Romero v. Maryland Cas. Co.

• Decision Date: 29 October 1951
• Docket Number: No. 19698,19698
• Citation: 54 So.2d 645
• Parties: ROMERO v. MARYLAND CAS. CO.
• Court: Court of Appeal of Louisiana — District of US

Page 645

54 So.2d 645

ROMERO v. MARYLAND CAS. CO.

No. 19698.

Court of Appeal of Louisiana, Orleans.

Oct. 29, 1951.

Warren M. Simon, Lucas S. Connor, Jr., New Orleans, for plaintiff-appellee.

Deutsch, Kerrigan & Stiles and Breard Snellings, all of New Orleans, for defendant-appellant.

JANVIER, Judge.

Plaintiff, Mayo Romero, brought this suit for $497.37 against Maryland Casualty Company on a policy of collision insurance issued by that company, alleging that he had secured the policy; that the automobile truck covered by it had been damaged in collision; that the cost of making the necessary repairs was $547.37; that from this there should properly be deducted $50 because of a deductible clause in the policy, and that the said insurance company had refused to pay the balance, to-wit $497.37.

Defendant admitted that the policy had been issued, but averred that, in accordance with certain provisions of the policy, it had been cancelled by the defendant company prior to the occurrence of the accident.

In its answer defendant also averred that in the notice of cancellation, which had been sent to plaintiff by registered mail, he had been advised that: 'Unearned Premium to date amounts to $109.52 which sum will be paid on demand by Agent.'

When the matter came to trial it was admitted that the truck had been damaged and that if there was liability under the policy, the amount to be recovered by plaintiff should be the amount sued for, to-wit $497.37.

Most of the facts which are involved are not in dispute. The plaintiff, who lives in New Iberia, Louisiana, apparently operates a plantation and requires insurance of various kinds, including what is known as collision insurance, that is to say, insurance under which the insurance company will pay for damage sustained by his own vehicle when such damage results from collision.

In New Iberia, there is an insurance agency known as 'Lourdes Insurance Agency', owned and operated by Madeline Viullemot. This agency is the local agent of defendant company, of which Black, Rogers and Company, in New Orleans, is general agent.

The Lourdes Insurance Agency, apparently beginning in 1942, had been employed by plaintiff to secure many different policies and, at his request, had secured from the defendant company, through the general agent, the policy which is now sued on. This policy was made effective at 12:01 noon, on October 28, 1948, and was to be in effect for one year. The premium on this policy was not paid to the Lourdes Insurance Agency, nor to the general agent, nor directly to the company by Romero, but, at the expiration of sixty days from the issuance of the policy, the Lourdes Agency remitted to the company, through the general agent, the amount of the premium; in other words, the Lourdes Agency advanced for the account of Romero the premium which was due the company but which he had not paid. This was done because local agents are required to make remittances for all such premiums within sixty days and the Lourdes Agency, during the many years previous to the issuance of this policy, had extended credit to Romero, and merely added the amount of this premium to other amounts which were due to that agency by Romero. At that time, Romero was indebted to the Lourdes Agency for several hundred dollars more than the amount of this premium.

On January 26th, 1949, the defendant company, having decided to cancel the policy, mailed to Romero a notice of cancellation in which it was stated that the policy herein sued on 'is hereby cancelled as of Noon 12:01 A.M. the 31st day of January, 1949 * * *.' In that notice there also appeared the statement, which we have already quoted, in which the insured Romero was advised that he could obtain the unearned premium by making demand on the local agent.

This notice was sent by registered mail to the residence of Romero and the return receipt card, signed by Mary Knott and dated '1-27-49', was returned to defendant company. It is admitted that Mary Knott was a household servant of Romero.

It is conceded that the defendant company had the legal right to cancel the policy on five days notice, but it is contended that the requirements of the Insurance Code of Louisiana were not complied with because the unearned return premium was not 'actually paid' to Romero, and that therefore the attempted cancellation never became effective.

The principal portion of the Louisiana Insurance Code on which this contention is based is to be found in L.S.A.R.S. 22:636, Act No. 195 of 1948, Sec. 14.26.

'A. Cancellation by the insurer of any policy which by its terms is cancellable at the option of the insurer, or of any binder based on such policy, may be effected as to any interest only upon compliance with either or both of the following:

'(1) Written notice of such cancellation must be actually delivered or mailed to the insured or to his representative in charge of the subject of the insurance not less than five days prior to the effective date of the cancellation.

'(2) Like notice must also be so delivered or mailed to each mortgagee, pledgee, or other known person shown by the policy to have an interest in any loss which may occur thereunder.

'B. * * *

'C. * * *

'D. The portion of any premium paid to the insurer on account of the policy, unearned because of the cancellation and in amount as computed on the pro rata basis, must be actually paid to the insured or other person entitled thereto as shown by the policy or by any endorsement thereon, or be mailed to the insured or such person as soon as practicable following such cancellation. Any such payment may be made by cash, or by cheque, bank draft, or money order.'

Counsel for plaintiff argue that the above quoted requirement of the Louisiana Insurance Code is clear and unambiguous, and that it means that if an insurer desires, for reasons of its own, to cancel such a policy, it may do so, but that in order to make the cancellation effective, it must do two things: (1) It must give the notice of cancellation, and (2) it must pay directly to the insured, at the time of the attempted cancellation, the unearned premium.

Counsel for the insurer, on the other hand, maintain that no such obligation is placed upon the insurer by the above quoted provisions of the Insurance Code, and that all that the Code requires is that written notice must be given, and that if the notice is given, then there is placed on the insurer the obligation, within a reasonable time, to see that the unearned premium is returned.

Counsel say that that provision which appears in 'A', the first of the above quoted paragraphs, under which the cancellation may be effected upon compliance 'with either or both of the following,' refers to the two paragraphs which immediately follow paragraph 'A', under the first of which paragraphs (1) it is provided that the notice must be given to the insured, and under the second of which (2) it must be given also to the mortgagee, pledgee or other person having an interest where there is such mortgagee, pledgee or other person at interest, and that the alternative, 'either or both of the following' found in that first paragraph does not in any way refer to the last or paragraph 'D' of the above quoted paragraphs, which is concerned only with the return of the unearned premium 'as soon as practicable following such cancellation.'

Counsel for defendant insurer also maintain that, even if the above quoted provisions of the Insurance Code could be interpreted as contended for by plaintiff and even if, as the result of such interpretation, it should be held that cancellation may be effected only upon the giving of notice and the return of the premium at the same time, nevertheless where this is not done and the insured makes no objection to the action of the insurer in returning the unearned premium to the agent instead of directly to the insured, the insured, by such failure to object, waives his right to insist that the premium should have been paid actually and directly to...