{ "id": 6142360, "name": "EQUITY GENERAL AGENTS, INC. and JOSEPH M. DOLAN AGENCY v. James A. O'NEAL and ALLSTATE INSURANCE CO.", "name_abbreviation": "Equity General Agents, Inc. v. O'Neal", "decision_date": "1985-07-03", "docket_number": "CA 84-144", "first_page": "302", "last_page": "309", "citations": [ { "type": "official", "cite": "15 Ark. App. 302" }, { "type": "parallel", "cite": "692 S.W.2d 789" } ], "court": { "name_abbreviation": "Ark. Ct. App.", "id": 13370, "name": "Arkansas Court of Appeals" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "266 Ark. 556", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8720825 ], "weight": 2, "year": 1979, "opinion_index": 0, "case_paths": [ "/ark/266/0556-01" ] }, { "cite": "9 Ark. App. 96", "category": "reporters:state", "reporter": "Ark. App.", "case_ids": [ 6137602 ], "weight": 2, "year": 1983, "opinion_index": 0, "case_paths": [ "/ark-app/9/0096-01" ] }, { "cite": "9 S.W.2d 26", "category": "reporters:state_regional", "reporter": "S.W.2d", "year": 1928, "opinion_index": 0 }, { "cite": "177 Ark. 927", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8725727 ], "year": 1928, "opinion_index": 0, "case_paths": [ "/ark/177/0927-01" ] }, { "cite": "232 Ark. 466", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1694020 ], "weight": 2, "year": 1960, "opinion_index": 0, "case_paths": [ "/ark/232/0466-01" ] }, { "cite": "236 Ark. 336", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1681271 ], "weight": 3, "year": 1963, "pin_cites": [ { "parenthetical": "reformation granted by the trial court and not an issue on appeal" }, { "parenthetical": "reformation granted by the trial court and not an issue on appeal" } ], "opinion_index": 0, "case_paths": [ "/ark/236/0336-01" ] }, { "cite": "266 Ark. 842", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8723303 ], "weight": 3, "year": 1979, "pin_cites": [ { "parenthetical": "reformation granted by the trial court and not an issue on appeal" }, { "parenthetical": "reformation granted by the trial court and not an issue on appeal" } ], "opinion_index": 0, "case_paths": [ "/ark/266/0842-01" ] }, { "cite": "90 S.W. 284", "category": "reporters:state_regional", "reporter": "S.W.", "year": 1905, "opinion_index": 0 }, { "cite": "77 Ark. 41", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1499098 ], "year": 1905, "opinion_index": 0, "case_paths": [ "/ark/77/0041-01" ] }, { "cite": "233 Ark. 942", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1691667 ], "weight": 3, "year": 1961, "pin_cites": [ { "page": "945" } ], "opinion_index": 0, "case_paths": [ "/ark/233/0942-01" ] }, { "cite": "139 F.2d 892", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 3683007 ], "year": 1943, "pin_cites": [ { "parenthetical": "issue of whether or not an injured third party may directly sue the insurer found to be a remedial matter and thus immaterial in an action for declaratory judgment" } ], "opinion_index": 0, "case_paths": [ "/f2d/139/0892-01" ] }, { "cite": "260 Ark. 3", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1616752 ], "weight": 3, "year": 1976, "pin_cites": [ { "parenthetical": "direct action by the insured party against an insurer upheld in action for declaratory judgment" }, { "parenthetical": "direct action by the insured party against an insurer upheld in action for declaratory judgment" } ], "opinion_index": 0, "case_paths": [ "/ark/260/0003-01" ] }, { "cite": "282 F.Supp. 604", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 5349756 ], "weight": 2, "year": 1968, "pin_cites": [ { "page": "606", "parenthetical": "quoting Borchard, Declaratory Judgments 296-298 [2d ed. 1941]" } ], "opinion_index": 0, "case_paths": [ "/f-supp/282/0604-01" ] }, { "cite": "434 F.2d 215", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2220270 ], "year": 1970, "opinion_index": 0, "case_paths": [ "/f2d/434/0215-01" ] }, { "cite": "305 F. Supp. 352", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3042561 ], "year": 1969, "pin_cites": [ { "page": "355" } ], "opinion_index": 0, "case_paths": [ "/f-supp/305/0352-01" ] } ], "analysis": { "cardinality": 602, "char_count": 12566, "ocr_confidence": 0.908, "pagerank": { "raw": 1.2506826038963747e-07, "percentile": 0.6100122053447904 }, "sha256": "eb26e64d1b74b0c0d7249089bd5fc1533bacf12b36aceb16537a4cc7d9ba5e8d", "simhash": "1:369cd0d0c3c883ba", "word_count": 2046 }, "last_updated": "2023-07-14T18:08:52.139004+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Corbin and Glaze, JJ., agree." ], "parties": [ "EQUITY GENERAL AGENTS, INC. and JOSEPH M. DOLAN AGENCY v. James A. O\u2019NEAL and ALLSTATE INSURANCE CO." ], "opinions": [ { "text": "Melvin Mayfield, Judge.\nThis is an appeal from a declaratory judgment entered in the Pulaski County Chancery Court. The facts are not in dispute. For some years, James A. O\u2019Neal had obtained his automobile insurance through the Joseph M. Dolan Agency. In January of 1981, the Dolan Agency cancelled O\u2019Neal\u2019s insurance policy with one company and issued in its place a policy with Allstate Insurance Company. At that time, O\u2019Neal owned two vehicles and both O\u2019Neal and the Dolan Agency intended for the Allstate policy to provide coverage for both vehicles. However, through an admitted error of the Dolan Agency, one of the vehicles, a 1980 Chevrolet pickup truck, was omitted from the policy.\nIn May of 1981, O\u2019Neal had an accident while driving the pickup truck and one of the persons involved in the accident brought suit in circuit court against O\u2019Neal for personal injuries. O\u2019Neal filed a third-party complaint against Allstate, seeking reformation of his insurance policy to provide coverage for the omitted vehicle. In turn, Allstate filed a third-party complaint against the Dolan Agency and against Equity General Agents, Inc., the Dolan Agency\u2019s errors and omissions carrier, seeking indemnity in the event of judgment against Allstate. The Dolan Agency filed an answer to Allstate\u2019s complaint and Equity General filed a motion to dismiss Allstate\u2019s complaint. The circuit court severed both third-party complaints from the original action and transferred them to chancery court because of the equitable nature of the subject matter.\nAfter hearing the testimony, the chancellor entered a declaratory judgment finding that the Dolan Agency was negligent in omitting the pickup from O\u2019Neal\u2019s policy and that Equity General\u2019s policy covered the agency\u2019s errors and omissions during the period involved. The judgment also ordered the Dolan Agency to defend O\u2019Neal in the personal injury lawsuit pending against him in circuit court; O\u2019Neal\u2019s complaint against Allstate was dismissed for want of equity; and Equity General\u2019s motion to dismiss Allstate\u2019s complaint was not granted.\nEquity General and the Dolan Agency have appealed. It is first argued that the chancellor should have granted Equity General\u2019s motion to dismiss. Greer v. Mid-West National Fire & Casualty Insurance Co., 305 F. Supp. 352, 355 (E.D. Ark. 1969), aff'd, 434 F.2d 215 (8th Cir. 1970), is cited for its statement that \u201cApart from statute an injured party has no right of direct action in Arkansas against the liability insurance carrier of the tortfeasor,\u201d and the argument is that there is no statutory authority that would allow Allstate to bring this direct action against Equity General. In response, Allstate argues that Equity General was properly made a party because Arkansas\u2019 Declaratory Judgment Act applies to this matter and one section of that act provides \u201cWhen the declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration. . . .\u201d Ark. Stat. Ann. \u00a7 34-2510 (Repl. 1962). We agree with Allstate on this point.\nIn Aetna Casualty & Surety Co. v. Hatridge, 282 F.Supp. 604 (W.D. Ark. 1968), the court stated the criteria for the affirmative exercise of the trial court\u2019s discretion in favor of a declaratory judgment:\n[T]he Court must have concluded that its judgment will \u201cterminate the uncertainty or controversy giving rise to the proceeding\u201d and that it will serve a useful purpose in stabilizing legal relations. The wide discretion of the court in moulding the declaration to the needs of the occasion, unhampered by the issues joined or the claims of counsel, enables it to respond effectively to those practical requirements. . . . Attention [is] directed from form and formula to substance and policy so that we find convenience, expediency, need, desirability, public interest, or policy the common criteria of the grant of the declaration. Moreover, it may be well to repeat that a declaration may not be denied merely because another remedy could have been used or because of the pendency of another suit in which the rights of the parties would not necessarily be determined.\nId. at 606 (quoting Borchard, Declaratory Judgments 296-298 [2d ed. 1941]).\nIn the instant case, the chancellor\u2019s judgment is entitled \u201cDeclaratory Judgment,\u201d and we find he correctly determined that the criteria for a declaratory judgment were met. Although neither O\u2019Neal nor Allstate\u2019s third-party complaint used the words \u201cdeclaratory judgment,\u201d the effect of their complaints was to request that the court \u201cdeclare rights, status, and other legal relations\u201d and that is the jurisdiction granted by the Declaratory Judgment Act. See Ark. Stat. Ann. \u00a7 34-2501 (Repl. 1962). We think it was a proper exercise of the trial court\u2019s discretion to enter a declaratory judgment in an attempt to \u201cstabilize the legal relations\u201d of the parties, and we hold that the court did not err in refusing to grant Equity General\u2019s motion to dismiss Allstate\u2019s third-party complaint. See, Priddy v. Mayer Aviation, Inc., 260 Ark. 3, 537 S.W.2d 370 (1976) (direct action by the insured party against an insurer upheld in action for declaratory judgment); Pennsylvania Casualty Co. v. Upchurch, 139 F.2d 892 (5th Cir. 1943) (issue of whether or not an injured third party may directly sue the insurer found to be a remedial matter and thus immaterial in an action for declaratory judgment).\nThe appellants\u2019 second argument is that the trial court erred in refusing to reform the insurance contract between Allstate and O\u2019Neal. We agree with the appellants on this point. In American Casualty Co. v. Hambleton, 233 Ark. 942, 349 S.W.2d 664 (1961), the Arkansas Supreme Court approved the principle that a court of equity \u201cmay grant relief for a mutual mistake in the writing of an insurance contract that results in the written terms not expressing the clear intent and understanding of the parties. . . .\u201d 233 Ark. at 945.\nMany cases support the granting of reformation when an insurance policy is not reflective of the parties\u2019 agreement and intentions. For instance, in Phoenix Assurance Co. v. Boyette, 77 Ark. 41, 90 S.W. 284 (1905), it was undisputed that the insurance policy issued by the appellant insurance company to the appellee did not express the real agreement and intention of the appellee and the agent of the appellant insurance company. The Arkansas Supreme Court upheld the chancellor\u2019s order for reformation of the policy. See also, Granite State Insurance Company v. Bacon, 266 Ark. 842, 586 S.W.2d 254 (Ark. App. 1979) (reformation granted by the trial court and not an issue on appeal); Pennsylvania Millers Mutual Insurance Company v. Walton, 236 Ark. 336, 365 S.W.2d 859 (1963) (reformation granted by the trial court and not an issue on appeal); Calvert Fire Insurance Company v. Hardwicke, 232 Ark. 466, 338 S.W.2d 329 (1960); and Inter-Southern Life Insurance Company v. Holzhauer, 177 Ark. 927, 9 S.W.2d 26 (1928).\nIn the instant case, it is undisputed that the written terms of O\u2019Neal\u2019s insurance policy did not afford the coverage intended. Clearly, this was a situation in which reformation was the proper remedy. However, Allstate argues that O\u2019Neal has not appealed from the chancellor\u2019s declaratory judgment and that the appellants, Dolan Agency and Equity General, do not have standing to seek reformation in privity with the original parties to the contract or in privity with the original parties. Allstate also points out that these appellants did not seek reformation at the trial court level and it is contended that they cannot complain about the trial court\u2019s decision for that reason. We find no merit in either contention.\nThe trial court\u2019s decision on reformation directly affected these appellants. On appeal, we try equity cases de novo and enter such judgment as should have been entered by the chancellor. Pickens v. Stroud, 9 Ark. App. 96, 653 S.W.2d 146 (1983). In Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979), the Arkansas Supreme Court stated:\nAn appeal in a chancery case opens the whole case for review. All of the issues raised in the court below are before the appellate court for decision. . . . The appellate court reviews both law and fact and, acting as judges of both law and fact as if no decision had been made in the trial court, sifts the evidence to determine what the finding of the chancellor should have been and renders a decree upon the record made in the trial court. . . . The appellate court may always enter such judgment as the chancery court should have entered upon the undisputed facts in the record.\n266 Ark. at 564 (citations omitted).\nIn the instant case, it is undisputed that (1) O\u2019Neal and the Dolan Agency intended that O\u2019Neal\u2019s policy would cover both of his vehicles, (2) coverage was provided for only one of the vehicles due to the admitted error of the Dolan Agency, (3) the Dolan Agency had the authority to bind Allstate, and (4) Allstate would have accepted this risk. On these undisputed facts, the chancellor should have granted O\u2019Neal\u2019s request for ref irmation. In this appeal by Dolan and Equity, we grant reformation to provide coverage for O\u2019Neal\u2019s 1980 Chevrolet pickup truck.\nThe appellants\u2019 final argument is that the trial court erred in ordering the Dolan Agency to defend the suit filed against O\u2019Neal in circuit court. We agree with the appellants since we find no legal basis for this order. Allstate thinks it is supported by Priddy v. Mayer Aviation, Inc., supra. In that case Mayer gave the insurance agent, Priddy, some premium money and asked him to obtain liability insurance coverage for Mayer from Pan American Fire & Casualty Company. Priddy failed to obtain the coverage through his own admitted negligence. Subsequently, two suits were filed against Mayer in circuit court and he in turn filed a petition for declaratory judgment in chancery court against Pan Am, Priddy, and Priddy\u2019s errors and omissions carrier. After hearing the evidence, the chancellor entered a declaratory judgment which declared that Priddy should defend Mayer in the two lawsuits. The Priddy case, however, is distinguishable from the instant case because there was no evidence in Priddy that the agent had the authority to bind Pan Am by issuing a policy to Mayer. In the instant case, the Dolan Agency clearly had full authority to issue the policy to O\u2019Neal.\nThe facts in this case are in line with the holdings in Granite State Insurance Company v. Bacon, supra, and Pennsylvania Millers Mutual Insurance Company v. Walton, supra. In Granite, the insurance agent made a typographical error which resulted in the insured receiving less coverage than was intended. The trial court reformed the contract between the insured and the insurance company and held that the insurance company was not entitled to indemnity from the negligent insurance agent. The insurance company appealed and this court affirmed on the basis that the agent\u2019s negligence was not an issue. We said the issues were (1) whether or not the agent had authority to bind the insurance company and (2) whether or not the insurance company would have initially accepted the increased coverage. We quoted from the Arkansas Supreme Court\u2019s decision in Pennsylvania Millers Mutual to the effect that in the absence of bad faith or collusion the agent is not liable to his company for a loss on an insurance contract that he had \u201cfull power and expressed authority to make.\u201d In the instant case, it is undisputed that the Dolan Agency had authority to bind Allstate to the type of policy issued to O\u2019Neal. Clearly, the Dolan Agency should not be required to indemnify Allstate and should not be required to defend O\u2019Neal.\nIn summary, we find the chancellor had the authority and was correct in entering a declaratory judgment in this case. However, he should have granted reformation of the O\u2019Neal insurance policy and should not have required the Dolan Agency to defend the personal injury suit filed against O\u2019Neal. Also, he should have held that neither the Dolan Agency nor Equity General was liable to indemnify Allstate for any loss on the O\u2019Neal policy as reformed.\nAffirmed in part and reversed in part.\nCorbin and Glaze, JJ., agree.", "type": "majority", "author": "Melvin Mayfield, Judge." } ], "attorneys": [ "Friday, Eldredge & Clark, by: Elizabeth J. Rabben, for appellants.", "Wright, Lindsey & Jennings, for appellees." ], "corrections": "", "head_matter": "EQUITY GENERAL AGENTS, INC. and JOSEPH M. DOLAN AGENCY v. James A. O\u2019NEAL and ALLSTATE INSURANCE CO.\nCA 84-144\n692 S.W.2d 789\nCourt of Appeals of Arkansas Division I\nOpinion delivered July 3, 1985\nFriday, Eldredge & Clark, by: Elizabeth J. Rabben, for appellants.\nWright, Lindsey & Jennings, for appellees." }, "file_name": "0302-01", "first_page_order": 332, "last_page_order": 339 }