Anzalone v. State Farm Mut. Ins. Co.

• Decision Date: 14 March 1983
• Citation: 92 A.D.2d 238,459 N.Y.S.2d 850
• Parties: Betty ANZALONE et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL INSURANCE COMPANY, Appellant; Insurance Company of North America, Respondent, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 850

459 N.Y.S.2d 850

92 A.D.2d 238

Betty ANZALONE et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL INSURANCE COMPANY, Appellant;

Insurance Company of North America, Respondent, et al., Defendants.

Supreme Court, Appellate Division,

Second Department.

March 14, 1983.

Nigro, D'Anna & Utrecht, P.C., Forest Hills (Michael A. Haskel, Forest Hills, of counsel), for plaintiffs-appellants.

Diamond, Rutman & Costello, New York City (Betram Herman, East Norwich, of counsel), for appellant.

Gerard A. Gilbride, Jr., Woodbury (Diane K. Farrell, Woodbury, of counsel), for respondent.

Before LAZER, J.P., and GIBBONS, NIEHOFF and BOYERS, JJ.

PER CURIAM.

In this action, plaintiffs, Peter and Betty Anzalone, seek a declaration that the automobile liability policy issued to defendant Ellen Steed by defendant Insurance Company of North America (INA), was in effect on July 18, 1979 when Steed's car collided with that of plaintiffs. INA defends with the claim that Steed's policy was canceled before the accident because she defaulted in her payment of premium installments to the Broadway Bank & Trust Company (the Bank) which had financed the premium. Special Term conducted an evidentiary hearing and decided that the Bank had indeed canceled the policy prior to the accident. Plaintiffs and their own insurer, defendant State Farm Mutual Insurance Company, now appeal, claiming INA failed to prove (1) that Steed signed the premium finance agreement which contained a power of attorney authorizing the Bank to cancel the policy, (2) that the cancellation notice was mailed to Steed, and (3) that Steed defaulted in the payment of premium installments. The appellants also allege that the cancellation was ineffective because Steed was overcharged by the Bank and because it did not return the unearned premiums.

To avoid liability under its policy, INA had the burden of proving cancellation in strict compliance with section 576 of the Banking Law (see Savino v. Merchants Mut. Ins. Co., 44 N.Y.2d 625, 407 N.Y.S.2d 468, 378 N.E.2d 1038; Viuker v. Allstate Ins. Co., 70 A.D.2d 295, 420 N.Y.S.2d 926). A premium finance company has the right to cancel the policy it has financed but only if the right is contained in the finance agreement (Matter of Sweers v. Malloy, 28 A.D.2d 955, 281 N.Y.S.2d 693). On this record--and in the absence of any denial from Steed or any contrary evidence (see Welde v. Wolfson, 32 A.D.2d 973, 302 N.Y.S.2d 906; Fisch, New York Evidence, § 103)--the authenticity of Steed's signature on the finance agreement may be reasonably inferred from the fact that she paid at least five premium installments (see People v. Manganaro, 218 N.Y. 9, 112 N.E. 1069; People v. Dunbar Contracting Co., 215 N.Y. 416, 109 N.E. 554; People v. Winley, 105 Misc.2d 474, 432 N.Y.S.2d 429; 7 Wigmore, Evidence [Chadbourn rev.], § 2131; Richardson, Evidence [10th ed, Prince], § 636).

Proof that the cancellation notice was mailed to Steed was insufficient, however. Bernadette Sudenko, an officer of the Bank in charge of the financing of insurance premiums, testified that the Bank's cancellation notices are produced by computer and placed in envelopes by a clerk who later delivers groups of envelopes to the post office and returns with a mailing sheet stamped by the post office. A mailing sheet, apparently so stamped, and containing 19 names, including Steed's, was received in evidence. Sudenko's testimony demonstrated an office practice and policy followed by the Bank in the regular course of its business (see Nassau Ins. Co. v. Murray, 46 N.Y.2d 828, 414 N.Y.S.2d 117, 386 N.E.2d 1085). But the office practice "must be geared so as to ensure the likelihood that a notice of cancellation is always properly addressed and mailed" (Nassau Ins. Co. v. Murray, supra, p. 830, 414 N.Y.S.2d 117, 386 N.E.2d 1085). When reliance is placed on a mailing sheet, there must be testimony that an employee normally checks the names and addresses on the envelopes with those on the mailing sheet (Ackler v. Nationwide Mut. Ins. Co., 87 A.D.2d 730, 449 N.Y.S.2d 334; Manning v. Boston Old...