Sorensen v. Farmers Ins. Assn. , 226 Iowa 1316 ( 1939 )

I find myself unable to agree with the majority and respectfully dissent.

This court has said that the parties having entered into a contract, it cannot be terminated unless the right to do so was reserved. I quote from Artificial Ice Co. v. Reciprocal Exch.,192 Iowa 1133, 1139, 184 N.W. 756, 759:

"I. The issuance of the policies being admitted, and the loss occurring within the term covered by the contract, the burden of establishing an effective cancellation before the loss is upon the defendant. Except as such right is provided for by statute or reserved in the contract, neither the insurer nor the insured can declare or effect a cancellation without the consent of the other. Such right is quite generally provided for, upon prescribed terms and conditions, in practically all insurance contracts; but the rule is quite universal that such cancellation at the will or demand of one of the parties, without the consent of the other, can be effected only by a strict compliance with such terms and conditions. As said by Marshall, J., in Davis Lbr. Co. v. Hartford F. Ins. Co., 95 Wis. 226,70 N.W. 84, 37 L.R.A. 131:

"The right of cancellation does not exist at all, except by contract, and a clause in that regard is in the nature of a condition precedent, which must be strictly complied with in order to make an effort to cancel effective to accomplish its purpose."

In the case of Salmon v. Insurance Assn., 168 Iowa 521, 528,150 N.W. 680, 682, this court said:

"The by-laws of the association do not control as against a statute, and the case in this respect is ruled by Beeman v. Ins. Co., 104 Iowa 83, 73 N.W. 597, 65 Am. St. Rep. 424; Bradford v. Ins. Co., 112 Iowa 495, 84 N.W. 693, although both were decided before the change in the statute already noticed."

The majority admit:

"It is no doubt true, as insisted by plaintiff that statutory provisions for the benefit of the insured cannot be contracted away and are binding upon the insured only if not contrary to the applicable statute."

With these rules of law in mind, I turn to the case at bar.

The legislature of Iowa by the enactment of section 9054 of the Code of 1935 said to insurance companies that before a policy of insurance can be canceled, the insurer must do a certain thing. That thing is the "giving five days' written notice thereof to the insured".

The statute under our cases must be strictly construed, can there be any doubt what it means? It says five days' notice to the insured, not the mailing of a notice or posting or some other manner which may be provided by a contract of insurance, but the giving of notice to the insured is required to satisfy the statute before the right to cancel is allowed.

The same identical question construing a statute similar to the Iowa one confronted the Michigan court in the case of Galkin v. Lincoln Mutual Casualty Co., 279 Mich. 327, 331, 272 N.W. 694,695. That court said:

"`Authorities on the question are in flat conflict. We think the better rule is as stated in 3 Joyce on Insurance (2d Ed.), §§ 1669 and 1669B:

"`"Notice of cancellation, if given by mail, must be received before loss by the party entitled thereto, or by his agent authorized to receive the same, otherwise there is no cancellation, even though a by-law provides for service of the notice personally or by registered mail." * * *

"`For discussion of authorities, see 6 Couch, Cyc. of Ins., § 1440, where it is said:

"`"And, as a matter of fact, the weight of authority seems to regard receipt of the notice as a condition precedent to cancellation."' Irish v. Monitor Insurance Co., 264 Mich. 586,250 N.W. 318.

"While the above quoted portion of the opinion was signed by only three members of the court, there is nothing in the concurring opinion signed by the other justices which conflicts with the law as above quoted. The following decisions hold that notice of cancellation, to be effective, must not only be mailed but must be received by the insured: Farnum v. Phoenix Insurance Co., 83 Cal. 246, 23 P. 869, 17 Am. St. Rep. 233; American B.M. Co. v. Indemnity Ins. Co., 214 Cal. 608, 7 P.2d 305; Mullen v. Dorchester Mut. Fire Insurance Co., 121 Mass. 171; Protection Life Ins. Co. v. Palmer, Admr., 81 Ill. 88; Commercial Union Fire Ins. Co. v. King, 108 Ark. 130, 156 S.W. 445; American Fire Ins. Co. v. Brooks, 83 Md. 22, 34 A. 373.

"`A notice of cancellation does not become effective until it is received, so that where it is mailed the time of its receipt by the insured is the time from which the notice must be computed, (citing Citizens' Ins. Co. of Missouri v. Henderson Elevator Co., 123 Ky. 478, 96 S.W. 601, 97 S.W. 810, 124 Am. St. Rep. 371; Crown Point Iron Co. v. Aetna Ins. Co., 27 N.Y. 608,28 N.E. 653, 14 L.R.A. 147).' 14 R.C.L. 1009.

"We are not in accord with appellant's contention that under the terms of its policy mailing notice of cancellation to the last known address of the insured in and of itself canceled the policy. Instead, because of the statutory requirement hereinabove quoted, cancellation could not be effected by the insurer until notice thereof was received by the insured."

I have no fault to find with the cases cited by the majority, they are not based upon statutes such as we have in Iowa but rather upon provision of the contract of insurance.

The majority say that to require the insurance company to show actual receipt of the notice "would in many cases require an impossibility".

But what about the insured if the insurance company can cancel his policy by simply mailing a notice, the insured would have no way of protecting himself. For if he did not receive the notice he would not know that the policy had been cancelled. To protect the insured, and he is the one entitled to the protection, the legislature of Iowa passed section 9054, which in my judgment is now repealed by the majority opinion.

I would affirm the case.