ÿWPC¥! …#†VUNÜ %* 0 (04Xl 0l{ 0Dç 0J+ 0Tu 0^É 0h' 0r 0| 0†} 0 1u“ U, 0d4 B˜ U,µ U >á U 6B)UDC~ D3Á AMôU*A 0@k>«ué2^u¿§Äv~kvÓé AO¼Æ 0DÑ 0D! D/Y! Bˆ!˜HP LaserJet 4/4MHPPCL5E,,,,0®ØP 5vÏ;zl âP(ÈhH  Z ‹6Times New Roman RegularX($¡¡c`…xxxxxx3|xî((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 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 d< Œ 9p`(Monaco< Œ 9p`(&Times New Roman< Œ 9p`(Courier New% Line 7 d((((7Border 1dd$$$$'ÿÿdxd€-)Cþÿ << Gÿÿ< Œ 9p`(Arial("ÿÿ$££Ò  ÒÒ  Ò 4Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ"ÝÝ  ÝÔ€,ÔÔ€,ÔÓ  ÓÔ YYY ÔFILEDÔ€,XÔÌÌò òJanuary€26,€1996ÌÌCecil€Crowson,€Jr.ÌÔ€,ôÔAppellate€Court€Clerkó ó kÝ ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€&ôÔÔ€'ÔNiehoff€testified€that€he€assumed€that€the€Chevrolet€Cavalier€was€theÏinoperable€car€that€the€Neases€had€referred€to€when€they€applied€for€the€PGAÏpolicy.Ì (Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€'ÔÔ€'ôÔThe€underlying€tort€action€was€served€on€Nease€in€the€February/March,Ï1993,€time€frame.Ì kÝ ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€'ÔÔ€'ôÔHowever,€it€is€clear€from€the€testimony€of€Nease€and€Niehoff€that€sheÏpromptly€delivered€the€suit€papers€to€Niehoff€who€immediately€forwarded€themÏto€PGA.Ì µÝ ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€&ôÔÔ€'ÔNease€testified€that€the€main€reason€she€agreed€to€repay€the€settlementÏmoney€was€that€Weissinger€threatened€her€with€criminal€fraud€charges.€€ÏWeissinger€denied€making€any€such€threats.Ô€&ÔÔ€&XÔÌ Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€'ÔÔ€'ôÔIt€is€not€clear€in€the€record€before€us€as€to€what€happened€to€the€suitÏpapers€transmitted€to€PGA€by€Niehoff;€however,€in€view€of€our€resolution€ofÏthis€case,€the€solution€of€that€"mystery"€is€immaterial.ÌPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'@Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA: T Monaco ÒÒ  BA: T Monaco Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€%%X„d&ÓÑ#€%%Xd#ÑÔ€&ÔÝ  ÝÓ  ÓÑ P ÑÔ€'ÔÑ7€õTXXdìdÈ7ÑÑ\R AØ'\ÑÑ  ÑIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌÓ  ÓÌÌÌPERMANENT€GENERAL€€€€€€€€€€€€€€€)€C/A€NO.€03A01„9507„CH„00215ÌASSURANCE€CORPORATION,€€€€€€€€€€)€GREENE€COUNTY€CHANCERY€COURTÌÙ€€ÙßL€+.);+'h|` Å `€€L߀€à àà àà àà àà àà à€€)Ìà à€€€€Plaintiff„Appellee,€€€€)Ìà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)Ìv.à àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)€Ìà àà àà àà àà àà à€€)ÌTAMMY€L.€NEASE,€ANNA€RUTH€WITT,€)ÌJOSEPH€D.€WITT,€WANDA€CHIPPS,à à€€)ÌMIRANDA€McMAHAN,€b/n/f€andà à€€)€HONORABLE€DENNIS€H.€INMAN,Ìmother,€WANDA€CHIPPS,€andà à€€)€CHANCELLORÌARVINE€TAYLOR,à àà àà à€€€€€€€)Ìà àà àà àà àà àà à€€)Ìà àà àDefendants,à àà à€€)Ìà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)Ìandà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)Ìà àà àà àà àà àà à€€)ÌTENNESSEE€FARMERS€MUTUALà àà à€€)ÌINSURANCE€CO.,€and€ATLANTAà à€€)ÌCASUALTY€COMPANY,à àà àà à€€)Ìà àà àà àà àà àà à€€)Ìà àà àDefendants„Appellants.)€AFFIRMED€AND€REMANDEDÌÌÌÌJEFFREY€M.€WARD€of€MILLIGAN€&€COLEMAN,€Greeneville,€for€AppellantsÏTENNESSEE€FARMERS€MUTUAL€INSURANCE€COMPANY€and€ATLANTA€CASUALTYÏCOMPANYÌÌJERRY€M.€MARTIN,€Knoxville,€for€AppelleeÌÌÌÌÌÌÌÌÌÓ  ÓòòO€P€I€N€I€O€NóóÌÓ  Ó€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ìà àà àà àà àà àÌà àà àà àà àà àà àà àà àà à€Susano,€J.ÇÓÓà àà àThis€is€a€declaratory€judgment€action€filed€pursuant€toÏT.C.A.€ðð€29„14„101,€òòet€seqóó.€€This€litigation€traces€its€genesis€toÏa€two„vehicle€accident€involving€a€1986€Chevrolet€CavalierÏautomobile€driven€by€the€defendant€Tammy€L.€Nease€(Nease).€€AÏnumber€of€claims€were€asserted€against€Nease€whose€negligenceÏapparently€caused€the€accident.€€Permanent€General€AssuranceÏCorporation€(PGA)€filed€the€instant€action€against€Nease€andÏothers€seeking€a€determination€that€these€claims€were€not€coveredÏunder€the€liability€feature€of€the€automobile€insurance€policyÏissued€by€PGA€to€Nease's€husband.€€This€suit€named€as€defendantsÏthe€accident€claimants€as€well€as€Tennessee€Farmers€MutualÏInsurance€Company€and€Atlanta€Casualty€Company€(TennesseeÏFarmers/Atlanta€Casualty).€€These€two€insurance€companies€had€beenÏsued€as€uninsured€motorist€carriers€in€the€underlying€tort€actionÏbrought€against€Nease.€€The€Chancellor,€following€a€non„juryÏhearing,€determined€that€PGA's€policy€did€not€afford€coverage€toÏNease€for€the€accident.€€Tennessee€Farmers/Atlanta€CasualtyÏappeal,€challenging€the€correctness€of€the€Chancellor's€ruling.€ÏThe€individual€defendants€did€not€appeal.ÌÌà àà àPGA€acknowledges€that€its€policy€was€in€force€at€theÏtime€of€the€accident.€€It€also€concedes€that€Nease€was€insuredÍunder€that€policy€as€the€spouse€of€the€named€insured.€€However,€itÏtakes€the€position€that€the€Chevrolet€Cavalier€was€not€coveredÏunder€the€policy€because€that€vehicle€was€owned€by€Nease€when€theÏpolicy€was€issued,€but€was€not€reflected€as€an€owned€vehicle€onÏthe€policy€or€added€to€the€policy€at€any€time€prior€to€theÏaccident.€€PGA€relies€upon€the€following€exclusion€in€the€policy:ÌÌÓÓò òà àà8 àEXCLUSIONSó óÌà@ à*€€€€€€€€*€€€€€€€€*Ìò òà àà8 àB.€ó óWe€do€not€provide€Liability€Coverage€€€€Ïfor€the€ownership,€maintenance€or€use€of:Ìà@ à*€€€€€€€€*€€€€€€€€*Ìà àà àà8 à2.€€Any€vehicle,€other€than€"yourÌà àà àà à€€€€covered€auto,"€[a€1986€MazdaÌà àà àà à€€€€truck]€which€is:Ìà àà àà à€€€€a.€€owned€by€you;€orÌà àà8 àà à€€€€b.€€furnished€or€available€for€your€à àà à€€Ïregular€use.ÌÌÌÌÓÓà àà àTennessee€Farmers/Atlanta€Casualty€argue€that€PGA€isÏestopped€to€deny€coverage€because€it€undertook€to€adjust€theÏclaims€arising€out€of€the€accident,€paid€$2,150€to€settle€aÏproperty€damage€claim€asserted€by€one€of€the€claimants,€and€waitedÏsome€nine€months€after€the€accident€before€advising€Nease€inÏwriting€that€it€was€adjusting€the€claims€under€a€reservation€ofÏrights.€€PGA€counters€by€arguing€that€it€initially€adjusted€theÏclaims€based€upon€a€misrepresentation€by€Nease€that€the€ChevroletÍCavalier€belonged€to€her€ex„husband€and€was€not,€using€the€wordsÏof€the€policy,€"available€for€[her]€regular€use."€€PGA€claims€thatÏit€acted€promptly€when€it€determined€that€the€vehicle€had€beenÏawarded€to€Nease€in€her€divorce€suit€against€her€former€husband.ÌÇÓ  ÓIÌÌÓ  Óà àà àOn€August€7,€1992,€Nease's€husband,€Bobby€Nease,Ïpurchased€an€automobile€insurance€policy€from€PGA€through€DavidÏNiehoff,€an€independent€agent.€€The€policy€provided€insurance€forÏa€1986€Mazda€truck.€€The€Neases€told€Niehoff€that€they€had€anotherÏcar,€but€that€it€was€inoperable.€€Niehoff€told€them€that€it€wasÏnot€necessary€to€list€the€vehicle€on€the€policy,€because€it€couldÏbe€added€when€it€was€operable.€€ÌÌà àà àAt€all€relevant€times,€the€1986€Chevrolet€Cavalier€wasÏtitled€in€the€name€of€Donald€L.€Paxton,€Nease's€ex„husband.€ÏHowever,€Nease€had€been€awarded€the€vehicle€in€her€March€2,€1990,Ïdivorce€from€Paxton.€€As€the€Chancellor€found€in€the€instant€case,ÏNease€was€the€equitable€owner€of€the€car;€the€only€step€that€hadÏnot€been€taken€was€the€securing€of€a€new€title€in€Nease's€name.ÌÌà àà àThe€accident€occurred€exactly€one€month€after€the€policyÏwas€issued.€€€Nease€promptly€called€Niehoff€and€told€him€she€hadÏbeen€involved€in€an€accident€while€driving€the€Cavalier.€€NiehoffÍtold€her€there€was€no€coverage€on€the€Cavalier× ƒ/ ××  ×,€and€he€testifiedÏthat€she€asked€him€whether€they€could€"back€date"€an€endorsementÏso€as€to€include€it€within€the€policy's€coverage.€€He€told€NeaseÏthat€this€was€not€possible.€€When€Nease€delivered€the€accidentÏreport€to€Niehoff,€the€latter€noticed€that€it€listed€Donald€L.ÏPaxton€as€the€owner€of€the€Cavalier.€€He€then€told€her€that€"[PGA]Ïmight€pay€the€claim€since€it€was€not€her€car€and€she€[was]€coveredÏdriving€other€people's€cars."€€Niehoff€testified€that€theyÏdiscussed€the€ownership€of€the€car,€but€that€he€could€not€rememberÏwhether€she€told€him€she€owned€it€as€a€result€of€the€divorce.€€HeÏstated€that€he€had€some€question€about€who€actually€owned€theÏCavalier;€but€since€he€had€no€claims€authority,€he€simplyÏforwarded€Nease's€claim€to€PGA.€ÌÌà àà àNiehoff€testified€that€he€later€had€a€phone€conversationÏwith€Jim€Strickland,€PGA's€initial€adjuster€on€the€Nease€file.€ÏNiehoff€stated€he€told€Strickland€that€the€Cavalier€was€not€titledÏin€Nease's€name€and€that€there€needed€to€be€further€investigationÏregarding€the€ownership€and€use€of€the€vehicle.€€Strickland€deniedÏthat€Niehoff€talked€to€him€about€Nease;€however,€it€is€clear€thatÍsomeone€in€PGA's€claims€office€spoke€to€Niehoff€because€there€isÏan€entry,€dated€September€16,€1992,€in€the€"data€log"€in€the€NeaseÏfile,€documenting€Niehoff's€call.€€Significantly,€the€log€entryÏmakes€no€mention€of€any€need€to€investigate€the€coverage€issues€ofÏownership€and€regular€use€of€the€car.€€Strickland€testified€thatÏthe€handwritten€entry€in€the€data€log€was€not€put€there€by€him.ÌÌà àà àStrickland€testified€that€on€September€9,€1992,€heÏreviewed€the€file€for€the€first€time€and€also€had€a€phoneÏconversation€with€Nease.€€He€testified€that€based€on€reading€theÏaccident€report,€which€stated€that€"the€insured€was€driving€herÏex„husband's€vehicle,"€and€his€discussion€with€Nease€(who€told€himÏthat€the€car€was€her€ex„husband's€and€that€she€had€borrowed€it),Ïhe€was€proceeding€on€the€assumption€that€there€was€coverage€forÏthe€vehicle.€€He€stated€that€the€data€log€entry€of€September€16Ïraised€coverage€questions,€but€that€those€questions€were€answeredÏby€the€notations€in€the€log.€€The€relevant€part€of€the€handwrittenÏlog€entry€is€as€follows:ÌÓÓÌÒ ` ÒÒ ` ÒDiscussed€with€agentÌà àà à1)€Liab?€€questionableÌà àà à2)€Primary€insurance€on€vehicle€à àà à€€ÏI'd€[insured]€was€driving?€€NONEÌà àà à3)€Freq€and€regular€use?€€€NOÌà àà à€€€Lives€in€same€household€€€NOÌÌÌÒ ° ÒÒ ° ÒÓÓStrickland€did€no€further€investigation€on€the€question€of€whetherÏthe€car€was€covered€under€the€insurance€policy.€€He€testified€thatÏhe€did€not€discover€that€Nease€actually€owned€the€car€until€afterÏhe€had€stopped€working€for€PGA.ÌÌà àà àOn€December€29,€1992,€PGA€settled€the€property€damageÏclaim€against€Nease€for€$2,150.€€PGA€did€not€settle€the€claimsÏagainst€Nease€for€personal€injuries.€ÌÌà àà àIn€March,€1993,€a€new€adjuster,€David€Weissinger,€tookÏover€the€Nease€file€from€Strickland.€€He€first€reviewed€the€fileÏon€June€3,€1993,€and€he€testified€that€he€saw€nothing€in€the€fileÏto€indicate€that€someone€other€than€Nease's€former€husband€ownedÏthe€car;€or€to€suggest€that€Nease€was€a€regular€user€of€the€car.€ÏWeissinger€also€discovered€on€June€3€that€a€lawsuit€had€been€filedÏagainst€Nease× ƒ0 ××  ×€and€that€apparently€Nease€had€not€forwarded€the€suitÏpapers€to€the€company.× ƒ1 ××  ×€€He€testified€that€he€tried€unsuccessfullyÍto€call€Nease€on€June€7€and€June€9,€and€that€he€sent€her€aÏreservation€of€rights€letter€on€June€11.€€He€stated€the€reason€forÏsending€that€letter€wasÌÓÓÌÌÒ ` ÒÒ ` Ò[b]ecause€it€appeared€that€suit€had€been€filedÏand€served€and€we€had€no€knowledge€or€recordÏin€the€file,€and€I€was€trying€to€get€hold€ofÏher€to€find€out€if€indeed€she€had€been€served,Ïso€I€sent€her€a€reservation€of€rights€forÏfailure€to€forward€suit€papers€immediately.ÌÌÌÌÒ ° ÒÒ ° ÒÓÓà àà àOn€June€15,€Weissinger€talked€with€Nease;€he€testifiedÏthat€they€did€not€discuss€ownership€or€frequent€use€of€the€car€atÏthat€time,€because€he€was€not€then€aware€of€any€possible€problemsÏon€these€issues.€€On€June€21,€Weissinger€spoke€with€the€attorneyÏwho€represented€Nease's€ex„husband€in€the€divorce,€who€sent€him€aÏcopy€of€the€final€divorce€judgment,€which€clearly€indicated€thatÏNease€was€the€owner€of€the€Cavalier.€€Weissinger€testified€thatÏprior€to€this€point,€he€was€unaware€that€there€was€any€questionÏregarding€the€car's€ownership.€€He€sent€out€a€second€reservationÏof€rights€letter€on€June€22,€1992,€which€stated:ÌÓÓÌÒ ` ÒÒ ` ÒWe€are€making€this€reservation€of€rights€forÏthe€following€problems€or€questions:Ì1.€€Driving€an€owned€and€or€[sic]€drivingÏvehicle€provided€for€regular€use€and€any€otherÏpolicy€violations€or€other€valid€reasons.€ÌÌTherefore,€you€are€hereby€notified€thatÏPermanent€General€Assurance,€in€investigatingÏthis€loss€or€any€claims€which€may€result€fromÏit,€does€not€waive€any€of€its€rights€or€admitÏany€obligation€under€the€policy.€€ÌÌÌÒ ° ÒÒ ° ÒÓÓIn€response€to€the€Chancellor's€inquiry€as€to€why€nine€months€hadÏelapsed€before€PGA€sent€a€reservation€of€rights€letter,€WeissingerÏtestified€that€the€Nease€file€had€always€reflected€that€she€wasÏdriving€a€non„owned€vehicle,€not€provided€for€her€regular€use,€andÏtherefore€he€had€no€reason€to€suspect€there€was€a€coverageÏproblem.€€ÌÌà àà àOn€July€15,€1993,€Weissinger€had€another€phoneÏconversation€with€Nease.€€He€testified€that€when€he€asked€why€sheÏwas€driving€the€Cavalier,€she€responded€by€saying€"I€borrowed€theÏcar€from€my€ex„husband€to€take€his€kids€to€the€doctor."€€When€heÏasked€her€if€she€had€received€the€car€in€the€divorce,€NeaseÏacknowledged,€for€the€first€time,€that€it€had€been€awarded€to€her.€ÏIt€appears€that€at€that€point€they€began€to€discuss€the€fact€thatÏPGA€had€erroneously€paid€the€property€damage€claim.€€NeaseÏindicated€that€she€would€be€willing€to€pay€back€theÇsettlement€to€PGA€in€monthly€installments.× ƒ2 ××  ×€€Nease€actually€sentÏPGA€at€least€three€installment€payments€before€she€stopped.€€PGAÏfiled€its€Complaint€for€Declaratory€Judgment€on€July€21,€1993.€ÌÓÓÌÌÓ  ÓIIÌÌÌÌÓ  ÓÓÓà àà àThe€standard€of€review€in€this€non„jury€case€is€òòde€novoóó,Ïbut€the€record€comes€to€us€accompanied€by€a€presumption€ofÏcorrectness€that€"carries€the€day"€unless€the€preponderance€of€theÏevidence€is€otherwise.€€T.R.A.P.€13(d).€€We€find€that€the€evidenceÏpreponderates€in€favor€of€the€Chancellor's€holding€that€PGA€shouldÏnot€be€estopped€from€relying€upon€the€exclusion€in€its€policy.€€ÌÌà àà àThe€parties€agree€that€the€applicable€Tennessee€rule€ofÏlaw€on€the€issue€at€bar€is€presented€in€the€case€of€ò òòòAmerican€HomeÏAssurance€Co.€v.€Ozburn„Hessey,€ó óóó817€S.W.2d€672,€675€(Tenn.Ï1991),€wherein€the€Supreme€Court€said:ÌÓÓÌÌÒ ` ÒÒ ` ÒThe€general€rule€supported€by€the€great€weightÏof€authority€is€that€if€a€liability€insuror,Ïòòwith€knowledge€of€a€ground€of€forfeiture€orÍnoncoverage€under€the€policyóó,€assumes€andÏconducts€the€defense€of€an€action€broughtÏagainst€the€insured,€without€disclaimingÏliability€and€giving€notice€of€its€reservationÏof€rights,€it€is€thereafter€precluded€in€anÏaction€upon€the€policy€from€setting€up€suchÏground€of€forfeiture€or€noncoverage.€€In€otherÏwords,€the€insuror's€unconditional€defense€ofÏan€action€brought€against€its€insured,Ïconstitutes€a€waiver€of€the€terms€of€theÏpolicy€and€an€estoppel€of€the€insured€[sic]€toÏassert€such€grounds.€ÌÌÌÌÒ ° ÒÒ ° ÒÓÓòòId.,€óóquotingòò€ò òMaryland€Cas.€Co.€v.€Gordon,€ó óóó371€S.W.2d€460,€464Ï(Tenn.App.€1963),€in€turn€quoting€29A€Am.Jur.„„Insurance„„ðð€1465,Ïp.€577€[now€44€Am.Jur.2d„„Insurance„„ðð€1423,€p.€369]€(emphasisÏadded).€€The€key€question€in€this€case€is€the€point€at€which€PGAÏobtained€knowledge€that€Nease€was€the€owner€of€the€Cavalier,€andÏthat€she€had€the€primary€use€and€control€of€the€car.€€The€answerÏto€that€question€will€determine€whether€PGA€acted€in€a€timelyÏfashion€to€reserve€its€rights€to€deny€coverage.€€In€this€regard,Ïthe€same€section€of€òòAmerican€Jurisprudence€2d,€óóindirectly€quotedÏabove,€contains€the€following€statement:ÌÓÓÌÒ ` ÒÒ ` ÒÌA€liability€insurer€does€not,€however,€byÏconducting€the€defense€of€a€suit€against€theÏinsured,€waive€a€ground€of€forfeiture€orÏnoncoverage€of€which€it€at€that€time€has€noÏknowledge,€especially€where,€in€addition€toÏsuch€lack€of€knowledge,€the€insurer€is€misledÏby€misrepresentations€into€defending€the€suit.ÌÌÌÌÒ ° ÒÒ ° ÒÓÓ44€Am.Jur.2d„„Insurance„„ðð€1423,€p.€371;€òòCf.ò ò€Fulton€Co.€v.ÏMassachusetts€Bonding€&€Ins.€Co.,€óóó ó197€S.W.€866,€868€(Tenn.Ï1917).Ìà àà àÌà àà àWe€find€that€the€evidence€in€this€case,€as€set€forthÏabove,€preponderates€in€favor€of€the€conclusion€that€PGA€did€notÏhave€knowledge€that€Nease€was€the€owner€and/or€primary€user€of€theÏCavalier€until€Weissinger€received€a€copy€of€the€divorce€decree.€ÏThe€decree€clearly€showed€the€true€owner,€but€up€until€that€point,Ïthere€was€nothing€in€the€Nease€file€to€cause€suspicion€regardingÏownership€or€control€of€the€vehicle.€€As€noted€earlier,€the€fileÏnote€of€September€16€indicated€that€Nease€was€òònot€óóa€frequent€andÏregular€user€of€the€automobile,€suggesting€there€was€coverageÏunder€the€policy.€€The€accident€report€stated€that€the€"insuredÏwas€driving€her€ex„husband's€vehicle,"€in€accordance€with€the€factÏthat€the€car€was€still€legally€titled€in€Paxton's€name.€€BothÏStrickland€and€Weissinger€testified€that€they€relied€on€Nease'sÏassertions€that€she€did€not€own€the€car.ÌÌà àà àThe€appellants€point€to€the€following€testimony€byÏWeissinger€in€support€of€their€position€that€PGA€had€earlierÏknowledge€that€Nease€owned€the€Cavalier:ÌÓÓÌÌÒ ` ÒÒ ` ÒQ:€€So€based€upon€the€information€that€you€hadÏin€the€file,€without€talking€to€Mrs.€Nease,Ïyou€were€able€to€generate€a€reservation€ofÏrights€letter€on€two€grounds€immediately€whenÏyou€reviewed€the€documentation€submitted€byÏthe€agent?ÌÌA:€€That's€correct.ÌÌQ:€€And€that€documentation€was€submitted€backÏin€September€1992?ÌÌA:€€That's€correct.ÌÌQ:€€The€same€information€that€Mr.€StricklandÏhad€in€his€possession?ÌÌA:€€Um„hmmm.ÌÌÌÌÒ ° ÒÒ ° ÒÓÓWhen€these€statements€are€considered€in€the€context€of€all€ofÏWeissinger's€testimony,€it€is€apparent€that€the€"two€grounds"Ïreferred€to€in€the€first€reservation€of€rights€letter€were€reasonsÏother€than€those€regarding€ownership€or€regular€use.€€The€firstÏreservation€of€rights€letter€contained€the€following€two€groundsÏfor€PGA's€reservation€of€rights:€ÌÓÓÌÒ ` ÒÒ ` Ò1.€€Failure€to€report€receipt€of€legal€papers.Ì2.€€Operating€a€non€owned€vehicle€and€notÏbeing€a€resident€of€the€named€insured'sÏaddress€and€any€other€policy€violations€orÏother€valid€reasons.€€ÌÌÌÒ ° ÒÒ ° ÒÓÓWeissinger€admitted€that€the€second€ground€"doesn't€make€sense";Ïhowever,€it€is€worth€noting€that€the€second€ground€given,€althoughÏperhaps€not€a€legitimate€or€correct€reason€to€deny€coverage,€doesÏstate€"operating€a€non€owned€vehicle,"€indicating€that€PGA€did€notÏknow€the€car€was€actually€owned€by€Nease€when€the€first€letter€wasÏsent.€€Regarding€the€first€ground,€it€appears€that€Weissinger€wasÏalluding€to€the€fact€that€the€file€did€not€reflect€receipt€of€theÏsuit€papers× ƒ3 ××  ×.€€We€do€not€think€Weissinger's€statements€should€beÏconstrued€as€any€kind€of€admission€regarding€knowledge€on€theÏdispositive€ownership€and€regular€use€issues.ÌÌà àà àThe€record€reveals€that€after€Weissinger€read€theÏdivorce€decree€and€discovered€that€Nease€was€the€true€owner€of€theÏcar,€PGA€acted€promptly€in€reserving€its€rights€to€deny€coverage.€ÏSince€PGA€did€not€have€knowledge€of€the€true€ownership€and€regularÏuse€of€the€Cavalier€until€shortly€before€it€sent€the€secondÏreservation€of€rights€letter,€its€action€in€settling€the€propertyÍdamage€claim,€and€its€delay€in€sending€the€second€letter,€did€notÏconstitute€a€waiver€of€its€right€to€rely€upon€the€above„quotedÏexclusion€provision.ÌÌà àà àWe€affirm€the€judgment€of€the€Chancellor.€€This€case€isÏremanded€for€collection€of€costs€assessed€below,€pursuant€toÏapplicable€law.€€Costs€on€appeal€are€taxed€and€assessed€to€theÏappellants.€ÌÌÓÓà àà àà àà àà àà àà à______________________________Ìà àà àà àà àà àà àà àCharles€D.€Susano,€Jr.,€J.ÌÌÌÌCONCUR:ÌÌÌÌ____________________________ÌHerschel€P.€Franks,€J.ÌÌÌÌ____________________________€€€ÌDon€T.€McMurray,€J.à à