Hughes v. . Lewis

Adams, J. Frank Lewis, an independent contractor, was the employer, Everett Hughes, the deceased, was his employee, and the American Casualty Company was the carrier of insurance. The employer applied to Joseph A. Eowland, an insurance agent of West Jefferson, for a Workmen’s Compensation policy, and Eowland made application for the policy to the Forester-Prevett Insurance Company of North Wilkesboro, agent of the American Casualty Company. On 12 March, 1930, the American Casualty Company issued in the name of the employer a Universal Standard Workmen’s Compensation Policy and sent it to the Forester-Prevett Company. The latter delivered it to Eowland and Eow-land to the employer. Eowland received the usual broker’s commission from the Forester-Prevett Company with whom he had an account. On 30 September, 1930, the American Casualty Company canceled the policy for nonpayment of the premium and notified the insured. Sometime thereafter it returned the unearned estimated premium to the Forester-Prevett Company, who credited Eowland’s account with this *778 sum. Of the unearned premium Eowland returned to the insured the sum of twenty-five dollars only, in part payment of the amount to which he was entitled. The plaintiffs contend that the policy is in effect because the whole amount of the unearned premium was never returned to the insured. The contract of insurance contains the following provisions: “This policy may be canceled at any time by either of the parties upon written notice to the other party stating when, not less than ten days thereafter, the cancellation shall be effective. The effective date of such cancellation shall then be the end of the policy period. . . . Notice of cancellation shall be served upon the employer as the law requires, but if no different requirement, notice mailed to the address of the employer herein given shall be a sufficient notice and the check of the company, similarly mailed, a sufficient tender of any unearned premium.” It is further provided that at the end of the policy period the actual amount of the remuneration earned by employees shall be exhibited to the company, as provided in condition C, and the earned premium adjusted in accordance therewith; also, that if the earned premium thus computed is greater than the advance premium paid, the employer shall pay the additional amount to the company, and if less, that the company shall return to the employer the unearned portion. Condition C is as follows: “The company shall be permitted, at all reasonable times during the policy period, to inspect the plants, works, machinery and appliances covered by this policy, and to examine this employer’s books at any time during the policy period, and any extension thereof, and within one year after its final expiration, so far as they relate to the remuneration earned by any employees of this employer while this policy was in force.” The plaintiffs assert that by virtue of these provisions payment or tender to the employer of the unearned premium was a condition precedent to the cancellation of the policy, and it may be conceded that the principle is frequently enforced in determining the liability of insurance companies on certain classes of policies. 5 Cooley’s Brief on Insurance, 4669; 3 Couch’s Cyclopedia of Insurance, 2347, sec. 707. In a life or fire insurance policy, for example, the amount of the unearned premium is fixed or may be ascertained at the time of cancellation and remitted to the insured with the notice. It is otherwise in the Standard Workmen’s Compensation Policy. Under its provisions the insurance carrier has the privilege of calling for an audit of the payroll as prerequisite to the calculation of the amount due the insured as unearned premium, the return of which is not a condition precedent to the cancellation of the policy. The employer admitted that the policy in question had been *779 canceled prior to the occurrence of the injury resulting in the death of the plaintiff’s intestate and that he had received notice of the cancellation. We are of opinion, however, that the appellant is liable for that portion of the unearned premium which has not been actually paid to the employer. The policy was procured through Joseph A. Rowland. It is provided by statute that an insurance agent or broker who acts for a person other than himself in negotiating a contract of insurance is, for the purpose of receiving a premium therefor, the company’s agent, whatever conditions or stipulations may be contained in the policies or contracts. 0. S., 6304. It is unnecessary to inquire whether such agent or broker is the company’s agent for the return to the insured of the unearned premium. If Rowland was the company’s agent for this purpose, the company is liable to the employer for so much of the unearned premium as has not been paid to the employer. The same result follows if the broker was the agent of the employer. The company’s agent at North Wilkesboro had no legal right to credit Rowland’s account with the unearned premium, which in fact was the property of the employer, the evidence being that Rowland was indebted to the Forester-Prevett Company at that time; and Rowland had no right to accept the credit without the consent of his principal. Turlington v. Ins. Co., 193 N. C., 481. The award of the Superior Court against the American Casualty Company is reversed, and as modified the judgment is affirmed. Modified and affirmed.