Davidson v. German Ins. Co. of Freeport, Ill.

• Decision Date: 04 March 1907
• Citation: 74 N.J.L. 487,65 A. 996
• Parties: DAVIDSON v. GERMAN INS. CO. OF FREEPORT, ILL.
• Court: New Jersey Supreme Court

65 A. 996

74 N.J.L. 487

DAVIDSON

v. GERMAN INS. CO. OF FREEPORT, ILL.

Court of Errors and Appeals of New Jersey.

March 4, 1907.

(Syllabus by the Court.)

Error to Circuit Court Bergen County.

Action by Samuel T. Davidson against the German Insurance Company of Freeport, Ill. Judgment for plaintiff. Defendant brings error. Reversed.

Cowles & Carey, for plaintiff in error. Addison Ely, for defendant in error.

GARRETSON, J. The plaintiff had a policy of insurance in the defendant company. He suffered loss by fire and sued upon the policy to recover the amount of that loss. Two defenses were interposed: (1) That the defendant had canceled the policy before the fire occurred; (2) that the plaintiff did not suffer the loss claimed. Judgment having gone for the plaintiff, the defendant sent out this writ of error.

The policy, which was of the standard form, contained the following clause: "This policy shall be canceled at any time at the request of the insured; or by the company by giving five days' notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on the surrender of this policy or last renewal, this company retaining the customary short rate; except that when this policy is canceled by this company by giving notice it shall retain only the pro rata premium." The errors alleged arise out of the construction of this clause by the trial judge in his charge and his refusal to charge certain requests of the defendant He charged, in substance, that, in addition to notice of cancellation, it was necessary for the defendant, at the time notice was given, to repay or tender the unearned premium, in order to effect a cancellation. He refused to charge: "The defendant was not bound to tender a return of the unearned premium until the policy was surrendered or offered to be surrendered."

The action of the trial judge followed the case of Tisdell v. New Hampshire Fire Ins. Co., 155 N. Y. 167, 49 N. E. 664, 40 L. R. A. 765. The Tisdell Case was decided by the Court of Appeals on a vote of four to two. The prevailing opinion was delivered by Bartlett, J., and the opinion with reference to this same cancellation clause does not discuss it. but only says: "The question presented on this appeal is no longer an open one in this court. It was decided in the case of Nitsch v. Insurance Co., 152 N. Y. 635, 46 N. E. 1149, affirmed in this court without an opinion. In that case, as in this one, the question presented was whether the provision of the New York standard policy of fire insurance relating to the cancellation of a policy at the instance of the company, requires that, in addition to giving the five days' notice, the company must return or tender the unearned premiums in order to effect a cancellation. The answer was in the affirmative. The only question presented for consideration in this case therefore is whether the defendant returned or tendered the unearned premium"—and the opinion then goes on to discuss that question. The dissenting opinion, by Parker, C. J., in the Tisdell Case, seems to us to properly construe the cancellation clause in question. He says: "It is the rule that if the language of a statute or contract, read in the order of its clauses, presents no ambiguity, courts will not attempt, through transposition of clauses or ingenious argument as to the general intent, to qualify by construction its meaning. Doe v. Considine, 6 Wall. [U. S.] 458, 18 L. Ed. 869. The first sentence provides for the cancellation of a policy. It declared that 'It shall be canceled * * * by the company by giving five days' notice of such cancellation'—in other words, the underwriter, by its contract, reserves to itself the right to cancel the...