Allstate Insurance Company v. Hale

154 S.E.2d 79 (1967) 270 N.C. 195

ALLSTATE INSURANCE COMPANY
v.
Linda Mills HALE, Mary Peoples Smith, and Jerry Winfred Henry, by his Guardian Ad Litem, Ralph Goodale.

No. 457.

Supreme Court of North Carolina.

May 3, 1967.

Womble, Carlyle, Sandridge & Rice, by Grady Barnhill, Jr., Winston-Salem, for plaintiff appellant.

Mast & Wilson, by David P. Mast, Jr., Winston-Salem, for defendant Hale.

White, Crumpler, Powell & Pfefferkorn, by James G. White, Winston-Salem, for defendants Smith and Henry.

HIGGINS, Justice:

In response to the issues submitted, the jury found: (1) Harold A. Roberts was the agent of plaintiff Allstate Insurance Company and acting within the scope of his authority when he collected from Mrs. Smith the balance of $75 due on the policy involved in this cause; and (2) the policy was not cancelled prior to August 30, 1965 when the insured vehicle was involved in the accident in which the defendant Linda Mills Hale was injured.

The plaintiff stressfully contends that Harold A. Roberts at all times was acting independently as a producer of record in obtaining the insurance policy and was acting as the agent of Mrs. Smith thereafter, and at no time was he the agent of Allstate. Plaintiff further contends that Mrs. Smith's payment to Roberts was not a payment to Allstate and consequently the cancellation for nonpayment of premium was fully authorized by law.

The evidence fails to show Roberts was ever the general agent of Allstate. It is sufficient, however, to show that Roberts was authorized by Allstate to deliver its assigned risk policy to Mrs. Smith and to collect from her $75 balance due on the annual premium. "`A general agent is one who is authorized to do all acts connected with a particular trade, business or employment, and a special agent is one authorized to do one or more specific acts in pursuance of particular, specific instructions or within restrictions necessarily implied from such instruction.' 3 Am.Jur.2d 422". Lee, N.C. Law of Agency & Partnerships, Sec. 45. "(A) special agent can only contract for his principal within the limits of his authority, and a third person dealing with such agent must acquaint himself with the strict extent of the agent's authority and deal with the agent accordingly." William Iselin & Co. v. Saunders, 231 N.C. 642, 58 S.E.2d 614, citing Graham v. Mutual Life Ins. Co., 176 N.C. 313, 97 S.E. 6; Swindell v. Latham, 145 N.C. 144, 58 S.E. 1010, 122 Am. St. Rep. 430; Mechem on Agency (2d Ed.) Vol. 1, Sec. 742; 2 Am.Jur., Agency, Sec. 96, 2 C.J.S. Agency §§ 93, 114. "A broker authorized to deliver the policy and collect the premium has been quite generally held to be the agent of the company in respect to those acts." Mechem on Agency, Sec. 2369 (see footnote citing numerous authorities). "An insurance broker to whom a policy is entrusted by the insurer for delivery to the insured has the authority to receive the first premium, and payment to the broker constitutes payment to the insurer." Couch on Insurance (2d Ed.) Vol. 3, Sec. 25:97.

It is true that Roberts was the producer of record. However, nothing in the Assigned Risk Plan appears to require the insurer to send the policy to the producer for delivery or for the collection of the premium or any part thereof. If the insurer elects to assign these responsibilities to the producer of record, he becomes the agent of the insurer for these specific activities. At least assignment of these duties furnishes evidence from which the jury may infer the special agency. A case in point is Taylor v. United States Casualty Co., 229 S.C. 230, 92 S.E.2d 647. The South Carolina Court held the producer of record completed his obligation when he forwarded the application and the deposit to the Assigned Risk Plan. Subsequent actions were of the insurer's "own choosing" and were sufficient to carry the issue of agency to the jury. In Underwood v. National Grange Mutual Liability Co., 258 N.C. 211, 128 S.E.2d 577 and Daniels v. Nationwide Mutual Ins. Co., 258 N.C. 660, 129 S.E.2d 314, a different question was involved.

The evidence of agency was sufficient to require Judge Gwyn to submit the issue to the jury and to support the jury's finding that the agency existed. The acceptance by the agent of the full balance due on the premium before cancellation prevented the insurer from terminating the policy for nonpayment of the premium. The payment to the agent was payment to the principal. The evidence fixed the time of the payment as early in the morning of December 2, 1964. Notice of cancellation was not mailed until later that afternoon.

Some confusion has arisen as to the method of cancelling assigned risk policies. The Vehicle Financial Responsibility Act of 1957 provided:

"No insurance furnished under the provisions of the 1957 Act `shall be terminated by cancellation or failure to renew by insurer until at least fifteen (15) days after mailing a notice of termination to the named insured * * * notice * * * shall be mailed by the insurer to the Commissioner * * * not later than fifteen (15) days following the effective date of such cancellation * * *.' G.S. 20-310." Faizan v. Grain Dealers Mutual Ins. Co., 254 N.C. 47, 118 S.E.2d 303. (Emphasis added)

Apparently Allstate sought to cancel its policy issued to Mrs. Smith by using forms and following procedures provided in the 1957 Act and discussed by Justice Moore in the Faizan case. Likewise, it appears that Allstate overlooked the 1963 Session Laws amendment which became effective October 1, 1963 as Chapter 964:

"No insurance policy provided in paragraph (d) may be terminated by cancellation or otherwise by the insurer without having given the North Carolina Motor Vehicles Department notice of such cancellation fifteen (15) days prior to effective date of cancellation." (Emphasis added)

Plaintiff's Exhibit No. 2, introduced in evidence, carries this information:

"NOTICE OF TERMINATION (giving name and address of insured, Mrs. Smith, the policy number and the serial number of the insured vehicle) terminates effective 12-19-64. Date FS-4 prepared Dec. 29, 1964. To be filed with the Department of Motor Vehicles Financial Security Section, Raleigh, North Carolina. R. L. Hargrove, signature of authorized representative."

The reverse side of the notice shows it was received in the office of the Department of Motor Vehicles on January 11, 1965. The plaintiff's evidence not only failed to show prior notice to the Department of Motor Vehicles of the effective date of the attempted cancellation, but it affirmatively shows the notice was prepared on December 29, 1964, claiming cancellation effective "12-19-64". Griffin v. Hartford Acc. & Indemnity Co., 264 N.C. 212, 141 S.E.2d 300 is not authority contra. Griffin was decided subsequent to the 1963 amendment, but the cancellation was effective prior to that date, and was according to the rules in force at the time of cancellation.

The primary purpose of the law requiring compulsory insurance is to furnish at least partial compensation to innocent victims who have suffered injury and damage as a result of the negligent operation of a motor vehicle upon the public highway. Insurance covering liability arising out of the ownership, maintenance and use of a motor vehicle on the highway in the amount required by statute is mandatory. If the policy exceeds the amount required, the policy to the extent of the excess is voluntary. Voluntary insurance is contractual and determines the rights and liabilities of the parties inter se. Assigned risk insurance is compulsory both as to the insurer and the insured, made so by law. Such policy must be interpreted in the light of the statutory requirement rather than the agreement or understanding of the parties. The requirements of the statute with respect to cancellation must be observed or the attempt at cancellation fails. Such policies "are generally construed with great liberality to accomplish their purpose." Nation-wide Mutual Ins. Co. v. Roberts, 261 N.C. 285, 134 S.E.2d 654; Wheeler v. O'Connell, 297 Mass. 549, 9 N.E.2d 544, 111 A.L.R. 1038.

We conclude the evidence was sufficient to support the finding that Roberts, as plaintiff's agent, received the balance due on the premium and that the plaintiff had not cancelled the policy. The Court entered judgment in part upon the jury's verdict and in part upon the Court's additional findings, both of which were supported by the evidence.

Any judgment against Allstate in favor of Linda Mills Hale may not exceed the maximum coverage provided in the policy.

Affirmed.