This is an action by the injured party and the insured to recover on a policy of automobile liability insurance. Upon a trial by the court, plaintiffs had judgment and defendants appealed.
On October 15, 1932, plaintiff Naify contracted to purchase an automobile from defendant Pacific Nash Motor Company. A conditional sale contract was executed with the understanding that the same was to be financed by and assigned to defendant Pacific Finance Corporation, and that said defendant would procure a policy of insurance with defendant Pacific Indemnity Company, covering the respective interests of the seller and buyer. The рayments called for by the conditional sale contract were $118.75 per month for 12 months, and this sum included pro rata payments on the insurance premium, which was thereby included in the total purchase price of the car. Upon the execution of the conditional sale contract on said date of October 15, 1932, the motor company obtained the insurance policy from the indemnity company, covering fire, theft, collision, property damage and personal liability. The motor company, seller, assigned the conditional sale contract to the finance corporation, and delivered the insurance policy to said assigneе.
It is to be noted that the transaction was one in which Naify, the buyer, had no choice of insurance carriers, but was, under the agreement, obligated to pay the premium for insurance procured by the finance corporation in a company of its own selection. It further appears that no copy of the рolicy was delivered to Naify, and he was given no information as to the terms thereof.
*8 On July 18, 1933, the assured’s brother, driving the ear with the assured’s consent, collided with a car driven by plaintiff Clark. Clark filed suit for damages. Naify gave due notice to the indemnity company of the accident and requested that the company undertake his defense. The indemnity company refused, stating that the policy coverage for public liability, property damage and collision had been cancelled on December 17, 1932, over six months previously. Clark secured judgment against Naify. The latter paid $300 on account, and thereupon both plaintiffs brought this action, Naify seeking reimbursement, and Clark demanding the balance due on the judgment by virtue of the statutory liability of an insurance company to an injured party after judgment.
The facts set forth by the defendants in opposition to this claim are as follows: On December 17,1932, about two months after issuance of the policy, an officer of the indemnity company delivеred a note to the manager of the insurance department of the finance corporation, stating that it had heard reports indicating that Naify was not a desirable risk, and requesting that the finance corporation recall the policy for cancellation. The finance corporation thereupon, according to the testimony on its behalf, mailed a letter to Naify stating that pursuant to instructions and in conformity with the policy it was cancelling his coverages, effective December, 1932; and that as legal owner of the car, it had instructed the indemnity company to remit the unearned premium not to Naify but to itself, which it would credit against the balance due on the contract. The letter was sent to the address given the insurance company by Naify’s agent and stated in the policy; but it was not his true address and the letter was never received by Naify. He had no knowledge of the cancellation until the answer to his notification of the collision and request tо defend, in July, 1933.
The policy provided that it was subject to cancellation at any time by the insurance company on five days’ written notice; and it also contained the following provisions upon which defendants chiefly rely: “Notice of cancellation mailed to the address of the Assured stated in this policy shall be a sufficient notice. Where the term Assured is used in this paragraph it shall mean the Pacific Finance Corporation of California only during the time the Pacific Finance Corporation of California has any financial interest in the automobile *9 insured hereunder. If the Pacific Finance Corporation of California has no financial interest, then the term Assured shall mean the purchaser.” Another provision in this same paragraph, upon which plaintiffs rely, reads: “Notice of cancellation shall state that said excess premium (if not tendered) will he refunded on demand
Before proceeding to a discussion of the legal issues, it may be well to review briefly just what was done by the parties. Plaintiff Naify, an automobile buyer, signed a contract, agreeing to pay for the ear and for insurance coverage, in installments. He performed both obligations fully. The finance corporation, as assignee of the seller, cоllected the installments, including that part allocated to the insurance premium; and the indemnity company, insurance carrier, received its premium for the insurance coverage. Without the knowledge of the buyer, the insurance was purportedly canceled, and for over six months plaintiff Naify was left without protectiоn for which he nevertheless continued to pay, and the payments were received and kept by one of the defendants. Meanwhile, though collecting the full premium and canceling all plaintiff’s protection, the finance corporation was permitted by the. insurance company to retain all coverage protecting itself, nаmely, fire and theft insurance.
Plaintiffs pleaded several causes of action, and the court found in their favor against all defendants. The theory of the judgment is that the three defendants acted in concert; that the conditional sale contract, the assignment, and the insurance policy were all included within a single transaction; that the notice of cancellation was ineffective; and that the defendants had agreed to insure Naify but left him unprotected. We are in full accord with the court’s conclusion that plaintiffs should recover, and there are sound reasons for recovery against each of the defendants according to different inferences which may be drawn from the facts. But defendants argue that the judgment, as rendered, is inconsistent, in that it declares the insurance company liable on the policy, yet holds the other defendants liable for failure to keep the plaintiff insured. It is, of course, true that Naify could not be both insured and uninsured at the same time, and accordingly it is necessary to determine whether he was or was not, or, in other words, whether his policy was effectively canceled prior to the accident.
*10
At the outset we are met with a question raised by
amici curiae
on behalf of various insurance companies, namely, whether a notice of cancellation, sent to the address of the assured as stated in thе policy, and pursuant to a provision in the policy stating that the mailing thereof shall be sufficient notice, is effective despite lack of receipt by the insured. In this simple form, the question may perhaps be answered in the affirmative (see
Raiken
v.
Commercial Cas. Ins. Co.,
(N. J.)
But if we assume the applicability of the provisions for mailed notice, defendants must show a strict compliance with its terms in order to effect a cancellation.
(B. & B. Trucking, Inc.,
v.
Home Fire & Marine Ins. Co.,
The second theory advanced is that cancellatiоn was effected by the prior letter of the insurance company to the finance corporation, which states: “Kindly recall policy for cancellation.” Defendants point to the provision of the policy that the finance corporation shall be deemed the
assured
while it has any interest in the automobile, and assert that it was proper to terminate Naify’s policy by notice to the finance corporation alone. Were the validity of this provision squarely presented, we would have serious doubts thereon. Parties are, within reason, free to contract as they please, and to make bargains which place оne party at a disadvantage ; but a contract must have mutuality of obligation, and an agreement which permits one party to withdraw at his pleasure is void.
(Shortell
v.
Evans-Ferguson Corp.,
We may, however, assume for the moment that the provision authorizing notice to the finance corporation alone was binding on Naify despite his total lack of assent thereto. Still defendants cannot prevail, for this notice, like the other, failed to comply with the provisions of the policy. In the first place, the letter to the finance corporation was not a notiсe of cancellation, but a request that the corporation recall the policy for cancellation. The finance corporation was thereby made agent of the insurance company to procure the policy, and neither in terms nor in effect was this letter a notice of cancellаtion. Indeed, it is shown in the record that the purported assured here, the finance corporation, did not suffer any cancellation of its coverages, and that the whole purpose of the letter was to have the finance corporation give actual notice of cancellation of the coverages of Naify. In the second place, even if the letter might be construed as an actual notice of cancellation, it was, like the letter to Naify, utterly lacking in a statement that the unearned premium would be repaid on demand. It is suggested by defendants that this requirement could be waived by the finance corporation, but inasmuch as the letter is relied upon to effect a cancellation of Naify’s coverages, only he could waive compliance with the requirement. If this were not true, then the insurance company could cancel at will, with *13 out five days’ notice, or without any notice, and its so-called “assured”, the finance corporation, having fully рrotected itself, could “waive” all the policy requirements as to Naify. We find nothing either in the policy or the conditional sale contract which gives any such extraordinary authority to the finance corporation. The contract merely authorizes the seller to keep the property insured in a company or companies selected by it, and obligates the buyer to pay the premiums. It is impossible to construe it as an authorization of the seller or its assignee to collect the premiums and contemporaneously to “waive” all of the buyer’s rights under the policy.
We conclude, therefore, that the insurance poliсy was in full force and effect at the time of the accident, and that plaintiffs were entitled to recover under its terms. This being so, it would appear that the defendant finance corporation cannot be held liable on the theory that it failed to keep plaintiff Naify insured. It may be true, as indicated by the trial court, that all of the defendants acted in concert in an attempt to deprive Naify of his insurance coverage, but since, under our holding, the attempt was unsuccessful, plaintiff suffered no appreciable damage therefrom. In short, defendant finance corporation would undoubtedly have been liable in the full amount of the lоss sustained by Naify, if the policy had actually terminated while it continued to collect premium payments therefor, but the conclusion that the policy was not terminated is inconsistent with such liability.
All defendants were, however, properly joined in the action in an attempt to discover which was liable for plaintiff’s claims; and since all denied and contested plaintiffs’ rights of recovery under the policy, none should recover costs.
The judgment against defendant Pacific Indemnity Company is affirmed, with costs to respondent. The judgments against defendants Pacific Nash Motor Company and Pacific Finance Corporation are reversed, neither party to recover costs.
Curtis, J., Houser, J., Shenk, J., Waste, C. J., and Seawell, J., concurred.