Seaboard Mut. Casualty Co. v. Profit, 4534.

• Decision Date: 08 January 1940
• Docket Number: No. 4534.,4534.
• Citation: 126 ALR 1105,108 F.2d 597
• Parties: SEABOARD MUT. CASUALTY CO. v. PROFIT.
• Court: U.S. Court of Appeals — Fourth Circuit

126 ALR 1105, 108 F.2d 597 (1940)

SEABOARD MUT. CASUALTY CO. v. PROFIT.

No. 4534.

Circuit Court of Appeals, Fourth Circuit.

January 8, 1940.

Roszel C. Thomsen and Walter L. Clark, both of Baltimore, Md. (Joseph Sherbow, of Baltimore, Md., on the brief), for appellant.

Zanvyl Krieger, of Baltimore, Md. (G. Randolph Aiken, Samuel S. Levin, and Ben B. Sellman, all of Baltimore, Md., on the brief), for appellee.

Before PARKER and SOPER, Circuit Judges, and DOBIE, District Judge.

SOPER, Circuit Judge.

The principal question in the case relates to the cancellation of an automobile public liability and property damage insurance policy, issued by Seaboard Mutual Casualty Company to Earl J. McCullough, covering his automobile. Carl Profit, plaintiff in the District Court, suffered injuries on June 25, 1938 caused by a collision between his car and the insured's, and recovered a judgment for $5,000 against McCullough in the State Court. Execution on the judgment produced nothing, whereupon Profit brought the pending suit against the Casualty Company under the customary provision of the policy, and in a trial before the District Judge, without a jury, obtained a judgment for the full amount. At the conclusion of the evidence, which brought out the circumstances hereinafter recited, the defendant moved for a directed verdict in its favor, but the motion was overruled and a judgment against it for the full amount was entered.

In considering the merits of the appeal, it must be borne in mind that Profit stands in the same position as the insured would have occupied had he paid the judgment of the State Court against him and sued the Casualty Company on his policy. The defense in the pending suit is that by reason of the circumstances now to be set out, the policy has been effectually cancelled before the Profit accident occurred. McCullough took out his first policy with the Casualty Company in November, 1936, covering the period of the ensuing year. The next month he had an accident, and when the matter was referred to the company, failed to cooperate with it to its satisfaction. On January 1, 1937 the Home Office gave a direction to the Baltimore office of the company in the following words: "Mark your records insofar as McCullough is concerned that if he reports another accident, regardless of whether he is at fault or not, you are, without any further notice from this office, to cancel the risk". At the expiration of the policy year in November, 1937 the policy in suit was issued. On April 23, 1938 McCullough was involved in another accident in which the automobile of one Housman was slightly damaged. McCullough gave the name of the Casualty Company to Housman, who telephoned the first notice of the accident to the Baltimore office of the company four days later. He talked with Margaret Cross, an employee; and thereupon, pursuant to the previous instructions of the Home Office, she prepared and mailed the following notice of cancellation addressed to McCullough and duly signed:

"Please take notice that Policy No. AL-5689 issued to you by Seaboard Mutual Casualty Company, is hereby cancelled, pursuant to the terms and conditions in said policy contained, such cancellation to take effect on the 2nd day of May, 1938 at 12.01 A. M. Standard Time, at the place where said policy was countersigned. This policy is cancelled due to request of underwriting dept."

The policy contains the following provision with respect to cancellation:

"This policy shall be cancelled at any time at the request of the Named Assured, in which case the Company shall, upon demand and surrender of this Policy, refund the excess of paid premium above the customary short rate premium for the expired term. This Policy may be cancelled at any time by the Company by giving to the Named Assured five (5) days' written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired term, which excess, if not tendered, shall be refunded on demand. Notice of cancellation mailed or delivered to the address of the Name Assured stated in this Policy shall be a sufficient notice. Where a special provision for cancellation and notice of such cancellation is required by statutory enactment in the State where this Policy is issued, the conditions of this Cancellation Clause are amended to conform thereto."

Miss Cross placed the notice of cancellation in an envelope bearing a two cent postage stamp, and directed it to McCullough at his address in Baltimore as stated in the policy, and delivered the letter to the Post Office Department in Baltimore on April 27, 1938, receiving a receipt therefrom acknowledging that it had received one piece of first class mail directed to the insured at the address on the envelope. The evidence that the notice of cancellation was mailed as described is very strong; the fact was assumed in the opinion of the District Judge which accompanied his verdict and it is not disputed in this court. The evidence as to whether the notice was actually delivered to the insured's residence and received by him was conflicting, and the District Judge found that the insured did not receive it. It is therefore important to observe that under the policy the notice of cancellation is sufficient if it is mailed or delivered to the address of the named assured stated in the policy. See Fidelity & Deposit Co. v. Riley, 168 Md. 430, 434, 178 A. 250. Both mailing and delivery are not required, and the ...