Reserve Insurance v. Duckett

⁵⁹⁴ Proctor, J., by special assignment, delivered the opinion of the Court. , Sometime in 1958 George Francis Duckett (Duckett) was involved in an,- automobile accident, with the result that it became necessary for him to obtain insurance under Code (1957), Art. 66j£, Sec. 122 (Security required following accident). Shortly thereafter, Duckett received from Davis & Davis Insurance Company (Davis) a letter in which, according to Duckett, they said they would insure him. Duckett went with his father to the office of Davis in Baltimore. On July 31, 1959, an SR' 22 form was filed with the Department of Motor Vehicles certifying that Duckett had obtained necessary insurance.

There is no evidence as to the name of the insurance company which initially filed this form for Duckett. However, he testified that he was “with Reserve” (Reserve Insurance Company) for three and a half years prior to September 7, 1961. On March 9,' 1961, Reserve issued its Combination Automobile Policy No. AC 9056 3822 under which it insured Duckett for the period óf six months from March 7, 1961, to September 7, 1961, 12:01 a.m. standard time, at the address of the named insured. This policy was countersigned by St. Paul Agency, Inc. (St. Paul), which name was typed on the policy, by J. S. McEachern, Authorized Representative, whose name was placed on the policy by rubber stamp.

On the face of this policy, near the upper right hand corner, the word “Agent” is printed. Under that was typed the name “Davis & Davis” and the'address “Seven St. Paul Street, Baltimore, Md.” On March 3, 1961, Reserve sent to the" Department of Motor Vehicles an SR 22 form certifying that Duckett was insured by the policy to'which reference has just been made “Effective from 3/7/61 to 9/7/61 — Effective date of this certificate 3/7/61.” This was signed on behalf of Reserve by the McEachern rubber stamp. Reserve offered' in evidence a document described by the witness, Cooke, a vice-president, as “a daily report.” With one insignificant exception, this is a carbon copy of the face sheet of the policy referred to above. Mr. Cooke testified that “It is the copy which the agent sends to the home office, as an indication that it has established a relationship between the in ⁵⁹⁵ sured and ourselves.” On this report, in addition to the typed name “Davis & Davis” under the printed word “Agent,” there was placed over the typed name “St. Paul Agency, Inc.” a rubber stamp reading “Davis & Davis Insurance Agency, Inc., Baltimore, Maryland.” Duckett testified that, three or four days before the expiration of the policy referred to above, he had mailed to Davis a money order covering the premium for a renewal of such policy.

However, although not mentioned below or in briefs or argument, one of the exhibits is a bill of Davis to Duckett covering a renewal policy on which under the printed words “Date Due” were typed the words and figures: “Paid M. O. 9/8/61 46.50 1st 10/8/61 16.00 2nd 11/8/61 16.00” The Court construes “M. O.” to be an abbreviation of money order. On September 7, 1961, at approximately 6:05 p.m. Duckett was involved in an automobile accident with a vehicle operated by Samuel G. Cornblatt and owned by Celeste Carp Cornblatt. On, apparently, September 8, 1961, this accident was reported by Duckett to Davis.

He was, informed that he should have notified Reserve but that Davis would do so. He talked with a Mrs. McAllister. He told her that he had received a letter from the Commissioner of Motor Vehicles stating that if he did not send in the “blue form” (obviously SR 22) he would have to send in his license. He testified that that was why he went to see Davis.

He asked Mrs. McAllister “Am I covered?” She went into her files and took .out his papers and said: “Yes, you are insured already.” When Duckett reported the accident to Reserve they sent him a letter stating that he was not covered. On September 9, 1961, Duckett received a Combination Automobile Policy issued by Reserve which was a “Renewal of No. AC 9056-3822.” The policy period was six months from September 8, 1961, to March 8, 1962 (10:00 a.m. standard time at the address of the named insured). This renewal policy bore as its date of issue, September 8, 1961. As on the original policy there was typed under the printed word “Agent” the name “Davis & Davis.” The renewal was countersigned in the same ⁵⁹⁶ manner as the original.

With one insignificant exception, the daily report covering the renewal policy was a carbon copy of such policy. A rubber stamp “Davis & Davis, 7 St. Paul Street, Baltimore 2, Maryland” was placed over the typed name “St. Paul Agency, Inc.” on the line provided for countersignature by an Authorized Representative. Mr. Cooke testified that, in Maryland, St. Paul was its agent under a written agreement and was- registered as Reserve’s agent with the proper authorities in the State; that the function of St. Paul was “To accept applications for policies and file SR 22 certificates” on behalf of Reserve; that “We have no record of Davis and Davis being our agents”; that he had never dealt with Davis nor had he ever authorized Davis “to accept risks or issue policies” for Reserve. He did not know whether the daily reports were written in the office of Davis or of St. Paul.

He had seen numerous policies such as those introduced in evidence with the name “Davis and Davis” on them. He had no knowledge of the day to day dealings of St. Paul nor of what arrangements St. Paul made with Davis. At the time of the trial St. Paul had been out of business for approximately three years. He had no knowledge of what proportion of St. Paul’s business was produced by Davis.

After the accident, Reserve instituted declaratory judgment proceedings against Duckett and the Cornblatts seeking a judicial determination as to whether or not any insurance policy issued by Reserve to Duckett was in effect on September 7, 1961, the date of the accident. Subsequently, the Unsatisfied Claim and Judgment Eund Board was made a party defendant. Although a jury was sworn to try three issues of fact, the trial judge ruled that the evidence pertaining to such issues was uncontradicted and discharged the jury. The trial court then found the following facts: (1) That Duckett had mailed in his premium to Davis prior to the expiration date of the original policy.

(2) That Duckett was told by a person in authority at Davis, after she had consulted the records, that he was covered. (3) That Reserve did not notify the Department of Motor Vehicles Financial Responsibility Section prior to September 7, 1961, of an intention to cancel the SR 22 form filed under the original policy. ⁵⁹⁷ The trial judge then proceeded to rule as follows: (1) That the original policy expired at 12:01 a.m. on September 7, 1961. (2) That the requirements of Code (1957), Art. 66%, §142, regarding notice before cancellation or annulment of security do not apply to the expiration of a policy. (3) That coverage under the renewal policy commenced at 10:00 a.m. on September 8, 1961.

(4) That, construing the SR 22 form filed under the original policy “as would anyone in the Department of Motor Vehicles,” the certified period of coverage included the entire day of September 7, 1961. (5) That although in a normal situation the policy would control as against the certificate, this being under the Financial Responsibility Act, the certificate controlled. (6) That clearly Davis did not have “express authority” to act on behalf of Reserve; that whether Davis had implied authority to act could not be determined from the evidence presented; that the trial judge did not believe that a sufficient showing had been made of apparent authority for Davis to act on behalf of Reserve. We will discuss the legal conclusions of the trial judge seriatim.

(1) We agree that the original policy expired at 12:01 a.m. on September 7, 1961. It is true that usually the law does not take cognizance of parts of a day. However, there is a well recognized exception to this rule, viz., that where a contract sets forth a specific hour of termination such provision will control rather than the general rule. “Where an automobile liability policy expressly provided that it should end at a stipulated time, termination at such time was automatic without further action by the insurer.” Appleman, Insurance Law and Practice, Vol. 7, Sec. 4268. The printed provision of the policy “12:01 A.M. standard time * * *” appearing directly under the specified policy period “from March 7, 1961 to September 7, 1961” clearly specified the hour and minute of those days at which coverage commenced and ended.

(2) Before both the trial court and this Court defendants contended that the provisions of Code (1957), Art. 66%, Sec. ⁵⁹⁸ 142, were applicable-to the original policy. That section reads as follows: “When any form of.proof of financial responsibility has been certified to the Department * * *, such proof-shall not be cancelled or annulled by any party in interest except upon not less than thirty (30) days’ notice to the Department * * Defendants further contended that, as the notice required by such section'had not been given by Reserve, it continued to be liable under such policy and -the -certificate issued thereunder. We'agree with the trial judge that this section does not apply. Thé specified notice is required only in the event of either a cancellation or an annulment of a-policy issued under the Financial Responsibility Act.

The accepted meaning of “cancellation” as applied to insurance policies is termination pursuant to'the provisions of a cancellation clause in the policy; the abrogation of so much of a contract as remains unperformed. Rothman v. National Mutual Insurance Company, 197 Md. 173, 179 .