Jensen v. Traders & General Ins. Co.

• Decision Date: 23 April 1959
• Citation: 338 P.2d 517
• Court: California Court of Appeals Court of Appeals
• Parties: Raymond H. JENSEN, Dorothy J. Jensen, Marian Morrow, and Vincent James DiMatteo, by and through his Guardian ad litem John DiMatteo, Plaintiffs and Appellants, v. TRADERS & GENERAL INSURANCE COMPANY, a corporation, Defendant and Respondent. * Civ. 18167.

Page 517

338 P.2d 517

Raymond H. JENSEN, Dorothy J. Jensen, Marian Morrow, and Vincent James DiMatteo, by and through his Guardian ad litem John DiMatteo, Plaintiffs and Appellants, v. TRADERS & GENERAL INSURANCE COMPANY, a corporation, Defendant and Respondent. ^*

Civ. 18167.

District Court of Appeal, First District, Division 2, California.

April 23, 1959.

Hearing Granted June 18, 1959.

Nichols, Williams, Morgan & Digardi, Edward Digardi, Sheridan, Hoffman & Mendel, Oakland, for appellants.

Partridge, O'Connell & Partridge, Wallace O'Connell, San Francisco, for respondents.

KAUFMAN, Presiding Justice.

Plaintiffs Raymond Jensen, Dorothy Jensen and Marian Morrow recovered judgment against plaintiff Vincent (Jim) DiMatteo for injuries sustained in an automobile accident and now have joined with DiMatteo in bringing the present action against his insurance carrier, Traders & General Insurance Company. DiMatteo claimed a right to be reimbursed for the cost of defending the first action. Defendant claimed it had cancelled the policy before the accident. At the first trial, a verdict for the plaintiffs was returned, but on appeal, reversed by this Court (Div. I) on the ground that on instruction conditioning cancellation upon return of the premium was prejudicial to Traders & General Jensen v. Traders & General Ins. Co., 141 Cal.App.2d 162, 296 P.2d 434. At the second trial, the jury returned a verdict in favor of the defendant. Plaintiffs now appeal.

On April 19, 1951, plaintiff 'Jim' DiMatteo, a minor, accompanied by his parents, purchased a used car on a conditional sales contract from A. A. Moschetti, doing business under the name of West Coast Motor Sales. The conditional sales contract included an item by way of premium on the policy. Moschetti (who was not an agent of the defendant) placed the insurance with defendant's agent Lotz. Defendant issued its policy of public liability and property damage insurance, naming as insured, plaintiff Jim DiMatteo, and his father plaintiff John DiMatteo. The DiMatteos received their policy by mail and read it to check coverages but did not read the fine print.

There is uncontroverted evidence that the DiMatteos paid all premiums due from May through November. The payments were made to Moschetti. Moschetti had sold the DiMatteo contract to a finance company in April and received the cash proceeds thereof, including the amount sufficient to pay the insurance premium in full. Moschetti did not remit this amount to defendant's agent Lotz until September 14, 1951. ^*

Defendant offered competent evidence of mailing of cancellation notices (two separate notices, one addressed to Jim DiMatteo, one to his father) on Friday, August 10, 1951. The letters were not returned to the defendant's office. The plaintiffs testified that no cancellation notices were received and that they had to inkling of any cancellation until November, when the accident occurred. They continued making their payments to Moschetti in August, September, October and November. Plaintiff John DiMatteo testified he would not have permitted his son to drive without insurance.

The sole issue on appeal is the propriety of the following instruction given to the jury.

'When a policy of insurance provides as in this case that the policy may be cancelled by the company by mailing to the insured at the address shown on the policy a written notice stating when, not less than five days thereafter, such cancellation shall become effective and further provides that the mailing of such notice shall be sufficient proof of notice it is not necessary that the notice so mailed shall be received by the insured in order to be effective. If you find that the defendant Traders and General Insurance Company mailed a notice of cancellation to John and Jim DiMatteo they have done everything which the policy and the law requires of them and the policy ceased to remain in effect after the date specified in said notice regardless of whether or not the DiMatteos or either of them ever actually received such notice.'

Plaintiffs argue that the concellation clause does not warrant such an instruction; that the instruction is contrary to California law and public policy; and that the instruction erroneously deprived them of having the fact of receipt of the notices determined by the jury.

'23. Cancelation. This policy may be canceled by the named insured by surrender thereof or by mailing to the company written notice stating when thereafter such cancelation shall be effective. This policy may be canceled by the company by mailing to the named insured at the address shown in this policy written notice stating when not less than five days thereafter such cancelation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date and hour of cancelation stated in the notice shall become the end of the policy period. Delivery of such written notice either by the named insured or by the company shall be equivalent to mailing.'

The question here presented has not been directly ruled upon in this state. In Naify v. Pacific Indemnity Company, 11 Cal.2d 5, at page 10, 76 P.2d 663, at page 666, 115 A.L.R. 476, the court said:

'At the outset we are met with a question raised by amici curiae on behalf of various insurance companies, namely, whether a notice of cancellation, sent to the address of the assured as stated in the policy, and pursuant to a provision in the policy stating that the mailing thereof shall be sufficient notice, is effective despite lack of receipt by the insured. In this simple form, the question may perhaps be answered in the affirmative.'

The court held, however, that under the special circumstances of the case (insured had no choice of policy and never received the policy; pro-rata payments were accepted by the seller who did not notify the insured), the doctrine was entirely inapplicable. American Building Maintenance Co. v. Indemnity Ins. Co., 214 Cal. 608, 7 P.2d 305, states that the mailing of notice under a similar policy clause would have been sufficient, but then held that if the notice sent by mail was not received, the cancellation is ineffective, citing Farnum v. Phoenix Ins. Co., 83 Cal. 246, 23 P. 869. However, the American B. M. case involved modification of the policy, while in the Farnum case the policy provided for termination on 'giving notice'. See also Truck Ins. Exchange v. Industrial Acc. Comm., 36 Cal.2d 646, at page 650, 226 P.2d 583.

An examination of the authorities on this question in other jurisdictions reveals a sharp conflict. See 29 Am.Jur. 285; 123 A.L.R. 1008, and such cases as Donarski v. Lardy, 1958, 251 Minn. 358, 88 N.W.2d 7; Grimes v. State Auto Mut. Ins. Co., 1953, 95 Ohio App. 254, 118 N.E.2d 841; Medford v. Pacific Nat. Fire Ins. Co., 189 Or. 617, 219 P.2d 142, 222 P.2d 407, 16 A.L.R.2d 1181. In part, this conflict may be explained by variations in the provisions of policies and statutes involved.

In Griffin v. General Acc. Fire & Life Assur. Co., 1953, 94 Ohio App. 403, 116 N.E.2d 41, cited by the plaintiffs, the court in construing a similar provision, indicated that 'sufficient proof' was not 'conclusive proof.' In the Griffin case, however, the agent of the insurer had knowledge that the notices had not been delivered as they were returned by the post office and the agent also had notice of where the insured could be found. In Donarski v. Lardy, 1958, 251 Minn. 358, 88 N.W.2d 7, the issue was whether the policy had been cancelled despite an express finding by the lower court that the notice of cancellation had not been received by the insured. The court held in favor of the plaintiff policy-holder, finding an ambiguity in the words 'sufficient proof of notice' by referring to the meaning of 'sufficient evidence', and held that even if the clause were interpreted as contended for by the insurance company, it would violate the public policy of the state which was to give the insured notice of cancellation so he could obtain other insurance and fulfill his obligation to those he may injure or damage through the use of his automobile.

Other courts have found that the standard policy provision is neither ambiguous nor contrary to public policy. For example, in Midwestern Insurance Co. v. Cathey, Okl. 1953, 262 P.2d 434, at page 436, the court said:

'There is no ambiguity in the language of the policy as contained in the cancellation provision. Under the very strictest construction of the policy, the contrasting language is not of doubtful meaning. Neither can it be said that the provision is unreasonable or unjust. Under the provision, the assured assumed the risk of receiving the notice when properly mailed to him at the address given in the policy. Under a policy containing the provision involved herein, it would place an unreasonable and unfair burden on the company to say that notice of the cancellation must be actually delivered to the assured. To make such a requirement would be placing additional words in the policy far beyond the actual terms of the policy agreed to by the parties.'

See also Service Fire Insurance Co. of N.Y. v. Markey, Fla.1955, 83 So.2d 855; Wisconsin Natural Gas Co. v. Employers Mut. Liability Ins. Co., 1953, 263 Wis. 633, 58 N.W.2d 424; Aetna Ins. Co. v. Aviritt, Tex.Civ.App., 199 S.W.2d 662; American Fire & Casualty Co. v. Combs, Ky.1954, 273 S.W.2d 37; Duff v. Secured Fire & Marine Ins. Co., Tex.Civ.App.1949, 227 S.W.2d 257; Putman v. Deinhamer, 1955, 270 Wis. 157, 70 N.W.2d 652; Womack v. Fenton, 1953, 28 N.J.Super. 345, 100 A.2d 690. Following these authorities (and others involving clauses with slightly different language such as Gendron v. Calvert Fire Ins. Co., 47 N.M. 348, 143 P.2d 462, 149 A.L.R. 1310; Trinity Universal Ins. Co. v. Willrich, 13 Wash.2d 263, 124 P.2d 950, 142 A.L.R. 1), a federal district court in this state has concluded that California...