Summary
In Crown Point Iron Co. v. Ætna Insurance Co. (127 N.Y. 608) a policyholder sent by mail for cancellation several policies to the agent of the insurance company, but before they were received the property was destroyed by fire.
Summary of this case from Peabody v. SatterleeOpinion
Argued June 23, 1891
Decided October 13, 1891
Richard L. Hand for appellant. A.H. Sawyer for respondent.
The question presented by these appeals is whether the policies were canceled or terminated before the fire occurred.
The statute regulating the cancellation of fire insurance policies provides that "any * * * corporation transacting the business of fire * * * insurance in this state shall cancel any policy of insurance hereafter issued or renewed at any time by request of the party insured." (Laws 1880, ch. 110, § 3.)
The command of the statute is clear, and no discretion or option is left to the company. The sole requirement to set the command in motion is a request by the insured, and after that request is made, the further continuance of the contract would be in contravention of the statute.
Each of the policies in question contains a provision that the "insurance may be terminated at any time at the request of the assured." While the method of terminating the insurance upon the motion of the insured is not specified, except that the insured party is to request it, the language of the contract indicates that the subject is within his control and that the terminating act is to be done by him alone, without any concurrent or supplemental act on the part of the company. The word "may" is the language of the insurer, used for the benefit of the insured, and should receive a liberal construction to that end. As thus used it is not permissive, but imperative, and is in the nature of "must" or "shall." Otherwise the provision in which it occurs is useless, because the parties who made the contract could, of course, terminate it by mutual consent without any such stipulation. But, while it takes two to make a contract, one may end it, if the contract itself so provides. Thus, by the next sentence of the policies, provision is made for the termination of the insurance on motion of the insurer in these words: "The insurance may also be terminated at any time, at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term." Here the method of effecting the termination is specified by requiring the insurer to give notice to the assured and return the unearned premium. ( Griffey v. N.Y. Central Ins. Co., 100 N.Y. 417; Van Valkenburgh v. Lenox Fire Ins. Co., 51 id. 465.)
No consent of the insured is essential. No meeting of minds is required. No act on his part is necessary. The contract through the force of its own provisions, is ended by the action of the insurer only. ( Stone v. Franklin Fire Ins. Co., 105 N.Y. 543. )
Although the language of the parties is at the "request" of the assured in the one instance and on "notice" to the assured in the other, we think that in both it is within the power of the party desiring to end the contract to do so without either consent or action on the part of the other. When the insured surrenders the policy and requests that it be cancelled, he can do no more. Unless that ends the contract, he is powerless to end it and the company, while able itself to hang on or let go as it wishes, can hold him against his will. An insolvent insurer by refusing to cancel could prevent the insured from procuring other insurance.
The right of action for the unearned premium would not be complete without the assent of the insurer, and that, in effect, would be a new agreement. It was not necessary, as we think, that there should be any action on the part of the company. No formal cancellation or physical defacement of the policy was required, because by virtue of the contract and the statute, the surrender of a policy with a request that it be terminated, operates as a cancellation, even if the insurer absolutely refuses to permit it to be canceled.
In Train v. Holland Purchase Ins. Co. ( 62 N.Y. 598; S.C., 68 id. 208), it was held that a surrender of a policy by the insured and the acceptance of it by the authorized agent of the insurer with the intention on the part of both that it should no longer be a contract, was in effect a cancellation of it. In that case, which arose prior to the passage of the statute, it did not appear on either occasion when it was before this court, as an examination of both appeal-books shows, that the policy surrendered contained any provision upon the subject of surrender or cancellation. Hence the decision proceeded upon the theory of a new arrangement involving a meeting of minds, but even then nothing was required to be done by the company to terminate the contract. (See also Atlantic Ins. Co. v. Goodall, 35 N.H. 328, 336; Walters v. St. Joseph Fire Marine Ins. Co., 39 Wis. 489.)
In order to terminate the insurance it was necessary that the "request" required by the statute and the contract should be made by one authorized to act in the matter in behalf of the plaintiff to one having adequate authority from the defendants. The act of Reed in surrendering the policies was the act of the plaintiff, because, aside from the authority plainly to be implied from the position he held, he was expressly authorized to surrender some of the policies covering the charcoal, and as he surrendered but part, the act came within the authorization. So the acts of Page and Little in receiving the policies for cancellation, were the acts of the respective defendants whom they represented, as it was conceded on the trial that they "had authority to accept policies of insurance for cancellation and to terminate insurance at the request of the insured." As to the Ætna policy, therefore, the case stands as if the insured had handed it to the insurer and had stated, as Reed wrote to Page on July 28, 1886, that it was "for cancellation. Our stock is nearly used up. We should be allowed for the unexpired time pro rata on amount paid. * * * Please attend to it at once." Thus we have an absolute surrender of the policy with an unqualified request that it be canceled "at once," because it was no longer needed. No condition was involved, for neither surrender nor request was dependent on the rate of the return premium. The writer simply expressed the opinion that there should be a pro rata allowance, but did not request cancellation if, nor forbid it unless, the amount suggested was allowed. Hence, we unite with the learned General Term in saying that "the plaintiff had done, in respect to the Ætna company, all that was needed." It had given up its policy to a person authorized to receive it and had requested cancellation. The policy having been actually terminated, was not revived by taking it back under the circumstances stated. ( Train v. Holland Pur. Ins. Co., supra.)
The order appealed from in the action against that company should, therefore, be affirmed and judgment absolute rendered against the plaintiff in accordance with the stipulation contained in its notice of appeal.
The cases against the other defendants are less clear, and the result reached less satisfactory, because it rests, of necessity, upon an arbitrary presumption, and may or may not be in accordance with justice. What has already been said applies to those cases down to the time that the policies involved therein reached the hands of Page, who, as to those policies, was not the agent of the insurer, but of the insured. When they reached his hands, therefore, his possession was the possession of the plaintiff. He promptly mailed them, however, to Little, who stood in the place of the insurer, so far as the receipt of policies for cancellation was concerned. Page had no power to impose conditions, and, as we read his letter, he assumed none. He followed the language of his instructions by stating that he enclosed the policies "for cancellation," giving as the reason that the stock of charcoal was used up. He requested as high a rebate as possible, and that a statement of the amount allowed on each policy should be sent him to show Reed, but he named neither sum nor rate even by way of suggestion, and left nothing open so that he could recede if the allowance was not satisfactory. If he was simply trying to find out what terms he could get in case of a surrender, why did he send on the policies before he knew what the companies would do?
It is contended by the defendants that the mailing of the policies with a letter stating the object sufficed to cancel them because it was equivalent to the acceptance of a proposition by mail, and the following cases are cited, among others, in support of the position: Trevor v. Wood ( 36 N.Y. 307); Vassar v. Camp (11 id. 441); Mactier v. Frith ( 6 Wend. 103), and Brisban v. Boyd (4 Paige, 17). These were cases of contracting wholly by letter or telegram. It was long ago held that if an offer made by mail is accepted by mail, the contract is complete from the moment the letter of acceptance is mailed, even if it is never received. ( Vassar v. Camp, supra.) Those cases have no application here, because no negotiation was pending and no contract was proposed. The plaintiff did not make any offer to the insurance companies that might or might not be accepted. It sought to do an act that would be binding on the companies, whether they were willing or not. That act was a surrender of the policies with the request that they be terminated, and the act could not be complete until the request reached the companies or their agent. The policies and notice might have been sent by a messenger, who would have been the agent of the plaintiff for that purpose. Having been sent by mail, it was none the less the agency of the plaintiff than if a messenger had been selected. It was necessary for the plaintiff, in order to terminate the policies, to have its notice actually reach the companies, or their representative, and the instrument selected for that purpose was the agent of the plaintiff, not of the defendant. If the plaintiff lost control of the letter as soon as it was mailed, that fact has no bearing except upon the nature of its relation to the agent that it empowered to deliver the package. It seems, however, that the writer of a letter may withdraw it from the office in which it is deposited, or from the office to which it is sent. (U.S. Postal Laws and Regulations, §§ 531, 533.) If the letter never reached the companies they would not have been bound, or, if it reached them after a long delay, they would have been bound only from the date of receipt. So far as the delivery of such a letter is concerned, the law does not recognize the agency of the mail as of any higher or more binding character than that of an express company or a private individual, although it may presume that a letter duly mailed was received by the person to whom it was properly addressed. (2 Whar. Ev. § 1324; Powell's Ev. 81-86.) When did the notice reach the companies or their agent Mr. Little? If it reached him before the fire the policies were terminated ipso facto and were not in force when the loss occured. If it reached him after the fire then the policies were in force when the loss occurred and the character of the contract was thereby changed from a contingent to a certain liability on the part of the insurer. A cause of action based on an absolute debt forthwith accrued to the plaintiff that was not extinguished by the subsequent receipt of the policies by Little. ( Stone v. Franklin Fire Ins. Co., 105 N.Y. 543, 550; Van Valkenburgh v. Lenox Fire Ins. Co., 51 id. 465, 467.) Whether such receipt would take effect from its date, as to losses subsequently occurring, is not here involved and it is only necessary now to decide that it had no retroactive effect as to losses that had already occurred. If the letter was in process of transmission at the time of the fire, the request required, both by statute and by contract, had not been effectually made and the cancellation was incomplete.
Unfortunately the learned referee did not determine whether the policies reached Little before or after the fire. He was requested by the defendants to find in these words: "At or about nine o'clock in the evening of July twenty-ninth Mr. Little, while on his way to his residence, called at the post-office and opened his post-office drawer and found therein the package containing the policies in question forwarded to him by George Page, opened the said package and found that it contained policies of the Crown Point Iron Co., supposed they were sent him for cancellation and placed the package back in his post-office drawer, locked it and went home." The referee refused to so find unless the proposed finding was amended by inserting after "July twenty-ninth" the words, "or morning of July thirtieth." The defendants excepted to the refusal, but the testimony of Mr. Little, the only witness upon the subject, was almost in the words of the finding as amended. The referee was clearly justified in refusing to find that the letter reached the agent of the defendants on the twenty-ninth. Whether this refusal to find is equivalent to a finding against the fact or not ( Standard Oil Co. v. Triumph Ins. Co., 64 N.Y. 85), there was a failure to find the fact essential to a successful defense. The plaintiff was entitled to recover unless the defendants established and the referee found, either that the policies had been terminated or the facts from which the law would infer a termination. The burden of proof was upon them to establish the facts necessary to make out that defense, and one of them was that Page's letter reached Little before the fire occurred. Having failed to do this, they failed utterly and, therefore, the order appealed from in each of the actions, except that against the Ætna Insurance Company, should be reversed and the judgment entered on the report of the referee affirmed, with costs.
All concur.
Judgment accordingly.