Koehn v. Central Nat. Ins. Co. of Omaha, Neb.

• Citation: 187 Kan. 192,354 P.2d 352
• Decision Date: 05 August 1960
• Docket Number: No. 41886,41886
• Parties: Richard Wayne KOEHN, a minor, by Reuben B. Koehn, his father and next friend, Appellant, v. CENTRAL NATIONAL INSURANCE COMPANY OF OMAHA, NEBRASKA, a corporation, Appellee.
• Court: Kansas Supreme Court

Page 352

354 P.2d 352

187 Kan. 192

Richard Wayne KOEHN, a minor, by Reuben B. Koehn, his father and next friend, Appellant, v. CENTRAL NATIONAL INSURANCE COMPANY OF OMAHA, NEBRASKA, a

corporation, Appellee.

No. 41886.

Supreme Court of Kansas.

Aug. 5, 1960.

Rehearing Denied Oct. 5, 1960.

John Staley Holden, Cimarron, argued the cause and was on the brief for the appellant.

B. G. Larson, Dodge City, argued the cause, and James A. Williams and C. W. Hughes, Dodge City, were with him on the brief for the appellee.

SCHROEDER, Justice.

This is an action to recover medical benefits under a policy of automobile liability insurance in which the insurance company defends on the ground that the policy was canceled.

The controlling question on appeal is whether actual receipt by the policy holder of the cancellation notice mailed by the insurer is a prerequisite to cancellation of the insurance under the so-called 'standard cancellation clause' in the policy.

This so-called 'standard form' of policy cancellation clause, insofar as material on this appeals, reads:

'* * * 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 ten days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice * * * the effective date and hour of cancellation stated in the notice shall become the end of the policy period * * *' (Emphasis added.)

The case was tried to a jury and resulted in a verdict for the Central National Insurance Company of Omaha, Nebraska, a corporation (defendant-appellee). The trial court ruled on the various questions arising at the trial upon the theory that the policy of insurance was canceled by mailing the 'Notice of Cancellation' to Reuben B. Koehn, the policy holder. Under this theory the actual receipt of cancellation notice by the policy holder was immaterial.

The appellant contends that before the insurance company can effectively cancel the policy of insurance the policy holder must receive the 'Notice of Cancellation.' The policy holder claims he did not receive the 'Notice of Cancellation.' The jury found in answer to special questions that the appellee mailed, postage prepaid, by United States mail an envelope addressed to Reuben B. Koehn at Cimarron, Kansas (the address shown in the policy), in which was enclosed the 'Notice of Cancellation.' On the question whether Reuben B. Koehn received such 'Notice of Cancellation' the jury answered 'Lack of evidence,' which under some circumstances is equivalent to a negative answer against the party whose duty it is to establish the affirmative. Meek v. Wheeler, etc., Investment Co., 122 Kan. 69, 251 P. 184; Pioneer Trust Co. v. Combs, 123 Kan. 356, 255 P. 81; Darrington v. Campbell, 150 Kan. 407, 94 P.2d 305, and Brittain v. Wichita Forwarding Co., 168 Kan. 145, 211 P.2d 77. If the trial court was correct as to the law the latter finding is immaterial.

The numerous specifications of trial error will not be treated individually, since they are all resolved by the single question heretofore stated.

The uncontroverted facts, insofar as material herein, indicate that the policy of insurance at issue was purchased by Reuben B. Koehn on July 13, 1957, for a total year's premium of $31.64. He paid $10.54 at that time and agreed to make two monthly payments, one in the amount of $10.54 on August 13, 1957, and a final payment of $10.56 on September 13, 1957. The last two payments were not made and the appellee canceled the policy as of October 7, 1957.

On June 22, 1958, Reuben B. Koehn's automobile was involved in a serious accident and his son, Richard Wayne Koehn (plaintiff-appellant), incurred medical bills as a result thereof in the amount of $420.85 for which this suit was brought.

The appellant relies on Merrill v. Farmers' Alliance Ins. Co., 155 Kan. 31, 122 P.2d 776. There the action was upon a fire insurance policy issued by the defendant insurance company. The only controverted question tried by the jury pertained to the cancellation of the policy upon the buildings which later burned. With respect to the cancellation and the service of notice of cancellation the policy there at issue read:

"This company reserves the right to cancel this policy, or any part thereof, by giving five days notice to that effect to the insured, * * * such notice of cancellation * * * to be made in person or by mail addressed to the insured's post office address." 155 Kan. at page 41, 122 P.2d at page 778.

There the policy holder alleged that no notice of cancellation was ever mailed to him, and that no such notice was at any time received by him. The answer of the insurance company alleged that on a certain date the defendant sent by United States mail, postage prepaid, a notice of cancellation addressed to the insured at his post office address as shown in the application. On issues joined a verdict resulted in favor of the policy holder. In the opinion the court said:

'* * * At any rate, the evidence of the mailing of the letter and the payment of postage thereon is not so positive and convincing that the jury and trial court would have to believe it.

'There is no contention on appellant's part that there was any personal service of the notice to cancel; neither is it contended that plaintiff actually received the notice, if it was in fact mailed * * *.' 155 Kan. at page 41, 122 P.2d at page 783.

Further in the opinion the court said:

'* * * We do not agree with appellant's counsel that if the notice had been mailed it would be effective even though it had not been received by the defendant. The clause in the policy authorizes the insurer to cancel the policy by giving notice 'to the insured.' It is true the provision authorized the notice of cancellation to be made 'in person or by mail'; but this does not say that if the notice is mailed it becomes effective even though it is never received by the insured. The general rule is to the contrary. Couch, in his Cyclopedia of Insurance Law, Vol. 6, § 1440, after noting some conflict of authority as to whether a notice of cancellation sent by mail must be received before it is effective, says:

"And, as a matter of fact, the weight of authority seems to regard receipt of the notice as a condition precedent to cancellation.'

'In Vance on Insurance, 2d ed., p. 778, it is said:

"The power to cancel, being derived only from the contract, must be exercised strictly in accordance with the terms of the contract. * * * and it must be given to the insured or his agent authorized to receive such notice." 155 Kan. at page 42, 122 P.2d at page 783.

It is readily apparent the cancellation provision in the policy before the court in the Merrill case is different from the cancellation provision in the policy presently at issue. In the Merrill case the clause in the policy authorized the insurer to cancel the policy by giving five days notice 'to the insured.' In the policy presently before the court the company is authorized to cancel the policy 'by mailing to the named insured at the address shown in this policy written notice.' But it has the added proviso: 'The mailing of notice as aforesaid shall be sufficient proof of notice.'

Actually in the Merrill decision the jury found specifically that the company had not mailed the notice of cancellation. Therefore, the statement made concerning receipt of the notice was dictum. In the instant case the jury specifically found that notice of cancellation was mailed in accordance with the terms of the policy.

Whether actual receipt by the policy holder of the cancellation notice mailed by the insurer is a prerequisite to the cancellation of the insurance has been the subject of an extended annontation in 64 A.L.R.2d 982. It is said in the annotation: 'A perusal of all the cases in point reveals that there are five different types of policy provisions dealing with notice of cancellation.' At page 988. The third type discussed is the provision with which the court was concerned in the Merrill case. A review of the cases cited concerning such provision indicates they unanimously support the rule that actual receipt by the insured of such notice is a condition precedent to a cancellation of the policy by the insurer, and that a letter containing a notice of cancellation which is mailed by the insurer but not received by the insured is ineffective as a cancellation. The rationale of this rule is that the requirement of five days' notice, or a similar requirement, is intended to give the insured timely information that the policy is to be canceled, and in order to achieve this objective the notice of cancellation must be received by the insured.

The 'standard cancellation clause' with which we are concerned in the instant case is the fourth type discussed in the annotation, and the question presented has not been directly before the Supreme Court in this state. (The situation must be distinguished from Wolford v. National Life Insurance Co., 114 Kan. 411, 219 P. 263, 32 A.L.R. 1248, which concerned the giving of a premium due notice in compliance with the statute relating to the forfeiture of life insurance policies.) An examination of the authorities on this question in other jurisdictions reveals a sharp conflict. It is clear the weight of authority in this country concerning the 'standard cancellation clause' holds that actual receipt of the cancellation notice by the insured is not a condition precedent to a cancellation of the insurance by the insurer. A few of the many cases cited and reviewed in 64 A.L.R.2d at pages 1000 to 1012, relied upon by the appellee, are Westmoreland v. General Accident Fire & Life Assurance Corporation, 1957, 144 Conn. 265, 129 A.2d 623, 64 A.L.R.2d 976; Superior Insurance Company v. Restituto, D.C.Cal.1954, 124 F.Supp. 392; and O'Daniel v. Michigan Mut. Liability Co., D.C.Ky.1950, 88...