Selken v. Northland Insurance Company ( 1958 )

Peterson, C. J.

On September 8, 1952, defendant issued a collision liability insurance policy to Dean E. Selken covering a Plymouth car. The car was wrecked and on January 31, 1953, he bought a Chevrolet, to which the insurance was transferred.

On March 12, 1953, Midwest Motor Agency, an authorized agent of defendant located at Dubuque, Iowa, mailed by ordinary mail to Mr. Selken at Altoona, Iowa, a ten-day notice of cancellation of the collision insurance policy. On April 5, 1953, Mr. Selken had a collision and the Chevrolet was destroyed. The record does not disclose the fact, but apparently Mr. Selken either was killed in the wreck or departed this life thereafter, because the action is started in the name of Irene Selken, his mother, as administratrix of his estate. She alleges the car was of the value of $1300 at the time of the collision and prays for judgment in said amount.

Under the trial court’s instructions the question of proper service of notice of cancellation was submitted to the jury. The jury decided in favor of defendant, and plaintiff has appealed.

Appellant assigns three errors. Assignments 1 and 3 are closely related and can be considered together. 1. The burden of proving proper cancellation of the policy rested on defendant and in light of the facts as shown the evidence was not sufficient to prove cancellation. 2. The. testimony of the acting manager and secretary in the office of Midwest Motor Agency was not competent under the provisions of section 622.4, 1954 Code, in view of the death of the manager who had signed the cancellation notice.

I. The provision in the policy with reference to cancellation by the company was as follows: “This policy may be canceled by the company by mailing to the insured at the address shown in this policy written notice stating when not less than ten days thereafter such cancelation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date and hour of cancelation stated in the notice shall become the end of the policy period. * * Notice of cancellation was mailed as heretofore stated, receipt being accepted by the insurance agent for deposit of the letter in the post office. There was no evidence by either plaintiff or defendant showing actual delivery to, or receipt of the notice by, the insured. The case rests on proof of deposit of the notice in the post office at Dubuque.

While the principal basis for our decision is interpretation of intent of cancellation statutes (sections 515.81 and 518.29), we desire to give consideration to the evidence with reference to mailing of notice of cancellation.

Don Anderson, owner of Anderson Motors, from whom Mr. Selken bought both cars, arranged financing of both cars through Interstate Finance Corporation. Midwest Motor Agency is a part of the Finance Corporation.

The officers and agents of both companies signed policies and documents interchangeably. The president of Interstate Finance Corporation signed Exhibits 3 and 6. These were the policy as to the Plymouth and transfer endorsement as to the Chevrolet.

Witness John P. Majerus, manager of Midwest Motor Agency, testified: “The Midwest -Motor Agency was a division of Interstate Finance Company and its office is in Dubuque. We service all of the Interstate Finance Corporation branches. * * * When the Interstate Finance Corporation purchased the finance paper from the automobile dealers, then the Northland Insurance Company would automatically bind the car for collision. In this particular instance, when Dean Selken bought the car from the Anderson Motors, the date that Selken bought the car, the ear was bound in accordance with the amount shown in the application that he signed at the Anderson Motors. Plaintiff’s Exhibit 3 is signed ‘Midwest Motor Agency’ by ‘D. B. Cassat’ and D. B. Cassat is the president of the Interstate Finance Corporation.”

Don Anderson testified he knew Dean Selken was teaching at Shellsburg when he bought the Chevrolet in January 1953 and that he lived at home with his mother at Vinton. Mr. Sel-ken’s mother testified she knew of only one letter forwarded from Altoona to Dean at Vinton and that was a serviceman’s letter.

Selken’s conditional sale contract of purchase, Exhibit 2, assigned to Interstate Finance Corporation, and the policy, Ex-bibit 3, dated September 25, 1952, botb state tbat Dean Selken was obligated to pay $58.52 per month for two years on the Plymouth. Exhibit 6, the endorsement on the policy to provide coverage for the Chevrolet, after the Plymouth was wrecked, stated the terms of the policy remained unchanged. This means that every month for some time prior to attempted cancellation, Mr. Selken was making remittance to Interstate Finance Company from Shellsburg or Vinton.

The receipt of monthly payments and the chain of purchasing, financing and insuring as to the Chevrolet were so interlocked that defendant’s agent must have known Dean Selken’s correct address when the notice of cancellation was mailed to him.

The presumption as to receipt of an ordinary letter and the steps required to submit such question to the jury are clearly stated in Forrest v. Sovereign Camp, W.O.W., 220 Iowa 478, 480, 261 N.W. 802, 804:

“Because of the probability that the officers of the government will perform their duties in the transmission and delivery of mail, this court has held that it will be presumed that a communication intrusted to the mails, in such manner that these duties are imposed on the officers of the government, will reach its destination. Watson v. Richardson, 110 Iowa 673, 80 N.W. 407. But to avail one’s self of the presumption mentioned it is essential that it first be established, as a matter of fact, that all things have been done and accomplished that are a necessary part of imposing on the government officers and employees the duty of transmitting and delivering the letter. These things, the doing of which must be proven, are set out in Central Trust Co. v. City of Des Moines, 205 Iowa 742, loc. cit. 746, 218 N.W. 580, 582, in following language: ‘In order to raise a presumption of delivery of a paper through the mail, there must be * * * (3) evidence of the correct post-office address of the person to be charged with receiving it; (4) evidence that the package containing the document was properly addressed; * * *.’ ”

Goodwin v. Provident Savings Life Assur. Assn., 97 Iowa 226, 241, 66 N.W. 157, 161, 32 L. R. A. 473, 59 Am. St. Rep. 411, was a case where plaintiff had notified a bank, where premiums were paid, as to change of address from Omaha to Chicago. Defendant mailed the notice involved to Omaha. On trial the defendant relied on fact that notice was sent to its last known address of assured. We said: “* * * the notice was not addressed to the city or town where the assured, at the time, resided. He was then living in Chicago, and it seems to be a well-established rule, that, under such circumstances, no presumption arises that the addressee received the notice. [Citations] Tho court did not err in refusing to submit the question as to the actual receipt of the notice by the assured * * * .” (Emphasis; ours.)

In Sorensen v. Farmers Mutual Hail Ins. Assn., 1939, 226 Iowa 1316, 286 N.W. 494, 123 A. L. R. 1000, the majority opinion relied in part on the presumption that a letter, properly addressed and mailed, reached the plaintiff in due time, although there was no direct evidence of receipt by plaintiff.

No such presumption can be assumed in this case as the notice was not addressed to Dean Selken where he lived nor where he worked. Goodwin v. Provident Savings Life Assur. Assn.; Central Trust Co. v. Des Moines; Forrest v. Sovereign Camp, W.O.W., all supra; Lundy v. Skinner, 220 Iowa 831, 835, 263 N.W. 520, 522; 31 C. J. S., Evidence, section 136 (b).

Lundy v. Skinner, supra, pertained to a notice to a creditor in a bankruptcy proceeding. We held the notice was not good, because the wrong address appeared on the envelope, saying: “There would be no presumption arising whatever that a letter or notice addressed to E. W. Lundy, Eldora, Iowa, would be delivered to E. W. Lundy, at Union, Iowa.”

As a general statement 31 C. J. S., supra, states: “Receipt of mail matter by the person for whom it was intended cannot be presumed unless it is proved that the matter was properly addressed to him, at the city or town where he resides or has his place of business, with the street and number if it is a city of considerable size, or at the post office where he usually receives his mail.”

It is true the policy in this ease provided notice could be mailed to insured at “address shown in this policy.” Such a policy provision is not supported by section 515.81, 1954 Code.» nor by the decisions of this court heretofore cited.

In view of above outlined situation the question of proper notice of cancellation did not generate a jury question. There is no fact controversy as to the notice being mailed to a town where Mr. Selken did not live, nor work. He had not lived there for some time. On this question alone we would reverse the case, but we will also discuss what we consider a fundamental and more important basis for reversal.

II. It is basic that the provisions of insurance policies issued in the state of Iowa cannot be contrary to statutory provisions. If the provisions of the policy are contrary to statute they will not be effective. If they need clarification same will be made in accordance with intent of the statute. Marden v. Hotel Owners Ins. Co., 85 Iowa 584, 52 N.W. 509, 39 Am. St. Rep. 316; Harrington v. Bremer County Farmers Mut. F. Ins. Assn., 1926, 203 Iowa 282, 285, 211 N.W. 383, 385; Salmon v. Farm Property Mut. Ins. Assn., 168 Iowa 521, 528, 150 N.W. 680, 682; Artificial Ice Co. v. Reciprocal Exchange, 1921, 192 Iowa 1133, 184 N.W. 756; Federal Land Bank of Omaha v. Farmers Mutual Ins. Assn. (Adams and Adjoining Counties), 217 Iowa 1098, 253 N.W. 52; Galkin v. Lincoln Mutual Casualty Co., 279 Mich. 327, 272 N.W. 694.

In Harrington v. Bremer County Farmers Mut. F. Ins. Assn., supra, we stated: “The burden of establishing an effective cancellation of the policy was on the appellee; and a cancellation by the insurer could only be effected by a strict compliance with the statute.”

In Salmon v. Farm Property Mut. Ins. Assn., supra, we said: “The by-laws of the association do not control as against a statute * * *.”

Chapter 515 of 1954 Code contains the statutory provisions with reference to “Insurance Other Than Life.” Section 515.81 provides as to cancellation: “The policy may be canceled by the insurance company by giving five days notice of such cancellation * * *.” Chapter 518 contains statutory provisions with reference to “Mutual Fire, Tornado, Hailstorm And Other Assessment Insurance Associations.” Section 518.29 provides with reference to cancellation: “Any policy of insurance issued by any association operating under the provisions of this chapter may be canceled by the association giving five days written notice thereof to the insured.” (Emphasis ours.)

Our latest direct expression on notice of cancellation appears in Sorensen v. Farmers Mutual Hail Ins. Assn., supra. Defendant deposited notice of cancellation in the post office, accepting receipt for deposit of the letter. The provision of the policy as to cancellation was substantially the same as in the policy involved herein. No evidence as to receipt of the notice by insured was produced. The majority opinion held it was not necessary to show receipt, as mailing to proper address presumed receipt. The decision was rendered by a divided eonrt, with two vigorous dissenting opinions by three Justices. The time has arrived to overrule the majority opinion in this case, and we so decide in the case at bar. It is not sound and does not reflect the intention of the legislature as expressed in the statutes heretofore quoted.

In interpretation of statutory provisions the primary object is to arrive at the legislative intent. We have so held in innumerable cases, and discussion of the proposition would be repetitious. Howard v. Emmet County, 140 Iowa 527, 118 N.W. 882; Seavert v. Cooper, 187 Iowa 1109, 175 N.W. 19; Keokuk Waterworks Co. v. City of Keokuk, 224 Iowa 718, 277 N.W. 291; Sinclair Refining Co. v. Burch, 235 Iowa 594, 16 N.W.2d 359.

Section 4.1(2), which is a part of chapter 4 on “Construction Of Statutes”, states: “Words and phrases shall be construed according to the context and the approved usage of the language; * * The approved usage of the word “giving” is “to deliver to another” and of the word “notice” is “to become aware of something.” (Emphasis ours.) American College Dictionary, 1953 Edition, pages 512 and 829.

Analyzing the meaning of the statutory provision concerning cancellation which provides for “giving of notice” we must conclude that the legislature intended that “giving” means the insured shall personally receive the notice, and that “notice” means he shall receive it so that he becomes “aware of the notice.” The provision involves a physical delivery to the insured of a document of which he becomes personally aware. This cannot be accomplished by depositing a document in the mail which he may or may not receive. When the legislature states an insured shall have “notice” it can only mean that he shall hnow about the fact of cancellation. The statutory provision can only be followed and concluded through actual receipt by the insured of the cancellation notice. This may be by actual service upon him, but it may also be by registered mail, with instructions to deliver to insured only, or legal representative if deceased, and secure signature on a return receipt card.

The provision in defendant’s policy as to notice of cancellation does not comply with Iowa statutes. It should provide for receipt of the notice by insured.

The burden of proof as to cancellation of a policy rests on the insurance company. Home Insurance Co. v. Fidelity-Phenix Fire Ins. Co., 225 Iowa 36, 279 N.W. 425; Harrington v. Bremer County Farmers Mut. F. Ins. Assn., supra; 45 C. J. S., Insurance, section 461(a); Salmon v. Farm Property Mut. Ins. Assn. and Artificial Ice Co. v. Reciprocal Exchange, both supra.

III. The great weight of authority, nation-wide, is that the insured must receive actual notice as to the cancellation. Galkin v. Lincoln Mutual Casualty Co., supra; Farnum v. Phoenix Ins. Co., 83 Cal. 246, 23 P. 869, 17 Am. St. Rep. 233; American Bldg. Main. Co. v. Indemnity Ins. Co., 214 Cal. 608, 7 P.2d 305; Mullen v. Dorchester Mut. Fire Ins. Co., 121 Mass. 171; Protection Life Ins. Co. v. Palmer, Admr., 81 Ill. 88; Rose Inn Corp. v. National Union Fire Ins. Co., 258 N. Y. 51, 179 N.E. 256, 83 A. L. R. 293; Long v. Home Indem. Co., La. App., 169 So. 154; 29 Am. Jur., Insurance, section 285; 45 C. J. S., Insurance, section 461 (a).

29 Am. Jur., Insurance, section 285, states: “According to the weight of authority, a notiee of cancelation mailed by the insurer does not become effective until it is received, and receipt by the insured of such notice is a condition precedent to a valid cancelation of the policy.”

Galkin v. Lincoln Mutual Casualty Co., supra, is similar to the case at bar and is referred to in one of the dissenting opinions in the Sorensen case. The policy provided (page 329 of 279 Mich.): “ ‘This policy may be canceled * * * upon five days’ notice in writing. * * * Notice of cancellation mailed to the last known address of the assured herein shall be sufficient’ * * The statutory provision in Michigan is similar to our provision. It provides: “ ‘No policy of casualty insurance * * * shall be issued or delivered in this State * * * unless there shall be contained within such policy a provision * * * whereby the policy may be canceled at any time by the company by giving to the insured a five days’ written notice of cancellation.’ ”

After discussion of the weight of authority and citation of several of the eases above cited the court stated at page 332 of 279 Mich., page 696 of 272 N.W.: “We are not in accord with appellant’s contention that under the terms of its policy mailing notice of cancellation to the last known address of the insured in and of itself canceled the policy. Instead, because of the statutory requirement hereinabove quoted, cancellation could not be effected by the insurer until notice thereof was received by the insured.”

In 123 A. L. R. 1008, annotation, we find the following general statement: “By the weight of authority the receipt of a notice of cancelation mailed by the insurer is held necessary.”

IY. The recent Minnesota case of Donarski v. Lardy, 251 Minn. 358, 88 N.W.2d 7, 9, 10, 11, in which the decision was rendered in January 1958 supports our position in this ease. Farmers Insurance Exchange, an insurance company, had attempted to cancel a policy prior to the collision in which two people were killed and another seriously injured. The provision of the policy was somewhat similar to the provision in the Selken policy. It was as follows: “This policy may be canceled by the Exchange by mailing to the named insured at the address shown in this policy written notice stating when not less than five days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date and hour of cancellation stated in the notice shall become the end of the policy period * *

Insurer mailed notice to insured on July 12, 1950, at Box 411, Thief River Falls, Minnesota (the address appearing in the policy), advising insured that date of cancellation would be 12:01 a. m., July 25, 1950. Insured never received the notice. The trial court held the contract between the parties had been complied with and the policy was canceled. The Supreme Court reversed. The court stated: “That issue is whether the policy bere was canceled when it appears from the court’s finding that the notice of cancellation was not received by the insured.” The decision of the court supporting the decision of this court in this case appears in following quotation: “It is our opinion that the provision means that mailing is a proper mode of communicating-notice of cancellation to the insured, but that it does not thereafter relieve the insurance company of the obligation of establishing that the insured received the notice.”

V. Counsel for appellant discussed at length the question considered in Item 1. He mentioned the ease, and quoted from dissenting opinions in Sorensen v. Farmers Mutual Hail Ins. Assn., supra, in Reply Brief. Appellant’s first and third assignments of error attacking the sufficiency of the cancellation notice are broad enough to sustain consideration of method of serving the notice, and reversal of the case.

In viéw of reversal under such assignments of error we do not reach assignment of error No. 2. Consideration of competency of certain evidence offered in view of the provisions of section 622.4, 1954 Code, is immaterial and unnecessary.

VI. In connection with remanding the ease to the trial court the only remaining question of fact for the jury is the value of the automobile at the time of its destruction, provided there is any conflict in the evidence as to this question.

The ease is reversed and remanded. — Reversed.

Bliss, Oliver, Garfield, and Wennerstrum, JJ., concur. Hats, ThompsoN and Larson, JJ., dissent. Smith, J., not sitting.