Woodruff Motors, Inc. v. Commercial Credit Corp.

• Decision Date: 09 April 1963
• Docket Number: No. 1218,1218
• Citation: 190 A.2d 705,123 Vt. 404
• Court: Vermont Supreme Court
• Parties: WOODRUFF MOTORS, INC. v. COMMERCIAL CREDIT CORPORATION.

Page 705

190 A.2d 705

123 Vt. 404

WOODRUFF MOTORS, INC. v. COMMERCIAL CREDIT CORPORATION.

No. 1218.

Supreme Court of Vermont.

April 9, 1963.

Parker & Ainsworth, Springfield, for plaintiff.

Loveland & Hackel, Rutland, for defendant.

Before HULBURD, C. J., and HOLDEN, SHANGRAW, BARNEY and SMITH, JJ.

HULBURD, Chief Justice.

In its amended declaration, the plaintiff alleged that it sold a certain automobile to a buyer by the name of Blanchard. This was done under a conditional sale contract which the plaintiff assigned to the defendant 'with recourse'. The conditional sale contract contained the following provision:

'Purchaser agrees to obtain and keep in force fire, theft and collision insurance on Car and other insurance requested by Seller. Such insurance shall be in form, amount and written by insurers satisfactory to Seller. Seller, as a creditor of Purchaser, is authorized to purchase any and all such insurance, at Purchaser's expense, whether or not included herein. If the cost of such insurance is not included in the Total Time Price, Purchaser agrees to pay same to Seller on demand.' In compliance with this provision, the purchaser, Blanchard, transferred an insurance policy, on a vehicle he had previously owned, so that the collision coverage applied to the automobile purchased of the plaintiff. The original of this policy was furnished the defendant. By its terms it designated the defendant as entitled to be paid any loss, as its interests might appear. On August 6, 1960, this policy was renewed. About eight months later, under date of February 24, 1961, notice of cancellation of the insurance was given to the defendant by the insurer, by the terms of which the cancellation was to become effective on March 7, 1961.

The remainder of the declaration we quote verbatim. It reads as follows:

'The Plaintiff further avers that the Defendant knew that the Plaintiff, as the assignor of the Blanchard conditional sale note, was liable to the Defendant for any unpaid balance on said Blanchard note by virtue of an assignment with recourse to the assignor;

'That it became and was the duty of the Defendant, acting in good faith, to use reasonable care in giving notice to the Plaintiff of such cancellation, to the end that the Plaintiff might procure new coverage on said car, as the Plaintiff was entitled to do, all for the protection of the Plaintiff-Assignor, in that said motor vehicle and the collision coverage thereon constituted security to the Plaintiff for any unpaid balance on the note, yet notwithstanding such duty, the Defendant wholly and completely failed and neglected to give notice of such cancellation, and thereby denying to the Plaintiff an opportunity to protect its interests by other insurance coverage;

'That on, to wit, the 11th day of March, 1961, the said motor vehicle, while being operated by the purchaser, was involved in a one-car accident, wherein said motor vehicle was completely and totally demolished and destroyed, and that when notice of such destruction was given to the Defendant by the Plaintiff, the Plaintiff was only then informed that the policy of insurance theretofor upon said vehicle had been cancelled as of March 7, 1961;

'By reason of the premises aforesaid the Plaintiff was thus denied the right to recover from insurance coverage any of the money then remaining due upon the conditional sale note, and the Defendant thereafterwards, against the requests of the Plaintiff, proceeded to charge the unpaid balance on said vehicle, amounting to $1624.95, back to the Plaintiff's Reserve Account;

'WHEREBY the Plaintiff, all by reason of the unreasonable and unwarranted failure on the Part of the Defendant to give due notice to the Plaintiff of such cancellation, has lost, as it says, the sum of $1624.95, for the recovery of which with interest and costs, the Plaintiff brings this suit.'

The complaint, as amended, was met by a motion to dismiss, on the ground that the declaration fails to state a claim upon which relief can be granted. The lower court denied the defendant's motion. From this ruling, the defendant comes here on appeal before final judgment pursuant to leave granted it below.

The defendant quite correctly states that the chief question is: does the declaration set forth such facts as give rise to a legal duty on the part of the defendant? Agosta v. Granite City Real Estate Co. Inc., 116 Vt. 526, 528, 80 A.2d 534. The defendant then goes on to argue that the declaration 'does not allege any undertaking on the part of the defendant with regard to insurance', and that the 'contract imposed no duty whatsoever upon the defendant', and that it is not alleged that 'the defendant at any time agreed or undertook to keep the insurance on force.' But it is not by a contract alone that a duty arises. The law may impose a duty by reason of the...