Louisiana Public Utilities Co. v. Atlas Assurance Co.

Martin, J. On October 1, 1928, at about three p. m., the plaintiff’s plant for generating electricity and manufacturing ice located at Oakdale, La., was destroyed by fire. The buildings and equipment were valued at $90,381.19 with salvage of $26,298.07, and a loss to the plaintiff of $64,083.12. At the time of the fire the plaintiff contends that it had insurance covering its plant to the amount of $69,600 in the defendant companies and a like amount in the Standard Insurance Company of New York, or a total of $139,200. The defendants contend that at the time of the loss, and three hours before the fire occurred, their policies had been canceled at the plaintiff’s request and were not outstanding so as to make them liable to contribute to the loss. In either case, [475] the plaintiff had sufficient fire insurance to cover its loss and the sole question presented is whether the defendants’ policies had been canceled or whether they were liable for contribution to the loss. The Standard Insurance Company has paid to plaintiff one-half of its loss, or the sum of $32,041.56; the balance has not been paid. If the defendants’ policies were in force at the time of the fire, they are liable for the other half as contributing insurance; if they had been effectively canceled, the remaining one-half of the loss is due from the Standard Insurance Company of New York and will be paid by it. There is no controversy as to the amount or the justness of the claim involving the loss, and it is conceded that if the defendants’ policies were not canceled, they are liable in the proportions set forth in the complaint. The issue, therefore, presented for our determination is between the claim of the Standard Insurance Company that it is liable for one-half of the plaintiff’s loss and the claim of the defendants that they are not liable for any part of the loss. Prior to October 1, 1928, the plaintiff had employed Wagner-Taylor Company of Philadelphia as its insurance broker. This broker procured the policies in suit for the plaintiff from the defendants’ agent in New Orleans, La., the Hartwig-Moss Insurance Agency, Ltd. It is conceded that the law of that State provides that policies of fire insurance on property located therein must be written through a resident agent in the State. In September, 1928, the plaintiff was advised by an insurance broker, the Brown-Crosby Company of Philadelphia, that it could obtain the plaintiff’s insurance at a lower premium than it was paying. This insurance involved not only fire, but other kinds of insurance which the plaintiff and its parent corporation, the American Utilities Company, were carrying. The brokers of the plaintiff could not meet the competitive figures presented by the Brown-Crosby Company, and the plaintiff decided to cancel all insurance then in existence as of October 1,1928, and to take out new insurance through Brown-Crosby Company. In pursuance of this determination, the new broker, the Brown-Crosby Company, was authorized to cover the line of the American Utilities Company, and on September 26, 1928, this broker negotiated a binder with the Standard Insurance Company of New York, in an amount of $2,600,000 effective that day. Included in this amount’ was $69,600 applicable to the plaintiff’s plant at Oakdale, La. The plaintiff and its parent company proceeded to order the cancellation of the outstanding insurance placed by the Wagner-Taylor Company. On September 27, 1928, the day following the [476] issuance of the'binder by the Standard Insurance Company, Joseph W. Henderson, the plaintiff’s counsel, wrote to Mr. Taylor of the Wagner-Taylor Company, as follows: “ Dear Mr. Taylor: “ The American Utilities Company have decided to place their insurance in accordance with the parties with whom I have advised you. They are going to cancel the policies as of October 1st. Therefore we will not need the binder with the insurance company in Washington. Will you kindly be governed by the above advices with reference to the policies which are now in existence. You will receive instructions directly from Harrisburg with reference to the cancellations and not from me. I shall be glad to discuss this matter with you. “ Very truly yours, “ JOS. W. HENDERSON.” The formal order to cancel all policies was given to Wagner-Taylor Company in a letter from Gannett, Seelye & Fleming, Inc., which company operates the properties insured by the defendants, the said letter being dated September 28, 1928. On October 1, 1928 (whether before or after the fire it does not appear), the Wagner-Taylor Company wrote to the Hartwig-Moss Insurance Agency, Ltd., in New Orleans, La., requesting the cancellation of the policies in suit. This letter was received by the Hartwig-Moss Insurance Agency in New Orleans on October 3,1928, 'two days after the fire occurred, and was answered by telegram of that date to the Wagner-Taylor Company. In this telegram the defendants’ agent claimed a cancellation of the policies in suit as of • October first, thereby presenting the issue which we are called upon to settle on this appeal. The fire which caused the loss involved in this litigation occurred on October 1, 1928, at about three-thirty p. m., at which time the defendant insurance companies became liable under the terms of the policy. The defendants contend that the insurance was taken away from them at noon on October 1, 1928, and was transferred to the Standard Insurance Company of New York. In other words, the defendants contend that the insurance had been transferred from them to the Standard Insurance Company a few hours before the fire, although they did not receive the request to cancel the policies until after the fire and at a time when the liability had accrued and when the rights of the parties were fixed and could not be changed. The plaintiff claimed the full amount of the loss from the Standard Insurance Company and seems to have treated the defendants’ [477] policies as canceled to the extent of collecting the unearned premium upon them as of October 1, 1928, at noon. The standard form of fire insurance policy used in this State, as prescribed by section 121 of the Insurance Law, is also required to be used in the State of Louisiana. The policies in suit being in that form provide that “ This policy shall be cancelled at any time at the request of the insured.” The court at Trial Term reviewed the law and the facts which are summarized, as follows: “I am unable to find that the insurance originally written by the defendants on the plaintiff’s plant in Oakdale, Louisiana, had been cancelled or had become otherwise ineffective as of October 1, 1928, at 3 p. m., the day and time of the loss insured against. The letter of September 27, 1928, from the plaintiff’s counsel to Wagner-Taylor Co., cannot be construed as a cancellation. Indeed, it specifically negates an intention presently to cancel by pointing out that ‘ you will receive instructions directly from Harrisburg [where the plaintiff’s managing agents, Gannett, Seelye & Fleming, Inc. were located] with reference to the cancellations and not from me.’ Furthermore, Wagner-Taylor Co. was not the agent of the defendants but solely the broker of the plaintiff. The effective cancellation was the letter of October 1, 1928, from Wagner-Taylor Company, the broker of the plaintiff, to Hartwig-Moss Insurance Agency, Lim., in Louisiana, the agent of the defendants, who had written the insurance in question. This letter was not received by the Hartwig-Moss Insurance Agency until October 3, 1928, two days after the fire. The law is quite clear that a cancellation of insurance is not effective, irrespective of the intention of the insured, until notice thereof is actually received either by the insurer or by his agent authorized to receive and accept such notice. This is the law in our State, the forum of this action. (Crown Point Iron Co. v. Ætna Ins. Co., 127 N. Y. 608; Gately-Haire Co. v. Niagara Fire Ins. Co., 221 N. Y. 162.) It is the law of Louisiana, where the insurance was written (McGraw Wooden Ware Co. v. German Fire Ins. Co., 126 La. 32). * * * The evidence does not sustain the contention of the defendants that Morgas was their agent authorized at the time to receive cancellations of policies, even assuming that the short telephone conversation relied on by the defendants could be construed as the expression of an intention between the parties thereby to cancel.” The insurance policies in question provide that they will not cover property insured more generally than by the policies themselves. It is also the contention of the defendants that these provisions were effective on September 26,1928, because of the issuance [478] of a binder of other insurance on that day and that, therefore, from September 26, 1928, their policies were not in force. The law seems to be well settled that a request for cancellation is not effective until delivery to the insurance company or its authorized agent is made, and that such delivery does not result from a mere deposit of the request to cancel in the mails. In Crown Point Iron Co. v. Ætna Ins. Co. (127 N. Y. 608, at p. 619) the court said: “ When did the notice reach the companies or their agent Mr. Little? If it reached him before the fire the policies were terminated ipso facto and were not in force when the loss occurred. If it reached him after the fire then the policies were in force when the loss occurred and the character of the contract was thereby changed from a contingent to a certain liability on the part of the insurer. A cause of action based on an absolute debt forthwith accrued to the plaintiff that was not extinguished by the subsequent receipt of the policies by Little. (Stone v. Franklin Fire Ins. Co., 105 N. Y. 543, 550; Van Valkenburgh v. Lenox Fire Ins. Co., 51 id. 465, 467.) ” There appears to be no doubt that the policies sued upon were in full force and effect at the time of the fire, and that the defendants’ liability thereunder attached before any cancellation thereof. The judgment should be affirmed, with costs. Merrell, McAvoy and Sherman, JJ., concur; Finch, P. J., dissents and votes for reversal and dismissal of the complaint.