Trans-America Ins. Co. v. Wilson, TRANS-AMERICA

• Decision Date: 10 March 1955
• Docket Number: TRANS-AMERICA,6 Div. 784
• Citation: 80 So.2d 253,262 Ala. 532
• Parties: INS. CO. v. Henry L. WILSON et al.
• Court: Alabama Supreme Court

Page 253

80 So.2d 253

262 Ala. 532

TRANS-AMERICA INS. CO. v. Henry L. WILSON et al.

6 Div. 784.

Supreme Court of Alabama.

March 10, 1955.

Rehearing Denied May 19, 1955.

Davis & Marsh, Bessemer, for appellant.

Barber & Barber, Birmingham, for appellee.

MERRILL, Justice.

The appellant, Trans-American Insurance Company, a corporation, successor to Trans-Continental Mutual Insurance Company, Inc., filed a petition for a declaratory judgment and temporary restraining order seeking to determine its liability under a policy of insurance issued to one of the appellees, Henry L. Wilson.

The automobile liability policy was issued on March 12, 1953, for one year's coverage for a cash premium of $47 and was delivered to Wilson. A purported notice of cancellation of the policy was mailed at the Birmingham Post Office on June 10, 1953, at 7:30 P.M. to Henry L. Wilson at his address shown on the policy and the notice showed the cancellation to be effective at 12:01 A.M. on June 15, 1953. Wilson denied that he ever received the notice of cancellation.

Wilson's automobile was in an accident on the 6th day of September 1953 and the respondents other than Henry L. Wilson have instituted suits for damages against him. On September 7, 1953, Wilson reported the accident and on September 10, 1953, a check was sent to Henry L. Wilson in the amount of $34.78 for the return premium on his policy based on its cancellation on June 15, 1953. Wilson did not live at the address shown on the policy at the time but the letter containing the check was brought to him by the occupant of the premises at that address on September 11, 1953. He did not cash the check and has continuously refused to execute a nonwaiver agreement with the insurer, it being his contention that he was still insured under the policy. It was the contention of the appellant that the policy had been cancelled in June 1953.

After hearing the testimony the court held that the cause presented a bona fide justiciable controversy appropriate for a declaratory decree and that the policy was in force and effect on the 6th day of September 1953, the date of the accident. Other parts of the decree are as follows:

'3. That the process of cancellation prescribed in paragraph 22 of the conditions of said policy had not been validly and effectively completed by the insurer in strict compliance with the terms and provisions of the policy governing same, as of the 6th day of September, 1953.

'4. That complainant's contention that the policy had been validly and completely cancelled, and was of no force and effect, and that there was not coverage in existence on the date of the collision is not well founded.

'5. That the insurer is obligated under said policy, as against complainant's contention that same had been validly cancelled theretofore, as to such rights and liabilities as may have accrued under said policy as of the 6th day of September, 1953.

'6. That, under the circumstances of this case, because of the wrongful retention by the insurer of the unearned premium beyond the date of the collision, it is precluded, under the principle of waiver, or under the equitable doctrine of estoppel, or under the maxim that 'He who comes into Equity, must come with clean hands', from successfully asserting the alleged cancellation of June 10, 1953.'

The cancellation clause in the policy is as follows:

'Section 22. This policy may be canceled by the named insured by surrender thereof or by mailing to the company written notice stating when thereafter such cancelation shall be effective. This policy may be canceled by the company by mailing to the named insured at the address shown in this policy written notice stating when not less than five days thereafter such cancelation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date of cancelation 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.

'If the named insured cancels, earned premiums shall be computed in accordance with the customary short rate table and procedure, If the company cancels, earned premium shall be computed pro rata. Premium adjustment may be made at the time cancelation is effected and, if not then made, shall be made as soon as practicable after cancellation becomes effective. The company's check or the check of its representative mailed or delivered as aforesaid shall be a sufficient tender of any refund of premium due to the named insured.'

The principle is universally recognized that the right in the insurer to cancel an insurance policy is strictly construed and the condition imposed upon it with respect to giving notice of cancellation must be strictly performed and the language of the policy being of the insurer's own choosing, it is to be construed most strongly against it. Continental Insurance Co. v. Parkes, 142 Ala. 650, 39 So. 204; Mobile Fire & Marine Ins. Co. v. Kraft, 36 Ala.App. 684, 63 So.2d 34; American Auto Ins. Co. v. Watts, 12 Ala.App. 518, 67 So. 758.

We do not reach item six of the decree of the lower court, because we agree with that part of the decree which holds that the attempted cancellation was not effective. The purported notice of cancellation was on a printed form and ended:

'Please return the policy and oblige.

'Yours very...