Shirley v. Aetna Cas. & Sur. Co.

• Decision Date: 04 January 1972
• Docket Number: No. 11718,11718
• Citation: 256 So.2d 462
• Parties: Charles Ray SHIRLEY et al., Plaintifs-Appellants, v. AETNA CASUALTY & SURETY COMPANY et al., Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

Page 462

256 So.2d 462

Charles Ray SHIRLEY et al., Plaintifs-Appellants, v. AETNA CASUALTY & SURETY COMPANY et al., Defendants-Appellees.

No. 11718.

Court of Appeal of Louisiana, Second Circuit.

Jan. 4, 1972.

Bodenheimer, Jones, Klotz & Simmons by G. M. Bodenheimer, Jr., Shreveport, for plaintiffs-appellants.

Lunn, Irion, Switzer, Johnson & Salley by Charles W. Salley, Shreveport, for defendants-appellees.

Before AYRES, HEARD and HALL, JJ.

HALL, Judge.

This suit was instituted by Charles Ray Shirley and Zurich Insurance Company against David B. Bain, Jr. and Aetna Casualty & Surety Company. The action arose ou of a one-car accident which occurred on February 15, 1970, while Shirley was riding as a guest pasenger in an automobile owned and operated by Bain. Bain was an unisured motorist on the date of the accident.

Both Zurich and Aetna had issued policies of liability insurance to Shirley which contained uninsured motorist coverage with limits of $5,000. Zurich paid Shirley the limits of its uninsured motorist coverage, $5,000, and by this action seeks judgment against Aetna for one-half of that amount. Zurich further prayed for judgment against the driver, Bain, for the sum of $5,000 paid to Shirley under its uninsured motorist clause, or alternatively, in the amount of $2,500 in the event the court granted Zurich judgment against Aetna for $2,500. Shirley sued Bain for $35,634.15 for his injuries . He further prayed, alternatively, and in the event Zurich's claims against Aetna were rejected, that here by judgment in his favor against Aetna for the use and benefit of Zurich in the full sum of $2,500, he having executed a written subrogation in favor of Zurich of all claims he may have had against Aetna.

Aetna denied liability to Zurich or Shirley contending (1) its policy issued to Shirley was canceled prior to the accident and (2) in the alternative, if the policy was found to be in effect, its liability was extinguished by the $5,000 payment to Shirley from Zurich. In he further alternative, Aetna made a third party demand against Bain for the entire amount of any judgment which might be rendered in favor of plaintiffs against Aetna.

Bain did not answer the original petition or third party demand and judgment was rendered against him by default in favor of Shirley and Zurich. He negligence of Bain is not an issue on this appeal.

There was judgment below in favor of Zurich against Bain in the amount of $5,000 and in favor of Shirley against Bain in the amount of $10,000. The demands of Zurich against Aetna were rejected. The judgment contained no disposition of Aetna's alternative third party demand against Bain. Zurich and Shirley have appealed.

There are only two issues presented for determination on appeal:

(1) Was Shirley's liability policy with Aetna in effect on the date of the accident; and, if so,

(2) What is the extent of Aetna's liability to Shirley and/or Zurich under the uninsured motorist coverage provided in its policy?

On the first issue, he evidence establishes that prior to the date of this accident, Charles Shirley had obtained liability insurance with Aetna through the Edwin Jones Insurance Agency in Shreveport. Some time shortly preceding February 12, 1970, Shirley attempted to obtain additional insurance coverage from Aetna which they could not supply. He subsequently procured the desired coverage from Zurich, effective February 12, 1970.

After he obtained the insurance from Zurich, Shirley instructed his wife to write the Jones agency and request that they cancel his policy with Aetna. Mrs. Shirley wrote the letter. The letter was undated and did not specify the date the policy was to be canceled. On February 16, Mrs. Shirley received a call from the agency, at which time she was advised that the policy could not be canceled until a release was signed because the policy had not been sent in to the agency. On Tuesday, February 17, 1970, Mrs. Shirley received by mail the release, which she signed and returned to the agency.

Aetna argues that the policy was canceled as of February 12, 1970, and in support of this argument relies on a 'Notice of Cancellation' filed in the record. This notice was prepared on March 10, 1970, after Aetna was advised of the occurrence of the accident on February 15, 1970, and stated that the policy herein involved was canceled as of February 12, 1970. However, the letter which Mrs. Shirley wrote to the agency requesting cancellation contains a notation made by the agency on the bottom of the letter stating that the policy was canceled as of February 16. In addition to this, Mr. Henry C. Mullin, an employee of the agency, testified that Shirley's policy with Aetna was not canceled until after the agency received the release signed by Mrs. Shirley and that, therefore, it was his opinion that Aetna's liability policy was still in effect on February 15, the date of the accident.

R.S. 22:637 provides that an insurance policy may be canceled in the following manner:

'A. Cancellation by the insured of any policy which by its terms is cancellable at the insured's option or of any binder based on such policy may be effected by written notice thereof to the insurer and surrender of the policy or binder for cancellation prior to or on the effective date of such cancellation. In event the policy or binder has been lost or destroyed and cannot be so surrendered, the insurer may in lieu of such surrender accept and in good faith rely upon the insured's written statement setting forth the fact of such loss or destruction. * * *'

The Aetna policy itself provides for cancellation in the following manner:

'This policy may be cancelled by the Insured named in item 1 of the declarations by mailing to the Company written notice stating when thereafter the cancellation shall be effective. This policy may be cancelled by the Company by mailing to the Insured named in item 1 of he declarations at the address shown in this policy written notice stating when not less than ten days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice. The effective date of cancellation stated in the notice shall become the end of the policy period. Delivery of such written notice either by such Insured or by the Company shall be equivalent to mailing.'

On the date of the accident, February 15, 1970, the requirements of neither method of cancellation had been complied with. The policy had not been surrendered as required by the statute, and the letter from Mrs. Shirley to the agency did not state the effective date of cancellation as required by the terms of the policy. Aetna's agent did not consider the policy canceled on February 15 and on February 16 required Shirley to execute a release before cancellation could be perfected.

We hold that the Aetna policy was in full force and effect on the date of the...