Perkins v. American Mut. Fire Ins. Co., 200

• Decision Date: 14 June 1968
• Docket Number: No. 200,200
• Citation: 274 N.C. 134,161 S.E.2d 536
• Parties: Lee PERKINS v. AMERICAN MUTUAL FIRE INSURANCE COMPANY.
• Court: North Carolina Supreme Court

Page 536

161 S.E.2d 536

274 N.C. 134

Lee PERKINS v. AMERICAN MUTUAL FIRE INSURANCE COMPANY.

No. 200.

Supreme Court of North Carolina.

June 14, 1968.

Mullen, Holland & Harrell and Thomas H. Morgan, Gastonia, for plaintiff appellant.

Hollowell, Stott & Hollowell, Gastonia, for defendant appellee.

BOBBITT, Justice.

The principal question presented by plaintiff's assignments of error is whether defendant's liability under the policy terminated on February 7, 1963, at 12:01 a.m. on account of plaintiff's failure to pay in full the renewal premium. In our view, the holding designated Finding of Fact No. 28 is in substance a conclusion of law and is so treated.

The policy was issued February 7, 1962, and provided the Compulsory coverage then required by the Vehicle Financial Responsibility Act of 1957 (Session Laws of 1957, Chapter 1393) as a prerequisite to the registration of a motor vehicle by the owner thereof. Swain v. Nationwide Mutual Insurance Co., 253 N.C. 120, 116 S.E.2d 482.

With reference to termination of coverage, Section 2 of said 1957 Act, later codified as G.S. § 20--310 in the 1959 and 1961 Cumulative Supplements to the General Statutes, provided:

'No contract of insurance or renewal thereof shall be terminated by cancellation or failure to renew by the insurer until at least fifteen (15) days after mailing a notice of termination to the named insured at the address shown on the policy. Time of the effective date and hour of termination stated in the notice shall become the end of the policy period. Every such notice of termination for any cause whatsoever sent to the insured shall include on the face of the notice a statement that proof of financial responsibility is required to be maintained continuously throughout the registration period and that operation of a motor vehicle without maintaining such proof of financial responsibility is a misdemeanor. Upon the termination of insurance by cancellation or failure to renew, notice of such cancellation or termination shall be mailed by the insurer to the Commissioner of Motor Vehicles not later than fifteen (15) days following the effective date of such cancellation or other termination.'

The quoted statutory provision was in force at all times pertinent to decision herein. It is noted the statute (G.S. § 20--310) was subsequently amended (1) by Chapter 842, Session Laws of 1963, applicable to policies written or renewed after September 1, 1963, and (2) by Chapter 964, Session Laws of 1963, effective October 1, 1963, and (3) by Chapter 1135, Session Laws of 1965, effective July 1, 1965, and (4) by Chapter 857, Session Laws of 1967, effective June 21, 1967. As amended, the statutes are brought forward and codified as G.S. § 20--310(a), (b) and (c) in the 1965 Replacement and 1967 Cumulative Supplement. However, the said amendments have no application to the present case.

Defendant contends it offered to renew the policy upon payment by plaintiff of the required ($55.00) premium; that the policy was not terminated By it but by plaintiff's failure to pay the premium; and that it was not required to give plaintiff a notice containing the provision, including the warning, set forth in the quoted statute.

No notice given by defendant to plaintiff set forth on the face thereof, in addition to the date and hour of termination, 'a statement that proof of financial responsibility is required to be maintained continuously throughout the registration period and that operation of a motor vehicle without maintaining such proof of financial responsibility is a misdemeanor.' Where applicable, the requirement of the quoted statute that the notice contain the provisions, including the warning, set forth therein, is mandatory. Crisp v. State Farm Mutual Automobile Insurance Co., 256 N.C. 408, 124 S.E.2d 149; Levinson v. Travelers Indemnity Co., 258 N.C. 672, 129 S.E.2d 297. The question is whether, in the factual situation under consideration, a notice containing the provisions, including the warning, set forth in the quoted statute, was prerequisite to termination for failure to renew on account of nonpayment of premium.

The manifest purpose of said 1957 Act was to provide protection, within the required limits, to persons injured or damaged by the negligent operation of a motor vehicle. Swain v. Nationwide Mutual Insurance Co., supra; Nixon v. Liberty Mutual Insurance Co., 255 N.C. 106, 120 S.E.2d 430; Lane v. Iowa Mutual Insurance Co., 258 N.C. 318, 128 S.E.2d 398. The quoted statute must be considered in context with other provisions of said 1957 Act. The primary intent of the General Assembly was that every motorist maintain continuously proof of financial responsibility; and the obvious purpose of the notice required by the quoted statute was to confront the insured with the fact that operation of a car without maintaining proof of financial responsibility was a misdemeanor. The quoted statute relates to the notice and warning that must be given the policyholder in the event his policy is terminated by the insurer, whether the termination is by cancellation or by failure to renew. We are of the opinion, and so hold, that the defendant was required to give such notice and warning, and that in the absence of such notice and warning the policy continued in force and effect notwithstanding plaintiff's failure to pay in full the required premium.

As noted in Faizan v. Grain Dealers Mutual Insurance Co., 254 N.C. 47, 118 S.E.2d 303, the provisions of the quoted statute and of § 313 of the Vehicle and Traffic Law of New York, are similar in all respects pertinent to decision in the present case. See McKinney's Consolidated Laws of New York, Book 62A, c. 71, pp. 106--107. The New York statute provides, Inter alia, that '(n)o contract of insurance or renewal thereof * * * shall be terminated by cancellation by the insurer of failure to renew by the insurer' until notice is given as prescribed; and that '(e)very such notice of termination for any such cause whatsoever sent to the insured shall include * * * a statement that proof of financial security is required to be maintained continuously throughout the registration period * * *' (Note: This statute was formerly codified as Section 93--c of the Vehicle and Traffic Law of New York.)

A brief reference to the two New York decisions discussed in Faizan, namely, Connecticut Fire Insurance Company v. Williams, 9 A.D.2d 461, 194 N.Y.S.2d 952 (1959) and Caristi v. Home Indemnity Company, New York, 24 Misc.2d 136, 202 N.Y.S.2d 340 (1960), seems appropriate. In Williams, the Court said: 'It was recently held in Teeter v. Allstate Ins. Co., 9 A.D.2d 176, 181, 192 N.Y.S.2d 610, 616, that cancellation can only be accomplished by giving the insured notice under Section 93--c * * *.' No notice of termination for failure to renew was mailed by the insurer to the insured. The Court concluded: 'The court below correctly determined that there was here a unilateral failure to renew by the insurer and since section 93--c was not complied with, the insurance continued in effect.' In Caristi, it was held the ruling in Williams would apply Unless it was found the insured had Rejected a renewal policy.

Later New York decisions, to wit, Mong v. Allstate Insurance Company, 15 A.D.2d 257, 223 N.Y.S.2d 218 (1962), and La Barre v. Nationwide Mutual Insurance Company, 16 A.D.2d 842, 227 N.Y.S.2d 632 (1962), and Monette v. Nationwide Mutual Insurance Co., Sup., 230...