State Distributing Corporation v. Travelers Indem. Co.

• Decision Date: 02 June 1944
• Docket Number: 453.
• Citation: State Distributing Corporation v. Travelers Indem. Co., 30 S.E.2d 377, 224 N.C. 370 (N.C. 1944)
• Parties: STATE DISTRIBUTING CORPORATION v. TRAVELERS INDEMNITY CO.
• Court: North Carolina Supreme Court

30 S.E.2d 377

224 N.C. 370

STATE DISTRIBUTING CORPORATION v. TRAVELERS INDEMNITY CO.

No. 453.

Supreme Court of North Carolina

June 2, 1944

Civil action on alleged contract of robbery and burglary insurance and for recovery of loss sustained.

In the trial court counsel for plaintiff and for defendant filed with the court an agreed statement of facts substantially as follows:

1. Plaintiff is a corporation with its principal office and place of business located at 108 S Blount Street, in the city of Raleigh, North Carolina.

2. Defendant, a foreign corporation, with its principal office and place of business in the city of Hartford, Connecticut, was authorized to engage, and did engage, in the indemnity insurance business in the State of North Carolina on the dates hereinafter stated, and I. J Dowdy, Jr., of the city of Rocky Mount, N. C., was a duly licensed agent and representative of it, with power and authority to enter into contracts of insurance for, and on behalf of it.

3. On December 21, 1939, plaintiff through its manager applied to Dowdy, agent of defendant, for a policy of robbery insurance by letter reading as follows:

"Please put a binder effective immediately covering robbery insurance for State Distributing Company, for $1,000 on the outside, and $1,300 on the inside", and "a day or two thereafter by telephone conversation the plaintiff amplified said application to said I. J. Dowdy by applying for a policy of burglary insurance in addition to the policy of robbery insurance above mentioned".

4. Dowdy, defendant's agent, bound plaintiff in accordance with said letter of December 21, 1939, and the telephone request above mentioned, and on December 27, 1939, wrote a letter to plaintiff advising that said binder for robbery insurance had been put into effect,--the letter reading in essential part as follows: "Thank you for your letter of December 21, 1939, requesting that we cover you in the amount of $1,300 for burglary and robbery insurance inside your premises and $1,000 robbery and hold-up insurance away from your premises. We have put this coverage in effect immediately. I am requesting one of the Company representatives to call on you the next time they are in Raleigh, as we will need additional information to enable us to issue the policy itself, however, in the meantime, you may be sure you are covered as requested." And at the same time Dowdy wrote defendant at Charlotte, N.C., requesting it "to handle in the manner suggested", and forwarded to it a copy of his said letter to plaintiff.

5. The "letter of December 27, 1939, from I. J. Dowdy, agent of defendant, to plaintiff constituted a binder or contract of insurance for a period of one year in accordance with the terms of said letter".

6. Under date of February 29, 1940, defendant issued to plaintiff a policy of robbery insurance for a period of one year from December 21, 1939, to December 21, 1940, which policy was entitled a "robbery policy", and contained these provisions: (a) In item 4 an exception to the protection of one outside custodian which exception provided that there were covered by the policy protection for three outside custodians in the amount of $1,000 each; (b) in item 9 a declaration that "the assured has no other burglary, robbery or theft insurance except as stated herein: 'No Exceptions"'; (c) agreement that "as respects moneys or securities, or both, *** stated to be insured hereunder: I. To indemnify the assured for all loss *** occasioned by Robbery Or Attempt Thereat committed *** from a custodian outside the assured's premises ***", and "II. To indemnify the assured for all loss *** occasioned by Robbery Or Attempt Thereat committed *** within the assured's premises ***"; (d) definition of robbery as used in the policy to mean "a felonious and forcible taking of property (1) by violence inflicted upon a custodian; (2) by putting him in fear of violence; (3) by any other overt felonious act committed in the presence of a custodian and of which he was actually cognizant provided such other act is not committed by an officer or employee of the assured; (4) from the person or direct care or custody of a custodian, who, while having custody of property covered hereby, has been killed or rendered unconscious by injuries inflicted maliciously or sustained accidentally"; (e) declaration that "the statements in items numbered 1 to 16, inclusive, in the declarations are declared by the assured to be true. This policy is issued in consideration of such statements and the payment of total premium in the declarations expressed"; and (f) statement on riders attached relating to amount of policy and to change of address that "nothing herein contained shall vary, alter, extend or otherwise change the condition of the policy other than as above stated".

7. Plaintiff accepted and retained said policy and on the date of loss, August 5, 1940, still retained said policy.

8. And "on the night of August 5, 1940, and while said policy was in full force and effect, the place of business of plaintiff was broken into or otherwise entered and the cash register of plaintiff was robbed and/or burglarized of the amount of $546.78 in cash", for which loss plaintiff made claim, and defendant denied liability therefor, and plaintiff instituted this action within the statutory period.

Upon the foregoing facts the plaintiff contends "that at the time of the said robbery and/or burglary it was covered therefor by virtue of the binder issued therefor by the defendant, and that it is, therefore, entitled to recover the amount lost by reason of said robbery and/or burglary"; and "the defendant admits the issuance of the binder for both the robbery and burglary insurance on December 27, 1939, but contends that the issuance of the robbery policy on February 29, 1940, was in substitution of the binder theretofore issued and that thereafter the binders were of no effect and that, therefore, on the date of the loss the plaintiff was not covered for the loss sustained".

By consent of counsel the cause came on for hearing upon the foregoing agreed statement of facts and the court being of opinion that plaintiff is entitled to recover of defendant for the loss sustained, entered judgment that plaintiff recover for the amount thereof, with interest and costs.

Defendant appeals therefrom to the Supreme Court and assigns error.

Joyner & Yarborough, of Raleigh, for appellant.

Bailey, Holding, Lassiter & Wyatt, of Raleigh, for appellee.

WINBORNE Justice.

The question for decision is this: Was the binder or contract of insurance against loss by burglary and robbery, as represented by the letter of December 27, 1939, superseded by or merged into the formal policy covering robbery only, subsequently delivered, accepted and retained by the assured? In the light of well-recognized principles adopted and applied in decisions of this court an affirmative answer is dictated.

The principles of law are:

1. In the field of insurance a "binder" or a "binding slip" "is merely a written memorandum of the most important terms of a preliminary contract of insurance intended to give temporary protection pending the investigation of the risk of the insurer, or until the issuance of a formal policy. By intendment it is subject to all the conditions in the policy to be issued." Vance on Insurance, Hornbook Series, 2nd Ed., Section 66, page 194, quoted and applied in Gardner v. North State Mut. Life Ins. Co., 163 N.C. 367, 79 S.E. 806, 48 L.R.A.,N.S., 714, Ann.Cas.1915B, 652, and Lea & Adcock v. Atlantic Fire Ins. Co., 168 N.C. 478, 84 S.E. 813. See also 29 Amer.Jur. 158, Insurance, Sec. 143, and 32 C.J. 1099, Insurance, Secs. 183.

2. "When the contract of insurance is finally complete, it is customarily embodied in a formal written instrument, termed a 'policy'. This instrument merges all prior or contemporaneous parol agreements touching the transaction and upon accepting it the insured is conclusively presumed, in the absence of fraud, to have given his assent to all of its terms." Vance on Insurance, Hornbook Series, Section 68, page 199. Floars v. Aetna Life Ins. Co., 144 N.C. 232, 56 S.E. 915; Clements v. Life Ins. Co., 155 N.C. 57, 70 S.E. 1076; Wilson v. Life Ins. Co., 155 N.C. 173, 71 S.E. 79; McNeal v. Ins. Co., 192 N.C. 450, 135 S.E. 300. See also 32 C. J. 1129, Insurance Sec. 233.

In the Floars case [144 N.C. 232, 56 S.E. 916] Hoke, J., speaking to the subject, declared that "It is also accepted doctrine that when the parties have bargained together touching a contract of insurance and reached an agreement, and in carrying it out, or in the effort to carry out the agreement, a formal written policy is delivered and accepted, the written policy, while it remains unaltered, will constitute the contract between the parties, and all prior oral agreements will be merged in the written instrument ***." And, continuing by quoting from Vance on Insurance, he says: "The rule that all prior agreements are merged in a subsequent written contract touching the same subject-matter is now too well established to need the support of cited authority. Therefore, when a policy of insurance, properly executed, is offered by the insurer and accepted by the insured as the evidence of their contract, it must be conclusively presumed to contain all the terms of the agreement for insurance by which the parties intend to be bound. If any previous agreement of the parties shall be omitted from the policy, or any term not theretofore considered added to it, the parties are necessarily presumed to have adopted the contract as written as the final form of their binding agreement."

3. It is the duty of the applicant to communicate acceptance or rejection of the policy. In Couch's Enc....