Maryland Automobile Insurance Fund v. Sparks

Lowe, J., delivered the opinion of the Court. For purposes of this appeal the pertinent facts indicate that a declaratory judgment was prayed by appellee to determine whether he was covered by the insurance of the Maryland Automobile Insurance Fund (MAIF) on the night of July 30, 1976. A summary judgment motion by MAIF was twice denied and substantial testimony taken, at the conclusion of which appellee was granted, and MAIF was denied, a directed verdict. “MAIF appeals from Judge Chasanow’s denial of its motion for summary judgment; from Judge Ross’ denial of its motion for summary judgment; from Judge Ross’ denial of its motion for a directed verdict at the close of the plaintiff’s case; and from Judge Ross’ grant of the plaintiff’s motion for a directed verdict and denial of MAIF’s motion for directed verdict.” ³⁸⁴ Appellant asks five questions and three alternative ones to the first. It is not necessary to address them all, however, because the primary issue turns upon an interpretation of a statute that is not sufficiently ambiguous to permit interpretation.

Wheeler v. State, 281 Md. 593, 596 (1977); Amalgamated Ins. v. Helms, 239 Md. 529, 535 (1965). Thus, appellant’s step-by-step progression of error which it assigns to the trial judge in reaching the conclusion that MAIF did insure appellee on the night of his accident is unnecessary. — the controversy — The appellee, Dudley Kenneth Sparks, at 11:00 a.m. on July 30,1976, called Zane Jontiff, a vice president of Cosmopolitan Insurance Agency, Inc., and appellee’s primary agent for a MAIF policy the preceding year. Jontiff advised Sparks that his policy had expired the preceding day. Sparks asked to “renew” his policy and was asked to stay on the telephone line while the matter was checked out.

Jontiff returned to advise Sparks of the amount of his premium ($485), whereupon Sparks received approval from Jontiff to pay the premium all at once. Sparks immediately wrote out a check which he mailed to Cosmopolitan agency within 20 minutes of the conversation. The agency received the check the following day; however, the previous night, July 30, at 10:30 p.m., after the check was mailed but before it was received, appellee Sparks had an accident for which he was sued by several injured parties. Upon receipt of the check Cosmopolitan had filled out a renewal questionnaire form, and had prepared a binder notice to MAIF indicating coverage was to begin at 12:01 a.m., August 1st, 1976.

The binder notice to MAIF was postmarked on August 1, 1976. MAIF contends that it had properly established a rule — MAIF Binding Rule 12.05.02.11 — which specifies that coverage will begin “ ... at 12:01 a.m. of the day following the date shown on the postal cancellation;” ³⁸⁵ And, as a consequence, Sparks’ policy did not commence until 12:01 a.m., August 2,1976, and would terminate at that same day and time the succeeding year. The court, in its collective rulings, declared that coverage did exist at the time of the accident, reasoning variously, that MAIF’s rules were improperly adopted and did not bind appellee and that the Legislature “intended” that “renewals” be handled by MAIF without coverage lapse; all of which was predicated upon interpretively finding a statutory method of binding coverage independent of rules or regulations. This procedure was found in Md. Ann. Code art. 48A, § 243B (d) (1) (1972 Repl.

Vol.): “(d) Binding authority of agents and brokers; cancellation of coverage after review of application. — (1) Any agent or broker licensed in Maryland may, subject to the provisions of this section, bind the minimum required coverage for an applicant in the Fund upon application to the agent or broker and payment of the appropriate premium.” MAIF contends, however, that such ruling overlooks the limiting phrase: “subject to the provisions of this section.” That reference, MAIF urges, points to the succeeding subsection, § 243B (d) (2) which provides MAIF its rule-making authority in this area. “(2) The board shall adopt and make available to each such agent or broker reasonable rules and regulations relating to the binding authority of such agents and brokers, including but not limited to the amount of premium to be collected, the evidence necessary to establish the applicant’s qualification to be insured by the Fund, and procedures for notifying the Fund of the binding of coverage.” Thus it seems, having adopted a rule that coverage will not begin until the day following the date a binder is mailed to ³⁸⁶ it by an agent, MAIF has made the statute “subject” to its rule by virtue of subsection (2). — the legal question — We adopt for our legal guidance the precepts of law and authority preliminarily set forth by MAIF. “The general principles by which courts are to construe statutes are well known: the cardinal rule is that the court should ascertain the legislative intent and give that intention effect, Unsatisfied Claim and Judgment Fund Board v. Bowman, 249 Md. 705 , 241 A. 2d 714 (1968); the primary source from which the court finds legislative intent is the language of the statute itself, Schweitzer v. Brewer, 280 Md. 430 , 374 A. 2d 347 (1977); but if there is no ambiguity or obscurity in the statutory language, the court will not enlarge or extend its application, Amalgamated Casualty Insurance Company v. Helms, 239 Md. 529 , 212 A. 2d 311 (1965).” The language in § 243B (d) (1) is unequivocal. The statutory authority provided an agent is elliptically clear: “(d) Binding authority of agents____(1) Any agent ... may ... bind the minimum required coverage for an applicant in the Fund upon application to the agent... and payment of the ... premium.” If we then assume, as does MAIF, that the omitted condition subjected that clear authority to the subsection (2) rule-making authority of the board, we must analyze the extent to which the Legislature authorized MAIF to act. The Legislature permitted MAIF to establish “(2) ... reasonable rules ... relating to the binding authority____” (emphasis added). It did not authorize MAIF to establish reasonable rules “limiting” the agents’ binding authority, or “extending” the ³⁸⁷ agents’ binding authority.

It obviously was intended to permit procedural regulation by MAIF such as the examples set forth by subsection (2) following the generic expression “relating to”: “including but not limited to the amount oí premium to be collected, the evidence necessary to establish the applicant’s qualification to be insured by the Fund, and procedures for notifying the Fund of the binding of coverage.” (emphasis added). As stated, the authority to regulate is not limited to these three categories but it is, like the doctrine of ejusdem generis, indicative of the scope of rule-making power granted. Nowhere can it be read into that authority that the Fund is delegated authority to divest or increase an agent’s binding authority as statutorily established. It may only procedurally regulate it, but may not interfere with it.

Appellant contends that the rule tracked the former statute which preceded MAIF and reinstated the Legislature’s own prior procedure. From this it asks that we read a legislative anticipation into subsection (2) of the adoption of a similar regulatory rule. That would indeed be stretching judicial interpretation of legislative intent. It is more likely that when the Legislature repeals an established limiting provision, and replaces it with one more nearly akin to that customarily used in the industry, it does so knowingly, purposefully and intentionally. — the factual question — But our holding that the statute means what it says does not fully answer the purpose of this appeal.

The testimony as we view it, is at best equivocal as to whether a binding contract that would provide coverage at the time of the accident, was made between Sparks and the agent. Mr. Sparks recalled the telephone conversation as follows: “Q. After you called and announced your intentions, that you thought your insurance policy ³⁸⁸ was coming due, what did Mr. Jontiff do, if you know? A. He said to hold on for a minute, and I take it he went to get — R. LEVIN: I object to what he takes. THE COURT: Sustained.

THE WITNESS: He got off the phone and — for a few minutes and came back and informed me that it ran out the day before. BY MR. STEPHENS: Q. On July 29, 1976? A. Yes.

Q. What did you say in response to that? A. ‘Okay, Mr. Jontiff, I want to renew my policy.’ Q. And what did he say to that? A. He said, ‘Okay, hold on a minute.’ And I heard an adding machine running in the background. Q. Did you have any conversation with him as concerns the amount of the premium?

A. When he told me that — he told me how much the premium would be. Q. What was the figure that he gave you? A. $485. Q. And what did you say in response to that?

A. ‘Okay. Fine. I’ve got the money in the bank, I’m going to make payment all at once this time.’ Q. Did you ask him at any time during that conversation whether you would be covered by automobile insurance? A. I’m sorry, I didn’t hear the question.

Q. Did you ask him, during that conversation, whether you would be covered? A. Well, I asked him if it was okay. Q. What was okay? A. If I could pay that like that.

He said, ‘Yes.’ ³⁸⁹ Q. Well, did you ask him whether you would be covered by insurance? MR. LEVIN: Object to the leading nature of the questions. THE COURT: Yes, rephrase the question.

BY MR. STEPHENS: Q. What did you then do after you had the conversation with Mr. Jontiff? A. After the conversation was completely over? Q. Yes.

A. I make out the check for the $485, went down, stuck it in the mailbox. Q. And that was on the same date? A. Yes, sir. Q. July 30th?

A. That was 20 minutes later. Q. After you had the conversation with Mr. Jontiff, what did you feel was the status of your insurance coverage? MR. LEVIN: I object.

THE COURT: Sustained. BY MR. STEPHENS: Q. At any time during the conversation with Mr. Jontiff, did you discuss coverage with him? A. Yes, sir, I asked him if that was the full payment.

I told him I was going to stick it in the mail. He said, ‘Fine. Okay. No problem.’ Q. And then after that conversation, or after you deposited the check in the mail, then what happened?

A. Then I went out.” On cross-examination of Mr. Sparks the following transpired: “Q. Now, what was it that Mr. Jontiff said to you, that led you to believe that you were covered by insurance? A. The last few words that he said was, ‘Okay, no problem, you’re taken care of.’ ³⁹⁰ Q. Would you have driven your car that evening if you thought you didn’t have insurance? A. No way, my mother was sitting right there. Q. Did Mr. Jontiff ever say anything to you about binding or 12:01 a.m., or anything to that effect?

A. No, sir, Q. Mr. Sparks, it is a fact that Mr. Jontiff never fold you when your coverage would begin, isn’t that true? A. Yes,, sir — on which particular time? Q. On the time we are talking about in 1976, in July of 1976 when you had the conversation. A. That’s correct.