Fidelity & Cas. Co. of New York v. Riley

• Citation: 178 A. 250,168 Md. 430
• Decision Date: 03 April 1935
• Docket Number: 31.
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. RILEY. [a1]
• Court: Court of Appeals of Maryland

178 A. 250

168 Md. 430

FIDELITY & CASUALTY CO. OF NEW YORK v. RILEY. ^[a1]

No. 31.

Court of Appeals of Maryland

April 3, 1935

Appeal from Superior Court of Baltimore City; Eli Frank, Judge.

Suit by Russell J. Riley against the Fidelity & Casualty Company of New York. Judgment for plaintiff, and defendant appeals.

Affirmed.

BOND C.J., and PARKE, J., dissenting.

Argued before BOND, C.J., and OFFUTT, PARKE, SLOAN, SHEHAN, and JOHNSON, JJ.

O Bowie Duckett, Jr., of Baltimore (Hargest, LeViness, Duckett & McGlannan, of Baltimore, on the brief), for appellant.

Hall Hammond, of Baltimore, for appellee.

SLOAN Judge.

On February 6, 1932, the Fidelity & Casualty Company of New York, appellant, issued to Russell J. Riley, appellee, an accident insurance policy. It was solicited by Edward Adrian Teaf, an employee of Parker & Co. of Philadelphia, agents of the appellant. Riley, who did not pay the premium, $38.35 testified the arrangement with Teaf was, "I agreed to pay him when I got the money; when I could afford to pay it." He never did pay, and the insurer did not receive it until it was charged by the insurer against the account of Parker & Co. In his application for insurance Riley gave his address as "735 Wynwood Road, City of Overbrook, Philadelphia County, State of Pennsylvania." One of the provisions of the policy of insurance was: "The company may cancel this policy at any time by written notice delivered to the insured or mailed to his last address, as shown by the records of the company, together with cash or the Company's check for the unearned portion of the premiums actually paid by the Insured, and such cancellation shall be without prejudice to any claim originating prior thereto." A notice was sent by the company from its Philadelphia branch office at the Philadelphia post office, October 5, 1932, by registered mail, to the insured, Russell J. Riley, to the address given by him in his application, advising him that his policy was canceled effective at noon on October 11, 1932, and at the same time a duplicate copy of the notice was mailed to him, registered, care of Pontiac Sales Agency, Pimlico Track, Baltimore, Md.; Parker & Co. having advised the insurer that he might be found there. The Overbrook letter, according to the cancellation stamps, was received at West Park Station, Philadelphia, October 6, 1932, and returned by that station to the Philadelphia post office October 10, where it was held until October 18 unclaimed and returned to the sender. The letter addressed to Baltimore, arrived there October 6, and on the same day was sent to Arlington Station, where it was held unclaimed until October 14, when it was returned to and received at the Philadelphia post office and returned to the sender. On the envelope was a notation, "Track closed." The insurer did not inclose with either notice the cash or its check for the unearned portion of the premium, but by letter of November 10, 1932, advised Parker & Co. that there was due them a return premium of $12.39 on Riley's policy and to take credit for the item.

Riley was severely injured in an automobile collision in Baltimore on December 11, 1932, was taken to a hospital, where he remained until January 22, 1933, and then went to his home, where he remained for seven weeks. He went back to work on July 10, 1933, as a part-time automobile salesman, his physician advising him that he should not work steadily and not to do any driving. July 19, 1933, Riley wrote the insurer at New York that on December 13, 1932, he had suffered an accident which "totally disabled" him, and requested it to send him forms for filing proofs of loss. A "Preliminary Report of Accident or Illness" was sent which he made and returned to New York. There was no response to this report by the insurer, and on August 3, 1933, the insured's attorney wrote the insurer at its Baltimore office that nothing had been heard from the company since the report was mailed, and on the 10th he was written to by the company's examiner at Baltimore that "the above policy having been cancelled the Fidelity and Casualty Company carry no insurance on the above named Russell J. Riley." On August 23, 1933. suit was brought by Riley on the policy, resulting in a judgment in favor of the plaintiff (appellee), from which the casualty company appealed.

Two questions were presented and argued: (1) The sufficiency or effectiveness of the notice of cancellation, or whether there was a notice under the terms of the policy; (2) was notice given as soon as was reasonably possible for him to do so after the accident?

1. Was the notice of cancellation which the insurer undertook to give the insured within the requirements of the condition of the policy already quoted? The insurer had the option, under the policy, to cancel by "written notice delivered to the insured or mailed to his last address as shown by the records of the company." All that was required of the company was to give the notice in either of the ways so plainly prescribed by the policy. The notice in this instance was sent by the insurer, postage prepaid, to the last record address of the insured, No. 735 Wynwood road, Overbrook, Pa., by what is known in the postal regulations as an "unrestricted" registered letter. Such a letter, under section 1323, may be delivered (a) to the addressee; (b) to a person authorized by the addressee to receive it; (c) to such person, other than the addressee as the sender, after mailing, directs in a written order verified by the mailing postmaster; (d) to any responsible person to whom the addressee's ordinary mail is customarily delivered.

Registered mail is delivered by the regular carrier, and, if there is no one at the place addressed to receive it and receipt for it, a notice is left in the mail receptacle advising the addressee that the letter is being held for him, and, if unclaimed by the time noted on the envelope, if there be such time, otherwise ten days, it is returned to the sender. There was no evidence as to what was done about the delivery of the letter in this case, but, in the absence of evidence to the contrary, the presumption is that the postal officials and employees did what the law required of them. Meese and Rullman v. Goodman (Md.) 176 A. 621; Union Trust Co. v. State, 116 Md. 368, 372, 81 A. 873.

The rights of the respective parties under the insurance contract were clearly stated in Stiegler v. Eureka Life Ins Co., 146 Md. 629, 642, 127 A. 397, 402, a case wherein the insurer undertook to rescind the contract, no cancellation clause appearing in the policy, on the ground that a fraud had been perpetrated in the application for insurance, this court there saying: "The policy of insurance in this case contained no clause permitting cancellation by either the insurer or the assured. It is important to bear this fact in mind, because a right conferred by the policy to cancel is exercisable at the option of the party, with or without a reason, while the right of rescission is implied and usable only when there exists some legally sufficient cause, as, for example, fraud, deceit, or misrepresentation. It is, therefore, a corollary that the method of communicating a rescission is according to the practice at common law, as it is here neither regulated by the terms of the policy or by statute." As to the manner by which notice may be given, it is said (146 Md. page 647, 127 A. 397, 404): "If it be proved that a letter which was sufficiently prepaid in stamps was correctly addressed and then mailed, this is evidence to establish that the letter was duly delivered to the person addressed." In that case the letter was imperfectly or incorrectly addressed, and it was necessary to show whether the letter so addressed reached the insured within the year after which the policy became incontestible from any cause. The policy in this case did not say whether notice should be sent by ordinary or registered mail. If it had been sent by ordinary mail properly addressed to the "last address" of the assured appearing "On the records of the Company," with cash or the company's check for the unearned portion of the premium "actually paid" by the insured, the requirements of the condition for cancellation would have been met; the presumption being that in the due course of the mail service it was delivered at the place addressed, in this case properly, the Overbrook address. Stiegler v. Eureka Life Ins. Co., supra; Liverpool & London & Globe Ins. Co. v. Harding (C. C. A.) 201 F. 515, 517; Kamille v. Home Fire & Marine Fire Ins. Co., 129 Misc. 536, 221 N.Y.S. 38; Wolonter v. U.S. Casualty Co., 126 Va. 156, 101 S.E. 58, 61; In re Leterman, Becher & Co. (C. C. A.) 260 F. 543; 46 C.J. 569. In the case of American Fire Ins. Co. v. Brooks, 83 Md. 22, 34, 34 A. 373, 376, where the provision for cancellation did not say how the notice should be given, it was held that actual notice was necessary; this court there saying of the cancellation clause in the policy there considered: "These are...