Summary
construing insurance policy which explicitly stated that coverage was effective "`upon receipt of the premium at the company's home office and not at the time of mailing'" to require delivery of payment at insurance company's home office
Summary of this case from Dalton Buick v. Universal Underwriters Ins. Co.Opinion
No. 142.
Argued October 29, 1969. —
Decided November 25, 1969.
APPEAL from a judgment of the circuit court for Milwaukee county: ROBERT M. CURLEY, Circuit Judge. Affirmed.
For the appellant there were briefs by Wickham, Borgelt, Skogstad Powell, attorneys, and Robert C. Watson of counsel, all of Milwaukee, and oral argument by Mr. Watson.
For the respondent there was a brief by Giffin, Simarski, Goodrich Brennan, attorneys, and Alvin A. Stack of counsel, all of Milwaukee, and oral argument by Mr. Stack.
This action was commenced to recover for personal injuries and property damage sustained in an automobile collision of January 31, 1965, between vehicles driven by the plaintiff, Paul K. Kamikawa, and the defendant, Charles Keskinen.
The defendant American Standard Insurance Company of Wisconsin was made a party defendant upon an allegation that Clifford Johnson, an agent of American Standard, had orally agreed to extend insurance to the defendant, Charles Keskinen, effective prior to the accident.
American Standard denied that any policy of insurance was in force at the time of the accident.
The issue of liability insurance coverage was separated from the negligence and damage issues and tried first before the court and jury.
Most of the facts are undisputed.
American Standard is a subsidiary company of American Family Insurance of Madison, Wisconsin. It was organized for the purpose of dealing in high-risk automobile liability insurance. As shown by its rules and rates manual, policies are issued for basic short terms of three months. The sales agents may issue binders for a period of fifteen days provided the applicant fulfills the standard of eligible risks in his application. Only the company, after the receipt of the full premium for the three-month period, issues the policy if the applicant is an eligible risk.
Sometime in October, 1964, the defendant Keskinen's automobile liability insurance carrier notified him it was canceling his policy. Keskinen, then, on October 23, 1964, contacted Clifford Johnson relative to obtaining automobile liability insurance. Johnson took an application and $30 in cash from Keskinen. Pursuant to Johnson's authority, liability coverage was extended by American Standard to Keskinen from October 25, 1964, to November 9, 1964, a period of fifteen days.
On October 28, 1964, the company at its home office, in writing, in a form designated "AUTOMOBILE POLICY BINDER AND BALANCE DUE NOTICE," acknowledged receipt of the application and the $30 payment on the premium. The effective dates of the binder were stated to be "10-25-64 — 11-9-64." This form then set forth in boldfaced red ink type, "IMPORTANT! BEFORE THE EXPIRATION DATE OF THIS BINDER THE BALANCE DUE must be received by the Company in its home office at Madison, Wisconsin if coverage is to continue." The form then indicated the balance due for the policy for the three-month period was $47. Keskinen sent the $47 to the company at its home office in Madison and a policy that was to expire on January 25, 1965, was issued to him.
Several days before the January 25th policy expiration date the home office of the company sent Keskinen an "AUTO PREMIUM NOTICE." This notice advised him his policy would expire January 25th and that the premium for the next three months was $77. It also set forth the following:
"Premium to continue the insurance under your policy as described herein is due and payable to the company on or before the due date. Payment shall be considered as having been made upon receipt of the premium at the company's home office and not at the time of mailing. Coverage under such policy ceases on the due date at the hour specified in the policy unless the premium is paid when due."
Keskinen did not make a payment of the renewal premium in any manner on or before January 25th. On January 28th Johnson received a policy lapse notice from the company. On January 29th he called Keskinen by telephone, as was his practice when he received lapse notices, to inquire as to whether Keskinen wanted coverage. The substance of the telephone conversation between Johnson and Keskinen is in dispute. Keskinen testified that he told Johnson he had sent in the premium or that he was sending it in that day and that Johnson responded "if he mailed it in he was covered." Johnson denied making any such statement.
Keskinen did make out a check to American Standard dated January 29, 1965, in the amount of $77 for the premium for three months' coverage and sent it (from Milwaukee) to the home office at Madison. January 29th was a Friday. The home office is not open Saturday or Sunday. The check was received Monday, February 1st, accepted, and a policy for three months, commencing February 1st, was issued.
Keskinen and Kamikawa were involved in the accident in question on January 31st. American Standard denies coverage.
The only question submitted to the jury was:
"Did the insurance agent, Clifford Johnson, on Friday, January 29, 1965, tell the defendant, Charles Keskinen, that he was covered with insurance as of that date?"
This question was answered, "Yes."
American Standard moved for judgment notwithstanding the verdict. The motion was granted and judgment was entered dismissing the complaint as to American Standard.
The plaintiff, Paul K. Kamikawa, appeals.
Was the automobile liability insurance in effect on the day of the accident by virtue of the agent's statement to the insured that if he sent the premium in he was covered?
The plaintiff-appellant points out that in Wisconsin the court has long recognized the validity of an oral contract of insurance.
In Kiviniemi v. American Mut. Liability Ins. Co. (1930), 201 Wis. 619, 629, 231 N.W. 252, it is stated:
"Should one before starting on an automobile trip orally request an agent to renew a policy about to expire issued by the agent on his automobile and be assured that it would be attended to, precisely the same reason exists for holding insurance effected as for holding fire insurance renewals effected under like circumstances. Had the collision here involved occurred after the request for and promise of coverage were made and before the writing of and mailing of a rider would customarily be consummated, there would be no hesitancy in holding the coverage of the truck effected."
Also see Stehlick v. Milwaukee Mechanics' Ins. Co. (1894), 87 Wis. 322, 58 N.W. 379; Kiviniemi v. American Mut. Liability Ins. Co., supra; Campbell v. Wilson (1962), 18 Wis.2d 22, 117 N.W.2d 620.
The respondent argues, and we believe correctly so, that even though oral contracts of insurance are recognized a valid oral contract was not entered into under the facts of this case.
The basic elements of a contract, of course, are an offer, an acceptance, and consideration.
Briggs v. Miller (1922), 176 Wis. 321, 186 N.W. 163.
The first policy clearly expired January 25th. The sending of the premium constituted a new offer by Keskinen. It was acted upon and accepted by the insurance company pursuant to the terms of the notice the day after the accident. Did the statement by Johnson that if he sent the premium in he was covered change the acceptance date? We think not.
The insurance was substandard or high-risk insurance; the policy issued in November clearly stated (on the declaration sheet and not buried within the policy) that the insurance expired January 25th; the premium notice received by Keskinen prior to the expiration date again set forth the expiration and advised that insurance would not be in force until the premium was received at the home office, and specifically provided it was the date the premium was received, not when it was mailed.
The agent Johnson clearly had no authority to waive premiums, nor to extend coverage dates or even issue binders without the payment of a premium.
The trial court was of the opinion that the rule of Ingalls v. Commercial Ins. Co. (1962), 18 Wis.2d 233, 237, 238, 118 N.W.2d 178, controls this case. Although Ingalls deals with cancellation and this case renewal, we agree it does apply and dictates the conclusion that Johnson did not have apparent authority to commit the company and that Keskinen did not have coverage on January 31st.
We stated in Ingalls, supra, at pages 237, 238:
"The company made use of this policy provision and unequivocally canceled the plaintiff's insurance. Although there are situations where the equities will lie in favor of an insured who has relied on the apparent authority of an insurance agent, this is not such a case. A line must be drawn somewhere and when an insurance company revokes a policy and the insured has received written notice of such cancellation in accordance with the policy terms, the insured, seeking revocation of that notice, must make sure that the agent with whom he is dealing has actual authority to countermand this order."
Though not discussed in the briefs, the issue of estoppel was raised and considered at oral argument. Estoppel, if applicable to the instant case, would be predicated upon the statement of Johnson that Keskinen was "covered" to bar American Standard from denying the issuance of a parol contract of insurance.
The doctrine of estoppel does not apply to this case because its usage would be directed to the creation of a contract of insurance. This court has specifically declined to extend the doctrine to such situations. See Schuster v. Germantown Mut. Ins. Co. (1968), 40 Wis.2d 447, 162 N.W.2d 129; Shearer v. Dunn County Farmers Mut. Ins. Co. (1968), 39 Wis.2d 240, 159 N.W.2d 89; Harris v. Knutson (1967), 35 Wis.2d 567, 151 N.W.2d 654; Maryland Casualty Co. v. Industrial Comm. (1939), 230 Wis. 363, 284 N.W. 36.
In agreement with the principle that estoppel cannot be used to create a contract of insurance is a recently revised edition of 16A Appleman, Insurance Law and Practice, pp. 339, 340, sec. 9090, where it is stated:
"Insurance contracts cannot be created by estoppel. That doctrine cannot be invoked by an insured to create a primary liability of the insurer for which all elements of a binding contract are necessary."
By the Court. — Judgment affirmed.