*1 how attractive and es schemes no matter they possi improvements
sential the make care of the rest.
ble. The voters will take said, way rightly
As best has been repeal law to enforce
insure bad
strictly.” trial judgment of the court must
and is
Reversed. concur, RAWLINGS, except
All Justices McCORMICK, JJ.,
LeGRAND and who
dissent. HENSLEY, Appellee,
Richard L.
The AETNA CASUALTY AND SURETY COMPANY, corporation, and E. H . Inc., Lougee, corporation, Appellants.
No. 55038.
Supreme Court of Iowa.
Sept. 19, 1972. Thorn, Stuart, Tinley, Peters &
Johnson, Bluffs, appellants. Council *2 553 Pearson, pay any Walker, judgment against rendered him Peters, Campbell & liability; Bluffs, of its and that appellee. within limits Council for by its contract refus- Aetna had breached pay ing judg- to defend suit or to LeGRAND, Justice. judgment court entered ments. The trial declaratory judgment action is a ordering pay This items defendants to plaintiff a de- by tried at law which seeks plaintiff’s listed as well collision above as. rights his under a contract termination of damage of $254.14. insurance, defendant, Aetna with The issue, course, is whether The ultimate of. Casualty Surety Company, hereafter question plaintiff policy in extended Defendant, Lougee, called E. Aetna. H. 16, 1966, despite coverage his on October Inc., Lougee, agency called hereafter 9, April premiums after pay failure to policy through which the was written. City Insur In Hoefler Farm and 1965. policy The trial court held the afforded (Iowa ance 193 538 Company, N.W.2d coverage plaintiff liability for his aris- to the trial of 1972)—decided 16, ing an out of accident on October considered this identical present case —we We reverse the trial court. question different facts. under somewhat make the pur- these factual differences The facts are these: Unless Plaintiff had controlling inapplicable, case it is through chased insurance Hoefler for some time distinguish them unable to Lougee. 1963, purchased he here. We are automo- court’s the trial through bile in and therefore reverse agent. Aetna this plaintiff. judgment was for a three-month issued period payment and was renewable . action, and This was a law we premiums quarter. of additional each Pre- accept findings trial court’s must 9, 1965, paid April miums were through support in the they fact if find substantial which maintained in until force 1, Rules Rules 344(f), record. 334 9, premiums July 1965. No were However, are Procedure. we not Civil thereafter. court law which the bound the rules of plaintiff On October was in- Standard, applied to those facts. Omaha volved in an accident in which resulted Nissen, (Iowa 723 Inc. v. personal injuries property damage to In Hawkeye-Security 1971); Henschel v. party plain- the other and collision loss to 409, 415 N.W.2d surance accident, day following tiff. (Iowa 1970). plaintiff completed report an accident Lougefe’s report office. The was sent to sup is substantial We there Aetna’s No- claim office at Omaha. On findings, but con port for the trial court’s 8, 1966, plaintiff vember Aetna advised he they justify the conclusions clude do not and, indeed, coverage had no insurance had pronounce disagree with the reached. We any 9, 1965, July not had since because of obliged plaintiff give ment Aetna was non-payment premium. refused Aetna under of cancellation of plaintiff subsequently defend the suit 515.80,The terms section Code. brought a result of the October pertinent policy provisions are of judg- accident. This action resulted in policy decla- importance here. Under against plaintiff totalling ments $2284.35. ' appears: rations this attorneys’ He incurred also fees and ex- penses in the amount of $1300.05. Quarter-annual “Policy Period — and, subject
By plaintiff commencing this action seeks a determi- 7-09-63 Casualty, succes- nation that his in full force and consent of Aetna 1966; periods as quarter-annual effect on October that Aetna sive obligated provided to defend action and to in Condition 1.” argues, however, that the statute referred to the declara- has Condition suspen- application because this is not a part: tion states sion, but cancellation mere- forfeiture or "Subject to the consent of Aetna Casual- ly expiration under policy may in force ty, this be continued specific argues fur- terms. Defendant policy periods by payment for successive governed rule ther the case is *3 required premium the continuation of Department. the Rules of Insurance Casualty on effec- Aetna or before the 1966; Departmental Rules, now (Iowa policy peri- date of each successive tive 16.1(2), appearing as and 16.1(1) rules paid, premium such is not when od. If I.D.R., rule is in as fol- 1971) The due, that the shall terminate as of lows : end of date and such date shall be the “ ” * ** may specifi- ‘A policy period. contract of insurance the cally specific provide for term of dura- a City In Hoefler Farm and Insurance tion, contract auto- in which event the interpreted Company, supra, we a similar term, expires matically the of that at end provision beyond re- being as the notice il- of notice. For giving without the quirements of section 515.80. Because we lustration, for a term written here, feel result that case dictates the we ad- one with the in year repeat page what at 539 of we said there expires the automatically vance at end 193 N.W.2d: year.’ “ * * * parties agree is the issue n n n n n n by simply this: issued Was the uncertainty ambiguity “We find no peri- plaintiff defendant to for a definite for defi- policy was written here. The od or indefinite one ? starting period. nite and certain Both given with and dates were terminating period, plain- “If for an indefinite then possible no certainty. could be There tiff was entitled to notice under section term misunderstanding about the 515.80, Code, provides fol- as which expiration policy or its date. lows : policy, ment, thereof, * days prior “ for ‘No writing upon * non-payment * * * * installment shall be forfeited or to, or or contract of on or of any the insured unless within provided shall serve after the premium, that suspended insurance maturity assess- in thirty partment’s regulations defendant that, give “We hold 515.80. [*] for a the notice under rule 9 of the Insurance [*] ‘specific [*] *” provided for term duration’ and was not issued [*] above by [*] referred required in section defendant n De- to, premium, assessment, or installment too, case, pol- present In the we * * * due or to become due which period.” icy is for a “definite certain may person, mailing be made in specific terms and It terminated its own certified mail letter addressed to give no- required to defendant was not post given as in or insured office provided tice for in section 515.80. policy, suspension, for- estopped trial court ruled Aetna feiture, or shall effect cancellation take premi- relying non-payment on from as except until the time thus fixed July beginning policy period um provided, anything herein in this conclu- if concur 1965. Even we application, separate agreement or a sion, only plain- save estoppel would contrary notwithstanding.’ three-month coverage ensuing tiff’s for the during did not occur required period. “It is conceded the notice The accident seriously Surely no one could given. this section was not Defendant that time. erroneously the trial court ruled in- We hold continued argue plaintiff’s insurance plaintiff’s policy was in effect this; insurance yet that is definitely because case is reversed on 1966. The premise. October plaintiff’s result of inevitable judgment that be entered with instructions plaintiff said for The best that can be as- Lougee with costs for both Aetna and Lougee gave the conduct of Aetna and plaintiff. sessed to insur- additional three months of him an Reversed. expire renewed ance, (unless which provided in on policy) October concur, except All Justices REYNOLDSON, UHLENHOPP occurring circumstances Several McCORMICK, JJ., who dissent. thereafter, the trial court relied which *4 coverage on to find existed October previously would not revive a REYNOLDSON, (dissenting). Justice
terminated, These say as we this one was. pertinent Stripped to essentials I. acci- accepting an circumstances include Code, provides 515.80,The litigation, this prior acci- report plaintiff dent from for be forfeited insurance shall of 1966, which, the trial January dent on premium unless nonpayment of for plaintiff belief says, “lulled into the court insured, ei- company a notice on serves and defendant his insurance was effect mail, “any- personally by certified ther neglect- profit from those should not now sepa- application, or a thing policy, in the their failure to exercise ful acts and contrary notwith- agreement rate to the requires of it the law duties which seems standing.” them.” Amplifying legislative prohibition, this important held it The trial court also Department 1966 I. (Rule the Insurance premium money
that Aetna had of $16 spe- is 327) declared where the term D.R. plaintiff by premium additional as of the term no expires cific and at the end purchased May when he a new car in required, is such notice proper- 1965. This amount never been had ly by applied portion A of it was Aetna. “However, in the event no definite term plaintiff only returned to after the October or if the is is fixed in the 16, 1966, this accident. No matter how pay- period premium for a definite with amount is treated it could not afford cov- in- installments at shorter ments made in erage it 1966. At most October * * * tervals, then before the premium pay would for of the from legally suspended for can be forfeited or July 9 to 1965. October nonpayment premium when due or * * * dates, on the installment Lougee’s accept- Neither does action in given. thirty days must be ing report plaintiff an accident from for * * 16, 1966, help plain- the October accident assumption tiff. This done on rule Interpretation of this statute and plain- there coverage. Aetna advised separated public cannot be from no-coverage promptly tiff of his status language. 515.80is inherent in its Section report receiving Lougee. from protection policyholder, not the for company. is a notice report Required insurance same is true of the to the The indicating in such form the insured will have actual Commissioner of Insurance cov- op- knowledge his lack of insurance and erage plaintiff. we Unless are to portunity coverage elsewhere. this creates Aetna to secure a contract between existed, personal plaintiff financial disaster which where none otherwise here, might occur, it did help plaintiff is of no otherwise here. Casualty immediately, Aetna thereby Indirectly benefited are effective avoided. right its protected other shall not exercise to cancel the highway users who are * * * insurance unless from the uninsured motorist. an in- named Insured dis- If the insurance contract were for 1. The fails any obliga- periodic premium pay- charge when due definite with term ments, payment clearly nonpayment tions in connection with the cancellation for meaning- this in- require installments would stallment thereof ful notice dictated the statute. company, question this here whether provision against the com- Construing this terms, ingenious ambiguous contract require, upon rules cancella- pany, as our coupled dealing course of later re- with the nonpayment premium or following tion to, ferred can achieve the same benefits thereof, an installment yet obli- avoid the notice required statute. See to follow the gation imposed by legislature in SIS.—§ v. Northland Insurance Selken (1958), Iowa N.W.2d 29 protected zealously which this court majority opinion compa- crowns policyholder’s right to actual notice. effort, ny’s holding for a one any event, this on the basis of clause definite and the situation thus con- might reasonably he insured conclude City trolled Farm Hoefler v. Insur *5 statutory of can- would receive the (Iowa ance 193 538 N.W.2d company did not cellation in the event beyond 1972). goes The contract before us premium payments. receive holding distinguishable is Hoefler from it. company after The conduct of policy manifested its went into force also opinion In Hoefler, majority as the in policy an in- actual intent that the was for noted, that case there was a fixed date of term, continuing in nature. definite contract termination. To that extent Hoef- Quarterly premium due were notices of ler’s policy followed the standard form. See years. insured for almost two sent to the Association, Fam- The Iowa State Bar “The billed, at Hensley paid frequently as these ily Policy Automobile Insurance Annotat- From_ ap- findings, Lougee’s office. Trial court’s ed,” (1970), “Policy Period proved by majority’s opinion, included the Day to - (Mo. Year).” No stated Aetna instituted a new com- fact that after appears date for contract in the termination 1965, puter billing Hensley in received no policy. “policy period” instant The de- premium court also notices. The more “quarter-annual period” fined as a com- Hensleys people were methodical found mencing 7-9-63. The declaration sets page paid in billed. who cash when “Quarter-Annual out the Premium Sched- language company’s ule.” Such claim belies Life Mayer The Mutual Ins. Co. only period a fixed three-month con- 304, (1874) this Chicago, Iowa 309 38 templated by parties. ordinary these reasoned, court layman pol- logically interpret would a icy character, as indefinite continuing every reasonable it must strike “Now payable quarter-annual on a basis. mind, ordinarily pru- majority that a customarily had been persons, who dent pursuing Still the unrealistic fiction the premiums when the time notified meeting manifests a of minds of due, policies and who upon their became contracting parties, consideration should of an intention no notice had received given also be to these terms: course, would, in customary abandon like expect a and await case particular
“After this has been effect for renewal, is the reasonable And if such sixty days or, is a notice. if
557
previous
of this
result of the
deal-
court
Conrad v. Midwest Coal
and natural
Co.,
ings
company,
govern
(1941)
it must
231 Iowa
300
721
N.W.
persua-
modified,
(1942)
3
511
future conduct so as to accord with
N.W.2d
expectation
reasonable
thus created.
sive. There the
contended
solely
was written
for the
be-
is,
having
“That
furnished a
August
Sept.
tween
1937
ground
expecting
holder reasonable
lapsed, it
lia-
and as the
had
had no
premi-
when his
that he will be advised
bility
Sept.
for an accident on
due,
con-
um becomes
must
policy provided
extension
for further
give
it furnish-
tinue to
such notice until
upon payment
premium
or renewal
es
he need no
the assured notice that
days
ten
end of the
before
longer expect
Any
it.
other construction
September
premium
term. The
trap
ensnare
would make the law
held,
1937. This court there
Iowa
unwary.
at
Projecting Mayer, we
tice
became
memory
sence of notice to allow the
getfulness
making payment
“For a
and,
due,
with the
person
not
accustomed to
thus accustomed to no-
day
very likely, in the ab-
pass
when his
should
by,
in utter for-
charge
*
judicially
premium
day
*
the insured to
* *
it contained an
contemplated
“It is our conclusion that the amendment
[*]
[*]
termination
*
sfc
demonstrates that
pay
continuing policy
agreement
date of
premiums beyond
on the
because
parties
years
ensuing
note in the
there has been
Applying
to the case
the Conrad rationale
explosive expansion
of business con-
before
can result in but one conclusion:
us
by billing.
ordinary person
ducted
indefinite term
Hensley’s policy was for an
usually
pays many
receives and
bills each
there,
Here,
or continuous in nature.
He
to remind
billings
month.
relies on
*6
policy
company
fixed
the
as a matter of
obligations, including
him all
of manner of
procedure accepted premium payments
and
insurance installments. This record satis-
“expiration”
after the
of the term.
factorily proves Hensleys
excep-
were no
tion.
In both Minnick
Farm Mutual
v. State
Co.,
125,
Automobile Ins.
54 Del.
174 A.2d
computer
Aetna’s
error was further com-
Seavey
and in
v. Er
(Super.Ct.1961)
706
acceptance
pounded by
processing
and
ickson,
244 Minn.
889
69 N.W.2d
prior
report by Hensley
of a
accident
over
companies
upon
(1955)
insurance
relied
the
policy
six months after it contends the
ter-
policies’
the
fea-
“automatic cancellation”
minated.
ture, claiming
policies lapsed
that
the
and
were re-
notices of forfeiture
July
day
the
after the
ex-
reject-
quired.
In
both cases
courts
pired by
reasoning,
accepted
Aetna’s
it
a
ing
arguments relied in
on
premium payment,
kept
of which it
$16
$11
practice
to
fixed
of the insurers
automati-
until after
the accident of October
cally
accept payments following
bill and to
significant,
company
1966. More
had a
authority such a
the due date. For further
accept premium payments
fixed
to
policy,”
“continuing
see
contract
a
during
“grace period”
a
(if
its ra-
Exchange,
Mitchell v. Farmers Insurance
tionale is to be
ex-
accepted)
(Mo.1965).
tended. This 515.80 notice induces another to believe that .a § required exist, coverage. to person terminate certain facts the other belief, rightfully relies and acts on such Returning premium payment II. to the prejudiced and will be if the former kept by Aetna, jurisdictions numerous permitted deny to the existence of such effectively only if policy can be cancelled Am.Jur., Estoppel, facts.’ also See the insurer returns tenders the unearned 34, page section 634.” premium. Such a refund or offer to re- right fund is in the nature of a condition we denied the insurer’s Sanborn precedent non-coverage though to the insurer’s exercise of its claim even rights, pay following expired and an offer to term had before the accident. See accident Appleman, Laverty Hawkeye Security is too late. 6A In See also Insur surance pp. Law & Practice ance 578-81 258 Iowa § (1972). prevails (1966). This rule in Iowa. Har rington County v. Bremer Farmers’ Mut. Equitable estoppel may be foundationed Ass’n, Fire Ins. 203 Iowa 211 N.W. practice usage particular on the (1926). insurer: The same rule should apply even when usage 30.128 Custom basis “§ company claims contract termination notice requirement. by expiration period. We should permit not access that im- By weight authority when, munity throughout view, equitable what is the more the ne- insured, failed to send notices to the it held cessity giving notice of the amount money his applying without it to the con- may and date on which is due tendering tract or its return. A refund practice usage be based Hensley check offered could well have particular insurer.” company’s alerted him to he claim had no —5 Couch 2d On Insurance 30.128 at 661 § insurance. (1960). Lastly, III. an overview of all Hensely’s above circumstances confirms Appleman See also 16A Insurance Law & pleaded theory estopped Practice (1968), 9254 at 639 in- “[T]he deny rights under the may estopped surer its actions from trial judgment adopting court’s theory. denying the existence of an insurance con- tract.” *7 In Maryland Sanborn Casualty v. Com
pany, 1319, 1327, 255 Iowa adopted by This rule was the Delaware (1964) quoted ap this court and Superior Minnick, supra, Court in 54 Del. plied general rule applicable: here 139-140, 174 A.2d a t714: Estoppel
“31 page C.J.S. “Insured had received of the benefit this states: premiums service of renewal [notice ‘Equitable estoppel estoppel by mis- policy, for the life of his due] representation is the effect of years. the volun- adequate several This is an tary person conduct of a whereby usage he is time to establish a custom and precluded, both at law and in equity, dealings parties. between the De- asserting from rights against right rely another fendant had a to relax and person relying conduct; on such anticipated and advising it notice him * * * person arises where a acts, repre- his impending due date. I * * * sentations, or admissions, or even hold that defendant could not silence when it duty speak, is his plaintiff’s to in- policy lapsed, declare can- tentionally through culpable negli- celled, or in forfeited default for non- only, re- I would that defendant as to given it had until premiums payment of verse. plaintiff seasonable Erickson, 244 Minn. Seavey v. McCORMICK, UHLENHOPP, JJ., (1955), 889, 897 243-244, 69 N.W.2d join in this dissent. ineq- noted the Supreme Court Minnesota rule: different uity that, rule to the better believe
“We established it has been
where insurer to practice
the custom and aof payment the time for
give notice of knowledge such premium and
renewal in deal- insured STATE acquired Iowa, Appellee, custom is insurer, insured has ings with the and, notice, in the rely right on such Freddie Lee HUGHES, Appellant. thereof, may not be absence No. 54565. giving forfeited without terminated custom that such some notice the insured Supreme Court of Iowa. has been abandoned. Sept. 19, 1972. simply
“Any would create other rule
trap could be used as a convenient which when it was
device to work a forfeiture of the insurer to invoke
to the interest provisions express provisions
permit it to waive it was to
collect the when
interest to do so.” equitable estoppel rule should be in- here, failure
voked based on Aetna’s notices, customary premium
send the ac-
ceptance payment on the routinely expiration, processing
the claimed report
an earlier accident six months after
the claimed termination of and re- application without or retender of
tention premium payment made. equitable estoppel
Where the rule denies right
insurer the claim non-existence *8 contract,
of the insurance then the notice
requirement apply. 515.80 should It is
undisputed statutory never
given in the instant case. judgment below should be affirmed
against Aetna. There was no basis in the Lougee,
record for holding E. H. lia- Inc. principal
ble for the acts disclosed