Chisholm v. Commonwealth Mortg. Co., Inc.

• Decision Date: 22 September 1994
• Docket Number: No. 91-P-623,91-P-623
• Citation: 37 Mass.App.Ct. 925,639 N.E.2d 733
• Court: Appeals Court of Massachusetts
• Parties: Marguerita CHISHOLM & another 1 v. COMMONWEALTH MORTGAGE COMPANY, INC., & another. 2

Page 733

639 N.E.2d 733

37 Mass.App.Ct. 925

Marguerita CHISHOLM & another ¹ v. COMMONWEALTH MORTGAGE COMPANY, INC., & another. ²

No. 91-P-623.

Appeals Court of Massachusetts.

Sept. 22, 1994.

Further Appellate Review Denied

Oct. 31, 1994.

Edward Rabinovitz, Boston (Robert A. Romero, Jr., with him), for Commonwealth Mortg. Co., Inc.

William T. Walsh, Springfield, for Massachusetts Property Ins. Underwriting Ass'n.

RESCRIPT.

When a fire on March 5, 1987, damaged premises belonging to Marguerita and Caroline Chisholm at 808 Morton Street, in the Mattapan section of Boston, their fire insurance policy had expired because they had failed to renew it. The date of expiration was January 23, 1987. In proceedings in the Superior Court, Commonwealth Mortgage Company (Commonwealth), as mortgagee of the property, sought to recover damages against Massachusetts Property Insurance Underwriting Association (MPIUA) by reason of its failure to have notified Commonwealth that the insurance policy on 808 Morton Street had been allowed to lapse. A motion for summary judgment against Commonwealth was allowed and judgment for MPIUA was entered against Commonwealth accordingly. From that judgment Commonwealth has appealed. ³

On the basis of the summary judgment papers (responses to interrogatories, depositions, and affidavits), the material facts are these. On November 24, 1986, sixty days before the expiration date of the policy issued by MPIUA on 808 Morton Street, it sent to the Chisholms an application for renewal of the policy. The Chisholms were escrowing monthly premium payments for property insurance ⁴ with Commonwealth. As a result of a physical inspection of the property, MPIUA on December 3, 1986, mailed to the Chisholms a "Declination to Continue Coverage." On affidavit, that document was neither a cancellation of insurance coverage nor a notice of refusal to renew, but, rather a notice that there are substandard conditions on the property to be corrected. Again on affidavit, MPIUA at no time had decided not to renew the insurance policy. Those assertions on affidavit by MPIUA are not contravened and the document, i.e., the "Declination to Continue Coverage," does not appear in the record. After the fire on March 5, 1987, the Chisholms submitted a renewal application for insurance (with premium payment) to MPIUA at its office. A policy issued effective March 12, 1987, but that, of course, did the Chisholms and Commonwealth no good so far as the fire loss on March 5 was concerned. On the same day that the Chisholms hustled a renewal application to MPIUA, a representative of the mortgagee, Commonwealth, telephoned the claims department of MPIUA to give notice of the loss on March 5. ⁵

Commonwealth asserts a right to have been notified by the insurer that coverage had not been renewed. That claim is not based on a statute; ⁶ rather, it is based on language in the policy:

"If the policy is cancelled or not renewed by us, the mortgagee will be notified at least 10 days before the date cancellation or nonrenewal takes effect." ⁷

Commonwealth asks us to read the words "by us" as surplusage, and that the insurer is obliged to inform the mortgagee of nonrenewal, whether resulting from the initiative of the insurer or from the failure of the insured to apply for renewal and pay the renewal premium. Yet the insurer can only give the required ten-day notice if it is the active party because only then can it know the date when "cancellation or nonrenewal takes effect." The insurer cannot know until the expiration date whether the policy holder will come marching in at the eleventh hour with a completed renewal application and premium payment to renew the insurance policy. As we read no ambiguity in the policy, there is no occasion to invoke, as Commonwealth would have us do, the doctrine that ambiguities in an insurance policy are to be resolved against the author of the policy. See Pinheiro v. Medical...