                     I N THE COURT OF APPEALS OF TENNESSEE

                                       EASTERN SECTI ON               FILED
                                                                          April 3, 1996

                                                                   Cecil Crowson, Jr.
ALLSTATE I NSURANCE COMPANY,                     )   C/ A NO. 03A01-Appellate C - 00426
                                                                     9512- C ourt Clerk
                                                 )
        Pl a i nt i f f - Appe l l a nt ,        )   CLAI BORNE LAW
                                                 )
v.                                               )   HON. CONRAD TROUTMAN,
                                                 )   J UDGE
M ARY LOUI SE DAVI S, J OHN                      )
RASNI C, CAROLYN RASNI C, a nd                   )
TENNESSEE FARM  ERS M UTUAL                      )
I NSURANCE COM PANI ES,                          )   REVERSED
                                                 )   AND
        De f e nda nt s - Appe l l e e s .       )   REMANDED



PAUL E. DUNN, DUNN M              ACDONALD & COLEMAN, P. C. , Knoxvi l l e , f o r
Pl a i nt i f f - Appe l l a nt .

J AM ES D. ESTEP, I I I , ESTEP & ESTEP, Ta z e we l l , f or De f e nda nt -
Ap p e l l e e , Te nne s s e e Fa r me r s M ua l I ns ur a nc e Compa ni e s .
                                             ut




                                            O P I N I O N




                                                              Fr a nks . J .




                  I n t hi s de c l a r a t or y j udgme nt a c t i on, pl a i nt i f f ,

i n s u r a nc e c ompa ny, s ough t a de c l a r a t i on t ha t i t s i ns ur e d, J o h n

H. Ra s ni c , wa s not a n i ns ur e d unde r i t s pol i c y f or t he

a c c i d e nt oc c ur r i ng be t we e n t he Ra s ni c a nd Da vi s mot or

ve hi c l e s .   Spe c i f i c a l l y, t h e c ompl a i nt a l l e ge d t ha t Ra s ni c h a d

v i o l a t e d t he pol i c y pr ov i s i on:

                  ?W mus t be not i f i e d pr ompt l y of how, whe n a nd
                    e
                  whe r e t he a c c i de nt or l os s ha ppe ne d. Not i c e s ho u l d
                  a l s o i nc l ude t he na me s a nd a ddr e s s e s of a ny i nj u r e d
                  pe r s ons a nd of a ny wi t ne s s . ? Al l s t a t e woul d a s s e r t
                  t ha t whi l e t he a c c i de nt oc c ur r e d on De c e mbe r 1,
                  1993, t he y di d not r e c e i ve not i c e unt i l J une 24,
                  1994.

Th e i s s ue wa s t r i e d be f or e a j ur y, a nd a t t he c onc l us i on of

a l l t h e pr oof , t he Cour t ?di r e c t e d a ve r di c t i n f a vor of t he

d e f e n d a nt s ? a nd ?f ound t ha t t he c ont r ol l i ng i s s ue wa s a s t a t e

o f mi n d of t he i ns ur e d, J ohn Ra s ni c .            W t h r e ga r d t o s uc h
                                                              i

i s s u e , t he Cour t f ound t ha t M . Ra s ni c r e a s ona bl y be l i e ve d
                                       r

t ha t t he c ol l i s i on i n q ue s t i on wa s a t r i vi a l ma t t e r a nd t ha t ,

b a s e d upon s uc h be l i e f , M . Ra s ni c wa s j us t i f i e d i n not
                                    r

i m d i a t e l y r e por t i ng t he a c c i de nt t o Al l s t a t e .
   me                                                                        The Cour t

f u r t h e r f ound t ha t , due t o hi s s t a t e of mi nd, M . Ra s ni c ’ s
                                                                r

d e l a y i n r e por t i ng t he a c c i de nt t o Al l s t a t e unt i l a f t e r he ha d

b e e n s ue d, c ompl i e d wi t h t he pr ompt not i c e pr ovi s i ons of

Al l s t a t e ’ s i ns ur a nc e p ol i c y. ?

                  On a ppe a l , Al l s t a t e doe s not que s t i on t he Tr i a l

Co u r t ’ s t a ki ng t he i s s ue a wa y f r om t he j ur y, but i ns i s t s t ha t

a s a ma t t e r o f l a w i t i s e nt i t l e d t o a j udgme nt i n i t s f a vo r .

                  I t i s c l e a r f r om t he Tr i a l Cour t ’ s a na l ys i s t ha t i t

e r r o n e ous l y a ppl i e d a s ubj e c t i ve t e s t r a t he r a n obj e c t i ve

t e s t , whi c h i s whe t he r a r e a s ona bl e a nd pr ude nt pe r s on woul d

b e l i e ve t ha t t he a c c i de nt mi ght gi ve r i s e t o a c l a i m f or

d a ma ge s .   Nat i onwi de M ual I ns ur anc e Company v . Shannon , 7 0 1
                               ut

S. W 2 d 615 ( Te nn. App. 1985) .
    .

                  Ra s ni c t e s t i f i e d t ha t he ?bumpe d? t he r e a r of t he

Da vi s c a r a nd t ha t t he oc c upa nt s a ns we r e d ?no? whe n a s ke d i f

t he y we r e h ur t .     He t e s t i f i e d t ha t he a dvi s e d i f t he ve hi c l e

wa s d a ma ge d t o l e t hi m know.             M s . Da vi s i ns i s t e d t ha t t he y
                                                   r

s h o u l d ?c a l l t he l a w?.     A pol i c e ma n c a me a f t e r t he ve hi c l e s h a d

                                                   2
b e e n move d, a nd r e f us e d t o pr e pa r e a wr i t t e n a c c i de nt r e por t .

?Two t o s i x we e ks l a t e r ? t he owne r of t he ot he r ve hi c l e t ol d

Ra s n i c a t a c onve ni e nc e s t or e t ha t ?t he y t ot a l e d t he c a r ? whi c h

Ra s n i c unde r s t ood t o me a n t he i ns ur a nc e c ompa ny.         Ra s ni c ma d e

n o r e por t of t he a c c i de nt unt i l J une 23, 1994, a f t e r he

r e c e i ve d s ui t p a pe r s f r om t he Da vi s e s .   The mos t t e l l i ng

a d mi s s i on by M . Ra s ni c c a me on c r os s - e xa mi na t i on a f t e r he h a d
                    r

t e s t i f i e d t ha t he ha d ma de pi c t ur e s of t he f r ont e nd of hi s

v e hi c l e , s ome t wo we e ks a f t e r t he a c c i de nt :

                 Q.    M . Ra s ni c , i f you di dn’ t c ons i de r t hi s
                         r
                       a c c i de nt wor t h r e por t i ng wha t woul d be your
                       oc c a s i on f or t a ki ng phot ogr a phs of t he f r ont o f
                       your v e hi c l e t wo we e ks a f t e r t hi s a c c i de nt t o
                       s how t he r e wa s no da ma ge t o i t ? I di dn’ t
                       unde r s t a nd.

                 A.    I t c oul d’ ve be e n f our we e ks , but I s a i d I
                       bought a ne w c a me r a , Pol a r oi d I ns t a ma t i c , a nd
                       t ha t ’ s t he f i r s t pi c t ur e s I ’ ve t a ke n wi t h i t .
                       And I ’ ve got s ome ot he r ve hi c l e s I t ook
                       pi c t ur e s of I c a n s how you.

                       . . .

                 Q.    I s n’ t i t a f a c t , s i r , t h a t you j us t ma de t he
                       de c i s i on t o t r y t o ha ndl e t hi s your s e l f a nd g o
                       out s i de your i ns ur a nc e c ompa ny a nd ha ndl e i t ?

                 A.    I t hough t t he da ma ge wa s mi nor e nough.              Ye s ,
                       si r.

Th e ma t e r i a l f a c t s a r e not i n di s put e a nd t he i s s ue i s a

q u e s t i on of l a w.    Ra s ni c ha d a dut y t o gi ve not i c e t o hi s

i n s u r a nc e c ompa ny of t he a c c i de nt , c e r t a i nl y no l a t e r t ha n t h e

t i me t he owne r of t he o t he r ve hi c l e a dvi s e d hi m t ha t t he

v e hi c l e ha d b e e n ?t ot a l e d?.   Our l a w i s c l e a r t ha t t he

c o n t r a c t ua l r e qui r e me nt of not i c e t o t he i ns ur e r i s a

c o n d i t i on pr e c e de nt t o r e c ove r y unde r t he pol i c y.     Le e v . Le e ,

7 3 2 S. W 2d 275 ( TN 1987 ) ; Phoe ni x Cot t on Oi l Company v . Roy a l
          .

I n d e mn i t y Company , 140 Te nn. 438, 205 S. W 128 ( 1918) .
                                                   .

                                               3
                 Thi s i s e s s e nt i a l l y a di s put e be t we e n t wo i ns ur a n c e

c o mp a n i e s , a nd we not e t ha t a n i ns ur a nc e c ompa ny woul d

s o me t i me s b e ne f i t i f t hi s i ne qui t a bl e r ul e wa s c ha nge d, i . e . ,

d e c l a r e f or f e i t ur e s of p ol i c y c ove r a ge s onl y i n c a s e s whe r e

t h e l a t e r e por t i ng o f t he a c c i de nt r e s ul t e d i n a c t ua l

p r e j u d i c e t o t he i ns ur a n c e c ompa ny.    As we obs e r ve d i n Nor t h

Ri v e r I ns ur anc e Company v . J ohns on, 757 S. W 2d 334 ( Te nn. Ap p .
                                                      .

1 9 8 8 ) , i ns ur a nc e pol i c i e s , unl i ke ot he r c ont r a c t s , a r e not

p u r e l y pr i va t e a gr e e me nt s but a f f e c t t he publ i c ge ne r a l l y.

                 Our r ul e r e pr e s e nt s t he mi nor i t y vi e w.        Se e

Ho s p i t al Unde r wr i t i ng Gr oup, I nc . , v . Summi t He al t h Lt d. , 6 3

F. 3 d 4 86 ( 6t h Ci r . 1995) .        Cons ume r s a nd i ns ur a nc e c ompa ni e s

a l i k e woul d be ne f i t i f t he Supr e me Cour t woul d ove r t ur n t he

mi n o r i t y r ul e i n f a vor of t he e qui t a bl e ma j or i t y vi e w.

                 W a r e c ons t r a i ne d t o r e ve r s e t he j udgme nt of t h e
                  e

Tr i a l Cour t a nd t he c a u s e i s r e ma nde d f or e nt r y of a j udgme n t

f o r a p pe l l a nt , i n a c c or da nc e wi t h t hi s opi ni on.

                 The c os t o f t he a ppe a l i s a s s e s s e d t o a ppe l l e e s .




                                              ________________________
                                              He r s c he l P. Fr a nks , J .


CONCUR:




_ _ _ _ _ __________________ ____
Ho u s t o n M Godda r d, P. J .
              .



                                               4
_ _ _ _ _ ______________________
Cl i f f or d E. Sa nde r s , Sp. J .




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