Majority
p. 328Waldemar A. Walthear, Doing Business as Walthear & Company, Respondent, v. The Pennsylvania Fire Insurance Company, Appellant.
Headnote
Insurance policy — requiring a return of the unearned premium, upon its cancellation by the company—tender.of the unearned premium by letter sufficient—a return of the policy required.An action was brought to recover the amount of a loss occasioned by fire to .property insured under a policy of insurance issued by the defendant to the plaintiff, which provided that it might be surrendered and also that .the company might cancel it on five days’ notice; that the unearned portion of the premium should be returned on surrender of the policy by the insured, the company retaining the customary short rate, except that when the policy was canceled by the company by its -giving notice, it should retain only the pro rata premium.
During the existence of the policy, and on October 3, 1892, the plaintiff received from the defendant a notice that the policy would be canceled by the. company on October 6, -1892, and that the unearned premium due, if any, would be held subject to the order of the plaintiff and the return of the policy. The plaintiff paid no attention to the notice, never returned the policy, and the defend- . ant never returned the premium, and thereafter, a loss by fire having occurred, the plaintiff brought this action.
Held, that the policy was canceled, notwithstanding the fact that the defendant had not actually paid over to the insured the unearned premium;
That its statement-to the insured that it held the unearned premium subject to his order and to the return of the policy amounted in law to an offer to return the premium to him, and called for action upon his part;
That such an offer' or tender was properly coupled with a demand for the return of the policy, as, by the express terms of the policy, the defendant was entitled to its return upon payment of the unearned premium;
Appeal by the defend an j;, Tbe Pennsylvania Eire Insurance Company, from a judgment of the Supreme Court in favor, of 'the plaintiff, entered in the office of the clerk of the county of New York on the 26th day of November, 1895, upon the verdict of a jury, rendered by direction of the .court after a- trial at the New York Circuit.
The action was brought to recover damages for loss by fire under a policy of- insurance dated August II, 1892, issued' by the defendant upon property of the plaintiff. The policy was in the standard New York form and contained, among others, the following candi-
p. 329
tians : This policy shall be cancelled at any time at the request of the insured ; or by the company by giving five days’ notice of such cancellation. If this policy shall be cancelled as hereinbeforeprovided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this .company retaining the customary short rate; except that when this policy is cancelled by this company by giving notice it shall retain only the jiro rata premium.”
It is admitted that on October 3,1892, -the plaintiff received from the defendant a notice stating, among other things, that “ on and -after the 6th day of October, 1892, at noon, the said policy will be - held by the company as cancelled and void, and no claim thereunder for loss from fire occurring after said date will be recognized or admitted by the company. The unearned premium due, if any, will be held subject to your order and return of the policy.” The plaintiff does not appear to have paid any attention to this notice or in any way to have replied to it. Thereafter, the fire-which damaged plaintiff’s property having occurred on November. 5,-1892, he made a claim for the resulting damages. The plaintiff, never surrendered to the defendant or its agents the policy of insurance,- and the defendant never returned to the plaintiff any portion - of the premium.
Both parties asked the court to direct a verdict in their favor respectively,.and the court directed for the plaintiff, and from the judgment entered upon such verdict this appeal is taken.
'M.iehael II. Gardozo and Edgar J. Nathan, for the appellant.
Henry Thompson, for the respondent.
The legal question is: Can a fire insurance company terminate a policy without actually returning and paying to the assured the unearned premium ?
It is insisted by the respondent that the covenant not to retain the premium is an integral part of the cancellation proviso, and that the payment of the unearned premium is no less an essential part of the act of cancellation ; that to cancel the policy it must return the unearned premium, and that the language “ not to retain ” is not
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satisfied by an actual retention, nor is it any excuse for actual retention to say to plaintiff that “ the unearned, premium due, if any, will be held subject to your order and return of the policy,” for the reason that the language calls for affirmative action on the part of the company ; their duty being to get rid of the unearned premium if they desire to get rid of their contract obligation. Support for this contention is claimed to be found in the case of Nitsch v. Am. Cent. Ins. Co. ( 83 Hun, 614 ), and following this decision, the case of Tisdell v. N. H. Five Ins. Co. ( 11 Misc. Rep. 20 ). We do not think the Nitscli case goes to the extent claimed for it by the respondent, nor is it controlling by reason of the difference which we will point out upon the facts here appearing. The learned judge at Circuit, in writing the opinion in that case, presents the case therein disposed of by saying: “ The learned counsel for the defendant contends that by nature of this language the insurance company can effectively and absolutely terminate its liability as an insurer simply by giving to the insured the prescribed five days’ notice, and without returning or tendering the unearned premiums;” And after construing the provision in the standard policy and speaking of the company’s duty in regard to -the unearned premium, he concludes the opinion as follows: “ The latter requirement * * * can only be complied with by actually returning the unearned premium or offering to return it to the insured; reading the entire provision as a whole, I am clearly of the opinion that it makes the actual payment or tendeyof the unearned premium essential to a cancellation of the policy by the company.” It will thus be seen that the court in that case did not hold that there must be an actual return of the unearned premium, but there must be either that or an offer to return it to the insured. Having regard to the language used in the notice of cancellation, we think that the latter was just what was done here,' namely, that the company offered to return the unearned premium upon a return of the policy — which was clearly within the language of the policy. As will be seen on reading its language, the duty was imposed upon the assured of returning the policy upon receipt of the unearned premium, and it would be violating the plain language of the provision to say that the company was pledged actually to deliver the- money, irrespective of whether the insured would return the policy or not., Upon receiv
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ing such a notice, we think the insured should have taken some action, either by replying to the letter or by going with the policy and receiving the money, or by sending it and ordering just what he wished done in regard to the unearned premium. For if we should take the view that the insured had no duty resting upon him, and notice was sent that the unearned premium was subject to his order, then he would hold the position where if a fire occurred, as here, he could claim that the policy was in force, and if no fire-occurred he could, after the policy terminated, recover from the company the unearned premium. The concluding statement of the notice, that “ the unearned premium due, if any, will be held subject to your order and return of the policy,” was effectual, at the end of the five days in such notice specified, to cancel the policy and to give the insured a right to the unearned premium upon returning the policy. The distinction, therefore, between this and the Nitsch case will be found in the fact which we have adverted to, that there was in that case no return or offer to return the premium, while in this case there was a distinct offer; because 'we think the statement that the unearned premium was held subject to-the order of the insured and the return of the policy was equivalent to a tender or offer of such unearned premium. And the coupling of the tender with, the request for a return of the policy did not destroy its efficacy as a tender, because the condition was one that the company, under the express language of the provision, had a right to add to its offer.
Our conclusion, therefore, is that the direction of a verdict in plaintiff’s favor was erroneous, and that the judgment must be reversed and a new trial ordered, with costs to appellant to abide, event.
Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ.„ concurred.
Judgment reversed and new trial ordered, with costs to the appellant to abide event.
Cases cited
- Tisdell v. New Hampshire Fire Insurance 11 Misc. Rep. 20 p. 330