Present: All the Justices
GENERAL INSURANCE OF ROANOKE,
INCORPORATED, ET AL.
OPINION BY JUSTICE ROSCOE B. STEPHENSON, JR.
v. Record No. 950195
November 3, 1995
JOHN E. PAGE, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
Clifford R. Weckstein, Judge
The dispositive issue in this appeal is whether an insured's
failure to read his insurance policy constitutes negligence as a
matter of law.
John E. Page is the sole stockholder of Keep on Trucking
Garage and Road Service, Inc. (the Company). In separate actions
consolidated for trial, Page and the Company sued General
Insurance of Roanoke, Inc. and its agent, E. Lin Baker, III
(collectively, the agent), claiming that the agent was negligent
in failing to procure adequate insurance coverage against losses
Page sustained as the result of a fire. A jury returned verdicts
in favor of the Company and Page in the amounts of $46,572 and
$20,000, respectively. The trial court entered judgments on the
verdicts, and we awarded the agent an appeal.
The facts will be stated in the light most favorable to Page
and the Company, the prevailing parties at trial. Page quit
school in the seventh grade because he "couldn't understand what
[he] was reading." After working at a shirt factory and later at
a powder plant, Page served in the United States Navy. Following
his honorable discharge from the Navy, Page worked for a trucking
company where he learned the trade of automotive mechanics.
Subsequently, Page became self-employed, providing on-call
mechanical and tire services for trucking companies. As his
business grew, Page became aware of his need for additional
insurance but was unsure of the extent of his need.
Consequently, in 1981, he contacted Baker, an independent,
licensed property and casualty insurance agent, to assist him.
Page told Baker that he needed to insure his parts inventory
and tools and the tractor trailers that he would be servicing in
his garage. Page also informed Baker that his inventory was
worth approximately $10,000, that his shop tools were worth
approximately $10,000, and that his hand tools were worth
approximately $10,000 to $20,000. Page explained to Baker that
he did not know the amounts of his existing insurance coverage
and gave Baker a copy of his existing policy. Page also told
Baker that he could not read and understand the policy and that
he wanted Baker to handle all his insurance requirements.
Thereupon, Baker began servicing Page's insurance needs.
In 1983, Page decided to move from his rented garage and to
build a new garage. To do so, he borrowed $50,000 from a bank,
using approximately $30,000 of the loan proceeds to pay off a
first mortgage on some land and approximately $20,000 thereof to
construct the shell of a building thereon. He notified Baker
that he needed insurance in the amount of $20,000 to cover the
building during construction and that he later would need to
update the coverage on the completed building. Page also told
Baker that he would need insurance in the amount of $15,000 to
- 2 -
cover some new equipment that would be placed in the building.
Baker assured Page that he would take care of his needs.
After the building was completed, Page installed an office
at a cost of approximately $5,000, plumbing at a cost of $4,500,
electrical systems for $6,500, a heating system for $2,700, and
$500 worth of plywood. Thus, upon completion, the new building
was worth about $35,000. Additionally, Page purchased all new
shop tools and increased his parts inventory.
Approximately two weeks after moving into the new building,
Page met with Baker to update his insurance coverage. Page told
Baker about the $50,000 bank loan. Page showed Baker the parts
inventory and told him that it was worth $15,000 and that it
would be increased to $20,000. Page also showed Baker the new
shop tools and told him that they were worth $20,000. In
addition, Page valued his hand tools at $20,000. Baker told Page
he would obtain the insurance.
Baker obtained a policy through Reliance Insurance Companies
and personally delivered it to Page. The policy stated on its
face the amount of coverage on the building as $20,000 and the
amount of coverage on the "personal property of others while
contained in [the building]" as $15,000. Page testified that he
never read or even looked at the policy and that he just put it
in a desk drawer. Page concedes that Baker committed no fraud.
On March 19, 1984, the building and most of its contents
were destroyed by a fire. Page lost inventory worth $17,587.61,
- 3 -
hand tools worth about $23,000, and shop tools worth $17,585.
His loss on the building was $25,000 to $30,000. Other insurance
paid approximately $7,000 toward the loss of the hand tools,
leaving Page's loss for these at about $16,000.
The agent contends on appeal, as it did at trial, that
Page's failure to read the insurance policy constituted
negligence, as a matter of law, and that such negligence
proximately caused his losses and precluded recovery against it. *
While we previously have not decided the precise issue presented
in the present case, we have held that one who signs an
application for life insurance without reading the application or
having someone read it to him is chargeable with notice of the
application's contents and is bound thereby. Peoples Life Ins.
Co. v. Parker, 179 Va. 662, 667, 20 S.E.2d 485, 487 (1942); Royal
Insurance Co. v. Poole, 148 Va. 363, 376-77, 138 S.E. 487, 491
(1927). We also have held that the failure of a grantor to read
a deed will not relieve him of obligations contained therein.
*
Page and the Company (the plaintiffs) contend on appeal
that the agent waived the defense of contributory negligence
because it failed to object to the submission of the issue to the
jury. We do not agree.
The record shows that throughout the trial, and even after
the verdict, the agent relied upon, and the trial court was fully
apprised of, the defense. Indeed, after overruling the agent's
motion to strike the plaintiffs' evidence, the trial court stated
the following: "The [agent's] objections to this ruling are
preserved . . . without the necessity for saying anything further
on the subject." Thus, given the procedural posture of the
present case, we hold that no waiver occurred. See Wright v.
Norfolk and Western Railway Co., 245 Va. 160, 427 S.E.2d 724
(1993).
- 4 -
Carter v. Carter, 223 Va. 505, 509, 291 S.E.2d 218, 221 (1982).
See Metro Realty v. Woolard, 223 Va. 92, 99, 286 S.E.2d 197, 200
(1982) (absent fraud, one who has capacity to understand written
document and signs it without reading it or having it read to him
is bound thereby). While the decisions cited are contract cases,
we think the same rule should apply in negligence actions.
In the present case, Baker handed Page the insurance policy
that stated plainly on its face that the building was insured for
$20,000 and the personal property of others on the premises was
insured for $15,000. Page, however, never so much as looked at
the insurance policy, but simply placed it in a desk drawer.
Page testified that he has reading difficulties. Page had a
duty, nonetheless, to have his wife, who occasionally helped with
business matters, or someone else read the policy to him if he
could not read it. We conclude, therefore, that Page's failure
to read the policy or to have someone read it to him constitutes
negligence as a matter of law that bars a recovery against the
agent.
Accordingly, the trial court's judgments will be reversed
and vacated, and final judgment will be entered in favor of the
agent.
Reversed and final judgment.
- 5 -