McFarland v. Farm Bureau Mut. Auto. Ins. Co.

• Decision Date: 08 January 1953
• Docket Number: No. 47,47
• Citation: McFarland v. Farm Bureau Mut. Auto. Ins. Co., 201 Md. 241, 93 A.2d 551 (Md. 1953)
• Parties: McFARLAND et al. v. FARM BUREAU MUT. AUTOMOBILE INS. CO.
• Court: Maryland Court of Appeals

Page 241

201 Md. 241

93 A.2d 551

McFARLAND et al. v.FARM BUREAU MUT. AUTOMOBILE INS. CO.

No. 47.

Court of Appeals of Maryland.

Jan. 8, 1953.

E. Stuart Bushong and Irvine H. Rutledge, both of Hagerstown (Lane, Bushong & Byron, Hagerstown, and Byron M. Thompson, Annapolis, on the brief), for appellee.

Before DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

HAMMOND, Judge.

To be answered in this appeal is whether or not an automobile liability insurance policy was in force at the time of the occurrence of an accident.The insured car was owned by Abraham Snyder Moore.While being driven by his son, Robert E. Moore, after the expiration date of the policy and with the premium unpaid, it collided with a car driven by Peter S. McFarland, one of the appellants, in which the other appellant, his wife, Lottie P. McFarland, was a passenger.Each recovered a judgment against Robert E. Moore for injuries sustained.After returns of nulla bona in efforts to execute on the judgments, the appellants caused writs of attachment to be laid in the hands of the Farm Bureau Mutual Insurance Company, the appellee, as a garnishee holding funds payable to or for the benefit of, Abraham Moore, the owner of the car, and Robert Moore, the driver, available to satisfy the judgments against the latter.Replications were filed to pleas of nulla bona, and on the issues to joined a Washington County jury was persuaded of the justice of the appellants' cause and found a verdict for each against the appellee in the amount of their respective judgments against Robert Moore.On motions seasonably made, the Court below entered judgments for the appellee, notwithstanding the verdicts, and the appeals are from these judgments.

The appellants base their right to reinstatement of the verdicts of the jury on a waiver by the insurance company of the policy requirement that the premium must be paid before the named expiration date lest the policy then expire automatically and finally.If waiver, or evidence of waiver sufficient to go to the jury, be found they say further that a second and final notice of unpaid premium sent by the company to the insured which states that the policy expires 17 days from due date if the premium is not paid is a conditional notice of intended cancellation which required further action by the company before the policy is terminated, even though the premium be not paid.

The field of insurance is one in which the familiar principle of waiver is commonly applied.It does not help the appellants here because they could not build the factual platform from which to use it.Their lack is of fact, not law.Appellants, who sue on a policy indemnifying Abraham Moore against claims for damages, stand in his shoes and, like him, are chargeable with any breach of condition as well as failure of proof of facts on which liability depends.Indemnity Insurance Co. of North America v. Smith, Md., 78 A.2d 461, 463.On June 23, 1947, Moore took out an automobile insurance policy with the Farm Bureau Company which, by its terms, provided that it was in effect from June 23, 1947 to December 23, 1947 at 12.01 A.M. and 'for such terms of six calendar months each thereafter as the required renewal premium is paid by the insured on or before the expiration of the current term and accepted by the Company'.The policy terms as to notice of the premium due date are:

'* * * prior to the expiration of the term for which a premium has been paid and accepted by the Company, a notice of the premium required to renew or maintain this policy in effect will be mailed to the named insured, at the address stated in this policy.'

There was no provision in the policy for a grace period but there was unchallenged testimony by a district manager of the appellee that it, as an established and uniform practice, gave a grace period the effect of which was to extend the 'current term', and the time during which the renewal premium could be paid, for seventeen days.The policy contained the usual clause that 'notice to any agent or knowledge possessed by any agent or by any other person shall not affect a waiver or change in any part of this policy or estop the company from asserting any right under the terms of this policy; nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy, signed by the President, a Vice-President, Secretary or Assistant Secretary, and countersigned by a duly Authorized Representative.'

Appellants say that the circumstances under which Abraham Moore took out the policy and the manner and time of the payment of the several premiums by him are evidences of waiver of the policy terms sufficient to go to the jury.Moore is a farmer living in the Clear Springs section of Washington County.One Schamel, who died before the trial, was a salesman of extracts who, as he made his way around the county selling his wares, also sold insurance for the appellee.On June 23, 1947, he sold Moore the policy here in controversy; presumably the first premium was then paid.Moore says that Schamel told him he would collect the renewal permiums when he vistied the farm on his extract selling tours of the county.Appellants argue that Moore gave testimony that the agent said he would 'take care of' the insurance and suggest that the effect of this is that he was led to believe his insurance would remain in force whether he paid the premium on time or not.The fact is that the only definite statement of Moore, as opposed to generalizations or characterizations susceptible of various but all vague meanings, was that as a result of his dealings with Schamel he was led to believe that 'when I made the payments he said I was taken care of.'Moore also testified that he knew of the seventeen day grace period.

Moore paid the renewal premium on several occasions.Each time he paid Schamel and later received a receipt from the Company sent from its office in Columbus, Ohio.

The first renewal was due December 23, 1947.The Company receipt was dated January 14, 1948, five days after the end of the seventeen day grace period.The second renewal premium was due June 23, 1948.The Company receipt was dated July 12, two days after the end of the grace period.The third renewal date was December 23, 1948, and the official receipt was dated December 28, 1948.Moore testified that it took three or four days after the payment to Schamel to get back the receipts.Mrs. Schamel said that her husband usually sent in his collections to the home office twice a week.If remittances were received at the home office after two thirty in the afternoon, they became part of the next day's mail and receipts for them were so dated.Schamel, as was true of all agents, gave a receipt for premium payments unless a check were given.Both sides were in full agreement at the trial, as they are here, that payment to Schamel was payment to the Company so that the time he was paid is decisive.

Moore could not or would not produce either check or receipt showing when he paid Schamel.On Moore's testimony there can be at most only a speculative possibility that one payment was made to Schamel after the grace period.

The fourth and final premium was due June 23, 1949.The grace period extended the due date to July 10th.The premium was not paid and on July 17th the accident happened.On the 18th Moore went to Schamel's home to get Schamel to accept a premium.He gave him a check dated July 18th.Schamel took it and first gave Moore a receipt dated the 16th, and then took it back and had Moore fill out an application for new insurance dated July 18th, the insurance to be effective July 18th.Later the Company refused the new insurance and returned the premium.

Asked whether he knew the policy had expired before the accident Moore said: 'I knew the premium was not paid, I was not sure how much it was over lapsed or over due.* * * I thought maybe five, six or seven days, something like that.'He was then asked if he knew that the grace period had expired.His answer was 'I knew there was a grace period but did not think it was over due only a couple days.'

The testimony of appellee was that, as provided in the policy, a notice of premium due was always mailed twenty days before the due date.If the premium is not paid, a second notice is mailed--seven days after the due date.This is a duplicate of the premium notice with the addition on the bottom in red: 'This policy expires 17 days from due date if premium is not paid.'Moore did not deny receipt of these notices; in fact, admitted receipt of them in relation to the premium due June 23, 1949, just preceding the accident.Clearly he knew of the grace period and its length and effect.

The appellee's district manager testified that the date the local agent received the premium controlled--if within the grace period the policy was in force, if beyond it an...