Title: Grubbs v. Credit General Ins. Co.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Wiley GRUBBS v. CREDIT GENERAL INSURANCE
COMPANY

96-889                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered March 3, 1997


1.   Insurance -- cancellation notice -- purpose of. -- The purpose of a
     cancellation notice is to give the insured the opportunity to
     obtain insurance elsewhere before he or she is subjected to no
     protection.

2.   Time -- calculation of limitations -- method employed. -- In calculating
     time limitations, the supreme court has observed that
     uniformity in its decisions is important; both Ark. Code Ann.
      16-55-119 and Ark. R. Civ. P. 6(a) provide that the first
     date and the last date should not both be counted when
     computing a period of time between two fixed dates; the
     supreme court has followed this method of calculation in
     fixing a limitation period for the time of filing pleadings as
     well as for certain notices.

3.   Insurance -- cancellation notice -- ten days' prior notice construed to
     mean ten full days of notice. -- When construing a cancellation
     clause in an insurance policy requiring ten days' prior
     notice, the supreme court has interpreted that to mean
     something different, namely ten full days of notice.

4.   Insurance -- cancellation notice -- plain language fixed by statute or
     policy must be strictly followed -- notice was ineffective. -- The plain
     language of cancellation provisions fixed by either statute or
     the insurance policy must be strictly followed; applying that
     standard, the supreme court held that, after eliminating the
     date of mailing the cancellation notice, November 24, 1992,
     the effective date of cancellation, December 3, 1992, did not
     give the insured ten days' notice; indeed, because the notice
     of cancellation was effective at 12:01 a.m. on December 3,
     1992, the insured, as a practical matter, received only eight
     days' notice; hence, the notice was ineffective.

5.   Statutes -- plain and unambiguous language given ordinary meaning. -- When
     the language of a statute is plain and unambiguous, it is
     given its ordinary meaning.

6.   Insurance -- cancellation notice -- invalid effective date of cancellation
     voided cancellation -- coverage remained in effect. -- Where the case
     turned on a statutory mandate that an effective date of
     cancellation be fixed, an invalid effective date of
     cancellation voided the cancellation, and the insurance
     coverage remained in effect; the order of summary judgment was
     reversed, and the case was remanded for further proceedings.

     Appeal from Faulkner Circuit Court; David Reynolds, Judge;
reversed and remanded.
     Callis L. Childs and Richard W. Weinthal, for appellant.
     Wright, Lindsey & Jennings, by:  Kathryn A. Pryor and Kristi
M. Moody, for appellee.

     Robert L. Brown, Justice.
     On December 7, 1992, appellant Wiley Grubbs was involved in an
automobile accident with William Hall in Faulkner County.  Grubbs
sued Hall as a result of the accident and obtained a judgment
against him in the amount of $27,500.  Grubbs then filed suit
against appellee Credit General Insurance Company, Hall's liability
carrier, to enforce the judgment.  Credit General denied the
material allegations raised by Grubbs in his complaint and
affirmatively pled failure to state facts upon which relief could
be granted.
     Discovery ensued, and in response to discovery, Credit General
denied that Hall was covered on the date of the accident. 
According to Credit General, Hall's policy coverage was from
September 25, 1992, to March 25, 1993, but Hall failed to pay his
monthly premium.  On November 23, 1992, Credit General mailed a
notice of cancellation to Hall for failure to pay the premium. 
Grubbs contended that the actual date of mailing was November 24,
1992.  The cancellation notice stated that the coverage would lapse
as of 12:01 a.m. on December 3, 1992.  A notice of lapsed insurance
was next mailed to Hall showing that the coverage was cancelled on
December 2, 1992, although Credit General later admitted that the
effective date of cancellation was December 3, 1992.  On December
5, 1992, Hall's mother mailed a check to Credit General for the
premium payment, reinstatement fee, and late charge in the amount
of $115.45, and Hall's insurance was reinstated on December 10,
1992.  On December 14, 1992, Hall's mother sent a second premium
check to Credit General in the amount of $105.45.
     Credit General moved for summary judgment premised on the fact
that Hall's liability coverage had been cancelled prior to the
accident and that the cancellation notice complied with both the
terms of the policy and the governing statute.  Grubbs responded to
Credit General's motion with a pleading entitled "Plaintiff's
Motion for Declaratory Judgment, By Summary Judgment, and Response
to Defendant's Motion for Summary Judgment" and asserted that
Credit General failed to comply with the ten-day cancellation
notice required by the policy and the controlling statute.
     At the hearing on the motions, Credit General conceded that
its notice of cancellation was mailed on November 24, 1992, and the
trial court found that that was the date of the mailing.  Despite
this finding, the trial court concluded that proper notice of the
cancellation was sent ten days prior to the effective cancellation
date.  The trial court further found that because a premium payment
was not made by December 3, 1992, coverage was cancelled as of that
date and that as a result, no insurance coverage was in effect when
the accident occurred on December 7, 1992.
     The primary issue on appeal is whether Credit General's
cancellation notice was in compliance with the pertinent Arkansas
statute which reads:
     No notice of cancellation to any named insured shall be
     effective unless mailed or delivered at least twenty (20)
     days prior to the effective date of cancellation,
     provided that, where cancellation is for nonpayment of
     premium, at least ten (10) days' notice of cancellation
     accompanied by the reason therefore shall be given.
Ark. Code Ann.  23-89-304(a)(2) (Repl. 1992).  Similarly, Hall's
insurance policy with Credit General provided for cancellation for
failure to pay premiums by giving "at least ten days notice."  The
purpose of the notice is to give the insured the opportunity to
obtain insurance elsewhere before he or she is subjected to no
protection.  Merrimack Mut. Fire Ins. Co. v. Scott, 219 Ark. 159,