Medford v. Pacific Nat. Fire Ins. Co.

• Decision Date: 06 June 1950
• Citation: 219 P.2d 142,189 Or. 617
• Parties: MEDFORD v. PACIFIC NAT. FIRE INS. CO.
• Court: Oregon Supreme Court

219 P.2d 142

189 Or. 617

MEDFORD v. PACIFIC NAT. FIRE INS. CO.

Supreme Court of Oregon.

June 6, 1950

Argued May 11, 1950.

Austin Dunn, of Baker, argued the cause for appellant. On the brief were Dunn & Jackson, of Baker.

David C Silven, of Baker, argued the cause for respondent. On the brief were Hallock, Donald, Banta & Silven, of Baker.

Before LUSK, C. J and BRAND, BELT, ROSSMAN and LATOURETTE, JJ.

BRAND, Justice.

On May 20, 1946 the defendant insurance company issued a policy insuring the plaintiff against loss or damage to his automobile caused by collision. The plaintiff sues on the policy and alleges that on November 8, 1946 when the policy was in full force and effect his car was totally wrecked in an accident; that its reasonable value was $2100; that $700 is a reasonable attorney fee; that all conditions precedent have been performed and that payment has been demanded and refused.

The defendant denies the allegations to which we have referred and alleges that the plaintiff has not filed any proof of loss. As a separate answer the defendant sets up certain provisions of the policy concerning cancelation and in apparent reliance upon those provisions alleges that on October 16, 1946 written notice of cancelation was mailed to the plaintiff at his address as shown in the policy and that the letter containing said notice was not returned to the defendant. The defendant asserts that under the terms of the policy liability ceased at midnight on October 23, 1946. The provisions of the policy so far as material are set forth in the answer as follows: '* * * 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 the 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 * * * If the company cancels, earned premiums shall be computed pro rata. Premium adjustment may be made at the time cancelation is effected and, if not then made, shall be made as soon as practicable after cancelation becomes effective.'

A copy of the alleged notice of cancelation is attached to the answer as an exhibit and reads as follows:

'Notice of Cancellation

'Place: Portland, Oregon

'Date: October 16th, 1946.

'You are hereby given notice of the cancellation of Policy No. PM 14207, issued through Walter J. Pearson agency Paul Medford and loss payable to First National Bank, Baker Oregon, Said Policy will stand cancelled, and all liability of Pacific National Fire Insurance Company and Massachusetts Bonding and Insurance Company, thereunder will cease, at and from midnight, standard time, October 23, 1946, without further notice.

'If the premium for said policy has been paid, the excess of said premium above the pro-rata premium for the expired time, if not tendered to you herein will be refunded on demand. If the premium has not been paid, no refund is due, and a bill for the premium earned to the time of cancellation will be forwarded in due course. Please return the policy.

'Pacific National Fire Insurance Company

'Massachusetts Bonding & Insurance Co.

'By ________

'Paul Medford

'General Delivery

'Baker, Oregon

'Return premium, Collision $81.84'

To the separate answer, the plaintiff filed a demurrer which was sustained. The defendant elected to stand upon the answer. The cause was tried by the court without a jury. The plaintiff submitted findings of fact and conclusions of law. Objections were filed by the defendant and the court, having considered the objections, made findings of fact and conclusions of law and entered judgment for the plaintiff in the sum of $1915 with legal interest from November 8, 1946 and for the further sum of $500 attorney's fee and costs and disbursements. The defendant appeals.

The defendant, as its first assignment, asserts that: 'The Court erred in sustaining plaintiff's demurrer to defendant's separate answer and defense of cancellation of the policy under the terms thereof prior to the alleged loss.'

The appellant states the issue thus: '* * * The principal question on this appeal is whether in Oregon an insurance company can effectively cancel a policy by complying with the cancellation clause provided in the policy or is 101-1609 O.C.L.A. the exclusive method to be employed.'

The plaintiff contends that 'The statutory method providing for cancellation of an insurance policy is exclusive' and relies upon the provisions of O.C.L.A. § 101-1609 as the exclusive method by which the policy in question could be canceled. Plaintiff argues further that the notice of cancelation did not comply with the provisions of that section and therefore was ineffectual. We will first consider whether the statutes of this state have provided any exclusive method for canceling a policy of this kind. The statute provides that:

'A company may be licensed to make any or all insurance and reinsurance comprised in any one of the following numbered subdivisions:

'First. Fire and Marine Insurance. (a) On property and rents and use and occupancy, against loss or damage by fire * * * on automobiles against loss or damage from collision or theft, and against liability of the owner or user for injury to property caused by his automobile.' O.C.L.A. § 101-117, Laws 1917, ch. 203, § 5, p. 312.

The statute further provides that:

'(1) When more than one class of insurance as enumerated and described in section 101-117 is effected by the same insurer each kind shall be written in a separate and distinct policy, which may be canceled, surrendered or otherwise terminated without affecting other premiums paid or policies held by the same assured, except as otherwise provided in this act.

'* * *

'(3) [Automobile insurance policies.] Insurance in one policy may be effected by any company licensed to transact such business, upon automobiles and vehicles and the accessories and other property transported upon and used in connection therewith against loss or damage by fire, collision, explosion and against loss by legal liability for damage to persons and/or property resulting from the maintenance, use and operation of such automobiles or vehicles and against loss by burglary, embezzlement or theft, or any one or more of them, such insurance to be known as 'automobile insurance' and the premiums and losses to be reported under such title. For this purpose a fire insurance company need not use the standard fire policy.' O.C.L.A. § 101-122.

O.C.L.A. § 101-131 provides in part: 'Every contract of insurance shall be construed according to the terms and conditions of the policy, except where the contract is made pursuant to a written application therefor, and such written application is intended to be made a part of the insurance contract * * *'.

O.C.L.A. § 101-1608 provides in part as follows: '* * * all insurance business transacted in whole or in part within or outside of this state, the subject matter of which insurance is located wholly or in part in this state, effected or placed by any company, unless otherwise provided, shall be subject to and governed by this act * * *.' Then follows the provision of the statute on which the defendant relies as a statement of the exclusive method by which the policy in question could have have been canceled. 'Any fire insurance policy may be canceled at any time by the insurer giving the insured or his representatives in charge of the property insured, and the mortgagee, if the insurance is for the benefit of the mortgagee, five days' notice of such cancelation, and if the premium has been actually paid, by paying in cash or mailing by registered letter with proper postage affixed thereto, addressed to the insured at his usual or last known post-office address, a post-office or express company money order or bank draft, for the return premium computed at pro rata rate for the time the insurance has yet to run, or customary short rate where the insurance is canceled by the insured, or, where the premium has not been paid, by the insured giving the insurer or its agent or agency who issued the policy notice of such cancelation and paying the premium for the time the insurance has been in force, computed at the usual short rate.' O.C.L.A. § 101-1609.

We may now call attention to certain provisions of the statutes thus far cited. A company issuing automobile insurance is deemed an insurance company under the provisions of O.C.L.A. § 101-117, and policies insuring automobiles against damage from collision are classified for the purpose of licensing along with fire and marine insurance. O.C.L.A. § 101-117, par. (2). Automobile insurance policies, though classified with fire insurance policies, need not use the standard fire policy. Such insurance is known as 'automobile insurance'. O.C.L.A. § 101-122, par. (3). The crucial section. O.C.L.A. § 101-1609, does not provide that all policies issued by fire insurance companies may be canceled as therein provided. If that section did apply to all policies issued by a fire insurance company, then there would be ground for arguing that the section applied to automobile insurance when issued by a fire insurance company. The provisions of O.C.L.A. § 101-1609 are that 'Any fire insurance policy may be canceled * * *', etc. The policy issued to the plaintiff was issued by a fire insurance company, but was not a fire insurance policy and was a policy known as an 'automobile insurance' policy, which, by express terms of the statute and not be in the form of a...