General Motors Acceptance Corp. v. Turner Ins. Agency, Inc., No. 11538

• Court: United States State Supreme Court of Idaho
• Writing for the Court: McQUADE; SHEPARD; McFADDEN
• Citation: 535 P.2d 664,96 Idaho 691
• Decision Date: 11 April 1975
• Docket Number: No. 11538
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION, a corporation, Plaintiff and Appellant, v. TURNER INSURANCE AGENCY, INC., and Westchester Fire Insurance Co., a corporation, Defendants and respondents, and Gerald B. Wahlen, Defendant.

Page 664

535 P.2d 664 96 Idaho 691 GENERAL MOTORS ACCEPTANCE CORPORATION, a corporation, Plaintiff and Appellant,
v.
TURNER INSURANCE AGENCY, INC., and Westchester Fire Insurance Co., a corporation, Defendants and respondents,
and Gerald B. Wahlen, Defendant. No. 11538. Supreme Court of Idaho. April 11, 1975.
Rehearing Denied June 10, 1975.

[96 Idaho 693]

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Jack G. Voshell, of Voshell & Wright, Idaho Falls, for plaintiff and appellant.

James B Green, of Terrell, Green, Service & Gasser, Pocatello, for defendants and respondents.

McQUADE, Chief Justice.

This is an appeal in an action to recover a $2,156.00 refund on an unearned physical damage insurance premium. Plaintiff-appellant, General Motors Acceptance Corporation (hereinafter GMAC) brought this action to recover this sum which it claimed was misappropriated by the joint action of the defendants-respondents, Turner Insurance Agency, Inc., (hereinafter Turner Insurance) and Westchester Fire Insurance Company (hereinafter Westchester Fire) and defendant, Gerald B. Wahlen. Judgment for the sum claimed was granted to the appellant by the trial court against the defendant, Gerald B. Wahlen, but upon its claim against Turner Insurance and Westchester Fire, relief was denied. Plaintiff-appellant appeals from that part of the judgment that denies recovery upon its claim against defendant-respondents, Turner Insurance and Westchester Fire. We reverse.

On Appril 30, 1968, defendant Wahlen entered into a conditional sales contract with Monie Oldsmobile in Phoenix, Arizona, to purchase a 1963 Mack Diesel truck and a 1956 Hyde Flatbed trailer. A few days later Wahlen consummated a second conditional sales contract whereby he purchased a 1963 White truck and a 1964 Biltwell trailer from the same dealer. Financing for both purchases was arranged through Monie Oldsmobile. Included in the combined total price on the two conditional sales contracts was a $4,470.00 charge. This charge was to protect the vendor's security interest in the vehicles through the purchase of physical damage insurance for the three year life of the two sales contracts. Both contracts were assigned by Monie Oldmobile to GMAC. GMAC purchased the physical damage insurance from Motors Insurance Corporation (hereinafter MIC) paying ur $4,470.00 for a three year term at the time the vehicles were delivered.

In June of the same year, Wahlen moved from Arizona to Aberdeen Idaho. Recognizing that changes in his insurance converage were necessary in order to obtain Public Utility Commission filing to legally operate his vehicles, Wahlen contacted Turner Insurance, an agent for Westchester Fire. On June 19, 1968, Turner Insurance[96 Idaho 694]

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wrote to MIC requesting a cancellation of the insurance policies it had issued on the vehicles. MIC complied with this request and refunded the unearned premium to GMAC. On July 16, 1968, GMAC sent a letter to Wahlen (with a copy to Turner Insurance) indicating that an unearned premium had been received from MIC. In that letter, GMAC indicated that it was ready to deal with Turner Insurance regarding the purchase of physical damage insurance for the three year term of the sales contracts.

GMAC advised Wahlen in an August 12 correspondence that it had received a note from Turner Insurance implying that the latter expected GMAC to forward the first year's premium of $1,653.00 to cover both 'physical damage' and 'liability coverage' on the vehicles. The letter went on to state that since liability coverage was not included in the original contracts, the refunded premium was 'available for purchase of physical damage (collision and comprehensive) coverage only.' (Emphasis in original). The letter advised Wahlen that the refunded premium could be used in one of several ways:

(1) To purchase physical damage insurance for the reamining term of the contract.

(2) To purchase physical damage coverage for one year on each contract.

In both cases any residual would be applied to his accounts to reduce the monthly payments.

(3) Applied to the contuact balance still outstanding to reduce the monthly payments.

Under this third alternative, Vahlen was to make his own arrangement for purchasing insurance. A copy of this letter was sent to Turner Insurance.

On August 14, Wahlen replied to GMAC, requesting that the first year premium of $1,653.00 be mailed to Turner Insurance with the balance of the unearned MIC premium mailed to him at his Aberdeen address. This letter was dictated by the president of Turner Insurance at Wahlen's request and signed by Wahlen.

In a letter dated August 21st written to Wahlen, (without a copy to Turner Insurance) GMAC informed Wahlen that the sales contracts were delinquent and rejected Wahlen's request that the balance of the unearned premium be returned to him. It informed him that any excess could only be used as a credit to the final installments due on the accounts. On the same day, GMAC wrote to Turner Insurance (with a copy to Wahlen) advising it that upon receipt of a certificate of insurance, it would forward the permium.

Turner Insurance sent GMAC the certificate of insurance of August 27th, showing that coverage for a three-year period, to be billed annually at $1,078.00 per year, had been issued by Westchester Fire. In response, in a letter dated September 3rd, GMAC queried if the entire three-year premium could be prepaid. Turner Insurance by letter of September 17th replied to this inquiry in the affirmative, quoting a total cost of $3,234.00 for a three-year period.

On or about September 26, Turner Insurance received the requested amount from GMAC. From the funds received, Turner Insurance used $1,078.00 to pay the first year's premium. It utilized an additional $828.00 to cover debts allegedly owed to it by Wahlen, and the balance ($1,328.00) was returned to Wahlen at the latter's instruction and request.

Subsequently Wahlen defaulted on the contracts. GMAC repossessed the vehicles and sold them at private sales. Westchester Fire cancelled the insurance coverage on the vehicles as of June 15, 1969. GMAC demanded return of the two year's unearned premium but was refused. Turner Insurance claimed that the Wahlen account was settled when it had returned to him the balance of the funds, $1,328.00 in October of 1968. The trial court rejected appellant's claim that Turner Insurance and Westchester Fire were obligated to return to it the unearned premium remaining [96 Idaho 695]

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on the policy. The appellant appeals to this Court from that decision.

Appellant makes many assignments of errors, founded in contract, tort, agency and trust law. GMAC contends that an express or implied agreement was made between itself and the respondents to provide insurance coverage for a three-year period on vehicles in which GMAC held an insurable interest. That agreement, as evidenced by the policy issued by Westchester Fire's agent, Turner Insurance, and paid for in full, covered the vehicles for three years. Appellant argues that the respondents breached their contractual obligation by not returning the unearned premiums after the policy was cancelled. We agree.

GMAC began preliminary negotiations with Turner Insurance for insurance coverage in July of 1968. It requested an estimate for physical damage coverage on the vehicles. GMAC received in response to its inquiry a figure which reflected liability insurance in addition to physical damage. It rejected this figure since liability coverage was not included in the original transaction between the assignor Monie Oldsmobile and Wahlen. Turner Insurance finally agreed to draft a policy which included only physical damage coverage.

GMAC by letter then offered to pay a three-year premium in advance.

'Inasmuch as we have a total of $4,183.43 in suspense for physical damage insurance on Mr. Wahlen's vehicles, would it be possible for me to pay a three-year premium at this time rather than only the one-year as we would like to get Mr. Wahlen's accounts set up so that no additional billing...