Allstate Ins. Co. v. Nationwide Ins. Co.

• Decision Date: 05 August 1986
• Docket Number: No. 8510SC1331,8510SC1331
• Citation: 82 N.C.App. 366,346 S.E.2d 310
• Parties: ALLSTATE INSURANCE COMPANY v. NATIONWIDE INSURANCE COMPANY, L.E. Boykin, Jr., Geraldine Boykin, Paul Martinez, Brian Savage, and Frank Ashburn, Administrator of the Estate of Stephanie Ashburn, Deceased.
• Court: North Carolina Court of Appeals

Page 310

346 S.E.2d 310

82 N.C.App. 366

ALLSTATE INSURANCE COMPANY v. NATIONWIDE INSURANCE COMPANY, L.E. Boykin, Jr., Geraldine

Boykin, Paul Martinez, Brian Savage, and Frank

Ashburn, Administrator of the Estate of

Stephanie Ashburn, Deceased.

No. 8510SC1331.

Court of Appeals of North Carolina.

Aug. 5, 1986.

Boyce, Mitchell, Burns and Smith, P.A. by Robert E. Smith and Susan K. Burkhart, Raleigh, for plaintiff-appellee.

Moore, Ragsdale, Liggett, Ray & Foley, P.A. by Peter M. Foley, Raleigh, for defendant-appellant Brian Savage.

Hendrick, Zotian & Cocklereece by T. Paul Hendrick, Winston-Salem, for defendant-appellant Geraldine Boykin, individually and as guardian ad litem for defendant-appellant Paul Martinez, and defendant-appellant Frank Ashburn, Administrator of the Estate of Stephanie Ashburn, Deceased.

Blanchard, Tucker, Twiggs, Earls & Abrams by Donald R. Strickland, Raleigh, for defendant-appellant L.E. Boykin, Jr. PARKER, Judge.

All parties contend, and we agree, that the question of whether plaintiff complied with the contractual requirements for cancellation notice was one of law for the court to decide and should not have been submitted to the jury. See Riddick v. State Capital Ins. Co., 271 F.2d 641 (4th Cir.1959). All parties made motions for directed verdict and all were denied. Defendants assign as error the denial of their motions for directed verdict.

The relevant cancellation provision in the insurance policy reads as follows:

2. We may cancel the Liability and Uninsured Motorists Coverages by mailing to the named insured shown in the Declarations at the last known address:

a. at least 15 days notice if cancellation is for nonpayment of premium; ...

Under the facts of this case, the crucial term in the above provision is "last known address." The trial court was of the opinion that the phrase was ambiguous, and under our relevant case law, submitted the question to the jury for construction of an ambiguous term. See, e.g., Root v. Allstate Ins. Co., 272 N.C. 580, 158 S.E.2d 829 (1968). However, in our view, the term is unambiguous. The material facts of this case are not contested, and the issue should, therefore, have been determined by the court as a question of law. See Kent Corp. v. City of Winston-Salem, 272 N.C. 395, 158 S.E.2d 563 (1968).

The facts related to the cancellation of Boykin's auto insurance policy are undisputed. Boykin purchased his first insurance policy from Allstate in December 1979. On his application for insurance, Boykin gave his mother's address where he then resided and his work address. These addresses remained in the file kept on Boykin at Allstate's offices in Charlotte after plaintiff converted its records to computer in 1981. In March 1981, Boykin had moved from the address he had originally listed in his application for insurance. Allstate was notified of the change to 1310 Glendale Avenue, Durham, N.C., and issued an endorsement confirming the change of address. This address was the one entered in the computer.

Until 1981, Boykin paid the premiums on his policy annually, at the beginning of the year. In December 1981, he received notice that his next premium payment would be only for a six-month period. Boykin paid the premium amount stated in the letter, but testified he did not realize that it was for six months only.

In April 1982, Boykin moved again, but this time, he neglected to notify Allstate. Boykin testified this failure was due to his mistaken belief that he had paid his insurance for the full year and did not immediately need to notify Allstate of the change. Boykin also testified that he did not notify the post office of his change of address, and he did not pick up any mail that might have been delivered to the old address. His new telephone number was not listed in his name.

On 4 May 1982, Allstate mailed to Boykin's Glendale Avenue address the six-month renewal notice. Boykin never received this notice, and there is no indication in the record that it was returned to Allstate. Then, on 9 June, Allstate mailed its standard Cancellation Notice to Boykin at the same address. This notice was returned to Allstate, unopened. The only effort made by Allstate to locate Boykin was to check a city phone directory. No review was made of Boykin's original application on file in Allstate's Charlotte offices which would have revealed the two alternative addresses originally given.

The Cancellation Notice stated that the cancellation would be effective 27 June 1982. The fatal collision occurred less than a week later, on 3 July. Allstate denied coverage, asserting that its cancellation of the policy for nonpayment of premiums had been effective prior to the accident.

In order to effectively cancel the policy of insurance, the insurer must comply with the provisions of G.S. 20-310(f), as well as the contractual provisions relating to cancellation contained in the policy. See Perkins v. American Mut. Fire Ins. Co., 274 N.C. 134, 161 S.E.2d 536 (1968). Failure to comply with these provisions negates the cancellation, and the policy remains in effect. Id.; see also Levinson v. Travelers Indem. Co., 258 N.C. 672, 129 S.E.2d 297 (1963). The issue of compliance with the statutory requirements for cancellation is not before us on this appeal. Therefore, a discussion of those requirements is not necessary.

The policy of insurance required Allstate, in order to cancel the policy, to mail notice of the forthcoming cancellation to the insured's "last known address." The law is settled that strict compliance with the conditions for cancellation is necessary in order to effect a valid cancellation of liability insurance. See Perkins, supra; see generally 63 A.L.R.2d 570 (1959), and cases cited therein.

Under Boykin's former annual policy, notice was effective if mailed to "the address shown in this policy." When the policy was changed to a six-month policy, one change required notice to be mailed to the insured's "last known address." Appellant contends that this change is significant and requires more than mailing of notice to just the policy address. We disagree.

The jurisdictions are split as to what satisfies the requirement for mailing to effectively cancel the contract. 17 Couch on Insurance 2d § 67:174 (rev. ed. 1983). Some courts have held that when a cancellation notice is returned unopened to the insurer, and the insurer has knowledge of additional addresses for the insured, the...