Western Casualty & Surety Company v. Lund

• Decision Date: 29 June 1955
• Docket Number: Civ. No. 6372.
• Citation: 132 F. Supp. 867
• Parties: The WESTERN CASUALTY & SURETY COMPANY, a corporation, Plaintiff, v. Billy Fred LUND, Halliburton Oil Well Cementing Company, and Donald Herbert Sprague, and The Standard Insurance Company, Defendants.
• Court: U.S. District Court — Western District of Oklahoma

132 F. Supp. 867

The WESTERN CASUALTY & SURETY COMPANY, a corporation, Plaintiff, v. Billy Fred LUND, Halliburton Oil Well Cementing Company, and Donald Herbert Sprague, and The Standard Insurance Company, Defendants.

Civ. No. 6372.

United States District Court W. D. Oklahoma.

June 29, 1955.

Looney, Watts, Ross, Looney & Nichols, Oklahoma City, Okl., for plaintiff.

Logan, Godlove & Cummins, Lawton, Okl., Pierce, Mock & Duncan, Oklahoma City, Okl., and Rucker, Tabor & Cox, Tulsa, Okl., for defendants.

WALLACE, District Judge.

The plaintiff, Western Casualty & Surety Company, a Kansas corporation (herein referred to as Western) instituted this declaratory judgment action¹ to determine whether it is under any legal liability to defend a state court damage action filed by defendant Lund against defendants Sprague and Halliburton Oil Well Cementing Company (herein referred to as Halliburton) arising out of an automobile collision between Lund and Sprague while Sprague was employed by Halliburton. The Standard Insurance Company of Tulsa, Oklahoma,² (herein referred to as Standard) has also been brought in as a party defendant in order to learn whether Standard has any policy liability in connection with the instant accident.

The introduced evidence indicates that on January 17, 1954, defendant Sprague purchased a 1948 DeSoto in Duncan, Oklahoma, financing the purchase through the Duncan Finance Company. L. A. Edwards, the owner of Duncan Finance and an authorized policy writing agent of Standard, wrote a Standard policy insuring Sprague against physical damage to his car and against public liability and property damage within limits of $5,000-$10,000-$5,000. On about February 16, 1954, Sprague, who was then working for Halliburton, requested Edwards to increase the public liability limits to $50,000-$100,000; this, Edwards agreed to do, furnishing Sprague with a letter to be given to Sprague's employer, Halliburton, showing that higher limits had been obtained. Later the same day, Edwards, upon realizing Sprague was under 25 years of age, called R. K. Arnold, a policy writing agent of plaintiff Western and procured for Sprague public liability coverage of $50,000-$100,000. Edwards then wrote Sprague that Standard was immediately cancelling its policy for $50,000-$100,000, but mentioned that Arnold was writing "a liability policy for the same limits".³ This same day or the day thereafter, Sprague traded the DeSoto for a 1941 Ford; and, on about February 17th or the 18th Sprague left for New Mexico in the Ford on business for Halliburton. Several days thereafter when Western's agent Arnold, mailed Western's liability policy to Edwards, Edwards promptly returned the policy to Arnold stating that no payment of premium had been made, that the DeSoto had been repossessed and that there was no further need for the policy.⁴ As a consequence, Arnold ran through a "flat" cancellation of the Western policy. While on the way to New Mexico, Sprague experienced mechanical trouble and traded the Ford for a 1949 Oldsmobile. Upon returning to Oklahoma and while driving the Oldsmobile, on March 8, 1954, Sprague was involved in the collision with defendant Lund.

The Court has concluded that at the time of the instant collision on March 8, 1954, the Western policy was in effect; and, the Standard policy was not in effect, but previous to such time had been validly cancelled.

On about February 16th, Sprague, in compliance with his employer's requirement, sought increased public liability protection. Edwards, an authorized agent of Standard, increased the public liability provision of Standard's policy to $50,000-$100,000. This same day Edwards wrote Sprague that Standard was cancelling its public liability policy but indicated that other public liability insurance had been obtained for Sprague from Arnold. Although Edwards could not immediately cancel the Standard policy as was attempted in the letter,⁵ the notification did serve to cancel said policy provision 10 days after the giving of such notice.⁶

Beyond question, Edwards was Sprague's agent to acquire the public liability policy from Western. However, this agency did not vest Edwards with authority to cancel such policy without Sprague's knowledge or consent.⁷ Edwards, who no longer held a mortgage on Sprague's car and who apparently had no further financial interest in Sprague's affairs, told Western the policy was no longer needed. At such point it was incumbent upon Western to give the requisite written notice of cancellation or to check with the insured, or one clearly authorized to approve immediate cancellation, before cancelling flat. It is obvious Sprague had not given Edwards authority to cancel the Western policy, but contrarily, had already left for New Mexico with full assurance from Edwards' letter that although Standard was cancelling, Arnold had written a policy in its place.

It is immaterial that Sprague, at the time of the collision, had not given Western notice of the change of automobiles inasmuch as under the express wording of the "newly acquired automobile" provision of the policy he had 30 days so to do; and, the accident in question occurred well within the 30-day period.⁸

It is likewise immaterial that Sprague failed to give Western immediate notice of the accident....