State v. Hartford Steam Boiler Inspection & Ins. Co.

• Decision Date: 22 November 1941
• Docket Number: 6701.
• Citation: 1 N.W.2d 52,71 N.D. 329
• Court: North Dakota Supreme Court

1 N.W.2d 52

71 N.D. 329

STATE v. HARTFORD STEAM BOILER INSPECTION & INSURANCE CO.

No. 6701.

Supreme Court of North Dakota

November 22, 1941

Syllabus by the Court.

1. The Industrial Commission of the State of North Dakota consisting of the Governor, the Attorney General and the Commissioner of Agriculture and Labor of the State of North Dakota, is a state agency charged with the operation management and control of The North Dakota Mill and Elevator Association. Pursuant to the statute (chapter 191, Session Laws 1933,) "all orders, rules, regulations, by-laws and written contracts adopted or authorized by the Commission shall, before becoming effective, be approved by the Governor, as chairman, and shall not be in force unless approved and signed by him", and (chapter 193, Session Laws 1933) "*** Title to property pertaining to the operation of the Association shall be obtained and conveyed in the name of 'The State of North Dakota, doing business as the North Dakota Mill and Elevator Association.' Written instruments shall be executed in the name of the State of North Dakota, signed by any two members of the Industrial Commission, of whom the Governor shall be one ***." The Commission at a meeting held on April 26 1939, on motion of one of the members thereof, unanimously resolved to cancel and terminate certain policies of insurance then in force covering property of the Association. The minutes of the meeting showing the action thus taken were signed by the Governor and the other two members of the Commission. The insurance company with which the policies were written, refused to repay the unearned premium in the amount claimed and demanded by the Commission, whereupon suit to recover the same was instituted. On the trial evidence tending to show that written notice of the action of the Commission cancelling the policies of insurance was given to the company by the secretary of the Commission and the policies surrendered for cancellation and that the company waived any objection on account of irregularity or insufficiency in the notice of cancellation or in the manner and method of the surrender of the policies, was offered and ruled inadmissible on the ground that the policies could not be cancelled under the provisions of the statute above quoted except by written notice signed by the Governor and one of the other members of the Commission. Held, for reasons stated in the opinion, that this ruling was erroneous.

Alvin C. Strutz, Atty. Gen., C. F. Kelsch, Asst. Atty. Gen., and Phil B. Vogel, of Fargo, for appellant.

Nilles Oehlert & Nilles, of Fargo, for respondent.

NUESSLE Judge.

Plaintiff, the State of North Dakota, doing business as the North Dakota Mill & Elevator Association, brought this action to recover money claimed as return premium on account of the cancellation of certain policies of insurance. The case was tried to a jury. At the close of the plaintiff's case the defendant moved for a directed verdict on the ground that the plaintiff had not established facts sufficient to constitute a cause of action and that there were no issues made under the evidence to require submission to the jury. This motion was granted and a verdict returned as directed. Judgment was entered thereon. The instant appeal is from this judgment.

The plaintiff operates a mill and elevator in the city of Grand Forks. The Industrial Commission is a state agency, charged with the conduct and management of this enterprise. See chapter 193, Session Laws North Dakota 1933, and acts prior thereto. The Governor, the Attorney General, and the Commissioner of Agriculture and Labor of the state of North Dakota, constitute the Industrial Commission. See chapter 191, Session Laws 1933, and acts prior thereto. The defendant is a corporation engaged in the business of writing contracts of insurance. In January, 1938, and in August, 1938, the defendant executed to the plaintiff certain contracts whereby it insured the plaintiff against losses therein described and arising out of the operation and maintenance of the mechanical equipment and apparatus at the mill and elevator. The first of said contracts covered the period from January 28, 1938, to January 28, 1941, and the second the period from August 23, 1938, to August 23, 1940. The premium required to be paid under these contracts aggregated $9,084.69, which was paid by the plaintiff. On April 26, 1939, the Industrial Commission determined to cancel the aforementioned contracts and to transfer the insurance therein provided to another company. The minutes of the meeting of the Commission held at that time read, in part, as follows:

"Mr. K. A. Fitch, of Fargo, North Dakota, representing the Fidelity & Casualty Company of New York, appeared before the Industrial Commission, requesting the return to the said Fidelity & Casualty Company of the insurance on the machinery, equipment, boilers and turbines at the State Mill and Elevator, it being shown to the Commission that the said insurance was cancelled before the date of its expiration during the year 1938.

"Commissioner of Agriculture and Labor *** moved that *** the policies of insurance now in force, towit, No. 32830, dated January 28th, 1938, expiring January 28th, 1941 ***; and No. 34581, dated August 23rd, 1938, expiring August 23, 1940 *** be and the same are hereby terminated and transferred to the said Fidelity & Casualty Company of New York; this being with the understanding that the termination and transfer of such policies shall not be at a loss to the State Mill and Elevator of the State of North Dakota; and that the Manager of the Mill and Elevator be instructed to deliver to the said K. A. Fitch as representative of the Fidelity & Casualty Company aforesaid, the said insurance policies described herein, to be returned to the Hartford Steam Boiler Inspection & Insurance Company." The vote in favor of this motion was unanimous and the motion was declared carried. These minutes were signed by the three members of the Commission and attested by James E. Bothne, as secretary thereof. Section 6 of each of the policies provides: "This policy may be canceled by the Assured by mailing written notice to the Company stating when thereafter such cancellation shall be effective ***." And section 6517, Comp.Laws 1913, by construction a part of the policies, provides: "The holder of any policy of insurance against loss or damage to property by fire or other casualty hereafter issued by any insurance company doing business in this state may, notwithstanding any provision thereof or contract to the contrary, at any time surrender the same for cancellation ***."

P. M. Murray, of Chicago, is the manager of the western department of the defendant company. The policy contracts above referred to were countersigned with his name by an authorized agent. On May 8, 1939, Mr. Bothne, as the secretary of the Industrial Commission, wrote and sent by registered mail the following letter addressed to the defendant company at its Chicago business address, directed to the attention of Mr. Murray as manager:

"Enclosed you will find your policy No. 32839 covering our State Mill and Elevator Association at Grand Forks, North Dakota. Please cancel by reducing coverage method, effective May 10, 1939, all objects from the enclosed policy except one Centrifugal Pump and at the same time reduce to $1000.00 the limit per accident.

"Then cancel as of May 10th, 1939, all of the Use and Occupancy coverage.

"Effective May 11, 1939, cancel short rate, the one remaining object to the policy, thereby cancelling the contract entirely.

"Please, also, include in your settlement the return premium for the suspension of insurance which is now applied to 1-35 KW Turbine and 1-50 HP Turbine.

"Please prepare a detailed statement of the cancellation and send to us with your check for the return premium, which we understand amounts to $4,730.86.

"We hereby make demand upon you for this amount in full regardless of the penalty endorsement which you have attached to the policy and which we do not consider in effect or binding upon us."

And, on the same date, wrote and sent a letter of the same purport with respect to policy No. 34581. As stated in the letters the policies were returned therewith. They were received and retained by the defendant which made no offer to return them until December 29, 1939, when the plaintiff was advised that they were held subject to plaintiff's direction.

The defendant refused to comply with plaintiff's demand for return of unearned premiums in the amount demanded but tendered a lesser amount which p...