Crisp v. State Farm Mut. Auto. Ins. Co., 99

• Decision Date: 28 February 1962
• Docket Number: No. 99,99
• Citation: 256 N.C. 408,124 S.E.2d 149
• Court: North Carolina Supreme Court
• Parties: Ernest G. CRISP v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

Page 149

124 S.E.2d 149

256 N.C. 408

Ernest G. CRISP v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 99

Supreme Court of North Carolina.

Feb. 28, 1962

Williams, Williams & Morris and James N. Golding, Asheville, for plaintiff, appellant.

Van Winkle, Walton, Buck & Wall, O. E. Starnes, Jr., and Roy W. Davis, Jr., Asheville, for defendant, appellee.

MOORE, Justice.

The judge instructed the jury as follows: '* * * (T)he court charges you * * * that if you believe all of the evidence in this case and find the facts to be as the evidence tends to show, that you would answer the issue NO.' The jury did answer the issue 'No.'

In the first place, the instruction is insufficient in form. When a peremptory instruction is permissible, the court must leave it to the jury to determine the credibility of the testimony. Reynolds v. Earley, 241 N.C. 521, 85 S.E.2d 904; City of Shelby v. Lackey, 236 N.C. 369, 72 S.E.2d 757. Where the peremptory instruction is favorable to the party having the burden of proof, it must be in such form as to clearly permit a verdict unfavorable to such party in the event the jury finds that the evidence is not of sufficient weight and credibility to carry the burden. Hunnicutt v. Shelby Mut. Insurance Co., 255 N.C. 515, 122 S.E.2d 74.

Furthermore, the instruction given, had it been in proper form, was inappropriate in this case.

On this record the pleadings raise two issues. These may be stated as follows: (1) Did defendant issue and deliver to Julius Creed Robinson an automobile liability insurance policy which insured a 1947 Chevrolet, owned by Julius Creed Robinson and involved in a collision in which plaintiff was damaged on December 4, 1959, as alleged in the complaint? (2) If so, was the insurance policy cancelled and terminated prior to said collision? Plaintiff has the burden of the first issue, and defendant has the burden of the second.

The following facts do not appear to be controverted on this appeal: The 1947 Chevrolet described in policy No. 473 166-F19-33 was involved in an accident on 4 December 1959 in which plaintiff was damaged, and was being operated at the time by Robinson, the insured named in the policy. Plaintiff recovered judgment in the amount of $2500 against Robinson in a damage suit growing out of the accident. The judgment has not been paid.

In addition, plaintiff's evidence tends to show: Policy No. 461-373-F19-33 was issued and delivered by defendant to the named insured for the policy period 19 June 1959 to 19 December 1959. By its terms it insured not only the Ford automobile described therein but also any automobile acquired by insured during the policy period to replace the Ford described. In the Fall of 1959 insured traded the Ford for the 1947 Chevrolet which was involved in the collision in question.

This makes out a prima facie case for plaintiff. Defendant disagrees, and contends that plaintiff has the further burden of showing that the premium was paid.

As to whether one who claims benefits under a policy of insurance has the burden of proving that the premium has been paid, or whether nonpayment is a matter of defense, depends on the provisions of the insurance contract and the circumstances of the case. Nonpayment of premium has been held in some instances to be an affirmative defense. Abernethy v. Mecklenburg Farmers Mut. Insurance Co., 213 N.C. 23, 195 S.E. 30; Harris v. National Council Junior Order United American Mechanics, 168 N.C. 357, 84 S.E. 405; Wilkie v. National Council, 147 N.C. 637, 61 S.E. 580; Page v. Life Insurance Co., 131 N.C. 115, 42 S.E. 543. 'The burden is on defendant to prove nonpayment of a premium or assessment * * * where the fact of payment has been prima facie proved, as where acknowledgment of payment is made in the policy, or where plaintiff is in possession of and produces the policy, and the other essentials to recovery are prima facie proved or admitted.' 46 C.J.S. Insurance § 1316 b(5)c, p. 397. Furthermore, payment of premium as a condition for effective insurance may be waived. Pender v. North State Life Insurance Co., 163 N.C. 98, 79 S.E. 293; Rayburn v. Pennsylvania Casualty Co., 138 N.C. 379, 50 S.E. 762.

The insurance policy in the instant case is subject to the provisions of the Vehicle Financial Responsibility Act of 1957, G.S. Ch. 20, Art. 13. 'Where a statute is applicable to a policy of insurance, the provisions of the statute enter into and form a part of the policy to the same extent as if they were actually written in it. ' Howell v. Travelers Indemnity Co., 237 N.C. 227, 74 S.E.2d 610. Plaintiff, in the case at bar, issued certificate FS-1, and it was delivered to the North Carolina Department of Motor Vehicles. By the issuance of the certificate (FS-1) an insurer represents that it has issued and there is in effect an owner's motor vehicle liability policy. Swain v. Nationwide Mutual Insurance Co., 253 N.C. 120, 126, 116 S.E.2d 482. In substance, by the issuance of the certificate the insurer represents that everything requisite for a binding insurance policy has been performed, including payment, or satisfactory arrangement for payment, of premium. Once the certificate has been issued, nonpayment of premium, nothing else appearing, is no defense in a suit by a third party beneficiary against insurer. To avoid liability insurer must allege and prove cancellation and termination of the insurance policy in accordance with the applicable statute, unless it is established by plaintiff's evidence or admissions.

'* * * (T)he party asserting the cancellation of an automobile policy as a defense has the burden of proving it. ' Blashfield: Cyclopedia of Automobile Law and Practice (Perm. Ed.), Vol. 6 (Part 1), s. 3765.5, p. 405. See also Barnes v. Security Life Trust Co., 229 N.C. 409, 50 S.E.2d 2.

Defendant contends that its evidence shows that the subject insurance policy was duly cancelled for nonpayment of premium and that this entitles it to a peremptory instruction that the policy was not in force on the date in question.

G.S. § 20-310 is the applicable statute in this case for the cancellation and termination of automobile liability insurance policies. It provides: 'No contract of insurance or renewal thereof...