229 F.2d 698 | 2d Cir. | 1956
Lead Opinion
This is an action on an automobile liability insurance policy issued by the defendant. Federal jurisdiction rests on diversity of citizenship. On January 1, 1954 the plaintiff was involved in an automobile accident by reason of which he incurred liability to a person injured in the accident. In the present action on the policy defendant denied liability on the ground that it had effectively can-celled the policy, pursuant to its terms, on November 23, 1953. Contending that its defense had been conclusively established, the defendant moved for a directed verdict and, after an adverse verdict by the jury, for judgment non obstante veredicto. These motions were denied. The sole question presented by the appeal is the correctness of the trial court’s ruling on these motions.
The plaintiff next contends that the policy was not effectively can-celled because of defendant’s failure to return the unearned premium as soon as practicable after cancellation becomes effective. In the absence of a statute on the subject, and no such Vermont statute has been called to our attention, the parties were at liberty to determine by contract the conditions upon which cancellation might be had. Cases involving cancellation provisions identical or similar to those of the policy here in suit are almost unaniznous in holding that return of the unearned premium is neither a condition precedent nor a condition subsequent to effective cancellation, and that the insurer’s obligation to return the premium is only a contractual duty arising in consequence of the cancellation.
*701 “Would a reasonable prudent man upon receiving the notice of cancellation worded as shown by defendant’s Exhibit 0, under the circumstances disclosed by the evidence in this case, have believed, as the plaintiff here claims he believed, that the cancellation merely affected the additional coverage.”
The plaintiff’s final contention is that the cancellation of November 28rd was subsequently waived by defendant by the action of Allen Agency in sending plaintiff on January 8, 1954 a bill (Exhibit 8) which stated: “This insurance has been in full force since the date of the policies and as the account is now overdue remittance should be sent at once.” As to this it will suffice to say (1) that the bill itself showed the refund of $17.36, (2) that the bill was presented by Allen Agency to obtain payment of a debt due to it, not one due to the defendant, and (3) that the notice of cancellation informed plaintiff: “Your policy can be put in force again only by ‘Notice of Reinstatement’ from a Branch or the Home Office.”
It is unfortunate that plaintiff after receiving the cancellation notice took no steps to have the policy reinstated. One may sympathize with his plight but his rights cannot be judicially determined on the basis of sympathy. The policy was legally cancelled and there were no relevant issues of fact for submission to the jury. Accordingly denial of defendant’s motions for a directed verdict and for judgment notwithstanding the jury’s verdict should have been granted. The judgment for plaintiff is reversed with directions to enter judgment for defendant.
. The notice also stated: “Premiums due when policies take effect. If insurance is not desired, the policy should be returned to our office at onpe. Holding the contract in your possession will be considered your acceptance of it.” Allen Agency had not sent the endorsement to plaintiff.
. “Notice of Cancellation
For Insured R. Marchessault
Date November 13, 1953
National Grange Mutual Liability Co.
National Grange Fire Insurance Co.
Keene, New Hampshire
Hereby gives you written notice' in accordance with the policy conditions of the cancelation of its Policy No. 846-532
By virtue of .this notice, as issued to you, the Policy will be canceled and all liability of the National Grange Mutual Liability Go. — National Grange Fire Insurance Co. under said Policy will cease at and from 12:01 A. M. November 23, 1953, without further notice. If the premium has been paid, the excess of such paid premium above the earned pro rata premium, if not tendered to you herewith,, will be refunded on demand. If the premium has not been paid, a bill for the premium earned to the time of cancelation will be forwarded in due course. This action is occasioned by reason of non-payment of premium 2.99.
Please return the Policy.
Very truly yours,
National Grange Mutual Liability Co.
National Grange Fire Insurance Co.
By Roy H. McCray Name of Insured Richard Marchessault 445 St. Paul Street Burlington, Vermont
Copy: Mortgagee ..................
Your policy can be put in force again only by ‘Notice of Reinstatement’ from a Branch or the Home Office.”
The premium mentioned therein, $2.99, is less by 33 cents then the premium demanded in the October 13th letter of Allen Agency, the difference being the commission to which Allen Agency would be entitled if the premium had been paid to defendant.
. “22 Cancellation. This policy may be canceled by the named insured by mailing to the company written notice stating when thereafter such cancelation shall be effective. This policy may be canceled by the company by mailing to the named insured at the address shown in this policy written notice stating when not less than five days thereafter such
If the named insured cancels, earned premiums shall be computed in accordance with the customary short rate table and procedure. If the company cancels, earned premiums shall be computed pro rata. Premium adjustment may be made at the time cancelation is effected and, if not then made, shall be made as soon as practicable after cancelation becomes effective. The company’s check or the cheek of its representative mailed or delivered as aforesaid shall be a sufficient tender of any refund of premium due to the named insured.”
. The jury answered “yes” to the following interrogatory:
. Genone v. Citizens Ins. Co., 207 Ga. 83, 60 S.E.2d 125; American Fire & Casualty Co. v. Combs, Ky., 273 S.W.2d 37.
. In addition to cases in the preceding footnote, see Summers v. Travelers Ins. Co., 8 Cir., 109 F.2d 845, 127 A.L.R. 1336; Gibbons v. Kelly, 156 Ohio St. 163, 101 N.E.2d 497; Wallace v. State Farm Mutual Automobile Ins. Co., 187 Tenn. 692, 216 S.W.2d 697; Medford v. Pacific Nat. Fire Ins. Co., 189 Or. 617, 219 P. 2d 142, 222 P.2d 407, 16 A.L.R.2d 1181; Department of Labor & Industries v. Northwestern Mut. Fire Ass’n, 13 Wash. 2d 288, 124 P.2d 944; and annotation in 16 A.L.R.2d 1200, 1204.
As supporting the view that return of the premium is a condition precedent to cancelation, see Ellzey v. Hardware Mut. Ins. Co., La.App., 40 So.2d 24; Crotts v. Fletcher Motor Co., 219 S.C. 204, 64 S.E.2d 540; Elmore v. Middlesex Mut. F. Ins. Co., 219 S.C. 520, 65 S.E.2d 871.
. On the general subject of conditions subsequent see Oorbin on Contracts § 739 et seq.
. See Summers v. Travelers Ins. Co., 8 Cir., 109 F.2d 845, 848.
Dissenting Opinion
(dissenting).
In February 1953, plaintiff requested and received from defendant, through an insurance agency, a policy against liability in the amount of $5,000 for each injured person and $10,000 for each accident. Defendant received payment of the premium for this policy in the amount of $81.76.
In October, 1953, without any request by plaintiff, the defendant issued an endorsement providing additional coverage. This endorsement, sent to the agency, plaintiff did not receive, but the agency notified plaintiff of its issuance. The additional premium demanded of plaintiff for this increased coverage was $3.-22. Plaintiff, who did not want the increased coverage, ignored the bill for this additional amount. On November 13,
Plaintiff contended that he believed that the cancellation notice related solely to the additional coverage; that the $2,99 related to the premium therefor; and that, consequently, when he received that notice, he thought the original policy was still in effect, so that he did not attempt to obtain an insurance policy from another insurance company, as he could have done. As defendant did not, until after the accident, return the premium for the original policy which would have been unearned if the entire policy had been cancelled, the return of that unearned premium did not put plaintiff on notice, previous to the accident, of such cancellation.
The trial judge asked the jury to answer this question: “Would a reasonable prudent man upon receiving notice of cancellation worded as shown by defendant’s Exhibit C, under the circumstances disclosed by the evidence in this case, have believed, as the plaintiff here claims he believed, that the cancellation merely affected the additional coverage?” The jury answered, yes.
I think that plaintiff, “an untutored layman,” dealing with an experienced insurance company, could reasonably have had such a belief.
. See, e. g., Allstate Insurance Co. v. Fannie Pacific, 2 Cir., 228 F.2d 399; Broidy v. State Mutual Life Assurance Co., 2 Cir., 186 F.2d 490; Gaunt v. John Hancock Mutual Life Insurance Co., 2 Cir., 160 F.2d 599.
. Such is the rule in the case of parties to ordinary contracts. See, e. g., 3 Cor-bin, Contracts, pp. 941-942; Railway Co. v. McCarthy, 96 U.S. 258, 267-268, 24 L.Ed. 693; Griffin Grocery Co. v. Richardson, 8 Cir., 10 F.2d 467, 472-473; Fielding v. Robertson, 141 Va. 323, 333, 126 S.E. 231.
A fortiorari should it be true of an insurance company.