Otis Mink v. Economy Fire & Casualty Co., (p. E. Shirk Ins. Agency), 82-LW-1742

• Decision Date: 10 August 1982
• Docket Number: 82AP-317,82-LW-1742
• Parties: Otis Mink, Plaintiff-Appellant v. Economy Fire & Casualty Co., (P. E. Shirk Insurance Agency), Defendants-Appellees.
• Court: Ohio Court of Appeals

Otis Mink, Plaintiff-Appellant v. Economy Fire & Casualty Co., (P. E. Shirk Insurance Agency), Defendants-Appellees.

No. 82AP-317.

82-LW-1742 (10th)

Court of Appeals of Ohio, Tenth District Franklin.

August 10, 1982

ZACKS LUPER & WOLINETZ, MR. STANLEY L. MYERS, of Counsel, 50 West Broad Street, Columbus, Ohio 43215, For Plaintiff-Appellant.

WILES DOUCHER, TRESSLER & VAN BUREN, MR. THOMAS E. BOYLE, of Counsel, 300 South Second Street, Columbus, Ohio 43215-5095 For Economy Fire & Casualty Co.

GINGHER & CHRISTENSEN, MR. JOHN M. MAHOTA and MR. DALE K. NICHOLS, of Counsel, 311 East Broad Street, Columbus, Ohio 43215, For P. E. Shirk Insurance Agency.

OPINION

MARKUS J.

Plaintiff seeks reversal of a Franklin County Common Pleas Court judgment, which denied recovery for a fire loss under alleged personal property insurance. The trial court found no coverage applied at the time of the loss, so it dismissed plaintiff's claim against the insurer and the insurer's third-party indemnity claim against the local insurance agent. Plaintiff argues that coverage was in effect, even though he had not paid his renewal premium for the policy which had expired three months before the fire loss.®1¯ We disagree.

Footnote 1 Plaintiff's sole assignment of error asserts:

"The lower court erred in finding that no contract of insurance existed between Appellant, Otis Mink, and Appellee, Economy Fire & Casualty Company, providing coverage for Appellant's loss that would otherwise would [sic] have been covered under the policy."

Plaintiff purchased an insurance policy from the defendant insurer through the third-party defendant agent to cover personal property contents of his residence, for the period from December 16, 1975 to December 16, 1978. On or about December 12, 1978, the insurer mailed a new policy to the agent, so that plaintiff could renew his insurance coverage. That new policy stated that it would be effective when the agent countersigned it. On December 18, the agent received the policy from the insurer and mailed plaintiff a Notice of Premium Due, informing plaintiff that he had until January 16, 1979, to pay the premium due on December 16, because the policy was received late. The notice further stated that the policy would be mailed to plaintiff when the premium was received. A short time later, the agent sent plaintiff a duplicate of the same notice. The duplicate notice was returned by the postal service with the explanation that plaintiff had moved and left no forwarding address. Plaintiff denied receiving either notice.

Meanwhile, the agent paid the new premium to the insurer on February 6, as part of the insurer's billing for December business. When the agent's duplicate notice was returned, the agent sent the policy back to the insurer on February 7, 1979, because plaintiff had not paid the premium. The insurer nullified the inchoate policy from its inception and refunded the total premium charge to the agent. The policy had never been countersigned by anyone at the agent's office. On March 16, 1979, three months after the term of his policy, plaintiff sustained the fire loss which is the subject of this action.

Plaintiff contends the insurer decided the policy could be renewed for another term, so the insurance coverage remained effective past the expiration date and would not terminate until the insurer sent plaintiff a cancellation notice. Plaintiff relies on Sections 1 and 2 of Endorsement D-206 in the policy which states:

"1. CANCELLATION FOR NON-PAYMENT OF PREMIUM.

"This policy may be cancelled by this Company at any time during the policy period for failure to pay any premium when due whether such premium is payable directly to this Company or its agent or indirectly under any premium finance plan or extension of credit by mailing or delivering to the Insured written notice stating when, not less than 10 days thereafter, such cancellation shall be effective.

"2. CANCELLATION OF POLICIES IN FORCE FOR 60 DAYS OR MORE AND RENEWAL POLICIES.

"If this policy:

"(a) has been in force for 60 days or more ; or

"(b) if this is a renewal of a policy issued by this Company, effective immediately ;

"it may be cancelled by this Company for one or more of the following reasons and then only by mailing or delivery to the Insured written notice stating when, not less than 30 days thereafter, such cancellation shall be effective:

"(1) This policy was obtained through material misrepresentation, fraudulent statements, omissions or concealment of fact material to the acceptance of the risk or to the hazard assumed by this Company;

"(2) There has been a substantial change in the risk assumed by this Company since the policy was issued; or

"(3) Wilful and negligent acts or omission by the Insured have substantially increased the hazards insured against." (Emphasis added.)

Plaintiff's argument lacks merit, since these sections apply only when a policy is cancelled during the policy period for one of the reasons set forth in Sections 1, 2(B)(1), (2) or (3). This policy lapsed. It was not renewed by the plaintiff-insured, although the insurer was willing to do so, and it was not cancelled. "In the absence of contract, statute, or course of dealing so requiring, no notice of lapse of the policy for non-payment of premium is necessary." See: 6 Couch on Insurance 2d, Sec. 32.92; Cf. Mougey v. Union Central Life Ins. Co. (1931), 123 Ohio St. 595; Miraldi v. Life Ins. Co. of Virginia (1971), 48 Ohio App. 2d 278.

The difference between a policy cancellation and its lapse is emphasized in Morey v. Educator & Executive Insurers (1976), 45 Ohio St. 2d 196. Morey concerned the provision in R.C. 3937.32 that cancellation of an automobile insurance policy is effective only when the requisite cancellation notice is sent to the insured. Although R.C. 3937.32 is not applicable to personal property insurance, the court's explanation of the difference between a lapse and a cancellation is noteworthy (Id, at 198-199):

"The statutory requirement of notice of cancellation, contained in R.C. 3937.32, does not require notice to terminate coverage where a policy has '

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