Ampy v. Metropolitan Cas. Ins. Co. of New York

• Decision Date: 01 December 1958
• Docket Number: No. 4836,4836
• Court: Virginia Supreme Court
• Parties: THOMAS E. AMPY v. THE METROPOLITAN CASUALTY INSURANCE COMPANY OF NEW YORK. Record

Page 839

105 S.E.2d 839

200 Va. 396

THOMAS E. AMPY v. THE METROPOLITAN CASUALTY INSURANCE COMPANY OF NEW YORK.

Record No. 4836.

Supreme Court of Appeals of Virginia

December 1, 1958.

Charles Edgar Gilliam (T. Taylor Cralle; Richard E. Lewis; J. Thompson Wyatt, on brief), for the plaintiff in error.

Edward R. Parker (Richard L. Williams; Bremner, Parker, Neal, Harris & Williams, on brief), for the defendant in error.

JUDGE: I'ANSON

I'ANSON, J., delivered the opinion of the court.

Thomas E. Ampy recovered a judgment against William H. Tomlin in the amount of $500.00 for property damages to his automobile which was in a collision with an automobile owned by Ethel C. Tomlin and operated with her permission by her husband, William H. Tomlin. Execution was issued on the judgment and returned no effects.

This action was instituted by Ampy against Metropolitan Casualty Insurance Company of New York to recover the amount of the judgment upon its contract of insurance ¹ covering the Tomlin automobile. The case was tried without a jury and judgment was entered for the defendant. To this judgment we granted a writ of error.

The parties will be referred to as plaintiff and defendant in accordance with their respective positions in the court below, except the defendant will often be referred to as the insurer. Mrs. Tomlin will often be referred to as the insured.

The plaintiff contends in his assignment of error that the defendant, or its general agent, had no right to cancel the insurance policy at the time and in the manner it was canceled for failure to pay a balance due on the premium.

Thus, the sole question involved is: Did the defendant's general agent effectively cancel the automobile liability insurance policy issued to Ethel C. Tomlin for non-payment of premiums before the date of the damage to plaintiff's automobile? If the policy was effectively canceled the plaintiff had no rights under the insurance contract, and the judgment of the circuit court should be affirmed.

On July 23, 1955, the defendant, through its general agent, Frank E. Wiley, issued an automobile liability insurance policy covering an automobile owned by Ethel C. Tomlin. Fourteen dollars and fifty-two cents was paid on account of the premium, and the balance of $30.00 was to be paid in installments. Ten dollars was paid on account on August 5. No other payments were made, although statements of balance due were sent insured. One statement was dated November 28, three days after date of mailing the cancellation notice. The evidence is in conflict as to when the balance would have to be paid under the installment arrangement. The general agent testified he told the insured that the entire premium would have to be paid within 45 days from the issuance of the policy. Insured claimed the general agent had agreed to let her pay the balance when she received her bonus check around Christmas time. At the expiration of 45 days the general agent sent his conditional monthly remittance of premiums to the defendant.

On November 25 the general agent's son, an associate in his office, mailed to the insured at the address shown on the policy a cancellation notice, to become effective December 6, for non-payment of premium. At the time of the mailing of the notice he obtained from the post office department a written receipt showing the name and address of the insured, and retained a duplicate copy of the notice upon which was endorsed a certificate of mailing. The insured claimed she never received the notice. The general agent's son's explanation for mailing the statement dated November 28 was that the cancellation notice had not been promptly entered upon the account records, and it was routine for the bookkeeper to send statements on all accounts showing a balance at the end of the month.

The Tomlin automobile was involved in an accident on December 17. On December 19 the insured called the general agent's office 'about getting her insurance straightened out,' but the general agent was not in the office. Later on the same day the general agent sent a letter to Mrs. Tomlin advising her to call or stop by his office 'to straighten her insurance out.' Mrs. Tomlin stated she called at the office on December 23 and that the general agent was about to accept the balance due on her premium when she informed him of the accident on the 17th. The general agent testified that he told her the insurance had been cancelled and gave her the agency check covering the unearned premium in the amount of $7.91, which she endorsed and cashed in his office.

The policy issued to the insured contained the following cancellation clause:

'24. Cancellation. All coverages.

'This policy may be cancelled by the Named Insured 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 Named Insured at the address shown on 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 and hour of cancellation stated in the notice shall become the end of the policy period. Delivery of such written notice either by the Named Insured or by the Company shall be equivalent to mailing.

'If the Named Insured cancels, earned premium shall be computed in accordance with the customary short rate table and procedure. If the Company cancels, earned premium shall be computed prorata. Premium adjustment may be made either at the time cancellation is effected or as soon as practicable after cancellation becomes effective, but payment or tender of unearned premium is not a condition of cancellation.'

The right of the plaintiff to maintain this action against the defendant rises no higher than the right of the insured against the defendant. The plaintiff stands in the same shoes as the insured, and the same defenses that would be available to the defendant in an action brought by the insured are available to the defendant in this action. Indemnity Ins. Co. of North America v. Hettie I. Davis' Adm'r, 150 Va. 778, 787, 788, 143 S.E. 328, 330; Storm v. Nationwide Ins. Co., supra, (199 Va. at p. 135).

Parties to insurance contracts are bound by the same rules of construction which apply to other contracts, subject, of course, only to provisions of law affecting insurance contracts. Darden v. North American Benefit Ass'n, 170 Va. 479, 482, 197 S.E. 413. In the absence of latent ambiguity, insurance contracts are to be construed according to their terms and provisions. Connecticut Fire Ins. Co. v. Roberts Lumber Co., 119 Va. 479, 89 S.E. 945, Ann. Cas. 1918 E. 1045; Home Ins. Co. v. Gwathmey, 82 Va. 923, 1 S.E. 209.

The cancellation clause in the policy before us is very similar to the one in State Farm Ins. Co. v. Pederson, 185 Va. 941, 946, 948, 41 S.E.2d 64, 65, 66, in which this Court said: 'Under such provisions either party has a right, by complying with the terms of the policy to terminate the contract. The consent of the other party is not necessary.'

Section 38.1-381.1, Code of 1950, provides the manner of cancelling motor vehicle insurance policies, and reads as follows:

'Notices of cancellation of motor vehicle insurance policies. -- No written notice of cancellation sent by mail by an insurer to an insured in accordance with the provisions of a motor vehicle insurance policy shall be effective unless it is sent by registered mail or unless at the time of the mailing of said notice, the insurer has obtained from the Post Office Department a written receipt showing the name and address of the insured and the insurer has retained a duplicate copy of said notice upon which is endorsed a certificate by the insurer that the duplicate copy is a copy of the notice which was sent to the insured in the mail for which said receipt was obtained.

'In the event that any such notice is mailed by other than registered mail or without obtaining the receipt and retaining the duplicate copy of said notice endorsed as specified above, then the burden of proof that said notice was actually delivered to the insured shall be upon the insurer. (1954, c. 263)'

This code provision became a part of the insurance policy contract by force of its language and either party seeking to cancel the policy has to comply with it. Maxey v. American Casualty Co., supra; and Storm v. Nationwide Ins. Co., supra.

There is a conflict of authority on the question of whether a notice of cancellation sent by the insurer by mail must be received before it can become effective. This conflict has arisen out of a variation in the facts and the provisions of the policy or statutes dealing with the giving of notice of cancellation. 29 Am. Jur. § 285. See Anno. 123 A.L.R. 1008; 26 Va.L.Rev. 224.

Under the rule laid down by this Court in Wolonter v. United States Casualty Co., 126 Va. 156, 166, 101 S.E. 58, 61 it is not necessary to prove actual receipt of the cancellation notice. If the notice is mailed in accordance with the terms of the policy and the provisions of the statute the notice of cancellation is effective. See also Wright v. Grain Dealers Nat. Mut. Fire Ins. Co., 4 Cir., 186 F.2d 956, 958, 960; Boyle v. Inter Ins. Exchange of Chicago Motor Club, 335 Ill.App. 386, 82 N.E.2d 179; Cherokee Ins. Co. v. Hardin, (Tenn.), 302 S.W.2d 817 (1957); Anno. 123 A.L.R. 1013, II b.

The notice of cancellation was mailed in accordance with the terms of the policy and the statute, and it was not necessary that the defendant prove that the insured received it. It was absolute and unconditional, and effectively terminated the policy.

The failure of the general agent to return unearned premium to the insured at the time of the cancellation has no effect on its cancellation. Notice of cancellation, when given in accordance with the terms of the policy and the statute, terminates...