Pierce v. Sentry Ins.

• Decision Date: 05 August 1981
• Citation: 421 N.E.2d 1252,12 Mass.App.Ct. 124
• Parties: Sumner H. PIERCE et al. 1 v. SENTRY INSURANCE.
• Court: Appeals Court of Massachusetts

Page 1252

421 N.E.2d 1252

12 Mass.App.Ct. 124

Sumner H. PIERCE et al. ¹ v. SENTRY INSURANCE.

Appeals Court of Massachusetts, Norfolk.

Argued May 8, 1981.

Decided June 22, 1981.

Further Appellate Review Denied

August 5, 1981.

John W. Marshall, Boston (Carol Lazarus, Boston, with him), for plaintiffs.

Gerald W. Motejunas, Boston, for defendant.

Before GREANEY, CUTTER and KASS, JJ.

KASS, Justice.

Approximately nine months after the cancellation of their home owner's insurance policy for nonpayment of the premium, the plaintiffs Roberta and Sumner H. Pierce, sustained a fire loss. The sole question before us is whether the cancellation was valid under G. L. c. 175, § 99, as amended through St. 1974, c. 498, § 1. Section 99 establishes a standard form of fire insurance policy for use in Massachusetts. See O'Roak v. Lloyds Cas. Co., 285 Mass. 532, 535, 189 N.E. 571 (1934). It provides that a "policy may be cancelled ² ... by giving to the insured and to any mortgagee to whom this policy is payable twenty days' written notice of cancellation ..." In view of a certified mail return receipt bearing the signature of Roberta Pierce, the plaintiffs do not dispute that they received Sentry's written notice of cancellation. They base their claim of invalid notice on the ground that Sentry failed to notify the mortgagee of the plaintiffs' real estate, Suffolk Franklin Savings Bank, of the cancellation. The statute is cast in the conjunctive, i. e., it requires notice "to the insured and to any mortgagee" and, therefore, the plaintiffs argue, a notice only to the insured is insufficient, even as to the insured. Upon a motion for summary judgment, a judge of the Superior Court ruled that notice of cancellation was legally sufficient as to the insured and judgment entered for Sentry. We affirm.

It is the general rule that conditions imposed with respect to giving notice of cancellation of insurance must be strictly followed. Gulesian v. Senibaldi, 289 Mass. 384, 387, 194 N.E. 119 (1935). White v. Edwards, 352 Mass. 655, 657, 227 N.E.2d 354 (1967). Fields v. Parsons, 353 Mass. 706, 707, 234 N.E.2d 744 (1968). Each of those cases had to do with cancellation of compulsory motor vehicle liability insurance and turned in part on the failure of the notices to provide the Registrar of Motor Vehicles with the information he requires to perform his duties. That is, the defects were of substance, not formal. Gulesian v. Senibaldi, 289 Mass. at 387, 194 N.E. 119. But the rule that notices of cancellation must comply with the statutory imperatives has been announced in cases dealing with fire insurance as well. Michelson v. Franklin Fire Ins. Co., 252 Mass. 336, 340, 147 N.E. 851 (1925). Strong v. Merchants Mut. Ins. Co., 2 Mass.App. 142, 148, 309 N.E.2d 510 (1974). In the Michelson case the insured did not receive any written notice of cancellation at all. In the Strong case the insured was not notified that he might recover the excess of a paid premium on demand. In either instance the prejudice to the persons insured, in that they were misled or inadequately alerted, was obvious. See generally 17 Couch, Insurance § 67:155 (2d ed. 1967).

Notice to the insured and notice to the mortgagee have discrete purposes, however, and it is difficult to see how, as to the party who receives notice, a failure to give notice to the other, can be anything but merely formal. All the cases we have discussed combine defects of form with disadvantage to the person who received the defective notice. Recognizing this difficulty, the plaintiffs speculate that if their bank had been notified of their nonpayment of insurance premiums, the bank would have called their delinquency to attention and the Pierces would have attended to what they had previously ignored or neglected. We are disinclined to engage in these ruminations. Notice to the bank might also have triggered foreclosure proceedings, as occurred in Strong v. Merchants Mut. Ins. Co., supra.

We are less inclined to so speculate in view of our cases which have treated the loss payable to the mortgagee provisions of insurance policies as a contract "somewhat different from that with the mortgagor." Palmer Sav. Bank v. Insurance Co. of No. America, 166 Mass. 189, 194, 44 N.E. 211 (1896). Union Inst. for Sav. v. Phoenix Ins. Co., 196 Mass. 230, 232, 81 N.E. 994 (1907). Trustees of Thayer Academy v. Corporation of the Royal Exch. Assur. of London, 281 Mass. 150, 153-154, 183 N.E. 264 (1932). In the Thayer Academy opinion the court described some of the elements which distinguish the contract of insurance between an insurer and an owner from the contract of insurance between an insurer and a mortgagee. These were that: by the terms of the policies certain specified acts or defaults of the owners would render the policy void as to them but not as to the mortgagee; if the policy should become void as to the owners by reason of the act of default, the insurer will have the right to pay to the mortgagee the amount secured by its mortgage and get from it an assignment of its mortgage; in case of loss the owners are obliged at once to render a statement in writing setting forth the particulars of the loss, whereas the mortgagee is required to furnish only within a reasonable time proper written information in regard to the loss as to such matters as the mortgagee reasonably might be expected to know.

This quality of separate obligations has been noted particularly where, as in the instant case, the insurance policy contains a so-called "standard mortgage clause." Aetna State Bank v. Maryland Cas. Co., 345 F.Supp. 903, 905-906 (N.D.Ill.1972). Early Settlers Ins. Co. v. Selected Risks Ins. Co., 346 F.Supp. 1272, 1275-1276 (E.D. Va. 1972). 11 Couch, Insurance § 42:694 (2d ed. 1963). Under that clause "the result has been that the courts have held that the agreement of the company with the mortgagee being separate and divisible from that with the mortgagor, the mortgagee cannot be affected by any act or default of the mortgagor,...