Sloan v. Wells , 296 N.C. 570 ( 1979 )

251 S.E.2d 449 (1979) 296 N.C. 570

Lloyd P. SLOAN, Jr., d/b/a Sloan Insurance Agency
v.
Joseph Earl WELLS.

No. 102.

Supreme Court of North Carolina.

February 5, 1979.

William P. Mayo and Rodman, Rodman, Holscher & Francisco by Edward N. Rodman, Washington, for plaintiff-appellee.

McCotter & Mayo by Hiram J. Mayo, Jr., New Bern, for defendant-appellant.

BRANCH, Justice.

The sole question presented is whether the trial court erred in granting plaintiff's motion for a directed verdict on defendant's counterclaim.

In finding no error in the trial below, the Court of Appeals apparently relied on an Oregon case, Rodgers Insurance Agency v. Andersen Machinery, 211 Or. 459, 316 P.2d 497 (1957), and quoted the following language therefrom:

... [W]e believe that a contract to procure insurance should be proved with the same certainty as an oral contract of insurance or agreement to insure. The essential elements of such an agreement were first stated by this court in Cleveland Oil & Paint Co. v. Norwich Union Fire Ins. Co., 34 Or. 228, 233, 55 P. 435, in the following language:

"``In order to make a valid contract of insurance,' says Mr. Wood, in his work on Fire Insurance (2 ed. § 5), ``several things must concur: First, the subject-matter to which the policy is to attach, must exist; second, the risk insured against; third, the amount of the indemnity must be definitely fixed; fourth, the duration of the risk; and, fifth, the premium or consideration to be paid therefor must be agreed upon, and paid, or exist as a valid legal charge against the party insured where payment in advance is not a part of the condition upon which the policy is to attach. The absence of either or any of these requisites is fatal in cases where a parol contract of insurance is relied upon'."

After quoting the foregoing language from Rodgers, Judge Erwin, speaking for the Court of Appeals, stated:

We conclude that defendant presented sufficient evidence to submit the following issues to the jury on the question of whether or not a proposed insurance contract was entered: (1) the subject matter to which the policy was to attach was a Franklin Logger, (2) the amount of indemnity or the proposed insurance contract was $12,500.00. However, defendant's evidence was fatal on the following issues: (1) the risk insured against (whether fire, liability, or comprehensive), (2) the duration of the risk (whether six months or one year), (3) the premium consideration to be paid for the proposed insurance contract. The evidence did not show that the premiums were paid or that the plaintiff charged the defendant for such insurance. In view of the record before us and the lack of evidence on the part of defendant, we are compelled to hold that the trial court properly granted plaintiff's motion for directed verdict of defendant's counterclaim under Rule 50(a) of the Rules of Civil Procedure.

We note that a subsequent Oregon case clarifies Rodgers. In Hamacher v. Tumy, 222 Or. 341, 352 P.2d 493 (1960), the court stated:

... The Rodgers case does not hold that the manner of proof is the same for both contracts to procure insurance and contracts of insurance.

. . . . .

... Obviously, liability for failure to procure insurance could not arise unless the agent had sufficiently definite directions from his principal to enable him to consummate the final insurance contract. Perhaps ordinarily the broker and his client expressly agree upon all of the essential elements which are to be included in the final insurance contract. But such an express agreement is not necessary; the scope of the risk, the subject matter to be covered, the duration of the insurance, and other elements can be found by implication....

In light of the distinction between contracts of insurance and contracts to procure insurance noted by the Oregon Supreme Court in Hamacher, we are of the opinion that the Court of Appeals' reliance on Rodgers Insurance Agency v. Andersen Machinery, supra, was misplaced.

More importantly, however, our own cases dictate a different result than that reached by the Court of Appeals. North Carolina does not adhere to such rigid requirements for valid insurance binders as those imposed by the Court of Appeals.

A binder is an insurer's bare acknowledgment of its contract to protect the insured against casualty of a specified kind until a formal policy can be issued. The binder may be oral or written. Wiles v. Mullinax, 270 N.C. 661, 155 S.E.2d 246 (1967); Moore v. Electric Co., 264 N.C. 667, 142 S.E.2d 659 (1965). No specific form, or provision, is necessary to constitute a memorandum, or an oral communication, intended as a binder, a valid contract of insurance. Mayo v. Casualty Co., 282 N.C. 346, 192 S.E.2d 828 (1972); Wiles v. Mullinax, supra. Moreover, it is not required that the writing, or oral communication, set forth all the terms of the contemplated contract of insurance. Mayo v. Casualty Co., supra.

In instant case, defendant testified as to the subject matter, the amount of coverage, and the premium to be paid. Although the record does not indicate the exact nature of the risk to be insured against or the duration of the risk, plaintiff testified that he "had insurance or started insuring his [defendant's] logging equipment in July, 1972." This evidence would support an inference which would permit, but not require, the jury to find that upon defendant's request plaintiff would obtain coverage consistent with the parties' previous dealings.

We hold that the evidence presented was sufficient to carry defendant's counterclaim to the jury, and the trial court erred in granting plaintiff's motion for a directed verdict thereon.

The decision of the Court of Appeals is

REVERSED.

BRITT and BROCK, JJ., did not participate in consideration or decision of this case.