Wilson v. National Union Fire Insurance, 206 N.C. 635 (1934)

June 20, 1934 · Supreme Court of North Carolina

206 N.C. 635

CARL WILSON and Others v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA.

(Filed 20 June, 1934.)

Insurance H a — Provision that insurer should give Jive days notice before canceling iiolicy held for benefit of insured and binding on insurer.

Defendant insurer sent written notice of the cancellation of a policy of fire insurance containing the standard mortgagee clause to the mortgagee protected thereby, the insurer having the right to cancel the policy at its option according to tlie terms of the policy by giving insured five days written notice of cancellation. All the evidence showed that insurer desired to cancel the policy and proceeded to do so under its terms without the consent of plaintiff! mortgagee, and there was evidence that loss covered by the policy occurred within five days from the date plaintiff received defendant’s written notice of cancellation, and that plaintiff, in compliance with insurer’s request in the notice of cancellation, mailed the policy to insurer during the five-day period, but before he had knowledge of the occurrence of the fire. Held, the provision for five days notice before cancellation was for the protection of plaintiff, and insurer could not effect cancellation until the expiration of five days from the receipt of the written notice by plaintiff, and whether plaintiff intended to waive this provision and did waive it by returning the policy as requested was for the determination of the jury, and insurer’s motion as of nonsuit was properly denied.

Appeal by defendant from. Shaw, Emergency Judge, at January Term, 1934, of Sukry.

No error.

This is an action to recover tbe loss suffered by tbe plaintiff, Carl Wilson, resulting from tbe destruction by fire of a dwelling-bouse located -on a farm in Surry County, North Carolina, and covered by a policy of fire insurance issued by tbe defendant.

Tbe policy was issued to tbe plaintiff, Eugene Cbilton, tbe owner of tbe farm on wbicb tbe dwelling-bouse was located. It was agreed tbat any loss or damage covered by tbe policy should be payable to tbe plaintiff, Carl Wilson, mortgagee, as bis interest might appear. Tbe policy was issued on 26 March, 1929, and according to its terms expired five years after its date, to wit: 26 March, 1934. Tbe dwelling-bouse covered by tbe policy was destroyed by a fire wbicb occurred between 11:30 a.m., and 12 o'clock, noon, on I December, 1931. Tbe amount due on tbe note secured by tbe mortgage from Eugene Chilton to Carl Wilson, at tbe date of tbe fire, was $1,000, with interest from 19 December, 1929.

On 2 December, 1931, tbe defendant sent to tbe plaintiff, Carl Wilson, by mail, from its borne office in Pittsburgh, Pa., a notice as follows:

“CANCELLATION NOTICE TO OwNER.

Carl Wilson, Pittsburgh, Pa., 2 December, 1931.

Pilot Mountain, N. C.

Dear Sir: Tbe National Union Fire Insurance Company, of Pittsburgh, Pa., notifies you. tbat it hereby cancels its policy No. 305, issued to you, covering on farm property situated at 5 M. from Westfield, said cancellation to take effect five days from receipt hereof, in accordance with its conditions, upon tbe expiration of wbicb five days tbe said policy becomes null and void without further notice.

On demand we will refund $3.65 and unpaid note $24.00, being tbe full amount of unearned premium on said policy for tbe unexpired term thereof, and we hereby request that you return tbe policy to tbe company. Yours truly,

National Union Eire Insurance Company.”

This notice was received by the plaintiff, Carl Wilson, at Pilot Mountain, N. C., through tbe mail, on Saturday, 5 December, 1931. On Monday morning 7 December, 1931, tbe plaintiff showed tbe notice to E. W. Lawson, of Pilot Mountain, N. C., and requested tbe said Lawson, who bad issued tbe policy, as tbe lpcal agent of tbe defendant, to advise him what be should do. E. W. Lawson advised the plaintiff that be was no longer tbe agent of tbe defendant, but suggested that plaintiff call on Welch Bowman, a fire insurance agent at Pilot Mountain, N. C., and get Mr. Bowman to write another policy for plaintiff. Tbe plaintiff accompanied by E. W. Lawson, called at tbe office of Welch Bowman, and upon ascertaining that tbe said Bowman would write him a policy to take tbe place of tbe policy issued by the defendant, requested him to do so. Tbe plaintiff showed tbe notice which be bad received from tbe defendant to Mr, Bowman, who thereupon placed tbe policy issued by tbe defendant in an envelope addressed to tbe defendant, at Pittsburgh, Pa., and banded tbe same to tbe plaintiff, who thereafter, about 11 o’clock a.m., on 7 December, 1931, deposited tbe envelope, containing the policy, in the post office at Pilot Mountain, N. 0. A few days thereafter, tbe plaintiff received from Mr. Bowman, through tbe mail, a policy of insurance covering tbe dwelling-house. This policy, according to its terms, became effective at 12 o’clock, noon, on 7 December, 1931.

Tbe dwelling-house covered by tbe policy of insurance issued by tbe defendant was destroyed by a fire which occurred between 11:30 a.m. and 12 o’clock, noon, on 7 December, 1931. Tbe plaintiff first beard of. tbe fire on 15 December, 1931, and then notified Mr. Bowman who advised him that tbe policy issued by him did not become effective until after tbe dwelling-house bad been destroyed by fire. Plaintiff thereafter received a letter from tbe defendant, as follows:

“Carl Wilson, 16 December, 1931.

Pilot Mountain, N. 0.

Dear Sir: Supplementing our registered letter cancellation notice, dated 2 December, we are attaching hereto our voucher No. 29457 for $3.65, which represents tbe unearned premium due to cancellation of this policy, along with your canceled note for $24.00.

Very truly yours, Auditor.”

Plaintiff offered evidence tending to show that the cash value of the dwelling-house covered by the policy, at the time of the fire was $1,200, and that the amount due to plaintiff as mortgagee, at the time of the trial, was $900.00.

The issues submitted to the jury were answered as follows:

“1. Was the dwelling-house described in the complaint destroyed by fire, as alleged in the complaint? Answer: Yes.

2. Was the policy of fire insurance referred to and described in the complaint in force and effect at the time of the fire as alleged in the complaint? Answer: Yes.

3. What was the actual cash value, of the building destroyed by fire at the time of the fire? Answer: $1,200.

4. What amount, if any, was the plaintiff, Eugene Chilton, indebted to the plaintiff, Carl Wilson, on the note secured by deed of trust on the property described in the complaint, at the time of the fire? Answer: $1,000, with interest from 19 December, 1931.

5. What amount, if any, are the plaintiffs entitled to recover of the defendant? Answer: Carl Wilson entitled to recover $900.00, and Eugene Chilton nothing.”

From judgment that the plaintiff, Carl Wilson, recover of the defendant the sum of $900.00, and the costs of the action, the defendant appealed to the Supreme Court.

W. R. Badgett for plaintiffs.

Smith, Wharton & Hudgins and Folgei' & Folger for defendant.

CoNNOR, J.

It is conceded that the defendant is liable under the policy sued on in this action for the loss suffered by the plaintiff, Carl Wilson, as the result of the destruction by fire of the dwelling-house covered by the policy unless, as contended by the defendant, the policy was canceled prior to the fire.

The policy sued on is in the form of the Standard Eire Insurance Policy of the State of North Carolina. O. S., 6437. It is provided therein that “this policy will be canceled at any time at the request of the insured, in which case the company shall upon demand and surrender of the policy refund the excess of paid premium above the customary short rate for the expired time. The policy may be canceled at any time by the company by giving to the insured five days written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess if not tendered shall be refunded on demand. Notice of cancellation must state that the excess premium (if not tendered) will be refunded on demand.”

There was no evidence tending to show that the plaintiff requested the defendant to cancel the policy prior to the fire, as he had the right to do, under the provisions of the policy. All the evidence showed that the plaintiff wished the policy to remain in force until its expiration according to its terms. Immediately upon his receipt of the notice that defendant would cancel the policy at the expiration of five days, without his consent, as it had a right to do, under the policy, he applied for a new policy to take the place of the policy issued by the defendant for his protection.

All the evidence shows that the defendant desired to cancel the policy, and proceeded to do so in accordance with its provisions, without the consent of the plaintiff. The cancellation by the defendant did not and could not under the provisions of the policy take effect until the expiration of five days from the receipt of the written notice by the plaintiff. This provision of the policy was manifestly for the protection of the plaintiff. Dawson v. Ins. Co., 192 N. C., 312, 135 S. E., 34. Whether or not the plaintiff intended to waive this provision and did waive it, when he returned the policy to the defendant, by mail, as he was requested to do, was a question for the jury. There was no error in the refusal of the trial court to allow defendant’s motion for judgment as of nonsuit.

We have examined defendant’s assignments of error based upon exceptions to the admission of evidence tending to show the cash value of the dwelling-house at the date of the fire, and to instructions of the court to the jury. These assignments of error cannot be sustained. We find no error in the trial. The judgment is affirmed.

No error.