Laverty v. Hawkeye Sec. Ins. Co.

Decision Date08 February 1966
Docket NumberNo. 51945,51945
Citation140 N.W.2d 83,258 Iowa 717
PartiesCarl F. LAVERTY and Ruth F. Laverty, Appellees, v. HAWKEYE SECURITY INSURANCE COMPANY, Appellant.
CourtIowa Supreme Court

Patterson & Lorentzen, by Roy M. Irish, Des Moines, for appellant.

Raymond E. Pogge, Council Bluffs, for appellees.

SNELL, Justice.

This is an action at law wherein plaintiff Carl F. Laverty seeks recovery for damage to his automobile and plaintiff Ruth F. Laverty seeks recovery for medical expense from defendant insurance company. The trial court found for plaintiffs and defendant appealed. The trial court's findings of fact are binding on us if supported by substantial evidence.

Defendant says the insurance policy under which plaintiffs seek recovery had expired and there was no insurance in force.

As Mrs. Laverty's claim depends for validity on her husband's claim he will be referred to as plaintiff.

The facts abound in examples of carelessness and how not to do business. The evasiveness of defendant's witnesses addsnothing to the strength of defendant's position.

Plaintiff, a farmer, formerly lived near Minden, Iowa. He was a customer of Farmers Savings Bank, Shelby, Iowa. Thomas M. Stoker was cashier of Farmers Savings Bank and also an insurance agent representing, among other companies, Hawkeye Security Insurance Company, defendant herein. He is a graduate of an insurance training center, has studied insurance policies and is duly licensed.

For several years prior to the incidents involved herein plaintiff had bought various types of insurance from the Stoker agency. He had a five-year Hartford Fire Insurance policy from October 7, 1958 to October 7, 1963; a three-year policy from April 6, 1962 to April 6, 1965 with Freeport Insurance Company and an automobile policy with defendant Hawkeye Security Insurance Company.

For some reason not appearing in the record it was the custom of the agent or the bank to keep the policies. Plaintiff had never seen nor had physical possession of any of his policies.

In February 1963 he had a $91.91 claim against defendant company and so knew the name of his car insurance carrier but otherwise did not even know the names of his insurance carriers. Premiums were paid by charging plaintiff's bank account with a debit slip when he happened to have sufficient money therein. The fact that this did not always coincide with the due date of the premiums apparently caused no concern to either the bank or the agent. The practice was continued for several years and was the only way the premiums were paid. Plaintiff never paid by check or cash.

As renewal certificates were sent by the insurance companies to the agent he kept them. He remitted when the net amount due the companies appeared on his monthly billing and then collected as indicated.

According to defendant's witnesses plaintiff's automobile insurance with the Stoker agency and defendant company began on June 8, 1959. However, debit slips charged to plaintiff's bank account show that he had been charged for automobile insurance with defendant company since June, 1956. Apparently a new policy was written in June, 1959. A different policy number appeared and was used thereafter. The policy limits remained the same. The policy was for one year. It was automatically renewed each year by issuing renewal certificates up to and including the year ending June 8, 1963. On July 6, 1960 the policy was amended to cover a 1960 Ford, the car involved in the present controversy.

In 1961 plaintiff moved to a farm near Elliott. On May 18, 1961 the Stoker agency executed a policy endorsement changing the address of plaintiff to Elliott, Iowa.

Some time prior to June 8, 1963, the renewal date of plaintiff's policy, defendant company mailed a renewal certificate to the Stoker agency. Defendant's Exhibit 10 shows that the agency cancelled the certificate on May 10, 1963. Defendant's Exhibit 9 is a letter to defendant returning the certificate. The letter is dated May 31. Mr. Stoker also mailed the existing policy that had not expired back to the company. Why Mr. Stoker would return to the company an unexpired policy paid for and belonging to plaintiff does not appear. There knew of this action. The result was that know of this action. The result was that even before the expiration date of plaintiff's policy defendant's agent had sent everything back to the company for cancellation.

On May 24, 1963 Mr. Stoker sent to plaintiff a letter in words and figures as follows:

'SPEED LETTER

'To Mr. Carl Laverty

From Farmers Savings Bank

Elliott, Iowa

Shelby, Iowa

Subject 1/4 POLICY NO. 7235733.

'MESSAGE

'Date 5/24/63 19

'Your policy expires 6/8/63. Please take out your insurance with an agent in your own local area as we think this would help you in claim work by having a closer agent.

'Thanks a lot Carl. Please let me know when you have done this so you won't be charged for a new policy.

'Signed TOM STOKER.'

It should be noted that the letter merely suggested a change of agents and not a change of companies.

Plaintiff testified that he received this letter and knew therefrom that some policy of insurance would expire but did not know which one. He was busy planting corn. He put the letter in his desk intending, when he got time, to go to Shelby and see Mr. Stoker about it.

From the official highway map it would appear to be over 50 miles from Elliott to Shelby. In any event plaintiff did nothing prior to June 8, 1963.

On July 10, 1963 Mrs. Laverty was driving the 1960 Ford belonging to her husband on a county road. The car struck loose gravel, went into the ditch and was damaged. Mrs. Laverty and two children received minor injuries. The doctor bills incident thereto amounted to $70.00.

The next day plaintiff called on Mr. Stoker to make a claim and get a copy of his policy. Mr. Stoker told plaintiff that he had no copy of the policy, that he had returned it to the company and that the premium had not been paid when due. Plaintiff offered to pay the premium. Mr. Stoker said he could not accept the money. Plaintiff never did get a copy of his policy. The next day plaintiff transferred his insurance business to the McConnelee agency in Griswold. He bought a 1958 Ford and insured it with defendant company through the McConnelee agency.

On July 30, 1963 plaintiff sent a check drawn on Houghton State Bank of Red Oak to Hawkeye Security Insurance Company for $36.14. The check had noted on its face 'For policy no. FA7-235733 from June 8, 1963 to June 8, 1964 1/2 payment.'

Defendant cashed the check and kept the money.

On November 15, 1963 plaintiff sent another check on the same bank to defendant for $36.14. This check had noted on its face 'For Policy No. FA7-235733 June 8, 1963 to June 8, 1964 1/2 payment last half.'

Defendant cashed the check and kept the money.

The policy number on the checks identified the policy issued through the Stoker agency that defendant claims expired on June 8, 1963. The exhibits (debit slips) show that from the beginning the premiums had been collected and accepted when long past due. The 1963 delinquency was no greater than customary.

Defendant, disregarding the policy identification, credited the McConnelee agency with the payments. As the credits did not correspond with any policy through the McConnelee agency defendant wrote McConnelee. Defendant's supervisor of accounting and collections testified:

'That's why we wrote. 'It's up to him to take care of it. Hum-hum, we will tell him what we have received. If we had given him an excess credit it actually belongs to refund to the assured. It's his duty to see that the refund is made.'

No notice of the procedure was ever given to plaintiff and no refund has ever been made.

Defendant on December 26, 1963 mailed notice of cancellation of the McConnelee policy.

In spite of the fact that the defendant had all the records and plaintiff had none except debit slips and the two checks, defendant's representatives were evasive about the coverages in plaintiff's policies. They could not find the policy returned by the Stoker agency although it was 'supposed to be just like the renewal certificate, clipped right onto our file if it was returned to our office.'

It was finally brought out that the coverage on the 1960 Ford had been $15/30000 bodily injury liability; $5000 property damage; medical payments $1000 and comprehensive collision $50 deductible.

Defendant does not claim that any notice of any kind was ever sent or given plaintiff except the letter quoted, supra, but not even the agent who wrote the letter was sure as to what it was. He testified:

'Q. As far as your agency is concerned you never did send Mr. Laverty a notice of cancellation? THE WITNESS: We sent him a letter telling him to take his insurance out with another agency. Whether that could be considered a notice of cancellation I don't know, and that's where I am in the fog--what we did do. * * *.'

If Mr. Stoker, defendant's agent, was in a fog, defendant could hardly expect plaintiff to see clearly and understand that a custom followed for seven years was terminated.

No question has been raised as to the authority of defendant's agent. There is no question as to the custom beginning in June 1956 as to automatic renewal of policies and belated collection of premiums. Except for once in 1959 the old policy was kept in force by a renewal certificate. The letter of May 24, 1963 was not a notice of termination of the custom as to renewal. It was a request for a change for plaintiff's convenience and it clearly indicated that unless plaintiff made the change he would be charged for a renewal at the Stoker agency. There was no expression of a definite intent to cancel or terminate and not even an adequate identification of the policy. There was a policy number on the letter but neither the name of the company nor the kind of insurance was shown. The Stoker agency had written insurance for plain...

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