nationwide
our decision Collister
Life
denied,
1346, cert.
1089, 99
U.S.
479 Pa.
388 A.2d
(1978),
adhesionary
recognizing
The reasonable of the insured is the focal of point the insurance transaction involved E.g. here. Beckham v. Travelers Co., Insurance 107, 424 Pa. 117- 532, (1967). 225 A.2d 537 Courts should be concerned assuring with the insurance purchasing public’s rea- sonable expectations Thus, are fulfilled. regardless of thereof, ambiguity, the or lack in a given inherent set of (whether insurance documents they applications, be condi- riders, receipts, tional policies, whatever), public a right expect has to they will receive something of value in comparable premium return for the paid. Courts keep should also alert to the fact that the expectations of large the insured are in measure created the insurance industry Through itself. the use of lengthy, complex, and cumbersomely applications, written conditional re- riders, ceipts, to policies, few, name just a the insur- industry ance forces the insurance consumer to rely upon oral representations agent. of the insurance Such representations may or may accurately reflect contents of written document and therefore the insur- er is often to position reap the benefit insured’s lack of understanding of the transaction. As in Allen v. stated Jersey Supreme New Court Co., Metropolitan Ins. 294, 302, 44 supra, N.J. 208 Life (1965): A.2d 642
Much of the difficulty may be laid at the doorstep of the life industry for, itself despite repeated courts, cautions from the it persisted has in using lan- guage which is obscure to and in layman tolerating agency practices layman which are calculated to lead the believe he has beyond may that which called for aby reading. literal The reports replete are here, with instances where company agents, as obtained of the payment premium full annual in advance on the representation broad there would be interim cover- age pending investigation company’s applica- tion and its action thereon. must
Courts examine the dynamics of the insurance transaction to ascertain are the reasonable expecta- what
457 Nationwide See, e.g., Rempel v. tions consumer. (1977). Pa. A.2d 366 must Ins. 370 Courts advantages gained by in mind keep also the obvious applica- at premium paid when the the time insurer permitted enjoy An insurer not be such tion. should in return to giving comparable without benefit benefits the insured.
Collister, 594-95, supra, at A.2d at 1353-54. Pa. trial is Superior Court a new granting Order remanded to of Com- record is the Court reversed *11 Dauphin the that County judg- Pleas of with direction mon in entered in accordance with ment be favor the verdict. jury’s
HUTCHINSON, J., in the concurs result. ZAPPALA, JJ., dissenting and file
FLAHERTY opinions.
FLAHERTY, Justice, dissenting. purchased in case appellant
I
The
this
dissent.
company,
subsequently
by
which was
limited
is
appellant
arises is whether the
question
and the
simple
should be
the limitation. The
answer
bound
(1)
allows
original
if
insurance contract
he is bound
(2)
coverage;
in
notice
changes
to make unilateral
company
(3)
given
purchaser;
is
an uncounseled
changes
of the
to the
reasonably
would
be able
purchaser
ordinary intelligence
communicated.
changes
they
as
are
understand
Pennsylva-
v.
Harvey
Gene &
Builders
in
recently
Only
Co., 512 Pa.
Association Insurance
nia Manufacturers’
impor-
(1986)
Court reaffirmed
420, 517 A.2d
this
the familiar
insurance contract and
tance of the written
i.e., that the
interpretation;
of insurance contract
principles
language
parties is manifested
intent of the
instrument;
are to be
ambiguities
policies
in
written
is
insurer;
language
that where
against
construed
must
effect to that
unambiguous,
give
a court
and
clear
“an
read the contract
and that failure to
language;
unavailing excuse or defense and cannot
justify an avoid-
ance, modification or nullification of the contract
426,
Pa.
citing
thereof.”
at
517 A.2d at
provision
Standard Venetian Blind v. American Empire Insur-
ance,
(1983).
503 Pa.
As we stated in Standard
Venetian
a court may
*12
required on
plain
be
occasion to deviate from the
language
contract,
of an insurance
I remand for new issue origi permitted the changes unilateral were under whether changes, insured was notified of the nal policy, whether was, a person ordinary intelligence and if he whether changes.* would have understood ZAPPALA, Justice, dissenting. Stan- majority’s
I conclusion must dissent from Empire Insurance Blind Co. v. American dard Venetian this (1983) is inapplicable A.2d 503 Pa. perceived conclusion is its Underlying majority’s case. specific type requests insured who a distinction an between provide does not coverage, a which but obtains the re- coverage, an receives insured who requested * trial, a for the trial case be remanded for new In event the should Monis, expressly gave was based on which court an instruction Venetian Blind. overruled in Standard Although majority correctly Venetian Blind states that Standard here, distinguishable present in that is facts from the case on the particular coverage bargained a allegedly, appellant eliminated, concerned subsequently and Standard Venetian Blind misunderstanding afforded an insur- apparent about the significant. cases policy, Both difference ance this factual given is to be effect question whether an exclusion concern the Venetian present from rule of Standard case could be removed appellant only did not receive it were established that the Blind if policy. jury present have been that if the case should The instruction policy, limitation appellant never received a found that *13 hand, If, a he did receive found that effect. on the other it without then, &Gene policy, Venetian Blind and question the under Standard Builders, language the contract Harvey be the would whether plainly a established limitation. the coverage, policy provisions. fails to read
quested
but
among the former.
Appellant
the
majority categorizes
The
characterization,
majority then
from this
the
Proceeding
charge on the issue
the
that
the trial court’s
determines
correct. The ma-
language
policy
was
exclusionary
Nationwide
upon Rempel
v.
relies
jority erroneously
Life
(1977)
Co., 471 Pa.
404,
Unlike Appellee’s asserting that assumpsit action in brought an upon as it was based wrongful denial of attention. to his brought exclusion which was cause of action separate forth a did not set Appellant only to sought misrepresentation, but trespass negligent issued. had been insurance on the recover in this of action stated contract cause Consistent with in chief in the case presented only testimony complaint, testified The Appellant himself. of the Appellant exclusions not told about length at that he was and that he policy, insurance not read the that he did policy, disability. pertaining never received in his plead did not noteworthy It agent Appellee’s he directed testify complaint without paid that would disability insurance procure *14 compensation cover- workmen’s the existence regard to following exchange only to the Appellant The testified age. agent: with you went there how you jury tell when
Q: And would out and it was executed filled how application was and so forth? I, I rapport had a where don’t and we
A: Mr. LaPorte don’t, I’m insurance, maybe and I still know granted as far as just for taking things guilty for I concerned, basically I told him what just insurance I needed, mortgage payment the amount that cover, me I didn’t make and Mr. LaPorte told could payment the whole but money to substantiate enough close, give or take a I was awful get could $450 few dollars. He testified: further 14a].
[R. 13a— insurance, Tonkovic, did bought the when Q. you Mr. cover you insurance which would buy desire you kind of exclusion? with this type with purchase I an insurance A: wouldn’t I hurt than get auto- else would of exclusion. Where thought to it. gave any I never just or work. mobile I I dream would be mentioned. didn’t It was never hurt October. 28a].
[R. 27a— presented testimony Appellee It not until the LaPorte, any reference agent, Norman that there was its for insur- applying understanding Appellant for eligibility provide coverage despite ance which would no At time did compensation. workmen’s to include a the pleadings amend or conform move to after this misrepresentation trespass negligent action requested cover- agent’s failure to obtain reference of the with his Instead, Appellant proceeded made. age was on the denial assumpsit wrongful claim The majority’s issued. which had been of action which upon its of a cause holding depends analysis theory complaint Appellant’s in the was not raised of the case during the course of trial. Although majori- ty legal has raised a theory which may applicable to the case, factual circumstances of this this Court is not at liberty to redraft the Appellant’s complaint or to dispose appeal legal issues which were not presented by the parties. of Appellant’s basis claim was that the exclusionary
language of the policy had not
explained
been
to him. The
*15
trial court specifically charged the jury that the burden was
upon
insurer to establish the insured’s awareness and
understanding of the exclusion under
existing
law
Hionis v.
Northern Mutual Insurance
230 Pa.Super.
(1974).
v.
Joseph BRUNER, Appellant. C.
Supreme Pennsylvania. Court of
Argued Dec. 1986.
Decided March 1987.