Evans v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 10 January 1977
• Docket Number: No. 3171--I,3171--I
• Parties: Steven M. EVANS and Diane Evans, Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.
• Court: Washington Court of Appeals

Page 704

16 Wn.App. 704

559 P.2d 574

Steven M. EVANS and Diane Evans, Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.

No. 3171--I.

Court of Appeals of Washington, Division 1.

Jan. 10, 1977.

Julin, Fosso & Sage, Harold C. Fosso, James D. McBride, Seattle, for appellant.

Lee A. Holley, Seattle, Benson, Chadwick, Stege & Wines, Kirk R. Wines, Seattle, for respondents.

WILLIAMS, Chief Judge.

Steven M. and Diane Evans brought this action against State Farm Automobile Insurance Company to recover on an insurance policy for losses they sustained in an automobile collision. The cause was tried to the court sitting without a jury and resulted in judgment for the Evans. State Farm's appeal raises the single issue of the existence of the policy at the time of the accident.

The Evans submitted evidence to prove that State Farm issued Steven Evans a policy of collision insurance covering his car in 1969, and that the policy was renewed every 6 months thereafter. The premium payments were made to the State Farm agent nearest where they were living. Sometimes the payments were late and sometimes partial. When the balance on a premium was overdue, State Farm customarily sent a notice by certified mail stating that the policy would be cancelled if payment was not made in 10 days.

In October 1971, the Evans moved from Bellevue to Granite Falls. They sent a change of address to State Farm and expected to be given the name of the agent in their new locality. When that information was not forthcoming, the Evans sent a second change of address and then, on January 17, 1972, drove to the Everett office of State Farm. There, an employee called the Bellevue office and told the Evans that their records were en route. Later on the day of their visit to the Everett office, the automobile collision occurred. This was during the 6-months premium period of December 26, 1971, to June 26, 1972.

Prior to that, in November 1971, the Evans received a notice from State Farm which stated in part as follows:

EXHIBIT 5

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

On December 30, 1975, State Farm sent the Evans another notice as follows:

EXHIBIT 8

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

State Farm contends that it offered to renew the policy as required by RCW 48.18.280 and RCW 48.18.292, but the offer was not accepted because the premium was not paid on the due date. Therefore, as State Farm could not extend the contract by unilateral action, the contract of insurance terminated on December 26, 1971. McGregor v. Inter-Ocean Ins. Co., 48 Wash.2d 268, 292 P.2d 1054 (1956).

Further, State Farm contends that an insurance company is not obliged to apply dividends to extend policy coverage and is not required to advance a deficiency necessary to make up the full premium. Eastman v. Northwestern Mut. Life Ins. Co., 169 Wash. 125, 13 P.2d 488 (1932).

The effect of the dealings between the parties is contained in the court's unchallenged finding of fact No. 8, which reads as follows:

The defendant was not guilty of malice in its actions and administration of the plaintiffs' contract of insurance, but at the same time, the defendant's agents did not act in the ordinary course of business and regularly, but did act in a manner to lead the plaintiffs to believe, reasonably, that they were insured, and the above damages were risks covered by the policy or were damages reasonably foreseeable and actual consequences of the defendant's actions in leading the plaintiffs to believe they were insured...