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

• Decision Date: 25 May 1984
• Citation: 451 So.2d 287
• Parties: Charles S. HILLIAR, et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY. 83-531.
• Court: Alabama Supreme Court

Page 287

451 So.2d 287

Charles S. HILLIAR, et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

83-531.

Supreme Court of Alabama.

May 25, 1984.

J. Huntley Johnson of Johnson, Huskey, Hornsby & Etheredge, Dothan, for appellants.

Joel W. Ramsey of Ramsey & Baxley, Dothan, for appellee.

SHORES, Justice.

This is an appeal from a declaratory judgment in favor of the defendant, State Farm Mutual Automobile Insurance Company. We affirm.

On August 28, 1981, the appellants, Charles and Gloria Hilliar, purchased liability insurance on a 1971 Chevrolet Monte Carlo from the local State Farm agent, Otto Vollinger. On that date, the Hilliars paid only a portion of the $89.75 premium for the six-month policy period. A balance of $44.87 remained due.

On December 17, 1981, the Hilliars' daughter was involved in an automobile accident while driving the Monte Carlo. The local State Farm agent was notified of the accident on the following day, whereupon he informed the Hilliars that the policy covering that automobile had been cancelled. Notwithstanding, a claim was submitted, and the Hilliars received a denial of coverage by registered mail from State Farm dated January 29, 1982. State Farm contends that on November 2, 1981, it had mailed a notice that the policy would be cancelled, effective November 29, 1981, unless the balance due on the six-month premium was paid in full.

The Hilliars filed this declaratory judgment action against State Farm to determine whether coverage exists on the automobile involved in the December 17 accident. State Farm moved for summary judgment, which was denied.

Following a trial on the merits, the trial court entered its order, holding that State Farm had properly and effectively cancelled the policy covering the Monte Carlo prior to the time of the accident, because of the Hilliars' failure to pay the premiums. State Farm, therefore, the court ruled, was not obligated to defend the Hilliars or their daughter in any suit arising from that accident nor to pay any judgment rendered against them. We affirm.

The only issue presented is whether State Farm met its burden of proving the cancellation notice was properly mailed. Section 27-23-25, Ala. Code 1975, controls in this instance. That section reads: "Proof of mailing of notice of cancellation to the named insured at the address shown on the policy shall be sufficient proof of notice." In the past, we have reviewed policy provisions which contain language similar to that of the statute, but have not before had a case in which the statute itself was relied on. E.g., Security Insurance Company of Hartford v. Smith, 360 So.2d 280 (Ala.1978).

In Security Insurance Company, supra, this Court held that where an insurer is setting up cancellation as a defense on a policy, it has the burden of proving by clear and convincing evidence that the notice of cancellation was mailed to the insured. Proof of actual receipt of the notice by the insured is not required, and where the insured insists, as in this case, that the notice was never received, it becomes a question of fact as to whether the cancellation notice was properly mailed. Harrell v. Alabama Farm Bureau Mutual Casualty Insurance Company, 287 Ala. 259, 251 So.2d 220 (1971).

State Farm contends that it complied with the statute, as well as the provisions contained in the policy, and met its burden of proof as to the proper mailing of the notice of cancellation. We agree.

State Farm submitted evidence of the procedures followed prior to the cancellation of a policy. John Victory, service superintendent for the South Alabama Automobile Division of State Farm, testified to the procedure of State Farm for cancelling a policy for nonpayment of premiums, as follows:

"For non-payment of premiums, we obviously have not received all the money that was due on the policy. And, when the money that was received or is received is applied to the policy, the amount is fed into the computer. And, the computer makes the determination how much is remaining to be paid and how far, how many days or months or whatever the premium that was paid, how far it will...