Case Title: Green Mtn. Ins. v. Maine Bonding Casualty

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1991-06-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
 that corrections may be made before this opinion goes to press.


                                 No. 91-113


 Green Mountain Insurance Company             Supreme Court

      v.                                      On Appeal from
                                              Orleans Superior Court
 Maine Bonding & Casualty Co.,
 Carol Carter, Alan Buck, Judye               June Term, 1991
 Cheney, Individually and as Next
 Best Friend of Sheena Cheney Buck
 and Gregory Hammond.


 John P. Meaker, J.

 Bruce C. Palmer of Downs Rachlin & Martin, St. Johnsbury, for plaintiff-
   appellant

 Allan R. Keyes and John A. Serafino of Ryan Smith & Carbine, Ltd., Rutland,
   for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.   This is a declaratory judgment action to establish which
 insurance carrier is primarily liable for damages resulting from an automo-
 bile accident.  Plaintiff Green Mountain Insurance Company (Green Mountain)
 appeals from an order of the Orleans Superior Court granting summary judg-
 ment to defendant Maine Bonding & Casualty Company (Maine Bonding).  Maine
 Bonding had insured a vehicle involved in a collision with a car insured by
 Green Mountain, but claimed that its policy had been cancelled.  We affirm.
      On October 4, 1987, Gregory Hammond was driving a car lent to him by
 its owner, Carol Carter, when it collided with a car driven by Alan Buck.
 Hammond was insured by Green Mountain, and the Carter vehicle carried the
 policy that Maine Bonding claims was cancelled.  Each policy provided that
 its coverage was primary with respect to the policy owner's vehicle and
 excess with regard to non-owned vehicles, with the result that the Maine
 Bonding policy would afford primary coverage if it were in effect.  The
 Maine Bonding policy had initially covered a 1976 Ford Pinto, but in March
 1987 Carter notified Maine Bonding that she was substituting a 1985 Ford
 Escort for the Pinto.  Prior to learning of the change in cars, Maine
 Bonding issued declarations of coverage for the period April 7 to October 7,
 1987, and on March 16, 1987, sent a bill for $81 for the renewal, with a
 minimum payment due of $27.  The due date for payment was April 8, 1987.
 Carter received the bill.
      On March 23, 1987, Maine Bonding issued Carter two amended declarations
 with respect to her new car, one covering the initial policy period from
 October 7, 1986 to April 7, 1987, and the second covering the renewal period
 from April 7 to October 7, 1987.  The first amended declaration reflected a
 "full term total premium" of $237 and stated at the bottom of the document,
 "Above amendments identified by * developed a premium of $24.00."  The
 second amended declaration also stated a "full term total premium" of $237
 and indicated at the bottom of the document that the amendments identified
 "developed a premium of $156.00."
      By check dated April 3, 1987, Carter paid Maine Bonding $27, apparently
 in response to the March 16, 1987 bill.   Maine Bonding received and negoti-
 ated the payment on April 6, 1987, applying $24 of the $27 toward the
 additional premium due for the new car for the remainder of the initial
 term, i.e., from March 10, 1987 through April 7, 1987, and applying the
 balance of $3 to the renewal period.
      On April 6, 1987, Maine Bonding rebilled Carter for $24, the difference
 between the minimum due for the renewal period ($27) and the $3 credit
 remaining from the check received from Carter on April 6, 1987.  Receiving
 no further payment thereafter, Maine Bonding on April 20, 1987 mailed the
 following notice to Carter:
           YOUR PREMIUM PAYMENT DUE APRIL 08, 1987 HAS NOT BEEN
           RECEIVED.  YOU HAVE AN OPPORTUNITY TO KEEP YOUR POLICY
           IN FORCE IF THE MINIMUM DUE OF $24.00 IS RECEIVED BEFORE
           THE CANCELLATION OF MAY 05, 1987.  SEND PAYMENT TO P.O.
           BOX 226, PORTLAND, MAINE 04112.  IF YOU HAVE ALREADY
           MAILED YOUR PAYMENT, PLEASE DISREGARD THIS NOTICE.

 Carter testified in deposition with respect to this notice that "I threw it
 away, because I'd already paid it."  The reason for her impression that she
 had paid the bill was the similarity of the $27 she had paid and the $24
 billed.
      Nearly five months later, Carter's Ford Escort was involved in the
 collision that resulted in the present action.
      Both Green Mountain and Maine Bonding filed motions for summary
 judgment.  Green Mountain stated that "the essential facts of this case are
 undisputed" and argued that Maine Bonding could not establish an effective
 cancellation as a matter of law because its notices to Carter were
 ambiguous.  Maine Bonding's motion also asserted that there were no material
 facts at issue and argued that its policy had been effectively cancelled as
 a matter of law.  The trial court ruled that Green Mountain had not met its
 burden of demonstrating that the cancellation notice was ambiguous, finding,
 on the contrary, that "the surrounding circumstances verify that the cancel-
 lation notice was an accurate integration of the bills sent by Maine Bonding
 and the payment received from Ms. Carter."  The court stressed that Carter
 should have been aware that her new car would require an additional premium
 and that she made no inquiry of the company after receiving a cancellation
 notice.  The court concluded that retention of the $3 toward payment of the
 renewal period premium did not estop Maine Bonding from relying on the
 cancellation notice.
                                    I. Standing
      Maine Bonding argues that Green Mountain has no standing to assert that
 its policy was not validly terminated for nonpayment of the premium.  Maine
 Bonding contends that the present issue is "personal to Carter and Maine
 Bonding."  We disagree.  That Carter has a significant interest in the
 issue cannot be disputed, because her vehicle was involved; but so does
 Green Mountain, for if the Maine Bonding policy was in force on the date of
 the accident, then Maine Bonding was the primary carrier, and Green Mountain
 the excess carrier.  It is hard to think of a question that would bear more
 on both Green Mountain's and Maine Bonding's respective interests in the
 underlying litigation and the declaratory judgment action is designed to
 raise and resolve such issues.  12 V.S.A. { 4722 (purpose of the declaratory
 judgment is "to settle and afford relief from uncertainty and insecurity
 with respect to rights, status and other legal relations and it is to be
 liberally construed and administered.").
      Maine Bonding cites no cases in which standing has been denied in a
 suit between insurance companies over the validity of, or the meaning of a
 term or clause within, one of the company's policies.  Declaratory judgment
 actions involving such issues are legion.  See, e.g., Concord General Mut.
 Ins. Co. v. Home Indem. Co.,