SIMMONS v. Civil Service Employees Insurance Company, Appellant.*

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District Court of Appeal, Third District, California.

Rebecca SIMMONS, Plaintiff and Respondent, v. CIVIL SERVICE EMPLOYEES INSURANCE COMPANY et al., Defendants, Civil Service Employees Insurance Company, Appellant.*

Civ. 10021.

Decided: July 19, 1961

Sedgwick, Detert, Moran & Arnold, San Francisco, for appellant. E. Glynn Stanley, Vallejo, for respondent.

This is an appeal from a summary judgment rendered against appellant.

On November 6, 1954, one Eddie Lee Symon was the owner and driver of an automobile which collided with another car. Respondent suffered personal injuries in the collision. Responsive to the provisions of Section 419, Vehicle Code,1 as it then stood, Symon reported the accident to the Department of Motor Vehicles and stated that he held a policy of insurance issued by appellant, which afforded coverage for public liability and property damage. This statement was untrue. Symon had a policy issued by appellant, but it did not extend such coverage. The department proceeded toward obtaining security for the payment of damages for personal injury, and in order to ascertain whether Symon was exempt from the deposit of security notified appellant that Symon had indicated he was so exempt by reason of appellant's policy. Section 422.6, subdivision (c),2 of the code, at that time read as follows:

‘Upon receipt of notice of such accident from the department, the insurance company * * * named in such notice shall notify the department within such time and in such manner as the department may require whenever such a policy * * * was not in effect at the time of such accident.’

The letter of the department transmitting notice of the accident to appellant contained the following statement: ‘If we do not receive positive verified coverage for Mr. Symon within a period of 10 days from the date of this letter we will proceed on the premise that no insurance exists and call upon Eddie Lee Symon to meet the security requirements of the law with regard to the injury and damage arising out of this accident.’ Appellant made no reply and after the expiration of the allotted time, the department proceeded against Symon by issuing its ‘Order for the Security Requirement or Suspension’. The amount of security required, as fixed by the department, was $5,160. On May 6th, and because the order of suspension had been returned to the department, Symon having moved without leaving a forwarding address, the department ordered Symon's operator's license picked up. On October 9, 1955, the department sent a second ‘Order of Security Requirement or Suspension’ to Symon which reached him at a new address. The amount of security required was the same and on October 19, 1955, Symon, failing to deposit security, sent his license to the department. In the meantime, respondent herein had filed an action against Symon and had recovered a default judgment in the sum of $20,000. Respondent, as such judgment holder, demanded that appellant satisfy the same and upon appellant's refusal filed this action, claiming that appellant was liable to pay said judgment.

Appellant herein, having answered the complaint in the action brought by respondent against it, moved for a summary judgment in its favor. Respondent herein likewise moved for summary judgment in her favor and both motions were heard together. The court denied the motion of appellant and granted that of respondent. Judgment was entered for the sum of $5,000, together with interest on said sum in the sum of $1,575. From that judgment this appeal was taken.

Respondent's theory of liability is that when appellant received the notice of accident and the accompanying letter from the department, it was statutorily obligated to either admit or affirmatively deny coverage; that by its silence it admitted coverage and could not thereafter change its position. In support of the judgment respondent relies principally upon certain decisions in Wisconsin. The Supreme Court of that state in Behringer v. State Farm Mutual Auto. Ins. Co., 1957, 275 Wis. 586, 82 N.W.2d 915, held that under the Wisconsin statutes an insurance carrier, called upon to affirm or deny coverage for a reported accident, having affirmatively admitted that it had extended such coverage, could not thereafter change its position, that, even though it might have at the outset successfully denied coverage, its right to do so was lost. The Wisconsin court arrived at this result by construction of the statutes of that state, although admittedly no such ground for fixing liability was expressly provided in the statutory enactments.

Respondent argues that appellant, by its silence, admitted liability and that our statutes should be construed, as were those of Wisconsin, as foreclosing any right after such admission to deny liability. Respondent also argues that the summary judgment can be supported upon the theory of estoppel. This same argument of estoppel was addressed to the trial court and in a memorandum opinion the court stated that it was not basing its judgment upon the theory of estoppel, but upon its construction of the relevant statutes.

We cannot in this case reach the question of whether or not our statutes can be construed so that once coverage has been admitted it cannot thereafter be denied, because it cannot be said that in this case appellant ever admitted liability. Section 422.6, subdivision (c), Vehicle Code, as it stood when the transactions here involved were before the department, gave the department discretion both as to the timing of the notice of denial of coverage, if denial was to be made, and as to the manner in which such denial could be transmitted to the department. In the exercise of that discretion the department informed appellant, as to time, that it had a period of 10 days within which to act in denial of coverage, and likewise in the exercise of its discretion the department informed appellant that it might deny by silence for the fixed period. The department said: ‘If we do not receive positive verified coverage for Mr. Symon within a period of 10 days from the date of this letter we will proceed on the premise that no insurance exists.’ That the foregoing is a correct interpretation of the department's communications is made certain by the fact that the department did proceed on the basis that Symon had no coverage. It cannot be said that appellant ever in anywise informed the department that it had extended coverage to Symon under its policy for personal injury and property damage and the fact is conceded that it had not. Of course, it is not and could not be contended that appellant could be bound beyond the limits of its policy unless in some way it had rendered itself liable beyond those limits.

Notwithstanding the statement in the trial court's memorandum opinion that it was not adjudging liability on the basis of estoppel, respondent here still argues that the judgment can be supported upon that ground. We do not agree. The claim of estoppel is based upon the following facts which are admitted. On December 23, 1954, respondent retained counsel, who forwarded to the department respondent's personal injury report and inquired whether Symon had insurance. On January 10, 1955, the department responded, stating to counsel that ‘Mr. Symon has demonstrated liability insurance as having been effective in his behalf when the accident occurred.’ This statement was made before the department had sent its notice of the accident and its accompanying letter to appellant and evidently was based upon the assertion in Mr. Symon's accident report that appellant had afforded him liability insurance. On January 14, 1955, respondent verified a complaint for damages against Symon which was filed January 21st following. During February Symon appeared in counsel's office informing him that he had been served with the summons and complaint and that he had no automobile liability insurance policy. On March 3d following Symon wrote counsel for respondent, saying, ‘I checked and found out that when I had my wreck with Mr. Trousdale's car, that I had no public liability insurance which would have paid to have his car fixed. All I had was $50.00 deductible which protected my car. Therefore I am retaining a lawyer to represent me in the lawsuit which Miss Simmons is bringing against me.’ This prompted a letter to the department from counsel, which made reference to the department's earlier letter, stating that Symon had ‘demonstrated liability insurance’, informed the department that Symon was asserting that he had no such coverage, and asked further information. On March 31st the department sent its notice of accident and its accompanying letter to appellant and also wrote responsively to counsel for respondent, stating it was asking positive verification as to insurance coverage for Symon, and that if it did not receive such verification the department would immediately call on Symon to meet the security requirements of the law. The essential elements of estoppel are false statements, or concealments or conduct amounting thereto, made by one who has actual or virtual knowledge of the facts to another who is ignorant of the truth, with the intention, resulting in consummation, that the other should act on such false statements or concealments or equivalent conduct. 18 Cal.Jur.2d p. 406, sec. 5. Although the supporting affidavits of respondent and her counsel aver that they relied upon the information they had received from the department stating that Symon had demonstrated to the department that he held liability coverage, these affidavits did no more than raise a conflict of fact on the plea of estoppel. Plaintiff and her counsel knew, or could be charged with knowledge, of the lack of coverage almost as soon as plaintiff's suit against Symon was begun. Further, reliance is largely a state of mind, and estoppel requires representations made with intent to induce action. It cannot be said that in obtaining a judgment against Symon estoppel had been established as a matter of law. The trial court was fully justified in its statement that it would not base its summary judgment upon the theory of estoppel for it is obvious that it could not rightfully have done so. The judgment cannot be thus supported.

For the reasons given the judgment appealed from is reversed.


1.  Now Vehicle Code 1959, §§ 16000–16005, 40833.

2.  Now Vehicle Code 1959, § 16060.

VAN DYKE, Presiding Justice.

PEEK and SCHOTTKY, JJ., concur.

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