Ingram v. Nationwide Mutual Insurance , 5 N.C. App. 255 ( 1969 )

168 S.E.2d 224 (1969) 5 N.C. App. 255

Clara S. INGRAM, Administratrix of the Estate of Christopher King Ingram
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, Original Defendant, and
Premium Payment Company, Additional Defendant.

No. 6918SC171.

Court of Appeals of North Carolina.

July 2, 1969. Certiorari Denied August 29, 1969.

Robert R. Gardner, Raleigh, and Haworth, Riggs, Kuhn & Haworth, by John Haworth, High Point, for original defendant appellant.

Smith, Moore, Smith, Schell & Hunter, by Stephen Millikin, Greensboro, Arch S. Schoch, Schoch, Schoch & Schoch, High Point, for additional defendant appellee.

BRITT, Judge.

The first issue is whether Nationwide has stated a cause of action against Payment Co. We answer in the affirmative.

Unless required by Article 4 of Chapter 58 of the General Statutes, Nationwide was not required to give Wall notice of the cancellation, since, on this record, the cancellation was made at the request of Wall's attorney-in-fact. Daniels v. Nationwide Mutual Insurance Co., 258 N.C. 660, 129 S.E.2d 314.

The case of Grant v. State Farm Mutual Automobile Insurance Co., 1 N.C.App. 76, 159 S.E.2d 368, although an action between the judgment creditor of the insured and insurance company only and which dealt with a request for cancellation somewhat different from that alleged in this case, placed the burden of proving cancellation by the insured or his agent on the insurance company.

Here, Nationwide has alleged receipt of a request for cancellation from Payment Co., to which was attached a copy of the notarized power of attorney executed by Wall and certification that Wall and J. M. Nurney had been given the notice required by G.S. § 58-60. Assuming such a request was received, we think Nationwide stated a cause of action against Payment Co., since upon receipt of the request Nationwide lacked further discretion in the matter under the mandate of G.S. § 58-60 (3) as follows:

"(3) Upon receipt of a copy of such request for cancellation notice by the insurer or insurers, the insurance contract shall be cancelled with the same force and effect as if the aforesaid request for cancellation had been submitted by the insured himself, without requiring the return of the insurance contract or contracts." (Emphasis added.)

Moreover, the Grant case expressly states that "[i]f the premium finance company misleads the insurance company wrongfully by requesting cancellation of the policy, the insurance company can seek redress from the premium finance company."

The second issue is whether this cause of action against Payment Co. may be asserted in the action of Clara S. Ingram against Nationwide.

It may be noted that this cross-action would seem clearly correct under our new Rules of Civil Procedure, § 1A-1, Rule 13(h) and Rule 14. These rules, originally slated to become effective 1 July 1969, will, by recent legislative enactment, become effective on 1 January 1970 and will apply to pending litigation. Session Laws, 1967, c. 954, § 10. However, the new rules were not in effect when the superior court made its ruling and will not control this decision

The problem facing the trial judge in making this determination under our present rules is fully appreciated. See the excellent treatment of the problems in 1 McIntosh, N.C. Practice 2d, 1969 Supplement, §§ 722, 722.5. Clearly, the superior court could have allowed the cross-claim to be prosecuted in the same action in order to handle the entire matter in one action and avoid a second suit. 1 McIntosh, N.C. Practice 2d, § 721, and citations therein.

The relationship between Nationwide and Payment Co. was not contractual, as all action by Payment Co. was as agent of the insured under G.S. § 58-60 and not in its own right; therefore, the case does not fall within the rulings of Clark v. Pilot Freight Carriers, Inc., 247 N.C. 705, 102 S.E.2d 252, or Gaither Corp. v. Skinner, 238 N.C. 254, 77 S.E.2d 659.

G.S. § 58-60 provides that the insurance contract "shall not be cancelled unless such cancellation is effectuated in accordance with the following provisions: * * *." Liberally construed, Nationwide appears to be alleging that if the provisions relating to notice to the insured by Payment Co. were not followed and if the insurance contract is found to be still in effect because of this noncompliance, then Nationwide is entitled to be indemnified for losses incurred by it resulting from the failures of Payment Co., as Nationwide was compelled to cancel by G.S. § 58-60(3).

On this basis, the case falls within the category of cross-claim for indemnification and thus the cross-claim is asserted as a matter of right. 1 McIntosh, N.C. Practice 2d, § 721. We conclude that the cross-claim should have been allowed.

The order of the superior court sustaining the demurrer to the amended cross-action and dismissing same is

Reversed.

MALLARD, C. J., and PARKER, J., concur.