Schroeder v. Horack, 60828

• Decision Date: 06 December 1979
• Docket Number: No. 60828,60828
• Citation: 592 S.W.2d 742
• Parties: Robert SCHROEDER, a Minor, by William Schroeder, His Father and Next Friend, Plaintiff-Respondent, v. James Wm. HORACK, Jr., Defendant, and Allstate Insurance Company, an Illinois Corporation, Defendant-Appellant.
• Court: Missouri Supreme Court

Page 742

592 S.W.2d 742

11 A.L.R.4th 440

Robert SCHROEDER, a Minor, by William Schroeder, His Father and Next Friend, Plaintiff-Respondent, v. James Wm. HORACK, Jr., Defendant, and Allstate Insurance Company, an Illinois Corporation,

Defendant-Appellant.

No. 60828.

Supreme Court of Missouri, En Banc.

Dec. 6, 1979.

Rehearing Denied Jan. 15, 1980.

Samuel T. Vandover, James E. Godfrey and Denis C. Burns, St. Louis, for defendant-appellant.

Anthony M. Gioia and Warren A. Grauel, St. Louis, for plaintiff-respondent.

SEILER, Judge.

This is an appeal in a declaratory judgment action on a liability insurance policy. The case was transferred here after opinion in the Eastern District Court of Appeals, to resolve a question of general interest and importance pertaining to the law on cancellation of an insurance policy by the insured ¹ and comes to the writer on reassignment. We will treat the case as though here on original appeal.

Respondent Robert Schroeder, a minor, by William Schroeder, his father and next friend, filed a petition in two counts. Count I asked for damages for personal injuries sustained by respondent when he was struck by a motorcycle driven by defendant James William Horack, Jr. In Count II, respondent sought a judgment declaring a liability insurance policy, issued by appellant to James Horack, Sr., to be in force and effect on May 11, 1974, the date of the accident.

The trial court decreed that the attempted cancellation by the insured did not conform to the policy provisions and that the liability insurance policy was in full force and effect on May 11, 1974 and designated the judgment as final within § 512.020, RSMo 1969, for purposes of appeal as set out in Civil Rule 81.06. Count I remains pending in the St. Louis County Circuit Court.

The case was submitted to the trial court without a jury, on an agreed statement of facts, with joint exhibits, which may be summarized as follows:

August 8, 1973 Allstate issued a liability policy numbered 10604364 to James Horack, Sr. covering the operation of a motorcycle. Coverage was effective from August 5, 1973 through August 5, 1974.

March 22, 1974 Allstate issued an oral binder extending the insurance to a second motorcycle and a second driver, James Horack, Jr., effective March 22, 1974. Allstate informed the policy holder, James Horack, Sr., that he would be billed at a later date.

May 1, 1974 Allstate sent Horack, Sr. a premium bill for $234.30 for the additional insurance on the second motorcycle and driver.

May 7, 1974 Allstate mailed a printed form "Renewal Questionnaire" to the policyholder.

May 8, 1974 Policyholder called his Allstate agent, Ray Kelly, and told the agent to cancel the policy. Pursuant to his request to do so, the agent prepared the necessary forms and mailed them to Allstate's regional office in Kansas City, stating under the "Remarks" section: "Cancel policy Insured's request." The effective date was specified as "5-8-74."

May 9, 1974 Allstate's Kansas City office received the agent's forms, computer processed them and cancelled the policy on its records, effective May 9, 1974.

May 9, 1974 The policyholder secured a liability policy for the motorcycle involved here from another insurer (Financial Indemnity Insurance Company).

May 11, 1974 James Horack, Jr., while operating the second motorcycle, was involved in an accident with the plaintiff.

May 28, 1974 Allstate's Kansas City Office received the "Renewal Questionnaire" mailed to the policyholder on May 7, 1974. Written across the face of the questionnaire, above the policyholder's signature, was: "Note: This policy was cancelled effective May 8, 1974. Please remit check for portion of payment not used. Lower your rates and I'll be back."

The cancellation provisions of the liability policy issued by Allstate were as follows:

"This policy may be cancelled by the named insured by mailing to the company written notice stating when thereafter the cancellation shall be effective. This policy may be cancelled by the company by mailing to the named insured at the address shown in this policy written notice stating when not less than 10 days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice. The effective date and hour of cancellation stated in the notice shall become the end of the policy period. Delivery of such written notice either by the named insured or by the company shall be equivalent to mailing.

On these stipulated facts, the trial court concluded there had been no cancellation. While this was a court tried case, it was on a stipulation of facts and was not one involving resolution by the trial court of conflicting testimony. As said in Drysdale v. Cornerstone Bank, 562 S.W.2d 182, 183 (Mo.App.1978), "The appeal is here upon an agreed statement of fact . . . Therefore, and contrary to counsel's assertion that our review is governed by Murphy v. Carron, 536 S.W.2d 30, 31 (1-3) (Mo. banc 1976), the only question before this court is whether the trial court drew the proper legal conclusions from the facts stipulated." Accord: State ex rel. Ciba Pharmaceutical Products, Inc. v. State Tax Commission, 382 S.W.2d 645, 651 (Mo. banc 1964); Seiferer v. City of St. Louis, 141 Mo. 586, 43 S.W. 163, 164 (1897); Stone v. Corbett, 20 Mo. 350, 352 (1855); Surface v. Ranger Insurance Company, 526 S.W.2d 44, 45 (Mo.App.1975). ² We must necessarily address the legal consequences of the facts before us and if, under the stipulated facts, plaintiff is not entitled to relief against Allstate, we must so declare. Rule 84.14.

The cancellation clause before us is the standard clause found in automobile liability policies. ³ Under it, the insured has the right to cancel the policy on his own initiative, without being first required to obtain the insurer's permission. The insured can act unilaterally.

This is what occurred here. Under the undisputed facts there was a written cancellation made by the named insured in full compliance with the cancellation provisions of the policy. Horack, Sr. instructed agent Kelly to cancel the policy for him. Acting on Horack's behalf, Kelly prepared and transmitted the cancellation notice. There is nothing in the policy which says the insured cannot have someone else prepare and send in the cancellation notice for him. "An insured may authorize another to cancel an automobile insurance policy. Cancellation by the insured is not an act so personal in its nature that it cannot be delegated, in the absence of a statutory prohibition of such delegation." Blashfield, 7 Automobile Law and Practice § 293.6, at 258 (3d ed. 1966). "There is nothing in the ordinary principles of agency or insurance, however, that prevents insured from authorizing an agent to cancel his insurance policy . . . and a cancellation effected by an agent of insured is valid if he acts within the scope of his express or implied authority." 45 C.J.S. Insurance § 456 at 111-12 (1946). "The authorization by plaintiff of the agent of the companies to cancel the policies, as his (the insured's) agent . . . was not inconsistent with the duties which said agent owed to the companies. He had fully performed such duties when the policies were issued. The companies had consented that they should be canceled at any time upon the request of the plaintiff . . . (U)pon his request, made by his agent, defendant had no discretion with respect to the cancellation . . . " Dawson v Concordia Fire Insurance Co. of Milwaukee, Wisc., 192 N.C. 312, 135 S.E. 34, 36-37 (1926). "The same person may act in both capacities; he may be the agent for the insured, although as to the procuring of the insurance he also represents the company." Meyers v. State Farm Life Ins. Co., 416 S.W.2d 10, 16 (Mo.App.1967). "(T)he policy gave insured the absolute right to cancel at any time by either of two methods: (1) by surrendering the policy to the company or any of its authorized agents, or (2) by mailing to the company written notice stating when thereafter the cancellation shall be effective. Furthermore, Sadler (the insured) could exercise that right personally or she could authorize another to act for her." Hayes v. Hartford Acc. & Indem. Co., 274 N.C. 73, 161 S.E.2d 552, 556 (1968). "An insured may personally cancel his automobile liability insurance policy, or he may authorize another to act for him in canceling." Griffin v. Hartford Acc. & Indem. Co., 264 N.C. 212, 141 S.E.2d 300, 302 (1965).

In the case at bar, Horack authorized the agent, Ray Kelly, to cancel for him. According to the stipulated facts, on May 8, 1974, Horack telephoned Allstate's agent, Ray Kelly, and told him to cancel the policy. The average American citizen who has an automobile liability policy which he wants to cancel does so by calling the insurance agent and telling him to cancel the policy. He does not sit down and write the insurance company a letter stating when thereafter the cancellation is to be effective. He leaves that to the insurance agent and that is the way this matter was handled. According to the authorities cited above, this is in all respects legal and proper.

Horack's telephone call on May 8 to the agent was not itself the equivalent of mailed notice to the company. This, however, is not the point. There is no reason why the insured cannot initiate his request for written cancellation by an oral request to the agent, by telephone or otherwise, to proceed on his behalf. The insurance policy contains no provision that the insured can deal with the agent only in writing.

According to the stipulation, "pursuant to the telephone request" of Horack, Kelly prepared a "Customer Service Request" form and mailed it to Allstate, which received it at the Kansas City office the following date, May 9, 1974.

The "Customer Service Request" form is a joint exhibit in this case. It refers to the Horack policy by number. Under the "Remarks" section appear these...