IN THE SUPREME COURT OF MISSISSIPPI
NO. 97-CA-00792-SCT
CONSOLIDATED WITH
NO. 98-CA-00100-SCT
JOSEPH HENRY STEINWINDER, JR. AND CYNTHIA MYRICK
STEINWINDER
v.
THE AETNA CASUALTY AND SURETY COMPANY
DATE OF JUDGMENT: 02/07/1997
TRIAL JUDGE: HON. JERRY O. TERRY, SR.
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: DEAN HOLLEMAN
BILLY W. HOOD
RODNEY D. ROBINSON
ATTORNEY FOR APPELLEE: JOHN ROGER MILLER
NATURE OF THE CASE: CIVIL - INSURANCE
DISPOSITION: REVERSED AND REMANDED - 8/19/1999
MOTION FOR REHEARING FILED: 08/31/99; denied 10/07/99
MANDATE ISSUED: 10/14/99
BEFORE SULLIVAN, P.J., BANKS, AND WALLER, JJ.
PER CURIAM:
¶1. A majority of the court agrees that the judgment of the trial court must be reversed
but fails to agree on the disposition thereafter. Because we cannot agree on any
instructions to guide the lower court, we remand the case to be decided on such
principles as the trial judge may deem right. See McNutt v. Lancaster, 17 Miss. 570
(1848).
BANKS, JUSTICE, DELIVERS THE FOLLOWING OPINION.
¶2. In this case, we are faced with the question of whether uninsured motorist coverage
extends to the shareholders/officers of a corporation when the corporation is the only
named insured under a corporate policy. Following the majority of jurisdictions which
have been faced with this issue, we conclude that a shareholder is not entitled to
uninsured motorist coverage in such instances solely by virtue of his status as a
shareholder. In this present case, however, factual issues exist as to the extent of
coverage agreed on by the parties which make a grant of summary judgment in favor of
the insurer improper. Accordingly, the summary judgment below in favor of the insurer
is reversed, and this case is remanded for further proceedings consistent with this
opinion.
I.
¶3. Steinwinder Enterprises, Inc. (SWI) is a corporation owned and operated by
Joseph Steinwinder, Sr. (Joe, Sr.); his wife, Kit; their son, Joseph Steinwinder, Jr. (Joe,
Jr.); and his sister. While SWI's principal place of business is Gulfport, Mississippi, its
business as a wholesale distributor requires extensive travel both nationally and
internationally. On July 13, 1990, Joe Steinwinder, Jr., was injured while in Chicago,
Illinois on business when the taxi cab in which he was a passenger collided with
another vehicle.
¶4. SWI possessed insurance coverage with Aetna Casualty and Surety Company.
The insurance policy was acquired by Joe, Sr. for SWI through Sam Readman, an
Aetna agent who had been SWI's insurance agent for about twenty-five years. The
policy with Aetna was first acquired by Joe, Sr. around 1989 in the name of SWI.
Under the policy in effect at the time of the accident, SWI carried a Worker's
Compensation, Employer's Liability and a Business Auto Policy. SWI possessed
uninsured motorist coverage in the amount of $300,000 for its business auto, one 1990
Ford truck. This amount had been changed from a $25,000 mistaken uninsured
coverage limit upon renewal in 1990. The named insured under the policies was SWI.
¶5. As a result of the Chicago accident, Joe, Jr. made a claim for uninsured motorist
coverage under the business auto policy. Aetna denied the claim on the basis that he
did not qualify as an insured for uninsured motorist coverage under this policy. This
denial provided grounds for a complaint filed by Joe, Jr. and his wife Cynthia. Cross-
Motions for Summary Judgment were filed by both parties. After hearing on the
motions, the trial court granted Aetna's summary judgment motion by order on
February 7, 1997, holding that Joe, Jr. was not entitled to uninsured motorist benefits
under the policy issued to SWI. Subsequently, Joe, Jr. filed a Motion to Alter, Amend
or Clarify the trial court's order which the court denied on May 20, 1997.
¶6. Aggrieved, Joe, Jr. and Cynthia appealed to this Court for relief. Joe, Jr. filed Notice
of Appeal to the Harrison County Circuit Court on June 20, 1997, one day after the
deadline for filing such notice. On June 21, 1997, Joe, Jr. filed a motion to extend time
for filing notice of appeal. After hearing on the motion, the trial court granted the motion
by order dated January 14, 1998, finding the delay was the result of excusable neglect
and extending the time for filing for period of ten days after the order date. Joe, Jr.,
thereafter filed a Re-Notice of Appeal on January 22, 1998.
II.
a.
¶7. This Court employs a de novo standard of review when reviewing a lower court's
grant of summary judgment. Box v. State Farm Mut. Auto. Ins. Co., 692 So. 2d 54,
55 (Miss. 1997) (citing Mississippi Farm Bureau Cas. Ins. Co. v. Curtis, 678 So. 2d
983 (Miss. 1996). Evidentiary matters are viewed in the light most favorable to the
nonmoving party, and if any triable issues of fact exist, the lower court's decision to
grant summary judgment will be reversed. Id.
b.
¶8. The Steinwinders contend that an officer and employee of a closely held family
corporation is entitled to uninsured motorist coverage under the corporate policy for
an accident which occurred while on company business, although not in a vehicle
designated under the corporate policy. They assert that because Joe, Jr. was an officer
and employee of SWI, acting in the scope of his employment while in Chicago, he falls
within the uninsured motorist coverage under SWI's business auto policy, regardless
of the fact that he was not in a covered auto. Aetna first counters that this appeal
should be dismissed because the Steinwinders' Notice of Appeal was not timely filed
pursuant to Rule 4 of the Mississippi Rules of Appellate Procedure.(1) Aetna also
argues that summary judgment was proper because under the terms of the policy, Joe,
Jr. was not a named insured.
¶9. While the trial court allowed the Steinwinders an extension to file their appeal based
on excusable neglect, Aetna argues that the reasons presented by the Steinwinders did
not constitute excusable neglect. Aetna, however, makes this argument on appeal to this
Court without first filing a cross-appeal. For an appellee to raise an argument other than
in response to the appellant, the appellee must comply with the requirements for filing a
cross appeal with this Court. Morrow v. Morrow, 591 So. 2d 829, 832 (Miss. 1991).
Failure to file a notice of cross-appeal is usually considered fatal. Lindsey v. Lindsey,
612 So. 2d 376, 378 (Miss. 1992). Where an appellee raises an issue not raised by the
appellant without filing a notice of cross-appeal, it is within this Court's discretion to
address the issue. Morrow, 591 So. 2d at 832. We decline to address the issue.
c.
¶10. It is a fundamental requirement that before a person is entitled to recover
uninsured motorist coverage, they must first prove that they are an insured under the
insurance policy or the uninsured motorist statute. Johnson v. Preferred Risk Auto.
Ins. Co., 659 So. 2d 866, 871 (Miss. 1995).
¶11. The language in the Uninsured Motorist Coverages section of the policy in this
case provides:
We [Aetna] will pay all sums the "insured" is legally entitled to recover as damages
from the owner or driver of an uninsured motor vehicle. The damages must result
from bodily injury sustained by the insured or property damage caused by an
accident.
WHO IS INSURED:
1. You
2. If you are an individual, any family member
3. Anyone else occupying a covered auto or a temporary substitute for a
covered auto. The covered auto must be out of service because of its
breakdown, repair, servicing, loss, or destruction.
4. Anyone for damages he is entitled to recover because of bodily injury
sustained by another insured.
¶12. Under the Mississippi Uninsured Motorist Coverage Statutes, an insured is defined
as follows:
[t]he term "insured" shall mean the named insured and, while resident of the same
household, the spouse of any such named insured and relatives of either, while in
a motor vehicle or otherwise, and any person who uses, with the consent,
expressed or implied, of the named insured, the motor vehicle to which the policy
applies, and a guest in such motor vehicle to which the policy applies, or the
personal representative of any of the above. . . .
Miss. Code Ann. § 83-11-103(b)(1991).
¶13. In the present case, Joe, Jr. was not designated as a named insured, nor was he
occupying a vehicle designated under the policy. To be entitled to coverage, Joe, Jr.
would have to qualify as a family member, which is defined in the policy as "a person
related to you by blood, marriage or adoption who is a resident of your household,
including a ward or foster child." The Steinwinders rely on J & W Foods Corp. v.
State Farm Mut. Auto. Ins. Co., 723 So. 2d 550 (Miss. 1998), for the proposition
that Joe, Jr., is entitled to uninsured motorist coverage under SWI's policy with Aetna.
¶14. In J & W Foods, the Court was faced with the question of whether the mother of
a shareholder in a closely held corporation qualifies as an insured pursuant to an
uninsured/underinsured motorist provision in an insurance policy where the
corporation is the named insured. Id at 551. The Court held that the record was
insufficient to support a judgment on the pleadings in the favor of the insurer,
concluding that in deciding whether one is an insured under an insurance contract, it
must first be determined whether the policy provision is ambiguous. Id at 552. This is
done by looking at the policy as a whole, and if there is an ambiguity within the policy
then the intention of the parties should be based upon what a reasonable person placed
in the insured position would have understood the terms to mean. Id. at 552. The
Court did not rule specifically on whether shareholders would qualify as an insured
when the policy is in the corporate name.
¶15. The policy language in the present case was not ambiguous. The policy clearly
listed SWI as the named insured, and no individuals were listed for coverage under this
section. There does appear, however, to be some question as whether Aetna's agent
represented to SWI that the officers would possess uninsured motorist coverage, even
in uncovered autos, while traveling in the course of employment. The Steinwinders
assert that when the coverage was purchased from Agent Readman, Joe, Sr., acting on
behalf of SWI, expressed to Readman that because the business required extensive
travel, uninsured motorist coverage on officers and employees during travel was
desired. The Steinwinders further contend and Joe, Sr.'s deposition testimony was that
Readman informed SWI that uninsured motorist coverage would follow its officers
while on business for the company, even if not occupying a vehicle specifically insured
through the policy. Agent Readman testified in his deposition that he did represent to
SWI that the officers would be covered for uninsured motorist coverage when
traveling in the course of business for SWI. He admitted that he failed to indicate to
SWI the need for it to submit a special endorsement for the officers to be covered.
Readman asserted that he was not aware of the need for any such endorsement or that
the officers had to be specifically named as an insured and that he believed the officers
were covered for uninsured motorist coverage when in the course of employment for
SWI. Readman was also of the opinion that Joe, Jr., a passenger in a Chicago, Illinois,
taxicab when the accident occurred, would have uninsured motorist coverage and that
his understanding was that the coverage extended to vehicles other than the covered
auto.
¶16. Miss. Code Ann. § 83-17-1 (1991) provides, in pertinent part that:
Every person who solicits insurance on behalf of any insurance company, or who
takes or transmits, other than for himself, an application for insurance or a policy
of insurance. . . .or who shall receive a policy or deliver a policy of insurance of
any such company or who shall examine or inspect any risk, or receive, collect,
or transmit any premium of insurance. . . .shall be held to be the agent of the
company for which the act is done or the risk is taken as to all the duties and
liabilities imposed by law, whatever conditions or stipulations may be contained in
the policy or contract . . . .
¶17. Knowledge acquired by a soliciting agent in the course of his employment in
soliciting insurance, preparing and transmitting applications, delivering policies, etc. is
ordinarily imputed to the company. Andrew Jackson Life Ins. Co. v. Williams, 566
So. 2d 1172, 1180 (Miss. 1990). While there is nothing in the record to suggest Aetna
was aware of Readman's actions in procuring the policy with SWI, Readman's
knowledge of SWI's intent, coupled with his representations to SWI, make summary
judgment on behalf of Aetna in this case improper. Based on the representations of
Aetna's agent, SWI and Joe, Sr. thought that officers and shareholders would be
covered under the business policy. To support this belief, the record reflects that SWI
increased the coverage limits. Therefore, questions of material fact as to the extent of
coverage in this case prevent summary judgment in favor of Aetna.
d.
¶18. Because the question was not answered by J & W Foods and because factual
issues prevent a determination of whether coverage should be allowed in the present
case, the Court takes this opportunity to determine whether a shareholder/officer is an
insured when the only named insured is the corporation.
¶19. The majority of jurisdictions that have been faced with similar issues hold that
when the corporation is the named insured, coverage does not extend to individuals. In
General Ins. Co. v. Icelandic Builders, Inc., 604 P.2d 966 (Wash. Ct. App. 1979),
a closely held corporation maintained uninsured motorist coverage on a vehicle. The
son of the sole shareholder, injured in an accident while in his personal vehicle,
attempted to recover under the corporate insurance policy. The insurer then filed suit
seeking a declaratory judgment of no coverage. The trial court found no coverage and
the Washington Court of Appeals affirmed, ruling that the corporation alone was the
named insured. Id. at 968. A Hawaii appellate court held that a corporation's sole
shareholder, officer and director, involved in an accident on his personal moped, was
not entitled to underinsured motorist coverage. Foote v. Royal Ins. Co., 962 P.2d
1004, 1006-08 (Hawaii Ct. App. 1998). The court reasoned that the policy language of
"you" and "your" within the business auto policy clearly referred to the named insured,
and common sense dictates that a reasonable layperson knows that a corporation does
not have relatives or family members. Id.
¶20. In Cincinnati Ins. Co. v. R. Russell Builders, Inc., No. 96-C-00249, 1997 WL
349991 (N.D. Ill. 1997), an Illinois federal district court held that a corporate secretary,
who was not a named insured under a policy listing the corporation as the only named
insured and who was not driving a covered auto, was not entitled to underinsured
motorist coverage. Id at *4-*6. A Florida appellate court has also held that under a
policy with the corporation as the named insured, the sole shareholders were not
eligible for uninsured motorist coverage, following the rule that corporations are legal
entities separate and distinct from the persons comprising them. American States Ins.
Co. v. Kelley, 446 So. 2d 1085, 1086 (Fla. Ct. App. 1984). The Florida Supreme
Court had previously determined that corporate shareholders and employees must be
specifically named in the policy. Id. at 1086 (citing Travelers Ins. Co. v.
Bartoszewicz, 404 So. 2d 1053 (Fla. 1981). Various other states addressing this issue
have also found noncoverage. See Bryant v. Protective Cas. Ins. Co., 554 So. 2d
177, 178-79 (La. Ct. App. 1989) (finding coverage also did not extend to employees
of corporation under policy listing corporation as the named insured when not in a
covered auto); Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455 (Tex. 1997).
¶21. In all of the aforementioned cases, there was policy language similar to the policy
in this case--corporate policies listing only the corporation as named insured with "you"
(the named insured) defined as "who is an insured" under the policy. There is little
justification for holding otherwise. Those sophisticated enough to do business in the
corporate form should be charged with the knowledge that corporations are, in law, a
separate entity and that in order to extend coverage to others absent unusual
circumstances or contrary representations, such others, corporate or human, should be
named. Accordingly, this Court adopts the holding of the majority of jurisdictions and
concludes that a corporate shareholder is not solely by virtue of being a shareholder
entitled to uninsured motorist coverage under an insurance policy where the corporation
is the only named insured.
III.
¶22. The Steinwinders assert that SWI and Joe, Sr. were entitled to rely on the
assurances of Readman, an Aetna agent, that uninsured motorists coverage would
extend to SWI's officers while traveling on business for SWI even if not occupying a
covered auto. Addressed supra, there is evidence that Readman, who had been SWI's
insurance agent for a number of years, did make such assurances to SWI. In dealing
with the agent, it is reasonable to believe that SWI would rely on the representations of
Readman as to coverage under its policy. This presents a triable issue of material fact
making summary judgment improper. See Box at 56.
IV.
¶23. In their final assignment of error, the Steinwinders argue that the insurance policy
should be reformed to meet the expectations of the insured and the representations of
the insurance company concerning uninsured motorist coverage of individual officers.
The Steinwinders assert that due to mutual mistake, the insurance policy should be
reformed.
¶24. The general rule in this state and elsewhere is that reformation of a contract is
justified only (1) if the mistake is a mutual one, or (2) where the mistake is on the part
of one party and fraud or inequitable conduct on the part of the other. Johnson v.
Consolidated Am. Life Ins. Co., 244 So. 2d 400, 402 (Miss. 1971). In order to
reform a contract upon the ground of mutual mistake, there must have been mutual
mistake and not merely a mistake of one of the parties. United States Fidelity &
Guar. Co. v. Gough, 289 So. 2d 925, 927 (Miss. 1974). Proof must establish mutual
mistake beyond a reasonable doubt. Hartford Fire Ins. Co. v. Associates Capital
Corp., 313 So. 2d 404, 408 (Miss. 1975).
¶25. Readman testified in his deposition that he believed coverage would extend to the
shareholders and officers of SWI at all times during business travel and that his
understanding of the policy was that uninsured motorist coverage extended to other
vehicles the insured traveled in. It was SWI's and Joe, Sr.'s intent that the coverage
follow its shareholders and officers in such instances as well. SWI also made certain
that its policy limit was increased from $25,000 to $300,000, due in large part to the
extensive travel of its officers. Hence, both SWI and Readman thought the uninsured
motorist coverage extended to the officers. The policy, however, did not reflect
uninsured motorist coverage to the shareholders and officers as SWI had intended. The
evidence may be amenable to a conclusion that the insurance contract should be
reformed because of mutual mistake of the parties. See Lititz Mut. Ins. Co. v. Miller,
210 Miss. 548, 50 So. 2d 221 (1951) (insurance contract reformed to reflect intention
and understanding of the parties); See also Davidson v. State Farm Mut. Auto. Ins.
Co., 373 N.W.2d 642, 647 (Minn. Ct. App. 1985) (insurance policy which failed to
reflect the intentions of the parties reformed based on mutual mistake).
V.
¶26. For the foregoing reasons, the grant of summary judgment to Aetna is reversed
and this case is remanded for further proceedings consistent with this opinion.
¶27. REVERSED AND REMANDED.
PRATHER, C.J., SULLIVAN, P.J., AND WALLER, J., JOIN THIS OPINION.
COBB, J., NOT PARTICIPATING.
McRAE, JUSTICE, DISSENTING, DELIVERS THE FOLLOWING
OPINION:
¶28. The majority carte blanche precludes shareholders and officers from claiming
insurance benefits from corporate insurance policies in which the closely held
corporation, Steinwinder Enterprises, Inc. [SWI], was the sole named insured. The
majority seems to ignore the fact that corporate officers are members of the
corporation and therefore should be entitled to benefits of the policy. Every named
insured should be covered by uninsured motorist insurance. Here, the sole named
insured is an artificial person, a corporation, which can only act through its officers,
directors, employees, and agents. A corporation may not be hurt. Hence, coverage of
a corporation, at least one which is closely held, inherently means coverage of the
corporate officers and shareholders. Otherwise, the insurance is a meaningless subsidy
to the insurance company. If, as the majority holds, officers and shareholders are not
covered under a corporation's policy, who is?
¶29. In Cossitt v. Nationwide Mut. Ins. Co., 551 So. 2d 879 (Miss. 1989), we applied
a church's insurance coverage on two other buses not involved in the accident to that
of the church members and passengers of the bus at issue in the case. Relatively the
same uninsured motorist coverage language used in the Nationwide policy was found
in this case. Hence, the same principle employed in Cossitt should be applied here. The
corporation's policy should cover its officers. Further, in J & W Foods Corp. v. State
Farm Mut. Auto. Ins. Co., 723 So. 2d 550 (Miss. 1998), this Court reviewed another
policy language case in which a closely held corporation is the named insured. We
pointed out that the case should be reversed and remanded for factual development
because "[t]he corporation and its shareholders may have expected that individuals
would be covered under the policy." See id. at 553. In the instant case, SWI explicitly
wanted uninsured motorist coverage for its officers, directors, and employees.
¶30. This case deals solely with officers, yet the majority extends the policy coverage
preclusion to both officers and shareholders. What good then is the policy? Who is to
benefit from the coverage? Did SWI get complete and full coverage for the premium
charged? Obviously not. In this case the injured officer was on a business call for the
corporation. What more corporate behavior is there? The majority has rendered
ineffective the corporation's attempt to gain uninsured motorist insurance coverage.
¶31. The insurance company will not allow a policy to be given at the time it is taken
out with the agent. The policy is an adhesion contract, and the forms are already
printed. Why cannot such forms be presented when the insurance is purchased so that
each party obtains proof of what coverage is obtained? The insurance agent said there
would be coverage and ordered the form contract from his company. Aetna should be
held accountable. SWI paid for insurance in hopes of covering the "human capital" that
allows it to remain a going concern. The corporation may not be hurt itself, so there is
no other reason to purchase such insurance. It would not be reasonable to force
corporate officers to take out individual insurance for harm caused while conducting the
corporate business. The corporation should receive the benefits of the policy for which
it paid. Such does not occur under the majority's holding. Therefore, I dissent because
I would hold the corporate officer insured.
MILLS, JUSTICE, DISSENTING, DELIVERS THE FOLLOWING
OPINION:
¶32. I respectfully dissent. This appeal should be immediately dismissed. The
Steinwinders' Notice of Appeal was untimely filed according to Mississippi Rule of
Appellate Procedure 4(a) which states in pertinent part:
. . . in a civil or criminal case in which an appeal or cross-appeal is permitted by
law as of right from a trial court to the Supreme Court, the notice of appeal
required by Rule 3 shall be filed with the clerk of the trial court within 30 days
after the date of entry of the judgment or order appealed from.
¶33. The Steinwinders filed their Notice of Appeal on June 20, 1997. The thirty-day
appeal period expired June 19, 1997, since the lower court's order denying the
plaintiff's Rule 59 Motion was entered May 20, 1997. Pursuant to Rule 4(g), the
Steinwinders filed a Motion to Extend Time for Filing Notice of Appeal on July 21,
1997, claiming excusable neglect. In this situation, it is within the Court's discretion to
address the issue. Morrow v. Morrow, 591 So.2d 829, 832 (Miss. 1991). However,
the majority declines to deal with this issue, thereby weakening a very simple
procedural rule.
¶34. We have previously held that excusable neglect is not: (1)counsel's failure to learn
of entry of the judgment; (2)counsel's failure to read published rules of court; (3)
counsel's reliance on mistaken legal advice from the trial court; or (4) counsel's busy
trial schedule. Guthrie v. Renfroe, 703 So.2d 846, 848 (Miss. 1997)(citing In Re
Estate of Ware, 573 So.2d 773, 775 (Miss. 1990)).
¶35. The attorney for the Steinwinders gave the following explanation for his failure to
timely file the Notice of Appeal:
Calculating the days, I calculated that from May 20th I had until June 20th, 1997,
within which to file the appeal. I marked it on my calendar.
. . . I did prepare the notice of appeal
...
It was my understanding and my thought that it had actually been filed on June
20th, 1997, the notice of appeal to the Mississippi Supreme Court . . . .
The problem seems to lie in the fact that the month of May contains not thirty, but
thirty-one days. The miscalculation on the part of the Steinwinders' attorney indicates
failure to read and understand the published rules of court. This neglect does not meet
the standard for excusable neglect, and I would therefore dismiss this appeal pursuant
to our precedents.
PITTMAN, P. J., AND SMITH, J., JOIN THIS OPINION.
1. "In a civil case. . . .in which an appeal or cross appeal is permitted by law as of right from a trial court to
the Supreme Court, the notice of appeal required by Rule 3 shall be filed with the clerk of the trial court
within 30 days after the date of entry of the judgment or order appealed from. . . . (c) if a timely notice of
appeal is filed by a party, any other party may file a notice of appeal within 14 days after the date on which
the first notice of appeal was filed, or within the time otherwise prescribed by this rule, whichever period
last expires."