Bassett v. Federal Kemper Ins. Co.

• Decision Date: 01 May 1978
• Docket Number: No. KCD,KCD
• Citation: Bassett v. Federal Kemper Ins. Co., 565 S.W.2d 823 (Mo. App. 1978)
• Parties: Cecil C. BASSETT and Doris J. Bassett, Respondents, v. FEDERAL KEMPER INSURANCE COMPANY, Appellant. 29079.
• Court: Missouri Court of Appeals

Page 823

565 S.W.2d 823

Cecil C. BASSETT and Doris J. Bassett, Respondents, v. FEDERAL KEMPER INSURANCE COMPANY, Appellant.

No. KCD 29079.

Missouri Court of Appeals,Kansas City District.

May 1, 1978.

Wiley W. Morrison, Raytown, for appellant; Morrison, Baker & Odneal, Raytown, of counsel.

Ronald E. Taylor, St. Joseph, for respondents.

Before WELBORN, Special Judge, Presiding, HIGGINS, Special Judge and PRITCHARD, J.

PRITCHARD, Judge.

One dispositive issue is whether appellant is liable for respondents' loss for collision loss to their van under a policy of insurance where the policy was cancelled by the appellant company retroactively prior to the collision by notice given by a premium finance company acting under insureds' power of attorney for nonpayment of premium, which notice was given to appellant after the collision occurred. Another question is whether appellant is liable for damages for vexatious delay in the payment of the loss under § 375.420, RSMo 1969 (Amended, Laws 1975, p. 369, H.B.No. 93, § 1).

Appellant sold the policy through its agent, Don Ireland, in December, 1974. The Bassetts arranged with Ireland to pay the premium on a monthly basis, and it was financed by appellant through National Agents Service Company (NASCO), all of the communications being through Ireland to NASCO. The van was added to the policy in January, 1975, and on July 27, 1975, Cecil Bassett's brother was added to the coverage, but the bill for October, 1975, was for a six month premium, $103.62, rather than for a little over one month, the brother's coverage being deleted September 1, 1975. On advice of Ireland, respondents paid $26.14. The bill for November, 1975, was again $104.40, including a $2.35 finance charge, and after consulting Ireland, respondents, according to exhibits, including credits for removing the brother from coverage, paid these additional premiums: 11-16-75, $46.27; 12-1-75, $30.00; 12-16-75, $26.87; 12-30-75, $26.50. A computation of total charge, total payments and total credits, shows that there is still owed to respondents $26.87 by appellant.

On November 25, 1975, the collision occurred and Ireland was notified that night and he told Mrs. Bassett to get the medical bills and three estimates, which she did, thereafter taking them to Ireland. In early December, 1975, Walter Jones, the adjuster, directed respondents to take the van to Detweiler's Auto Service and Body Shop, which they did. On January 12, 1976, Mrs. Bassett inquired of Ireland why they had not received a check for the repair of the van, and while she was in his office, he called appellant, and then told her a check had already been mailed to the body shop. The following week respondents received a letter dated January 13, 1976, from appellant notifying them that their insurance had been cancelled as of November 4, 1975 (which date was prior to the time of the collision, the notification being made after that time.). On January 17 or 18, 1976, Mrs. Bassett contacted Ireland, who again called appellant, and informed her that the check was on the way, but that their insurance was cancelled. The check was received by the body shop before respondents were allowed to take possession of the van, which was delivered to them about the first of February. Mrs. Bassett saw the check at the body shop, but appellant refused to accept it on presentment.

Shortly after respondents got the van from Detweiler, the paint began peeling off and Mr. Bassett took it back to the body shop. When he returned with the van, the owner of the shop then blocked it with another car and refused to let him remove it, demanding payment for the previous repairs. At the time, because Mr. Bassett had no other vehicle, he could not get to work, and as a result he lost $56.00 in wages. He also incurred $11.00 for costs in filing a replevin action the following week to recover the van. The owner of the body shop required respondents to pay for the repairs because appellant did not pay him, and they had to borrow the money to pay him, even though they had endorsed the check to him.

At the time NASCO financed the premiums for respondents, they gave it a power of attorney to request cancellation (of appellant) when payments were not made. Appellant's underwriting department supervisor, Dwaine Eugene Cook, testified that his department handled cancellations, and had received a copy of the finance agreement between respondents and NASCO. He also received a request to remove Mr. Bassett's brother from coverage, which was done and which resulted in a credit of $75.67, which was given to NASCO on November 20, 1975. NASCO, however, applied this credit to respondents November 16, 1975, billing (which was erroneously billed by NASCO as $104.40 instead of the regular monthly payment of around $26.14). On December 18, 1975, appellant received a letter from NASCO requesting cancellation as of November 4, 1975, which appellant did, treating it as an insureds' cancellation under respondents' power of attorney given to NASCO.

It appears from the evidence that respondents were never actually in default in the payment of proper premiums through NASCO, and certainly it would seem that appellant would be charged with knowledge of what a proper audit of its own records with respect to respondents' account would reveal. But any issue as to those matters is not here presented by respondents to justify the trial court's judgment.

Appellant's first point contention is that there is no evidence from which the trial court could conclude that the policy was not effectively cancelled prior to loss because appellant had a right or duty to accede to the request by NASCO, respondents' attorney in fact, to cancel the policy. As first stated, the real issue is: Can an insurance company cancel a policy retroactively and make cancellation effective prior to the date that a loss occurred and thus avoid liability?

The date of the loss, November 25, 1975, was known to appellant as it sent out its adjuster in early December, 1975, who authorized the repairs at Detweiler's Body Shop. Then, on December 18, 1975, it received from NASCO the request to cancel the policy under the respondents' power of attorney as of November 4, 1975. The real issue posed above has its answer in the following analogous cases, and, first, these excerpts bearing on the issue from Appleman, Insurance Law and Practice: § 4226, p. 660, "A request for cancellation does not take effect until received by the insurer, or by his agent authorized to...