ÿWPCo …#†VUFÜ %" 07(_O~4Íá 0Jð 0T: 0^Ž 0hì 0rT 0|Æ 0†B 0È 1uX U,Í 0dù U,] U6‰ B)¿ DCè AM+U*xI¢ªë B• 0U²ªv~±vÓ/ D3 0@5 AOuÆÄ 0UŠ 0Dß D/# BR˜IBM Laser Printer 4019IBM4019ÈÈ,,,,ÈÈ0ÙP Ÿ%‡6·^)·) <¾½Q 9Z ‹.Courier New RegularX&âõ$¡Ñ€²Ñ Ö€ÿÿÖ EÝ ƒ&¦)ÝÝ  Ýà@°°*ìàÚ  Ú2Ú  Úc`… (|3|xH2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô  ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernP ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Monaco< Œ 9p`(Courier New% Line 7 d7Border 1dd€- Cþÿ << Gÿÿ< Œ 9p`(Arial ?Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€ÔÔ€ÔÝ  ÝÝ ƒ"ÝÝ  ÝÔ€"ÔÔ€"ÔÓ  ÓÔ YYY ÔFILEDÔ€"XÔÌÌò òJanuary€29,€1996ÌÌCecil€Crowson,€Jr.ÌÔ€"ôÔAppellate€Court€Clerkó ó  Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€ÔÝ  ÝÝ ƒ&)ÝÝ  Ýà@ àÚ  ÚÚ  Ú d(-3¦$©©Ý ƒâõ!ÝÑ€²ÑÝ  Ý  Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€ÔÝ  ÝÝ ƒ&)ÝÝ  Ýà@ àÚ  ÚÚ  ÚPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'@Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA: T Monaco ÒÒ  BA: T Monaco Ò%%%%'ÿÿdxd("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(-3¦$¢¢Ý ƒâõ!ÝÑ€²ÑÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€X„d&ÓÑ#€Xd#ÑÔ€ÔÝ  ÝÒ Ü ÒÒ ° ÒÑ € ÑÑ\R AØ'\ÑÑ7€‰ÃXXdÖdÈ7ÑÑ  ÑÑ  ÑÙ€€ÙßL€!# ;+'h|` Å `€€LßÌÌÌ€€€€€€€€€€IN€THE€COURT€OF€APPEALS€OFÏTENNESSEE€ÌÌÌÌÌÌÌÌÌSTEVE€GILLIAM€€€€€€€€€€€€€€€€:€€€€KNOX€CHANCERY€Ìd/b/a€STEVE'S€AUTO€TRIM€€€€€€:€€€€03A01„9509„CH„00314ÌAND€UPHOLSTERY€€€€€€€€€€€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ì€€€€€Plaintiff„Appellant€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ìvs.€€€€€€€€€€€€€€€€€€€€€€€€€€:€€€€HON.€SHARON€J.€BELLÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:€€€€CHANCELLOR€Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:ÌAUTO€OWNERS€MUTUAL€€€€€€€€€€€:ÌINSURANCE€COMPANY€€€€€€€€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ì€€€€€Defendant„Appellee€€€€€€:€€€€AFFIRMED€AND€REMANDEDÌÌÌÌÌÌÌÌÌA.€BENJAMIN€STRAND,€JR.,€WITH€STRAND€&€GODDARD,€OF€DANDRIDGE,ÏTENNESSEE,€FOR€APPELLANTÌÌLINDA€J.€MOWLES€and€ERIC€S.€NOWINSKI,€WITH€LEWIS,€KING,€KRIEG,ÏWALDROP€&€CATRON,€OF€KNOXVILLE,€TENNESSEE,€FOR€APPELLEEÌÌÌÌÌÌÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€O€P€I€N€I€O€NÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Sanders,€Sr.J.ÌÌÌÓÓà àà àPlaintiff€has€appealed€from€a€decree€sustainingÏDefendant's€motion€for€summary€judgment€based€on€materialÏmisrepresentations€in€Plaintiff's€application€for€insurance,Ïwhich€increased€the€risk€of€loss€to€Defendant.ÌÌÖ€$ÖÖ€'ÖÑ  Ñà àà àIn€August,€1993,€the€Defendant„Appellee,€Auto€OwnersÏMutual€Insurance€Company€(Auto€Owners),€issued€a€comprehensiveÏcoverage€insurance€policy€to€the€Plaintiff„Appellant,€SteveÏGilliam,€d/b/a€Steve's€Auto€Trim€and€Upholstery€(Mr.€Gilliam).€ÏAs€pertinent,€the€policy€insured€against€loss€or€damage€to€Mr.ÏGilliam's€premises,€equipment,€inventory€or€property€of€otherÏparties€in€his€possession,€resulting€from€fire€or€theft.€ÏApproximately€two€months€later€a€fire€occurred€in€the€buildingÏoccupied€by€Mr.€Gilliam,€destroying€or€damaging€the€building,Ïequipment,€inventory€and€automobiles€in€Mr.€Gilliam's€possessionÏwhich€belonged€to€third€parties.€€Mr.€Gilliam€filed€a€claimÏunder€the€policy€with€Auto€Owners€for€approximately€$85,000,Ïwhich€it€declined€to€pay,€and€that€precipitated€this€litigation.ÌÌà àà àThe€Plaintiff€filed€suit€asking€for€compensation€forÏhis€damages€resulting€from€the€fire€and€for€the€value€of€certainÏfixtures€and€equipment€stolen€from€the€premises€after€the€fireÍand€a€bad€faith€penalty€against€Auto€Owners€for€failure€to€payÏhis€claim€pursuant€to€T.C.A.€ðð€56„7„105.ÌÌà àà àAuto€Owners,€for€answer,€admitted€it€had€issued€aÏcomprehensive€insurance€policy€which€was€in€force€at€the€time€ofÏthe€fire.€€It€admitted€the€provisions€of€the€policy€would€extendÏcoverage€to€Plaintiff's€losses€if€the€policy€were€enforceable.€ÏAs€an€affirmative€defense,€however,€Auto€Owners€averred€theÏPlaintiff€had€made€material€misrepresentations€in€theÏapplication€for€the€insurance€regarding€prior€losses,€priorÏinsurance,€and€the€value€of€his€inventory,€which€increased€itsÏrisk€of€loss.ÌÌÑ  Ñà àà àSubsequently,€the€Defendant€filed€a€motion€for€summaryÏjudgment.€€It€alleged€there€were€no€genuine€issues€of€materialÏfact€and€Defendant€was€entitled€to€judgment€as€a€matter€of€law.€ÏIn€support€of€its€motion,€it€relied€on€the€affidavit€of€EdnaÏNix,€the€affidavit€of€Carolyn€Harris,€Plaintiff's€applicationÏfor€insurance,€certified€copies€of€offense€reports€of€the€KnoxÏCounty€Sheriff's€Department,€and€excerpts€from€the€swornÏstatement€of€the€Plaintiff.ÌÌà àà àIn€response€to€the€motion€for€summary€judgment,€theÏPlaintiff€filed€an€affidavit€and€also€stated€he€relied€on€theÏapplication€for€insurance.ÌÌà àà àThe€affidavit€of€Edna€Nix€stated€she€is€an€insuranceÏagent€of€Powell€Insurers,€Inc.,€of€Knoxville€which€took€Mr.ÏGilliam's€application€for€the€Auto€Owners€insurance€policy.€Ms.ÏNix€asked€Mr.€Gilliam€the€questions€on€the€application€and€wroteÏon€the€application€the€answers€given€by€him.€€After€theÏapplication€was€completed,€Mr.€Gilliam€went€over€the€applicationÏline€by€line€with€Ms.€Nix€and€verified€it€was€correct.€€TheÏapplication,€as€completed€by€Ms.€Nix€and€signed€by€Mr.€Gilliam,Ïas€pertinent,€stated€Mr.€Gilliam€had€no€property€losses€for€theÏthree„year€period€of€1990€through€1993.€€It€showed€the€limits€ofÏliability€for€personal€property€to€be€$30,000.€€It€stated€theÏapplicant€was€presently€carrying€SMP€insurance€coverage€whichÏwould€expire€8„3„93€and€the€insurance€company€was€Grange.ÌÌà àà àThe€excerpts€from€Mr.€Gilliam's€sworn€statement,€asÏpertinent,€show€he€was€asked€the€following€questions€and€that€heÏgave€the€following€answers:ÌÑ  Ñ"Q.à àà àBefore€you€took€out€this€Auto€Owners€policy€on€yourÏbusiness,€had€you€had€insurance€on€it?Ì"A.à àà àYeah,€I€had€some€several€years€back.Ì"Q.à àà àHow€many€years€back,€do€you€know?Ì"A.à àà àI'm€not€sure.€Ì"Q.à àà àWho€was€it€with?Ì"A.à àà àI€don't€have€any€idea."Ì€€€€€€€€€€€€€€€*€€€€€€€€€€€€€€€*€€€€€€€€€€€€€€€*Ì"Q.à àà àThe€agent€told€the€company€that€you€had€insuranceÏprior€to€the€Auto€Owners€policy€being€issued,€and€it€was€withÏGrange.€€Do€you€know€where€she€would€have€gotten€thatÏinformation?€Ì"A.à àà àNo,€sir.€Ì"Q.à àà àThe€agent€also€told€the€company€that€you€had€had€noÏprior€losses.€€Did€you€tell€her€that?€Ì"A.à àà àNo,€sir.€Ì"Q.à àà àDid€she€talk€to€you€about€prior€losses?€Ì"A.à àà àYes,€sir.€Ì"Q.à àà àDid€you€sign€an€application?€Ì"A.à àà àYes,€sir,€I€believe€I€did."Ì€€€€€€€€€€€€€€€*€€€€€€€€€€€€€€€*€€€€€€€€€€€€€€€*Ì"Q.à àà àDid€you€know€you€had€that€much€stuff€in€there€when€youÏtook€out€this€insurance?€Ì"A.à àà àI€figured€there€was€80€or€90€thousand€dollars€worth€ofÏstuff€in€there.€Ì"Q.à àà àWhen€you€took€out€the€insurance?€Ì"A.à àà àYes.€Ì"Q.à àà àYou€figured€you€had€80€to€90€thousand?€Ì"A.à àà àI€didn't€try€to€sell€it€to€the€insurance€company,€IÏtried€to€buy€some€protection€for€me€in€case€something€actuallyÏhappened.€ÌÑ  Ñ"Q.à àà àDid€you€figure€you€had€80€to€90€thousand€dollars€worthÏof€stuff€in€there?€Ì"A.à àà àYes,€sir.€Ì"Q.à àà àSo€you€only€took€out€I€believe€50€thousand€dollars€onÏyour€„„€Ì"A.à àà àI€took€out€30€thousand.€Ì"Q.à àà àOkay.€Ì"A.à àà àThirty€thousand€on€contents.€Ì"Q.à àà àOkay.€€I€believe€you€said€earlier€the€reason€you€didÏthat€was€you€just€wanted€to€cover€some€of€the€„„€Ì"A.à àà àI€just€wanted€to€make€sure€that,€you€know,€that€IÏcould€afford€to€pay€for€the€insurance."ÌÌà àà àThe€records€of€the€Knox€County€Sheriff's€DepartmentÏshow€the€Plaintiff€had€break„ins€at€his€place€of€business€onÏfive€occasions€between€September€3,€1990,€and€January,€1992.ÌÌà àà àIn€Mr.€Gilliam's€affidavit,€as€pertinent,€he€stated€heÏwent€to€the€office€of€Powell€Insurers€on€August€3,€1993,€andÏEdna€Nix€took€information€to€fill€out€the€application€forÍinsurance.€€She€asked€him€a€series€of€questions€about€hisÏinventory,€kind€of€equipment,€and€about€the€building€he€wasÏleasing.€€He€told€her€he€had€insurance€through€Betty€Hart.€€HeÏdidn't€recall€whether€or€not€Ms.€Nix€asked€him€if€he€hadÏinsurance€with€any€other€company.€€He€said€he€told€Ms.€NixÏbefore€filling€out€the€application€for€insurance€that€he€had€hadÏtwo€or€three€break„ins€at€his€business€within€two€to€threeÏyears.€€When€representatives€of€either€Powell€Insurers€or€AutoÏOwners€came€to€his€place€of€business€after€he€had€made€theÏapplication€for€insurance,€he€told€them€he€had€several€break„insÏwithin€the€last€two€or€three€years.€€He€also€told€them€the€Ñ  ÑvalueÏof€his€inventory.€€Mr.€Gilliam€further€said€he€didn't€know€heÏhad€to€insure€his€property€for€its€actual€value.€€He€only€wantedÏ$30,000€coverage€and€didn't€know€his€claim€would€be€deniedÏbecause€he€was€underinsured.€€He€also€said€he€didn't€know€whyÏMs.€Nix€would€list€Grange€as€his€present€insurance€companyÏbecause€he€had€not€had€insurance€on€his€business€for€at€leastÏone€year.€€He€denied€he€went€over€the€application€of€insuranceÏwith€Ms.€Nix€line€by€line.ÌÌà àà àThe€affidavit€of€Carolyn€Harris€stated€she€is€theÏunderwriting€manager€of€the€Brentwood€underwriting€branch€ofÏAuto€Owners€Insurance€in€Brentwood,€Tennessee.€€The€applicationÏof€Plaintiff€for€insurance€which€was€dated€August€3,€1993,Íreflected€the€Plaintiff€had€incurred€no€losses€during€the€three„year€period€prior€to€the€application€date.€€The€application€alsoÏstated€the€business€was€presently€being€insured€by€Grange.€€TheÏaffidavit€further€stated€it€had€come€to€affiant's€attention€thatÏAppellant's€business€had€been€burglarized€on€at€least€fiveÏseparate€occasions€during€the€three„year€period€prior€to€AugustÏ3,€1992.€€None€of€those€burglaries€were€reported€on€theÏapplication€for€insurance.€€It€also€had€come€to€affiant'sÏattention€that€Plaintiff€did€not€have€insurance€for€severalÏyears€prior€to€filing€his€application€for€insurance€with€AutoÏOwners.€€Further,€in€Plaintiff's€application€for€insurance€heÏapplied€for€$30,000€worth€of€coverage€for€the€contents€of€hisÏcommercial€property;€€he€is€now€claiming,€however,€there€wasÏbetween€$80,000€and€$90,000€worth€of€property€on€the€premises€atÏthe€time€of€the€fire.€€The€affidavit€concludes€as€follows:€Ï"These€incorrect€statements€increased€the€risk€of€loss€to€AutoÏOwners€and€had€Auto€Owners€had€been€aware€of€the€prior€losses,Ïthe€fact€that€Ñ  Ñthere€was€no€insurance€on€the€property€for€severalÏyears€prior€to€this€application,€and€the€fact€that€there€wasÏallegedly€between€$80,000€and€$90,000€worth€of€property€on€theÏpremises€with€only€$30,000€coverage,€Auto€Owners€would€not€haveÏaccepted€the€application€nor€written€the€policy.€€That€as€anÏunderwriting€manager,€I€am€familiar€with€the€usage€and€practiceÏprevailing€among€reputable€insurance€companies€in€making€premiumÍrates€and€accepting€or€rejecting€applications€for€insurance.€€AÏreputable€insurance€company€would€either€increase€the€premiumÏrates€or€refuse€to€accept€or€write€an€insurance€policy€if€theÏinsurance€company€became€aware€that€an€applicant€had€eitherÏseveral€prior€losses,€no€insurance€coverage€on€the€property€forÏseveral€years€previous€and/or€substantially€less€coverage€thatÏ[sic]€the€value€of€the€property€which€the€applicant€seeks€toÏinsure."ÌÌà àà àUpon€the€hearing€of€the€motion€for€summary€judgment,Ïthe€chancellor€found:€€"[T]here€is€no€genuine€issue€of€materialÏfact€in€this€action,€and€that€the€Defendant€is€entitled€toÏjudgment€as€a€matter€of€law€due€to€the€fact€that€Plaintiff'sÏapplication€for€insurance€contained€material€misrepresentationsÏwhich€increased€the€risk€of€loss€to€Defendant,€thereby€allowingÏthe€Defendant€to€void€said€insurance€policy."€€The€chancellorÏdismissed€the€complaint€and€the€Plaintiff€has€appealed,€sayingÏthe€court€was€in€error.€€We€cannot€agree,€and€affirm.ÌÌà àà àThe€pivotal€issue€on€this€appeal€is€governed€by€theÏprovisions€of€T.C.A.€ðð€56„7„103€and€the€large€number€of€reportedÏcases€construing€the€application€of€the€provisions€of€thisÏstatute€in€this€jurisdiction.€€It€provides:ÌÒ  ÒÒ  ÒÑ  ÑÓÓà àNo€written€or€oral€misrepresentation€or€warrantyÏtherein€made€in€the€negotiations€of€a€contract€orÍpolicy€of€insurance,€or€in€the€application€therefor,Ïby€the€insured€or€in€the€insured's€behalf,€shall€beÏdeemed€material€or€defeat€or€void€the€policy€orÏprevent€its€attaching,€unless€such€misrepresentationÏor€warranty€is€made€with€actual€intent€to€deceive,€orÏòòunless€the€matter€represented€increases€the€risk€ofÏloss.óó€€(Emphasis€ours.)ÌÌÌÌÒ Ü ÒÒ ° ÒÓÓà àà àIn€applying€the€provisions€of€the€statute,€our€courtsÏhave€held€any€misrepresentation€which€naturally€and€reasonablyÏinfluences€the€judgment€of€the€insurer€in€making€the€contract€isÏa€misrepresentation€which€"increases€the€risk€of€loss"€withinÏthe€meaning€of€the€statute.€€òòSeeóó€ò òTegethoff€v.€MetropolitanÏLife€Insurance€Co.ó ó,€57€Tenn.App.€695,€424€S.W.2d€565€(1966);Ïò òBauer€v.€Mutual€of€Omaha€Insurance€Co.ó ó,€62€Tenn.App.€189,Ï460€S.W.2d€366€(1969);€ò òLane€v.€Travelers€Indemnity€Co.ó ó,€499ÏS.W.2d€643€(Tenn.App.1973).ÌÌà àà àThe€decree€of€the€chancellor€in€the€case€at€bar€isÏsupported€by€ò òSine€v.€Tennessee€Farmers€Mutual€InsuranceÏCo.ó ó,€861€S.W.2d€838€(Tenn.App.1993)€and€ò òGiles€v.€AllstateÏInsurance€Companyó ó,€871€S.W.2d€154€(Tenn.App.€1993).ÌÌà àà àThe€decree€of€the€chancellor€is€affirmed.€€The€cost€ofÏthis€appeal€is€taxed€to€the€Appellant€and€the€case€is€remandedÏto€the€trial€court€for€any€further€necessary€proceedings.ÌÓÓÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€__________________________Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Clifford€E.€Sanders,€Sr.J.ÌCONCUR:€ÌÌ______________________ÌHerschel€P.€Franks,€J.€ÌÌ______________________ÌDon€T.€McMurray,€J.