                  IN THE SUPREME COURT OF TENNESSEE
                             AT KNOXVILLE
                                 August 31, 2011 Session

 ALLSTATE INSURANCE COMPANY v. DIANA LYNN TARRANT ET AL.

      Rule 11 Appeal by Permission from the Court of Appeals, Eastern Section
                        Chancery Court for Sevier County
                   No. 0810463     Telford Forgety, Chancellor


                  No. E2009-02431-SC-R11-CV - Filed March 26, 2012



         After an automobile accident between the insured’s van and a motorcycle, the insurer
filed a declaratory judgment action to determine whether the van was covered under a
commercial policy with a liability limit of $500,000 or a personal policy with liability limits
of $100,000 per person and $300,000 per accident. The insurer alleged that before the
accident the insured had instructed his insurance agent to transfer the van from the
commercial policy to the personal policy. The insured denied this and alleged that he had
instructed the agent to retain the van on the commercial policy. The trial court ruled that
because the insurer had sent the insured a letter and premium bills showing the change in
coverage and the insured had paid the bills without objection, he had ratified the transfer and
the van was covered under the personal policy. The Court of Appeals reversed. We hold that
the action of the insurance agent in transferring the van to the personal policy was not subject
to ratification by the insured because the insurance agent was not acting in the insured’s stead
or for his benefit when it made the transfer. We further hold that the insurer is estopped from
denying coverage under the commercial policy. We affirm the judgment of the Court of
Appeals, although on different grounds.

 Tenn. R. App. P. Rule 11 Appeal by Permission; Judgment of the Court of Appeals
                           Affirmed; Cause Remanded

S HARON G. L EE., J, delivered the opinion of the Court, in which J ANICE M. H OLDER AND
G ARY R. W ADE, JJ., joined. W ILLIAM C. K OCH, J R., J., filed a dissenting opinion, in which
C ORNELIA A. C LARK, C.J., joined.

David Lyle Franklin, Chattanooga, Tennessee, for the appellant, Allstate Insurance
Company.
Charles S. Sexton, Sevierville, Tennessee, for the appellees, John Tarrant, Diana Lynn
Tarrant, and Blue Ribbon Cleaning, Inc.

Billy J. Stokes, Jon M. Cope, and Hudson T. Ellis, Knoxville, Tennessee, for the appellee,
Charles E. Leatherwood.

                                             OPINION

                                                   I.

       On June 17, 2005, Charles E. Leatherwood was allegedly injured when the motorcycle
he was driving collided with a 2002 Chrysler Town & Country van (“the van”) driven by
Diana Lynn Tarrant. At the time of the accident, the van was leased from Huntington Bank
and registered to Blue Ribbon Cleaning, Inc. (“Blue Ribbon”), a cleaning business operated
and solely owned by Mrs. Tarrant and her husband, John Tarrant. Mr. Leatherwood
subsequently filed suit against the Tarrants, alleging that the accident was caused by Mrs.
Tarrant’s negligence and seeking compensation for personal injury and property damage.

        After the negligence lawsuit was filed against the Tarrants, a dispute arose between
the Tarrants and their vehicle insurer, Allstate Insurance Company (“Allstate”), as to the
amount of liability insurance coverage that was available on the van. Allstate’s position was
that the van was covered under a personal policy with liability limits of $100,000 per person
and $300,000 per accident; the Tarrants maintained that the van was covered under a
commercial policy with liability limits of $500,000. In October 2008, Allstate filed a
declaratory judgment action1 seeking a ruling that the van was covered under the personal
policy and therefore subject to the lower liability coverage of $100,000/$300,000. The
complaint alleged that in March 2005, before the accident, Mr. Tarrant requested that his
Allstate agent, the Lonnie Jones Agency (“the Jones Agency”) in Knoxville, move the van
from the commercial policy to the personal policy because he wanted to save money on
premiums and that, accordingly, the Jones Agency moved the van and two other vehicles
from the commercial policy to the personal policy. In their answer, the Tarrants and Blue
Ribbon denied that Mr. Tarrant directed the Jones Agency to move the van to the personal
policy, alleged that the transfer to the personal policy was the Jones Agency’s mistake, and
requested a declaratory judgment that at the time of the accident the van was covered under
the commercial policy.



       1
           Allstate sued the Tarrants and Blue Ribbon, as well as Tennessee Farmers Mutual Insurance
Company, as subrogee of Charles Leatherwood, and United States Liability Insurance Company, as liability
carrier for Blue Ribbon.

                                                  -2-
       At the trial on the complaint for declaratory judgment, the trial court heard the
testimony of Lonnie Jones, owner of the Jones Agency; Patricia Smith, an insurance producer
employed by the Jones Agency; Kathleen Collard, an Allstate field support representative;
and Mr. Tarrant.

        Mr. Jones testified that the Tarrants have been clients of the Jones Agency since
1990. He stated that Mr. Tarrant usually called him each year before renewing his
commercial policy in an attempt to lower his premium payments. “[H]e’s very watchful of
his money and he calls me yearly particularly on his commercial and he gives me this
direction, now, Lonnie, if you can’t beat this, I’m going to leave you.” Mr. Jones testified
that a vehicle’s usage determines whether it should be insured under a commercial policy or
a personal policy. He admitted that the Jones Agency was aware that the van was leased in
the name of Blue Ribbon and, therefore, it should have been on the commercial
policy. However, he also stated that the van would have been moved from the commercial
policy to the personal policy “just if [Mr. Tarrant] asked. . . . We take the directive of the
insured to do that.” While Mr. Jones did not recall any conversation with Mr. Tarrant in
Spring of 2005, when Mr. Tarrant allegedly requested that the van be moved to the personal
policy, Mr. Jones testified that if Mr. Tarrant called him at that time, he would have referred
Mr. Tarrant to Patricia Smith, one of the agents employed at the Jones Agency.

        Ms. Smith is a licensed insurance agent or insurance producer2 and had been
employed at the Jones Agency since March of 2004. She admitted that she did not recall her
conversation with Mr. Tarrant or any of the changes that she made to the policies in March
of 2005, and she retained no notes of her conversation with Mr. Tarrant. Her testimony was
based on her usual practice — “I know how I do my job” — and on her review of policy
billing histories and computer records she generated when she made the policy changes, none
of which contain any information as to the discussion that transpired between herself and Mr.
Tarrant or what his instructions to her were as to coverage. Based on computer printouts
generated by the Jones Agency, she testified that when the van was originally leased in 2002,
it was insured by itself under a commercial policy. Beginning in April of 2003, the van was
insured under a discounted commercial fleet policy, along with a 1995 Lexus ES-300, a 2001
Econoline van, a 1998 Dodge Ram van, a 1984 Dodge Ram wagon, and subsequently, a 2003
DR-3500 Dodge truck. At the time of Mr. Tarrant’s call, Allstate also insured a 1993 BMW
325 I and a 2000 Spinker camper under the personal policy. Ms. Smith stated that when she
spoke with Mr. Tarrant, the commercial policy was due for renewal in early April of 2005
and that he was concerned with obtaining a lower premium. She stated that at Mr. Tarrant’s


        2
           “‘Insurance producer’ means a person required to be licensed under the laws of this state to sell,
solicit or negotiate insurance[.]” Tenn. Code Ann. § 56-6-102(6) (2008).


                                                    -3-
request, she moved the van, the Lexus, and the Dodge truck from the commercial policy to
the personal policy and moved the BMW to a separate personal policy in the name of Mr.
Tarrant’s son.

        Ms. Smith testified that in her conversation with Mr. Tarrant about transferring the
three vehicles to the personal policy, she “would have discussed that he was using [these
vehicles] in a personal manner. That would have been one of the things that would have
prompted me, usage.” Referencing an event history showing information that she entered
into the Jones Agency’s computer on March 23, 2005, Ms. Smith noted that the movement
of the van and the other two vehicles to the personal policy was processed on that date, with
an effective date of April 4, 2005. She admitted that at the time she made the coverage
changes, the Jones Agency’s records incorrectly showed Mr. Tarrant as the van’s registered
owner and did not show that the van was leased from Huntington Bank and was registered
in the name of Blue Ribbon. In her prior deposition testimony, Ms. Smith stated that it would
not have been appropriate to put the van on a personal policy if it was owned or leased by
Blue Ribbon and that a company-owned vehicle should never be on a personal policy. At
trial, when questioned about moving a vehicle registered to a commercial entity to a personal
policy, Ms. Smith stated, “At that time I would figure that Mr. John Tarrant has an insurable
interest in that vehicle and the fact that he’s going to use it as a pleasure vehicle or personal
vehicle, okay. And that he wanted me to do these things, that’s what prompted me to do
them.” Ms. Smith said that had she known that Blue Ribbon owned the van it would have
been her practice to advise Mr. Tarrant to have it titled in his name, although she does not
remember whether she did so in this instance. Ms. Smith testified that she would not have
moved the van to the personal policy unless Mr. Tarrant had requested the transfer. Although
she stated that he requested the transfer, she admitted that she had no personal recollection
of such a conversation. Ms. Smith did not testify that she moved the van to the personal
policy because of a misunderstanding or confusion over the meaning of the word “van.”

        Ms. Collard, an Allstate field representative from Allstate’s national support center
in Roanoke, Virginia, testified that a letter from Allstate bearing the signature of Mr. Jones
was mailed to Mr. Tarrant on March 25, 2005. This letter alluded to changes in insurance
coverage but did not state the amount of coverage available on each vehicle. The letter stated
in part as follows:

              The accompanying Amended Policy Declarations includes these
              changes:
              The addition of your 03 Dodge Trk Dr3500 2wd.
              The addition of your 95 Lexus Es300.
              A change in insurance coverage for your 02 Chrysler Town-
              Country.

                                               -4-
                A change in description for your 02 Chrysler Town-Country.
                The addition of the passive restraint discount 02 Chrysler Town-
                Country.
                The deletion of one or more operators.

       The letter further noted that the “coverages and limits you carry for your vehicles, and
the costs of those coverages, are listed in detail on the enclosed Amended Policy
Declarations.” The enclosure, however, was not admitted into evidence at the trial. Mr.
Tarrant did not testify that he received it, nor did the trial court make any finding of fact that
he received it.3

        Ms. Collard also confirmed that on April 15, May 16, and June 15, 2005, Allstate
mailed to Blue Ribbon Cleaning, Inc. “commercial automobile insurance” bills that did not
include the van among the list of covered vehicles, and these bills were paid. Ms. Collard
also confirmed that on April, 20, 2005, and May 20, 2005, Allstate mailed “personal
automobile insurance” bills to Mr. Tarrant that included the van among the list of insured
vehicles, and these bills were paid. Ms. Collard testified that as a result of the transfer of the
van and the other two vehicles from the commercial policy to the personal policy, there was
a savings of $2,867.74 in premiums. The premium bills did not specifically state the amount
of liability coverage available on the various insured vehicles.

        Mr. Tarrant testified that he would regularly call the Jones Agency to discuss his
premium. After he received the commercial policy renewal notice in early 2005 showing a
“substantial increase” in the premium as compared to the previous year, he called the Jones
Agency to see what could be done about lowering it. He stated that he never told an
employee of the Jones Agency to remove the van from the commercial policy. “We got a
quote back [from the Jones Agency] what it would cost for us to keep the vans in the
commercial line and then what we could put everything else in the personal line.” Mr.
Tarrant attested that his instructions to the Jones Agency were “to put all the vans under the
commercial policy.” Mr. Tarrant testified that there was no question in his mind about the
instructions he gave the Jones Agency. He further testified that when he talked to Ms. Smith,
he did not know that the Jones Agency’s records did not list Blue Ribbon as the titled owner
of the van. He noted that the van was the only vehicle that he owned at the time that was
titled in the name of the business and that “of all the vehicles [it] would have been the one


        3
          Although the dissent states that in March, Mr. Tarrant was sent “The Amended Policy
Declarations” which listed the amount of the van’s liability insurance coverage and the amount of the
premium, the Declarations admitted into evidence were not sent to Mr. Tarrant in March but rather were part
of a packet of information sent to Mr. Tarrant as a result of a change in driver assignment that was effective
on May 20, 2005 and resulted in a premium increase of $2.30.

                                                     -5-
for sure that would have remained in the commercial policy.” He testified that use of the van
was divided equally between business and personal use. He stated that he did not recall
getting the March 25, 2005 letter from the Jones Agency indicating the changes in his
coverage and that he did not know that the van had been moved to the personal policy until
May 2009, when he and his attorney were reviewing his insurance records. Mr. Tarrant
testified that until that time, although checks were written to pay the premium bills, he never
looked at the premium bills. His daughter, whom he employs as his secretary, would make
out the checks for payment of the bills, and “at a glance” he would sign them and send them
to Allstate.

        The trial court found that although Mr. Tarrant instructed the Jones Agency to place
the vans under the commercial policy, maybe there had been a misunderstanding that resulted
in the van being placed under the personal policy. The trial court determined that Mr. Tarrant
had ratified the change in coverage because he had received the March 25, 2005 letter
denoting changes to his coverage and had also received premium bills showing that the van
was covered under the personal policy.4 The trial court held that at the time of the accident,
the van was covered under the personal policy, not the commercial policy. The Court of
Appeals reversed the trial court, holding that Allstate failed to follow Mr. Tarrant’s
instruction that the van be covered under the commercial policy and that Mr. Tarrant’s
receipt of notification of the change in coverage and payment of premium bills reflecting the
change did not absolve Allstate from liability. Allstate Ins. Co. v. Tarrant, No. E2009-
02431-COA-R3-CV, 2010 WL 4188232 at *10 (Tenn. Ct. App. Oct. 21, 2010).

       We granted Allstate’s application for permission to appeal and address two
issues: 1) whether Mr. Tarrant ratified the transfer of the van from the commercial policy
to the personal policy; 2) if Mr. Tarrant did not ratify the transfer, whether Allstate is
estopped from denying coverage of the van under the commercial policy.

                                                     II.

       We begin our analysis with the trial court’s findings of fact as to whether Mr. Tarrant
instructed the Jones Agency to move the van from the commercial policy to the personal
policy. Neither Mr. Jones nor Ms. Smith had any personal recollection of their conversation
with Mr. Tarrant when he called the Jones Agency in March of 2005. Mr. Jones recalled no
conversation with Mr. Tarrant and stated that he would have referred Mr. Tarrant to
Ms. Smith. Ms. Smith testified that she had no independent recollection of her conversation


        4
          The trial court did not find nor does the record show that Allstate provided Mr. Tarrant with a copy
of either his commercial policy or personal policy between the time Allstate placed the van under the
personal policy and the time of the accident.

                                                     -6-
with Mr. Tarrant or of any steps she took as a result of the conversation. Her testimony as
to what transpired at that time was based on her review of the billing history. Although
Mr. Jones denied that the Jones Agency made a mistake, at the same time he acknowledged
the possibility of a mistake by the Jones Agency, stating that if the agency made a mistake,
it was Mr. Tarrant’s responsibility to notify the agency of the mistake upon his receipt of
proof of insurance cards. In contrast, Mr. Tarrant testified that he specifically told the Jones
Agency to “go ahead and put all of the vans in the commercial line, the ones we were using
for business.” This included “the ‘84 Dodge Ram, the ‘98 Dodge Ram, the Ford Econoline
150 and the Town and Country Van.” He testified that there was no question in his mind that
he gave the instruction to the Jones Agency to place the van on the commercial policy. The
trial court found that Mr. Jones, Ms. Smith, and Mr. Tarrant were all credible witnesses and
then specifically noted that Mr. Tarrant testified that “what he told them at the Jones
[A]gency was look, his words were, put the vans on the commercial policy, put the other
vehicles on the personal policy.”

        We review the trial court’s findings of fact 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. 13(d). As to the weight and credibility to be
given the testimony of witnesses, we must afford considerable deference to the trial court’s
findings of fact based upon the court’s assessment of live testimony. Dixon v. Travelers
Indem. Co., 336 S.W.3d 532, 536 (Tenn. 2011); Padilla v. Twin City Fire Ins. Co., 324
S.W.3d 507, 511 (Tenn. 2010). Because a trial court is in a position to observe witnesses and
assess their demeanor and other indicators of credibility, a trial court’s determination of
credibility will not be overturned on appeal unless there is clear and convincing evidence to
the contrary. Hughes v. Metro. Gov’t of Nashville & Davidson Cnty., 340 S.W.3d 352, 360
(Tenn. 2011); Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999). We construe
the trial court’s finding to be that Ms. Smith testified as to what she would have done based
on her usual practice and that Mr. Tarrant testified as to what he did. The trial court’s finding
that Mr. Tarrant was credible implicitly constitutes a finding that Mr. Tarrant told Ms. Smith
to place the van on the commercial policy. The trial court’s finding that Ms. Smith was
credible constitutes a conclusion that she testified truthfully that her usual practice would
have been to follow the instruction of the insured and does not contradict the trial court’s
finding as to what Mr. Tarrant actually did. Based on the trial court’s determinations as to
the witnesses’ credibility and the testimony of those witnesses, the inference is inescapable
that Mr. Tarrant instructed Ms. Smith to place the van on the commercial policy and she
failed to do so; her action of placing the van on the personal policy constituted a mistake by
the Jones Agency.

       The dissent is based on the premise that the trial court made a finding of fact that “the
parties’ coverage dispute arose from a ‘good faith misunderstanding’ regarding the meaning

                                               -7-
of the word ‘vans.’” This premise is not supported by the proof at trial. When announcing
its decision, the trial court speculated as to what may have occurred, noting, “Well, maybe
maybe maybe that this case only comes down to a misunderstanding about the definition of
the word van.” Later the trial court said “[b]ut the case may boil down to just nothing more
than a misunderstanding about what one side honestly meant one thing about the word van
and the other side honestly understood another thing about it.” We disagree that a statement
by the trial court that “maybe maybe maybe” there was a misunderstanding as to the meaning
of the word “van” qualifies as a judicial finding of fact on which to base a legal
conclusion. The trial court also subsequently stated, “I’m satisfied it is nothing more than
a good faith misunderstanding about what the meaning of the word vans was.” Given the
court’s prior equivocal statements, it is unclear whether this statement qualifies as a finding
of fact based on proof before the court or is instead a conclusion based on nothing more than
the court’s speculation as to what might have happened. More importantly, there simply is
no evidence to support the conclusion that there was a misunderstanding about meaning of
the word “van.” Neither Mr. Jones nor Ms. Smith testified that they were confused about
what Mr. Tarrant meant when he referred to the van. Neither recalled any such discussion
with Mr. Tarrant. While Mr. Tarrant speculated that “if [the Jones Agency wasn’t] aware
that [the Chrysler Town and Country van] was a van [that] may have been the reason that
they miss understand [sic] the directions,” (emphasis added) there is no proof that the Jones
Agency was not aware that the subject van was a van. Because the underlying contingency
of this statement was not met, it does not constitute a concession that the Jones Agency’s
failure to include the van on the commercial policy was the result of a misunderstanding as
to the nature of the vehicle. The trial court could not reasonably infer from this testimony
or any other evidence in the record that the Jones Agency’s failure to list the van on the
commercial policy was the result of a misunderstanding as to the definition of “van.” See
Underwood v. HCA Health Serv. of Tenn., Inc., 892 S.W.2d 423, 426 (Tenn. Ct. App. 1994)
(“An inference is reasonable and legitimate only when the evidence makes the existence of
the fact to be inferred more probable than the nonexistence of the fact.”). Given Mr.
Tarrant’s instruction that all the vans be covered under the commercial policy, an instruction
credited by the trial court as a finding of fact, listing the van in question on the personal
policy was the Jones Agency’s mistake. It makes no difference if the mistake was the result
of the agency’s negligence in failing to follow Mr. Tarrant’s instructions or whether the
mistake was the result of its confusion as to the nature of the vehicle.

                                             III.

        Next, we address the question of whether Mr. Tarrant ratified the transfer of the van
to the personal policy. The trial court determined that even if Mr. Tarrant did not authorize
the transfer of the van to the personal policy and the Jones Agency made a mistake in making
the transfer, Mr. Tarrant ratified the transfer when he continued to pay premiums on the

                                              -8-
policies after receiving the March 25, 2005 letter and premium bills indicating that the van
was covered under the personal policy.

        In order for Mr. Tarrant to ratify Ms. Smith’s mistake, Ms. Smith must have been
acting in the stead of Mr. Tarrant and for his benefit when the van was transferred to the
personal policy. “Ratification of a contract occurs when one approves, adopts, or confirms
a contract previously executed by another[,] in his stead and for his benefit, but without his
authority.” Webber v. State Farm Mut. Auto. Ins. Co., 49 S.W.3d 265, 270 (Tenn. 2001)
(alteration in original) (internal quotation marks omitted); Harber v. Leader Fed. Bank for
Sav., 159 S.W.3d 545, 552 (Tenn. Ct. App. 2004).

       The Jones Agency did not act in the stead of Mr. Tarrant in making the policy
change. “Stead” is defined as “the place of a person or thing as occupied by a successor or
substitute.” Webster’s Encyclopedic Unabridged Dictionary of the English Language 1390
(1989). Mr. Tarrant acted on his own behalf in requesting that all the vans be placed on the
commercial policy and the other vehicles placed on the personal policy. Ms. Smith, by
performing the clerical tasks necessary to implement Mr. Tarrant’s request, acted in the place
of Allstate, not Mr. Tarrant. Ms. Smith did not perform any task that Mr. Tarrant would have
been able to perform himself since he did not have access to the Allstate computer system.

        This is consistent with the General Assembly’s determination that in disputes arising
out of an application for insurance or an insurance policy, the insurance producer, which in
this case is the Jones Agency, is the agent of the insurer, Allstate, and not the insured:

              [a]n insurance producer who solicits or negotiates an application
              for insurance shall be regarded, in any controversy arising from
              the application for insurance or any policy issued in connection
              with the application between the insured or insured’s beneficiary
              and the insurer, as the agent of the insurer and not the insured or
              insured’s beneficiary.

Tenn. Code Ann. § 56-6-115(b) (2008).

        This statute serves the purpose of preventing an insurance company “‘from denying
responsibility for representations and actions from the agent from whom applications are
voluntarily accepted’” and of “‘protect[ing] an applicant who relies on such representations
or actions,’” and the statute is to be liberally construed in favor of the insured. Bill Brown
Constr. Co. v. Glen Falls Ins. Co., 818 S.W.2d 1, 4 (Tenn. 1991) (quoting 15 Tenn. Jur.
Insurance § 9 (1984)). Declaring the insurance producer to be the agent of the insurer, not
the insured, is tantamount to declaring that the producer acts in the stead of the insurer, not

                                              -9-
the insured, an “agent” being “[o]ne who is authorized to act for or in place of another; a
representative.” Black’s Law Dictionary 64 (7th ed. 1999). Based on Tennessee Code
Annotated section 56-6-115(b), an insurance producer acts in the place of the insurer and not
the insured. Ms. Smith merely listened to Mr. Tarrant and assumed the place of Allstate by
entering his requests, as she understood them, into the insurer’s system. See also Gen.
Accident Fire & Life Assurance Corp. v. Browne, 217 F.2d 418, 422 (7th Cir. 1954) (holding
that insurance agency was acting as agent of insurer, not insured, in acceding to insured’s
request to keep him insured against liability in the operation of his automobile, stating
“[m]ere attention to the needs of a customer does not make a business man the agent of a
customer.”)

       Tennessee Code Annotated section 56-6-115(b) applies to the renewal of an insurance
policy as well as the application for the original policy. In Maryland Casualty Co. v.
McTyier, 266 S.W. 767 (Tenn. 1924), we construed the predecessor statute to Tennessee
Code Annotated section 56-6-115(b), which also referred to the “application,” and not
specifically to a renewal policy.5 We quoted with approval the following language from
Schoener v. Hekla Fire Ins. Co., 7 N.W. 544, 546-47 (Wis. 1880), a Wisconsin case
construing that state’s similar statute:

                 “[T]he Legislature has assumed the right to regulate the business
                 of insurance, and prescribe the manner in which it shall be
                 conducted in this state. It has declared that whoever solicits
                 insurance on behalf of an insurance company, or makes any
                 contract of insurance, or in any manner aids or assists in making
                 such contract, or transacts any business for the company, shall
                 be held an agent of such company to all intents and purposes.”

McTyier, 266 S.W. at 769 (emphasis added). Accentuating the statutory language “and the
policy issued in consequence thereof,” the McTyier Court stated that “[i]t was manifestly not
the intention of the Legislature to restrict the agency representation of the [insurance]
company to matters relating to the application only, but to extend it to all matters relating to


       5
           As quoted by the McTyier Court, this earlier statute provided that

                 “any person who shall solicit an application for insurance shall in all
                 matters relating to such application and the policy issued in consequence
                 thereof be regarded as an agent of the company issuing the policy, and not
                 the agent of the insured, and all provisions in the application and policy to
                 the contrary are void and no effect whatever . . . .”

McTyier, 266 S.W. at 767 (quoting Chapter 442, Acts of 1907).

                                                     -10-
the policy issued.” Id. at 768; see also T.H. Hayes & Sons v. Stuyvesant Ins. Co., 250
S.W.2d 7, 11 (Tenn. 1952); Tenn. Storm Window & Hardware Co. v. Newark Ins. Co., 506
S.W.2d 792, 795-96 (Tenn. Ct. App. 1973). Renewal of the policy issued is a “matter[]
relating to the policy issued.” We find no distinction between the language of the earlier
statute construed by the Court in McTyier and that of the statute in its current form, which
replaces the phrase “the policy issued in consequence of [the application]” with “any policy
issued in connection with the application.” If anything, the substitution of the adjective
“any” for “the” in the current version lends stronger support to the conclusion that the statute
is intended to encompass a renewal policy as well as the policy originally issued.

       Our conclusion is in accord with the Arkansas Supreme Court’s decision in Coal
Operators Casualty Co. v. F.S. Neely Co., 243 S.W.2d 744 (Ark. 1951). In that case, the
insured, a coal mining business, purchased a workers’ compensation insurance policy
through an insurance agency. Id. at 744. The policy covered the insured’s business
operations in both Arkansas and Oklahoma. Id. The policy was renewed the next year with
coverage extending to both states; however, when it was renewed a third time, it was issued
to cover operations solely in Oklahoma. Id. at 745. After the third renewal, one of the
insured’s employees was injured in Arkansas, and the insurance company denied
coverage. Id. In addressing the question of whether the insurance agent was a broker acting
as agent for the insured or an agent of the insurance company, the Arkansas Supreme Court
considered Arkansas and Oklahoma statutes similar to section 56-6-115(b), which were
respectively quoted as follows:

              “Any person, who shall hereafter solicit insurance or procure
              applications, shall be held to be soliciting agent of the insurance
              company or association issuing a policy on such application, or
              on a renewal thereof, anything in the application or policy to the
              contrary notwithstanding.”

Neely Co., 243 S.W.2d at 745 (quoting Ark. Stats. § 66-302).

              “Any person who shall solicit and procure an application for
              insurance shall, in all matters relating to such application for
              insurance, and the policy issued in consequence thereof, be
              regarded as the agent of the company issuing the policy and not
              the agent of the insured, and all provisions in the application and
              policy to the contrary are void and of no effect whatever.”

Neely Co., at 745-46 (quoting Okla. Stats. tit. 36, § 197). The Oklahoma statute, like section
56-6-115(b), referred only to an application for insurance and a policy issued in connection

                                              -11-
with the application and did not specifically include a renewal, as did the Arkansas
statute. The Court, however, determined that both statutes were to the same effect and that,
as applied to the facts of the case, both statutes made the insurance agent the agent of the
insurance company in issuing the renewal. Id. at 746.

       We find that Ms. Smith did not assume the place of Mr. Tarrant, and she was also
statutorily precluded from acting in his stead. Nor did Ms. Smith act for the benefit of Mr.
Tarrant. “Benefit” is defined as “[p]rofit or gain.” Black’s Law Dictionary 150 (7th ed.
1999). Mr. Tarrant did not realize a profit or gain from Ms. Smith’s actions. While Mr.
Tarrant’s premiums were lower after the transfer,6 he also received commensurately lower
coverage and assumed greater personal risk. While Allstate received a lower premium
payment, it enjoyed a commensurate decrease in liability exposure. Consequently, in terms
of the change in premium rate and risk exposure, neither party enjoyed a positive
benefit. Allstate did, however, otherwise benefit from the transaction in that it was able to
retain Mr. Tarrant’s business. Mr. Jones testified that Mr. Tarrant had threatened to take his
business elsewhere if nothing could be done to lower his premiums.7

       Not only did Allstate actually receive a benefit from Ms. Smith’s mistake, the
evidence also demonstrates that Ms. Smith was primarily motivated to benefit Allstate. The
Jones Agency acted in furtherance of its goal of retaining Mr. Tarrant’s business, which
inured to the benefit of Allstate. The Jones Agency performed no act or service for Mr.
Tarrant inconsistent with obtaining insurance business for itself and Allstate. Further, Mr.
Jones admitted that his agency’s primary allegiance is to Allstate, not Mr. Tarrant, stating:
“[T]he company is primary. The insured is next in line. So if we do make a mistake, it is the


        6
          Although Ms. Collard testified that Mr. Tarrant realized a total premium savings of $2,867.74 as
a result of the transfer of the van and the other two vehicles to the personal policy, there was no testimony
as to what portion of this amount was specifically attributable to the transfer of the van. Obviously, a
significant portion, if not the majority, of the $2,867.74 premium decrease can be ascribed to the change in
coverage on the 1985 Lexus and the 2003 Dodge truck, which were transferred from the commercial policy
to the personal policy at the same time as the van.

        7
           Allstate also appears to have benefitted in another respect. Ms. Smith testified that at the time of
the transfer, the van was insured under a commercial fleet policy that carried a lower premium than a non-
fleet policy. However, Ms. Smith stated that “[y]ou have to have five vehicles for a commercial policy to
obtain the fleet discount.” The transfer of three of the six vehicles that, prior to March 2005, had been
covered under the commercial policy brought the total number of vehicles insured under that policy below
the minimum five required to qualify for the fleet premium discount. Consequently, an advantage accrued
to Allstate because the premium rate per vehicle on each of the three vehicles remaining on the commercial
policy increased without any increased liability exposure to Allstate. While it is true that the commercial
fleet discount would have been lost even had the van not been transferred from the commercial policy, it is
apparent that, on the whole, the transaction benefitted Allstate, not Mr. Tarrant.

                                                     -12-
obligation of the insured to correct us.” The only negative consequence that the Jones
Agency would have experienced had it refused to insure Mr. Tarrant’s property would have
been the loss of Mr. Tarrant as a customer, with the corresponding loss of its percentage of
the insurance premiums he would have paid.

       To conclude, since the Jones Agency neither acted in the place or stead of Mr. Tarrant,
nor for his benefit, Mr. Tarrant could not have ratified its mistake by continuing to pay the
premiums after receiving the March 25, 2005 letter and premium notices indicating that the
van had been moved to the personal policy.

                                                      IV.

       The final issue we address is whether Allstate was estopped from denying coverage
of the van under the commercial policy.8

       An insurance company is generally deemed estopped to deny policy liability on a
matter arising out of the negligence or mistake of its agent, and if either party has to suffer
from an insurance agent’s mistake, it must be the insurance company. See Vulcan Life &
Accident Ins. Co. v. Segars, 391 S.W.2d 393, 397 (Tenn. 1965); Magnavox Co. of Tenn. v.
Boles & Hite Constr. Co., 585 S.W.2d 622, 627 (Tenn. Ct. App. 1979); Henry v. S. Fire &
Cas. Co., 330 S.W.2d 18, 32 (Tenn. Ct. App. 1958); 44A Am. Jur. 2d Insurance § 1580
(2003); 46 C.J.S. Insurance § 1207 (2007).

       The Court of Appeals determined that this rule cannot be utilized to estop Allstate
from denying coverage of the van because, in fact, Allstate did not deny coverage but
allowed coverage under the personal policy. See Tarrant, 2010 WL 4188232, at *9. We do
not agree. Allstate seeks to deny coverage under the commercial policy and is therefore
subject to estoppel as to the commercial policy. It is immaterial that coverage of the van is
allowed under the personal policy. The Court of Appeals’ incorrect reasoning undermines
the rule’s function in protecting the insured from the mistakes of the insurance agent.


        8
           Allstate argues that we are precluded from applying the rule of estoppel because this issue was not
raised at trial. However, the record belies this assertion and shows that the issue of estoppel was presented
to the trial court by both Mr. Leatherwood’s attorney and Mr. Tarrant’s attorney. The trial brief of Mr.
Leatherwood’s attorney cited case law pertaining to estoppel, and the matter of estoppel was also raised by
Mr. Tarrant’s attorney in closing argument when he stated “Allstate can’t benefit from a mistake, your
Honor. The law is pretty clear on that. They can’t benefit at the expense of their insured on a mistake they
made.” Tennessee Rule of Civil Procedure 15.02 provides that “[w]hen issues not raised by the pleadings
are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been
raised in the pleadings.” We deem the issue of estoppel to have been tried by implied consent of the parties,
and the issue is properly considered by this Court.

                                                      -13-
        The insurer – not the insured – should bear the consequences of an error by the
insurer’s agent. The rationale for estopping an insurance company from taking advantage
of its agent’s mistake was noted by this Court in Vulcan:

               “[T]he man on the street purchases his insurance policy in very
               much the same way that he purchases his automobile or his
               reaper or other chattels. He knows no more about the making of
               a contract of insurance than he does about the making of an
               automobile, and he naturally relies upon the skill and good faith
               of those who hold themselves out to be experts in such matters,
               by advertising their wares for sale. It would seem to be the clear
               duty of the insurer, professing to draw an instrument protecting
               the applicant’s property against certain defined perils, to
               exercise due diligence to supply a policy which will effect the
               purpose intended. Any damage caused to the applicant through
               the agent’s mistakes or negligence in making inquiries that he
               should know to be pertinent should rest on the insurer.”

391 S.W.2d at 397.

        Allstate argues that Mr. Tarrant should be denied coverage under the commercial
policy because he failed to discover the change in coverage on the van when he received the
March 25, 2005 letter and when he paid the subsequent premium bills. There is no proof that
Allstate sent Mr. Tarrant a policy after the change in coverage.9 The March 25, 2005 letter
mailed to Mr. Tarrant noted there was a change in coverage, but did not state what the change
in coverage was. The subsequent premium bills sent to Mr. Tarrant and Blue Ribbon were
either for commercial or personal coverage and did not state the amount of coverage. It was
not apparent from the face of the March 25, 2005 letter or the premium bills that the coverage
on the van had decreased from $500,000 to $100,000 per person/$300,000 per
accident. However, even if the letter and bills were deemed to be clear disclosures of the
changes in his coverage, Allstate should not be relieved of liability due to its agent’s error
because Mr. Tarrant failed to discover the error after reading the letter and premium bills. As
stated in Henry,




       9
         Even had Allstate sent Mr. Tarrant a copy of the policy, courts have taken judicial notice
of the fact that an insured will customarily accept and retain an insurance policy without reading
it. Henry, 330 S.W.2d at 32; Brewer v. Vanguard Ins. Co., 614 S.W.2d 360, 363 (Tenn. Ct. App.
1980); Smith v. Continental Ins. Co., 469 S.W.2d 138, 147 (Tenn. Ct. App. 1971).

                                               -14-
                Where the [insurance] company or its agent delivers to the
                insured a policy which is known, or should be known, to be
                defective, such conduct is a representation that the policy is
                valid and effective for the purpose intended. And the insured,
                if he is ignorant of the defect and has no special competence or
                experience in insurance matters is privileged . . . to rely upon
                that representation without reading or being charged with the
                contents of the policy.

Id., 330 S.W.2d at 32. In Henry, the insured plaintiffs operated a logging business and
sought compensation from their insurer for damages incurred after one of their logging
trailers was involved in an accident. Id. at 20. Before the accident, the insurer had issued
to the plaintiffs policies containing a clause that excluded coverage of the trailer. Id. at 20-
21. The court held that if the jury found that the plaintiffs had requested that the insurer’s
agent write the policies to provide full and complete liability coverage on all of their
equipment and the agent erred in failing to comply with the plaintiffs’ request, the insurer
would be estopped from denying full coverage, even though the plaintiffs failed to read their
policies. Id. at 32.

       Mr. Tarrant requested that the van be covered under the commercial policy. Despite
Allstate’s implicit assurance that this request would be complied with, it was not, due to the
mistake of Allstate’s agent. Under these circumstances, Allstate is estopped from denying
coverage, notwithstanding Mr. Tarrant’s failure to discover the error from the mailings he
received. See also, Magnavox, 585 S.W.2d at 628 (Insurer not guilty of contributory
negligence in accepting without protest policies containing exclusionary clause where
insured was “lulled into a false sense of security” by insurance agent.)10

       To hold otherwise would place the burden on the insured to discover and protect
himself or herself from mistakes of the insurer’s agent and relieve the insurer from any
responsibility for the errors of its agent. Mr. Tarrant relied on the Jones Agency to provide
the insurance coverage he requested and as a result of the Agency’s mistake, the coverage
was not provided. Accordingly, Allstate is estopped from denying coverage of the van under
the commercial policy. We do not disagree with the dissent’s assertion that insurance
policies are as a general matter controlled by basic contract principles. However, as to the


        10
           In Morrison v. Allen, 338 S.W.3d 417 (Tenn. 2011), we held that the financial planner who was
employed by the insured to procure an incontestable insurance policy was liable to a beneficiary under the
policy for breach of contract because the planner failed to correctly fill out the insurance application form
on behalf of the insured. The beneficiary was allowed recovery despite the insured’s failure to read the
application and correct the misstatement. Id. at 429.

                                                    -15-
specific matter of a mistake by an insurance agent as occurred in this case, the common law
clearly dictates that the insurer is estopped to deny coverage.

        This is not a “failure to read” case, but one in which the insured instructed his
insurance agent to make a change in the insured’s insurance coverage, and the agent made
a mistake in carrying out the instruction. As a result, the insured did not receive the coverage
he requested. Under these circumstances, it is the insurer who must bear the consequences
for the loss, not the insured. To hold otherwise would ignore the facts and well-settled law
and allow an insurance agent or company to err at will without any consequences and place
the full burden on the insured to discover and correct the insurer’s mistake.

                                                   V.

        We hold that the Jones Agency’s mistake in transferring the van from the commercial
policy to the personal policy was not subject to ratification by Mr. Tarrant because in
effecting the transfer, the Jones Ageny did not act in Mr. Tarrant’s stead or for his
benefit. We further hold that because the van was transferred from the commercial policy
as the result of the mistake of the Jones Agency, Allstate is estopped from denying coverage
of the van under the commercial policy. Accordingly, the van is insured under the
commercial insurance policy issued by Allstate. This cause is remanded to the trial court for
further proceedings consistent with this opinion, which shall include determining any
additional amount of premiums due Allstate and the Jones Agency for coverage of the van
under the commercial policy. The judgment of the Court of Appeals is affirmed on different
grounds.11 Costs are assessed against appellant, Allstate Insurance Company, and its surety,
for which execution may issue if necessary.




                                                         ________________________
                                                         SHARON G. LEE, JUSTICE




        11
          We may affirm the judgment of a lower court on grounds different from those relied upon by the
court below where the lower court has reached the correct result. Cont’l Cas. Co. v. Smith, 720 S.W.2d 48,
50 (Tenn. 1986).

                                                  -16-
