Payne v. The President and Directors of the Insurance Company of North America

• Decision Date: 21 April 1913
• Citation: Payne v. The President and Directors of the Insurance Company of North America, 156 S.W. 52, 170 Mo.App. 85 (Kan. App. 1913)
• Parties: D. A. PAYNE and C. A PAYNE, Respondents, v. THE PRESIDENT AND DIRECTORS OF THE INSURANCE COMPANY OF NORTH AMERICA, Appellant
• Court: Kansas Court of Appeals

156 S.W. 52

170 Mo.App. 85

D. A. PAYNE and C. A PAYNE, Respondents, v. THE PRESIDENT AND DIRECTORS OF THE INSURANCE COMPANY OF NORTH AMERICA, Appellant

Court of Appeals of Missouri, Kansas City

April 21, 1913

Appeal from Sullivan Circuit Court.--Hon. Fred Lamb, Judge.

Judgment affirmed.

Fyke & Snider for appellant.

John W Bingham and Earl F. Nelson for respondents.

OPINION

JOHNSON, J.

This is an action on a policy of fire insurance of $ 1200 covering a store building owned by plaintiffs in Milan. The principal defense is the alleged cancellation of the policy by defendant before the occurrence of the loss. The policy was issued September 11, 1911, and was to continue in force one year from that date. Plaintiffs paid the premium of $ 34.80 which covered the whole term. The fire occurred April 9, 1912, during the term for which the policy was issued and according to the evidence of plaintiffs, damaged the property in the sum of $ 1172.56. Defendant refused to pay the loss on the ground that the policy had been cancelled and this suit followed.

The contract provided that "this policy shall be cancelled at any time at the request of the insured; or by the company by giving five days' notice of such cancellation."

The subject of cancellation arose between the parties early in March, 1912, in a letter written by defendant's agent at Milan to plaintiff D. A. Payne who, at the time, was temporarily in Colorado Springs, Colo. Neither the letter nor a copy could be found at the time of the trial and the only evidence of its contents is in the testimony of Mr. Payne who stated that the agent informed him "that the company wanted to cancel the policy and he wanted to know where the policy was." The answer to this letter which was written and mailed at Colorado Springs, March 4, 1912, was as follows:

"Mr W. J. Wattenberger, Milan, Mo.

"Dear Sir: Yours regarding cancelling insurance on Depot Restaurant Bldg. at hand and in reply will say I am very much surprised at this, and I hardly know what to say. I don't see any reason for cancelling as it is all paid up for a year from the time of insuring it. Now if the company won't carry it any longer and you can place it in any other good company for the unexpired time without any further expense to me you can do so. The policy is in charge of the Sullivan Co. Bank. You can see Nova Payne and he will show you the policy. I don't see any need of changing policies and hope you won't have to. Please let me hear from you at once and oblige."

Payne returned to Milan and was informed by the agent that he could not find the policy at the Sullivan County Bank. Payne replied that the policy certainly was at the bank. The agent suggested that it might be at Payne's house and Payne then promised to search for it and the agent agreed to change the insurance to another company. This conversation occurred on or about March 23d and in its course the agent stated that the old policy "stands till we can get it changed, if any loss." Payne did not find the policy and nothing further was said by the parties on the subject of cancellation until after the loss. Defendant did not offer to return the unearned premium.

To effect a cancellation of the policy before the end of the term for which it was issued, defendant was required by the contract to give plaintiffs "five days' notice of cancellation." Such notice to be valid necessarily should have expressed a clear and unequivocal action of defendant on the subject of cancellation and not a mere purpose or intention to take such action at some future time. As we said in Banking Co. v. Ins. Co., 75 Mo.App 310: "The effect of a cancellation being an option of one party to bring to an end a contract for the protection of another, the action taken to that end must be unequivocal and not such as may be a subject of misinterpretation. It must not depend upon a future event, but must be a present purpose carried out, so that the policy is cancelled at the time the cancellation could become effective under the contract." [See, also, Gardner v. Ins. Co., 58...