Dairyland Insurance Company v. Kankelberg, Civ. No. 72-1023.

• Decision Date: 17 December 1973
• Docket Number: Civ. No. 72-1023.
• Citation: 368 F. Supp. 996
• Parties: DAIRYLAND INSURANCE COMPANY, a Wisconsin corporation, Plaintiff, v. Robert D. KANKELBERG et al, Defendants.
• Court: U.S. District Court — District of Oregon

368 F. Supp. 996

DAIRYLAND INSURANCE COMPANY, a Wisconsin corporation, Plaintiff, v. Robert D. KANKELBERG et al, Defendants.

Civ. No. 72-1023.

United States District Court, D. Oregon.

December 17, 1973.

Asa L. Lewelling, Salem, Or., for plaintiff.

Paul J. Kelly, Jr., Legal Aid Society, Portland, Or., for defendants Kankelberg.

Peter A. Schwabe, Jr., Portland, Or., for defendants Blystone.

OPINION

BURNS, District Judge:

This is a declaratory judgment action to determine insurance coverage. Trial was to the Court. Plaintiff insurance company is a Wisconsin corporation with its principal place of business in Oregon. Defendants are citizens of Washington. Jurisdiction is predicated on 28 U.S.C. § 1332.

On March 14, 1972, Defendant Robert Kankelberg, accompanied by Defendant Raymond Blystone, went to the office of Joseph L. Smokey, dba Vancouver Insurance Agency in Vancouver, Washington. Kankelberg executed a written application to Plaintiff for liability coverage on his 1969 Chevrolet automobile.¹ Mr. Kankelberg gave Mr. Smokey a $38.00 check in payment of the first two months' premium. Smokey "bound" coverage as of 12:01 A.M. March 15, 1972.

Kankelberg obtained the insurance in contemplation of an impending automobile trip to Reno, Nevada, with the Blystones. While returning from this trip on March 18, 1972, the above automobile, operated by Defendant Patricia Kankelberg (Robert's wife), was involved in a single car accident in Linn County, Oregon. Defendants Raymond and Bonnie Blystone each sustained injury as a result of the accident, and have brought suit against the Kankelbergs in state court to recover for personal injuries.

On about March 20, 1972, Mr. Kankelberg went to the office of Mr. Smokey to notify him of the accident and check his coverage. Defendants claim that at this meeting, Smokey deliberately or recklessly falsely represented to Kankelberg that he had no insurance for personal injuries or other damages arising out of the March 18th accident. Defendants further contend that as a result of these representations, Kankelberg stopped payment on the $38.00 check which he had given Smokey when he made the original application.

The evidence shows that at the March 20th meeting no specific discussion took place vis-a-vis "coverage" for Kankelberg as to any claims by the Blystones, although I find that Kankelberg mentioned the existence of the Blystones' injuries in his discussion with Smokey. I also find that Smokey correctly represented to Kankelberg that while he had "liability coverage," there would be no medical payments coverage for him or his wife. Apparently, the lack of medical coverage led Kankelberg to believe that the insurance was of no benefit to him, and, therefore, he stopped payment on the check.

When the check was returned unpaid to Plaintiff by Kankelberg's bank (because of the stop payment order), Plaintiff, relying on the "nonpayment" provision in the application, infra, notified Kankelberg on March 28, 1972, that ". . . no insurance coverage has been afforded to you" for the March 18th accident. Plaintiff continues to rely on this provision in seeking a declaratory judgment that no coverage of any kind exists for this accident.

Defendants counterclaim for a declaratory judgment to the contrary. They rely on an estoppel theory, i. e., Smokey's alleged false representations induced Kankelberg to stop payment on his check, and upon two Washington Statutes, infra. Based on my findings of fact, supra, I reject the estoppel defense. Thus, the remaining problem to be solved involves an analysis of the Washington statutes, and their interplay, if any, with the nonpayment provisions of the insurance application. Hence each is set forth:

RCW 48.18.291(1) provides:

"No contract of insurance predicated upon the use of a private passenger automobile shall be terminated by cancellation by the insurer until at least twenty days after mailing written notice of cancellation to the named insured at the latest address filed with the insurer by or on behalf of the named insured Provided, That where cancellation is for nonpayment of premium, at least ten days notice of cancellation, accompanied by the reason therefor, shall be given."

RCW 48.18.320 provides:

"No insurance contract insuring against loss or damage through legal liability for the bodily injury or death by accident of any individual, or for damage to the property of any person, shall be retroactively annulled by any agreement between the insurer and insured after the occurrence of any such injury, death, or damage for which the insured may be liable, and any such annulment attempted shall be void."

The "nonpayment" provision in the insurance application provides:

"I also fully understand and agree that if any premium remittance by me, or on my behalf, is not honored by the Payor (Bank), it will be deemed non-payment of premium, and no coverage will have been bound, or afforded under this application and subsequent binder or policy."

Plaintiff initially contends that the application provision, supra, means no insurance ever existed to be cancelled or retroactively annulled. However, the application also states that the policy period begins as of 12:01 A.M. March 15, 1972,...