            IN THE COURT OF APPEALS OF TENNESSEE
                       AT KNOXVILLE
                                                           FILED
                                                           February 27, 1998

                                                           Cecil Crowson, Jr.
                                                           Appellate C ourt Clerk
DAVID LEE WALKER,        )                     HAMILTON CIRCUIT
                         )
    Plaintiff/Appellant  )                     NO. 03A01-9709-CV-00402
                         )
v.                       )                     HON. SAMUEL H. PAYNE
                         )                     JUDGE
EXCHANGE INSURANCE       )
COMPANY and CHATTANOOGA )
INSURANCE AGENCY, INC.,  )
                         )
    Defendants/Appellees )                     REVERSED




R. Dee Hobbs, Chattanooga, for Appellant.

David P. Hawley, Chattanooga, for Chattanooga Insurance Agency, Appellee.

W. Gerald Tidwell, Jr., Chattanooga, for Exchange Insurance Company,
Appellee.

                                OPINION

                                               INMAN, Senior Judge


      This action to recover on a policy of fire insurance was resisted on the

ground that the policy was void ab initio because the plaintiff denied in his

application that a prior policy had been canceled, and because the damaged

property had been vacant for more than 60 days in violation of the policy.

      The defendants moved for summary judgment and filed the affidavits

of (1) Jean Rice, adjustor, who testified that the plaintiff stated the property

had been vacant for five months before the fire; (2) Richard Wilson, an

officer of Exchange Insurance Company, who testified that the company did

not insure dwellings unoccupied for longer than 30 days; (3) Donnitta

Scruggs, independent agent, who testified that the plaintiff contacted the
Chattanooga Insurance Agency about a policy of insurance and when asked if

a policy had ever been canceled responded, no; further, when asked about

occupancy, he responded that a tenant occupied the property. Scruggs further

testified that she inspected the property on August 16, 1994, the date the

plaintiff applied for the policy, and that the windows were draped and lights

were on, indicating occupancy.

      A countervailing affidavit was filed by the plaintiff. Janice Long,

office manager for the plaintiff, testified that coverage had previously been

provided by Shelter Insurance Company, which canceled its policy on

account of an unsatisfactory credit report it received on the plaintiff. She

testified that she contacted the Chattanooga Insurance Agency on behalf of

the plaintiff, and advised them that his prior policy had been canceled. The

plaintiff testified during discovery that he told the Chattanooga Agency the

house was being renovated and eventually rented, but no time frame was

mentioned; that he signed the application with knowledge that he had

represented the house as tenant occupied, but assumed a tenant would be

living there. Specifically, he testified:

      A:     “The only part I filled out on this was my signature.

      Q:     Okay. Do you recall being asked a series of questions which
             constitutes the information on there?

      A:     Yes.

      Q:     Do you remember being asked whether you had ever had
             insurance canceled, non renewed or revoked?

      A:     I don’t recall.

      Q:     Okay. If you would look on that application about the mid point,
             that question appears.

      A:     Yes, it does.

      Q:     There’s a check mark under - - or I believe there’s a box there
             that says no and it’s checked no, so you don’t recall whether you
     had told them you had not been canceled or revoked or non
     renewed?

A:   I did not tell her that.

Q:   What did you tell her?

A:   I do not recall the exact particulars, but that - - I do not recall her
     asking the question.

Q:   Okay. Do you recall discussing the issue of revocation,
     cancellation or non renewal at all?

A:   With her, no.
                        .   .   .   .   .

Q:   . . . that appears to be your signature?

A:   Yes.

Q:   Did you read this application before you signed it?

A:   Yes.

Q:   Okay. Why didn’t you correct this if you knew that you had
     been canceled?

A:   That was not filled in on the form that I signed.

Q:   So you’re saying this isn’t the form you signed?

A:   No. I’m saying that this part was not filled in on the form that I
     signed.

Q:   So, are you saying that this part on Exhibit One that says Policy
     History was blank completely, or just this word ‘no’ that’s
     written in here?

A:   Just the word ‘no’ that’s written right there.

Q:   Did you think to inquire as to why nothing was listed there?

A:   No, I did not.

Q:   Okay. Well, you knew you had been canceled. I mean, didn’t
     you think that was important to know, for them to know, if it was
     on the application?

A:   It was my understanding that she was in full understanding of
     that fact, that my policy had been canceled, and that’s my whole
     reason for going to them.
Q:   I’m going to ask you to look at something that’s previously got
     an Exhibit C on it, but it’s actually going to need to be marked,
     too. It’s something from a summary judgment motion. Would
     you look at this, and if we could, let’s just let you mark that Two
     right now . . . Okay. Take a good look at that and see if you
     recognize it.

A:   Yes, I do.

Q:   Okay. That’s the letter from Shelter Insurance Company
     notifying you of your cancellation. Right?

A:   Correct.

Q:   And that was - - you got that before you applied for insurance
     through Chattanooga or Acuff-Wirz to get Exchange on the John
     Ross property. Is that correct?

A:   Yes. This arrived the 24th of June. It wasn’t until August that I
     applied.

Q:   Okay. Do you know why they canceled you at Shelter?

A:   What they say in their letter is in whole or part on the consumer
     credit report.
                       . . . . .

Q:   Okay. Under the portion which is a little lower under the
     Cancellation History that talks about the - - it says Underwriting
     Information, it says occupancy or occupied and it’s checked
     ‘tenant.’ Is that correct?

A:   Yes.

Q:   Now, that was there when you signed the application. Is that
     right?

A:   Correct.

Q:   Okay. When you were - - I assume you were asked who was
     going to be living there. Right?

A:   Correct.

Q:   And who and what did you say?

A:   I explained my situation, that the house was in the process of
     being renovated, and that as soon as that was completed there
     would be a tenant in there.

Q:   And did you give any time frame for when there would be a
     tenant in there?
A:   I do not recall a giving a time.

Q:   And is it your testimony today that nobody asked you when it
     would be occupied?

A:   That would be correct.

Q:   Okay. Have you ever bought insurance on an unoccupied or
     vacant house before this?

A:   No.
                          .       .       .       .       .

Q:   Okay. What did you think that meant when you signed the
     application, that she checked tenant occupied?

A:   That eventually a tenant would be living there.

Q:   That’s what you read that to mean?

A:   Yes.
                              .       .       .       .       .

Q:   Did you read this policy when you got it?

A:   I read part of it.

Q:   Did you ever read all of it?

A:   No, I did not read all of it.

Q:   Okay. Did you read this page here that in bold type says:
     ‘Conditions Suspending/Restricting Insurance. Unless otherwise
     provided in writing added hereto, this company shall not be
     liable for loss occurring . . .’ a few . . jump down here to (b) it
     says ‘. . . while a described building, whether intended for
     occupancy by owner or tenant, is vacant or unoccupied beyond a
     period of 30 consecutive days.’ Did you ever read that clause?

A:   I do not recall.

Q:   You don’t recall?

A:   (Whereupon, witness moves head from side to side.)

Q:   What part of the policy did you read? You don’t have to tell me
     page by page, but what part were you interested in?

A:   I was interested in the policy as a whole. The specifics are
     beyond my understanding of law, how they were going to apply
     to my case, this being of course the second policy I’ve ever seen
     in my life.
      Q:       So I understand your testimony today, you don’t recall whether
               or not vacancy or occupancy was discussed when you bought the
               insurance?

      A:       This is correct.

      Q:       Okay. And you don’t know whether you ever read the part of
               the policy about vacancy or occupancy. Is that correct?

      A:       Correct.”

               MR. TIDWELL: “That’s all I have.”

      Our review of the findings of fact made by the trial Court is de novo

upon the record of the trial Court, accompanied by a presumption of the

correctness of the finding, unless the preponderance of the evidence is

otherwise. TENN. R. APP. P., RULE 13(d). There is no presumption of the

correctness of the decision of the trial Court on a question of law. NCNB

Nat’l. Bank v. Thrailkill, 856 S.W.2d 150 (Tenn. Ct. App. 1993).

      The plaintiff argues, as to the issue of vacancy, that the defendants had

knowledge of the fact that the property was unoccupied, and that it would be

rented, thereby creating an issue of fact beyond the reach of summary

judgment, and that he is entitled to prove, if possible, a waiver by the

defendants of the vacancy provision. As to the issue of a material

misrepresentation, the plaintiff argues that since he furnished the agent a copy

of the Shelter letter canceling his policy, an issue is thereby presented as to

whether the defendants are estopped to rely upon his “no” answer in the

application.

      It is made clear in Cashen v. Camden Fire Insurance Ass’n., 348

S.W.2d 883 (Tenn. App. 1961) that vacancy provisions together with other

provisions can be waived by the insurer. But it is equally clear under well

settled principles that unless it can be established by a preponderance of the
evidence that the policy provisions were waived by the defendants, the

plaintiff cannot recover.

      But summary judgment may not be substituted for a trial, and a trial

cannot be conducted by affidavit. If a factual dispute exists creating a

genuine issue for trial, summary judgment is inappropriate. Byrd v. Hall, 847

S.W.2d 208 (Tenn. 1993). Whether the defendants had actual notice, prior to

the application, of the Shelter cancellation, and of the fact that the dwelling

would be unoccupied for longer than 30 days, are disputed issues of fact

properly to be resolved at a trial. Accordingly, the judgment of the trial court

is reversed and the case is remanded for trial.



                                        ____________________________
                                        William H. Inman, Senior Judge

CONCUR:



_______________________________
Houston M. Goddard, Presiding Judge



_______________________________
Herschel P. Franks, Judge
