Sorensen v. Farmers Mutual Hail Insurance

Hale, J. Plaintiff, on May 14, 1937, applied for a policy of insurance against hail, on growing crops on forty acres of land. Policy was issued May 17, 1937, and on August 1, 1937, plaintiff suffered a loss on such forty acres by reason of hail. To his petition defendant filed answer by way of general denial, and in division II of such answer alleged that on June 17, 1937, plaintiff’s policy was canceled by defendant by sending to plaintiff a notice of cancellation, addressed to Harry H. Sorensen, Elk Plom, Iowa, R. D. No. 1, and alleged further that said notice of cancellation complied with section 6 of the policy issued to Sorensen and was mailed in compliance with Code section 9054, and, further, that the cancellation of said policy became effective more than forty days prior to the storm and loss, and asked dismissal. To the second division of defendant’s answer plaintiff demurred, on the grounds: (1) That it did not show any compliance with the laws of Iowa pertaining to cancellation of insurance policies of the kind involved in the action; (2) that no notice of cancellation was given to the assured; (3) that the provision for cancellation of policies in the bylaws of defendant company, as printed on the back of the policy, to wit, section 6, is not authorized by the statutes of Iowa, and particularly section 9054, Code, 1935; and (4) that there was no allegation in defendant’s answer that any notice of cancellation was ever received by plaintiff. This demurrer was sustained. Defendant filed election to stand on its answer, and appealed from the order of the court sustaining the demurrer. Plaintiff in his petition sets out as an exhibit a copy of his application, dated May 14, 1937; the articles of incorporation of the defendant association; and the bylaws, section 6 of which bylaws is as follows: “A policy of insurance issued by this Association may be cancelled by the Association giving five days’ notice in writing *1318 thereof to the assured or if the assured shall demand in writing or in person of the Association, the cancellation of his policy, the Association shall immediately advise, by letter to address named, the amount, if any, due as his pro rata share of the losses and in addition the actual expenses incurred since the date of his policy. Upon the surrender of his policy and the payment of all sums due, his membership shall cease, provided that during the months of May, June, July and August, hail policies may be cancelled only at the option of the officers of the Association. Notice of cancellation by the Association mailed to the address of the assured stated in the representations shall be a sufficient notice.” Section 9054 of the Code of 1935 is as follows: “Cancellation by association — notice. Any policy of insurance issued by any association operating under the provisions of this chapter may be canceled by the association giving five days’ written notice thereof to the insured.” It is not disputed that the provision in the bylaws is a part of the policy, or that, by the terms of the contract of insurance, it is expressly agreed that the articles of incorporation and the bylaws printed in the policy are a part of the contract and binding upon both parties thereto. Nor is it disputed that existing statutes are to be construed as a part of all insurance policies subject thereto. 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 statutes. Also a policy is construed to give the insured his' indemnity in questions of cancellation or forfeiture. Assuming that the position of the plaintiff is well taken in regard to these matters, there remains only for consideration whether or not the mailing of the notice pleaded by the defendant in division II of its answer, constituted cancellation within the meaning of section 9054 of the Code, and is such a notice as is contemplated in that statute. The notice was dated June 17, 1937, and was as follows: “The Farmers Mutual Hail Ins. Ass’n. of Iowa, Des Moines, Iowa, hereby gives you written notice in accordance with the policy conditions of the cancellation of its hail Policy *1319 No. 317339 issued through the Home Office to Harry H. Sorem sen. “By virtue of this notice, as issued to you, the Policy will be cancelled and all liability of the Farmers Mutual Hail Insurance Association of Iowa under said Policy will cease five days from noon standard time the 17th day of June, 1937, without further notice. “Mutually, “Farmers Mutual Hail Ins. Ass’n. of Iowa, “By (Signed) F. O. Rutledge, Ass’t. Secy.” Attached to this exhibit is a receipt from the post office department at Des Moines. In argument the plaintiff makes no objection to the form of notice; nor is the second ground of the demurrer argued to any extent, that the defendant did send to the plaintiff the notice of cancellation as stated in division II of its answer. The questions remaining for consideration are: Did the sending of the notice in the manner pleaded comply with the laws of Iowa pertaining to cancellation of insurance policies of the kind involved in this action; was such attempted cancellation authorized by section 9054, or is it necessary under such section that the notice of cancellation be received by the insured ? The whole question centers itself in one proposition: Does a cancellation under section 9054 of the Code require that the notice be received by the insured before it becomes effective? The allegations of defendant’s answer must be taken as true for the purpose of considering the demurrer, so that in this case we have a notice in due form, mailed to the plaintiff a sufficient period before the time of loss and in compliance with section 6 of the bylaws of the association and the provisions of the policy. It will be noticed that the Code (section 9054) does not specify any particular form of notice except that it shall be. five days written notice. Plaintiff insists that notice to the insured cannot be such unless there is a showing, or in the case at bar a plea, that the same had been received by the insured; that the bylaw of the association which provides for the giving of notice by mail is inconsistent with, and conflicts with the provisions of the statute. If this is true, the statute would prevail. The bylaw would give way to the statutory provision. The question, therefore, *1320 becomes still narrower, and remains: Does this provision of the policy conflict with the statute? If it does, then the court was right in sustaining the demurrer. If there is no conflict, then the demurrer should have been overruled. Many authorities are cited by both parties, and the courts in their rulings upon provisions of this kind have not been unanimous, and there is much conflict. The principal case cited by plaintiff is Galkin v. Lincoln Mutual Casualty Co. (1937), 279 Mich. 327, 272 N. W. 694. This case holds that there must be actual receipt of the notice, following a former Michigan case, Irish v. Monitor Ins. Co., 264 Mich. 586, 250 N. W. 318, in which case the statement is made that the authorities are in flat conflict, citing 3 Joyce on Insurance, 2d Ed., sections 1669, 1669B, and 6 Couch, Cye. of Insurance, section 1440; and further citing Farnum v. Phoenix Insurance Co., 83 Cal. 246, 23 P. 869, 17 Am. St. Rep. 233; American Building Maintenance Co. v. Indemnity Ins. Co., 214 Cal. 608, 7 P. 2d 305; Mullen v. Dorchester Mut. Fire Ins. Co., 121 Mass. 171; Protection Life Ins. Co. v. Palmer, Admr., 81 Ill. 88; Commercial Union Fire Ins. Co. v. King (decided in 1913), 108 Ark. 130, 156 S. W. 445; American Fire Ins. Co. v. Brooks, 83 Md. 22, 34 A. 373. An examination of these cases does not disclose that in any case, except the Michigan case, there was any reference to any statute similar in form to the one under consideration. Several cite the Mullen case, supra, from Massachusetts, where no such statute is referred to. Since the rendition of the decision in the Arkansas case (Commercial Union Fire Ins. Co. v. King, supra), which is cited in support of the Michigan ruling, the supreme court of Arkansas, in the case of Home Ins. Co. of New York v. Jones, in a decision rendered in 1936, 192 Ark. 916, 95 S. W. 2d 894, 896, has held that evidence of the receipt of the notice is not necessary. In an action upon an automobile policy, the lower court’s holding that in order to be effective the cancellation must show that the insured received the notice, was reversed, the court saying: “We cannot agree with the trial court that the provision with reference to notice of cancellation is unreasonable, unfair, etc., and therefore void. On the contrary, the provision is valid, but must be strictly complied with to be availing. If the notice is given strictly in accordance with its terms, it is not necessary *1321 that the insured shall receive it to be effective, as its receipt is a risk he assumes under the plain provisions of the contract.” (Italics ours.) The holdings of various eourts with reference to the validity of such a policy provision sustain the defendant’s view, as in the recent cases of Dent v. Monarch Life Ins. Co. (1936), 231 Mo. App. 283, 98 S. W. 2d 123; St. Paul Fire & Marine Ins. Co. v. C. I. T. Corporation, 55 Ga. App. 101, 189 S. E. 390; McBride v. New Amsterdam Casualty Co. (1934), 12 N. J. Misc. 617, 173 A. 346, following Raiken v. Commercial Casualty Ins. Co. (1926), N. J. Sup., 135 A. 479. In the recent case of California-Western States Life Ins. Co. v. Williams (Sept. 22, 1938), Tex. Civ. App., 120 S. W. 2d 844, under the same provisions of a policy as to cancellation, providing that the company might cancel the policy at any time by written notice delivered to the insured or mailed to his last address, the supreme court reversed the lower court which held that the cancellation was not effective because there was no evidence of the notice being received, the court in its opinion citing among other authorities, the case of Wolonter v. United States Casualty Co., 126 Va. 156, 101 S. E. 58, 61, in which latter case the following language was used: “The contract was a valid contract, and the company had the right to cancel it in the manner therein provided. If the notice, properly addressed, was mailed to the assured at his latest address appearing on the company’s record, accompanied by the company’s check for the unearned premium, that was sufficient. The assured assumed the risk of the due receipt of the notice.” Citing Manchester Fire Assur. Co. v. Insurance Co., 91 Ill. App. 609; International Life Ins. & Trust Co. v. Franklin Fire Ins. & Trust Co., 66 N. Y. 119. All the foregoing authorities, with other eases cited therein, indicate that the question of receipt of notice is one upon which the courts of the country are in conflict. It is asserted that, the question at issue has never been passed upon in this state. But it may be of interest to note that, while the exact question in issue has not been before this court, yet some suggestion has been made heretofore as to the proper manner of service of the notice provided in the Code (section 1759-m, S. ’13) in Salmon v. Insurance Assn. (1915), 168 Iowa 521, 527, *1322 150 N. W. 680, 682, an action to reform a policy of insurance under a statute identical with, such Code section 9054. The question of receipt of notice was not in issue, nor a determining question in the case, but the court, in holding that the form of notice sent was not effective and that the notice prescribed by section 1759-m (section 9054, Code, 1935) was the only statutory method of cancellation, stated as to such prescribed method, “This notice may doubtless be given by registered letter,” and that, assuming insured “did not receive it, yet he should be bound by what it contained.” We do not say that the foregoing case is authority for the position we take as to the effect of section 9054, but that the interpretation of the policy provision under that statute, as made therein, seems to us to be reasonable and correct. It seems to us that the only requirement of the statute is that written notice be given in proper time. The statute is silent as to the manner of notice. The parties to this action have recognized the fact that notice is necessary; they have by the stipulations of the policy contracted with each other as to the form and manner in which the notice shall be given, and as to what shall constitute a notice within the meaning of the statute. The statute leaves the parties free to meet its requirements in such manner as to them may seem best adapted to the purpose. Any method of notice should be sufficient which will reasonably apprise the insured of the intention of the insurer to cancel, provided that it does not conflict with the statute. Thus the parties could not agree that no notice should be given, but if in their opinion the manner of service of notice set out in the bylaws is sufficient, it does not appear to us that there is anything in the statute that would prevent them from so agreeing, the parties being free to provide such reasonable notice, not in conflict with the statute, as they may elect. To hold as plaintiff insists th-at to defend against a.suit on a policy which a company has seen fit to cancel, the defendant must show the actual receipt of notice, would in many cases require an impossibility. We think that the provision in the policy provides a reasonable way of terminating it, is not in conflict with the statute, and it is one to which both parties have agreed. We feel that the court was in error in sustaining the demurrer under the pleadings. So far as this particular case is concerned, the question in issue being the correctness of the court’s ruling on a demurrer, *1323 we should bear in mind the presumption or inference that the notice did actually reach the plaintiff by reason of its being deposited in the post office at Des Moines in time, in the ordinary course of mail, to reach the insured. Such a presumption is authorized by the holdings of this court. The demurrer recognized as true that the registered letter was deposited on the date claimed, and we may presume or infer that the letter, properly addressed and mailed, reached the plaintiff in due time. Watson v. Richardson, 110 Iowa 673, 80 N. W. 407; Pennypacker v. The Capital Insurance Co., 80 Iowa 56, 45 N. W. 408, 8 L. R. A. 236, 20 Am. St. Rep. 395; Cushman v. Hassler, 82 Iowa 295, 47 N. W. 1036. Travelers Ins. Co. v. Farmers Mutual Fire Ins. Assn., 211 Iowa 1051, 233 N. W. 153, is not contrary to the presumption of delivery and receipt. In that case there was a conflict of testimony. The court speaks of the inference which applies in the absence of evidence to the contrary, and holds that if defendant actually mailed such a letter the probability is great that it reached its destination, but if, on the other hand, the plaintiff never received such a letter the probability is great that it was never mailed, and that the evidence on that point is contradictory, as is not true in the present case. There is, of course, in the case at bar, no contradiction in the evidence. But if there were such contradictory evidence, still, for the reasons given in the first part of this opinion, we would be compelled to hold that the ruling on the demurrer was erroneous, and should be, and it is, reversed. — Reversed. ' Stiger, Sager, Bliss, and Miller, JJ., concur, Mitchell, C. J., and Richards and Oliver, JJ., dissent.