Dawson v. Concordia Fire Insurance

ADAMS, J., dissenting. The policies of insurance, upon which this action was begun, issued on 13 April, 1923, and insuring plaintiff, E. V. Dawson, for one year, against the loss of the property described therein, by fire, were in force on 2 June, 1923, the date of the destruction of said property (1) unless said policies were delivered upon condition that they should not become effective until the premiums were paid, or (2) unless the policies were canceled on 30 April, 1923, as contended by defendants. Plaintiffs contend that the policies were delivered without condition as to payment of premiums, and that the attempted cancellation by the agent on 30 April, 1923, was not valid, and therefore did not release defendants from their obligations, under the policies, because no notice, as required in the policies, was given to him by defendants, of an intention to cancel the policies, or that the same had been cancelled.

Whether a policy of insurance has been delivered or not is largely a question of intention. If it was the intention of defendant companies, acting by their authorized agents, that the policies, executed by them, should be completed instruments; if this intention was evidenced by words or acts of defendants, indicating that the policies were put beyond their legal control; and if plaintiff acquiesced in this intention, and accepted the policies, they were delivered, so as to become effective from the date of issue, notwithstanding they did not pass beyond the physical control of the agents of the defendant companies; Vance on Insurance, p. 169; Hardy v. Insurance Co., 154 N.C. 430; Mfg. Co. v.Assurance Co., 161 N.C. 88, C. J., 58, sec. 51. Retention by the agent of the company of the policy, which as between the insurer and the insured, has been delivered as a completed instrument, does not affect its validity.

A policy of insurance, in form as required by statute, may be delivered upon condition that it shall not become effective until the happening of some subsequent event. "In such cases, the policy is of no binding effect until the condition is fulfilled. Such conditions may be shown by parol, without violating the well-known rule prohibiting the varying of written agreements by parol testimony. The condition so shown goes to the existence of the policy, and not to its terms." Vance on Insurance, p. 170. InHartford Fire Insurance Co. v. Wilson, 187 U.S. 467, 47 L.Ed., 261, it is held that a policy of fire insurance may be delivered to the agent of the insured upon condition, and that if the condition is not fulfilled, prior to the destruction of the property by fire, no recovery can be had, because the policy had not become effective prior to the loss. 18 Roses' Notes, p. 1187. See 26 C. J., p. 59, note 95.

The jury in the instant case has found that the policies were issued as alleged in the complaint; there is no finding or admission in the pleadings or otherwise that they were issued or delivered, conditionally as between the insurer and the insured. The policies became effective for all purposes on the day of their issue. The agreement as found by the jury was not between the insured and the insurer with respect to the terms of the policy but between the insured and the agent of the insurer with respect to the payment of the premiums to the said agent, and not to the company. Unless canceled in accordance with its terms, each of the policies continued in full force and effect from date of issue until 2 June, 1923, the day on which the property was destroyed by fire. There was an unconditional delivery of the policies, and they were in full force and effect, according to all the terms thereof from the date of their issuance.

It is expressly stipulated in each policy, as required by statute (1) that "this policy will be canceled at any time at the request of the insured," and (2) that "the policy may be canceled at any time by the company by giving to the insured five days' written notice of cancellation." No notice of intention to cancel, or of cancellation was given to the insured by the company. Clearly, therefore, if the attempted cancellation of the policies, on 30 April, 1923, was upon the initiative of the companies, or of their agent, acting for them, it was void. It did not release the companies from their obligations under the policies; they were in force, notwithstanding such attempted cancellation, on 2 June, 1923. No contract, valid in its inception, and unobjectionable in its terms, can be canceled, without the consent of all parties, who have acquired rights thereunder. Trust Co. v. Ins. Co., 173 N.C. 558. The insured, when he accepted the policy, consented that the company might thereafter cancel the policy, upon giving him notice in writing, of five days. This provision is manifestly for the protection of the insured. The right of the company to cancel the policy exists only because of the consent of the insured, given at the time of his acceptance of the policy and thereafter to be acted upon by the company only upon strict compliance by it with the terms upon which such consent was given. "A consent to a cancellation on a specified condition does not terminate the insurance unless such condition is performed." 26 C. J., p. 147, note 38. No written notice of five days having been given to plaintiff, by defendants, as required by the terms of the policies, defendants had no right to cancel the policies on 30 April, 1923; if the cancellation on said date was made by the companies, and not at the request of plaintiff, it is void, and did not terminate the insurance. Vance on Insurance, p. 495; Mfg. Co. v.Assurance Co., 161 N.C. 88.

It is stipulated in the policy, however, that it will be canceled at any time by the company, at the request of the insured. This request may be made by the insured, in person, or by his authorized agent. Manifestly, the request for cancellation must be made after the policy has been issued, and while it is in force. It does not follow, however, that the agent who makes the request in behalf of the insured, must have been authorized so to do, after the policy has been issued, and while it was in force; such authority may be given prior to, or contemporaneously with the issuance of the policy. It may also be given upon condition, to be exercised in the discretion of the agent, upon the happening of the condition.

In the instant case, the terms of the contract of insurance between the insured and the insurer are contained in the written policy, as required by statute. The agreement as found by the jury, with respect to cancellation upon the failure of plaintiff to pay the premiums on the policies, was not a part of the contract of insurance between plaintiff and defendants. Only plaintiff, and the agent, acting in his own behalf, and not for his principal, were parties to this agreement. The agent did not undertake to act for, or to bind his principal, by the agreement. Failure of plaintiff to pay the premiums, within the time agreed upon, was not intended to result in a forfeiture of the policy. The agreement had no effect whatever upon the rights and obligations of plaintiff and defendant, under the policy. It was for the protection of the agent, who, upon the issuance of the policies, became liable to defendants for the amount due for premiums. These premiums were payable in money; it was the duty of the agent to collect the premiums; upon the issuance of the policies, he became liable at once to the companies for the amount of the premiums. In extending credit to plaintiff, he was acting for himself, and not for the company. In consideration of the extension of credit, plaintiff agreed that upon his failure to pay the amount due as premiums, within the time agreed upon, the agent, acting for him, might cancel the policies, and thus relieve himself of liability to the company, or at least reduce the amount for which he was liable on account of premiums on these policies. The effect of the agreement was to authorize the agent, in behalf of plaintiff, to have the policies canceled by the companies, by making the request as provided in the policies. The agent having made the request, upon the failure of plaintiff to pay the amounts due him for premiums on the policies within the time agreed upon, the policies were thereby canceled on 30 April, 1923. After said date they ceased to have any validity as contracts of insurance. There is no error in the judgment that E. V. Dawson take nothing by this action.

The authorization by plaintiff of the agent of the companies to cancel the policies, as his agent, upon plaintiff's failure to pay the amounts due as premiums, within the time agreed upon, and the cancellation by said agent of the policies, under such authority, was not inconsistent with the duties which said agent owed to the companies. He had fully performed such duties when the policies were issued. The companies had consented that they should be canceled at any time upon the request of plaintiff. No terms or conditions were imposed upon plaintiff, and upon his request, made by the agent, defendants had no discretion, with respect to the cancellation. SeeWarren v. Franklin Fire Ins. Co., 161 Iowa 440. L.R.A., 1918 E., 477.

There being no error in the judgment that the insured cannot recover in this action, it must follow that there is no error in adjudging that his coplaintiffs cannot recover. No sum having been ascertained and proven to be due to the assured under the policies, none can be recovered by them under the "Loss Payable" clause in the policies. Roper v. Ins. Co.,161 N.C. 151; Gilman v. Commonwealth Ins. Co., 112 Me. 528, L.R.A., 1915 C, 759 note. The New York Standard mortgage clause is not in the policies.

The judgment is affirmed. There is

No error.

ADAMS, J., dissenting.