Case Name: Heather BLAIR, by her mother, Carla SNIDER, Appellant, v. PERRY COUNTY MUTUAL INSURANCE COMPANY and FMH Mutual Insurance Company, Respondents
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 2003-11-04
Citations: 118 S.W.3d 605
Docket Number: No. SC 85247
Parties: Heather BLAIR, by her mother, Carla SNIDER, Appellant, v. PERRY COUNTY MUTUAL INSURANCE COMPANY and FMH Mutual Insurance Company, Respondents.
Judges: WHITE, C.J., WOLFF, LAURA DENVIR STITH, PRICE and TEITELMAN, JJ., concur.
Reporter: South Western Reporter Third Series
Volume: 118
Pages: 605–610

Head Matter:
Heather BLAIR, by her mother, Carla SNIDER, Appellant, v. PERRY COUNTY MUTUAL INSURANCE COMPANY and FMH Mutual Insurance Company, Respondents.
No. SC 85247.
Supreme Court of Missouri, En Banc.
Nov. 4, 2003.
Matthew J. Devoti, Stephen F. Meyer-kord, St. Louis, for Appellant.
A.M. Spradling, III, Cape Girardeau, for Respondents.

Opinion:
DUANE BENTON, Judge.
Heather Blair sued for equitable garnishment of Perry County Mutual Insurance Company and FMH Mutual Insurance Company. The circuit court granted summary judgment to the insurance companies. After opinion by the Court of Appeals, this Court granted transfer. Mo. Const. art. V, sec. 10. Reversed and remanded.
On October 21, 1998, five-year-old Heather Blair fell from a treehouse at her trailer court. The owner of the court, Aileen Fiedler, had contracted for liability insurance. The policy was for a one-year term — April 3, 1998 to April 3, 1999— subject to an amendatory endorsement:
We may cancel this policy or any of its parts by mailing or delivering to the named insured a written notice before the cancellation is to take effect. The notice must be given:
• Not less than 10 days before the cancellation is to take effect when the cancellation is based upon one or more of the following reasons:
a. Nonpayment of premium .
• Not less than 60 days before the cancellation is to take effect when the cancellation is based on reasons other than those stated above.
The notice of cancellation shall state the reasons for cancellation.
A quarterly payment of Fiedler's insurance premium was due October 3, 1998. On September 14, the insurance company sent a "NOTICE OF PAYMENT DUE" to Fiedler advising "POLICY VOID IF NOT PAID BY DUE DATE." Fiedler did not pay the October 3 premium. On October 14, the insurance company sent Fiedler another "NOTICE OF PAYMENT DUE," which stated:
THE COVERAGE ON THIS POLICY HAS LAPSED FOR NON-PAYMENT. NO COVERAGE IS BEING PROVIDED AT THIS TIME.
IF PAYMENT HAS BEEN MADE PLEASE DISREGARD THIS NOTICE.
Blair sued Fiedler for her October 21 injuries. She received judgment for $200,000, after limiting recovery to insurance proceeds. She then sued for equitable garnishment.
The insurance companies argue that the policy was cancelled on the date of nonpayment, October 3 — before Blair's injuries. She counters that the cancellation did not take effect until at least 10 days after the October 14 notice — after her injuries.
Insurance policies are contracts. Central Surety and Ins. Corp. v. New Amsterdam Casualty Co., 359 Mo. 430, 222 S.W.2d 76, 78 (banc 1949). The rules of contract construction govern insurance policies. Peters v. Employers Mutual Casualty Co., 853 S.W.2d 300, 301-02 (Mo. banc 1993). "The more probable and reasonable of two available constructions should be utilized to the exclusion of one which produces a 'redundant, illusory, absurd, and therefore unreasonable' result." Rathbun v. CATO Corp., 93 S.W.3d 771, 781 (Mo.App.2002), quoting Rouggly v. Whitman, 592 S.W.2d 516, 521 (Mo.App.1979).
Absent an equitable ground, an insurance policy may be cancelled only: 1) by mutual assent of the parties or, 2) under the terms of the policy. MFA Mutual Ins. Co. v. Southwest Baptist College, Inc., 381 S.W.2d 797, 801 (Mo.1964). Here, there was no mutual assent to cancellation.
The insurance companies interpret the terms of the policy that, once they gave the notice of September 14, they could cancel the policy as of the date of nonpayment. A unilateral cancellation must strictly comply with the policy. Id. "There would have to be an unequivocal, unmistakable act of cancellation, not dependent upon some future event, and a mere intention to cancel would not suffice to effect a cancellation under the policy provisions." Id. (citations omitted). "A notice of cancellation to be effective must be a present cancellation as distinguished from an intention to cancel at a future day." Malin v. Netherlands Ins. Co., 203 Mo.App. 153, 219 S.W. 143, 144 (1920). "The assured must be informed, not that the policy mil be cancelled, but that it is cancelled." Chrisman & Sawyer Banking Co. v. Hartford Fire Ins. Co., 75 Mo.App. 310, 314 (1898) (emphasis in original).
Here, the September 14 notice did not strictly comply with the policy provisions. The policy may be cancelled if notice is given: "Not less than 10 days before the cancellation is to take effect when the cancellation is based upon . Nonpayment of premium...." For cancellation to be "based" upon nonpayment, nonpayment must have occurred. This Court has held:
[T]he proper construction of the cancellation provisions here involved is that the insurer . cannot cancel unless and until the conditions precedent set forth in the endorsement arise. There having been no default whereon to effect cancellation based on the non-payment provisions of the endorsement, it follows that the attempt so to do was abortive and wholly ineffectual because premature and unwarranted.
Cain v. Robinson Lumber Co., 365 Mo. 1238, 295 S.W.2d 388, 391 (banc 1956).
The insurance companies propose to give a conditional notice of cancellation at any time, if at least 10 days before cancellation. The companies concede that such anticipatory notice could be weeks, months, or even years before nonpayment. Their interpretation would render the policy provision illusory, absurd, and unreasonable.
The insurance companies invoke the general rule that nonpayment of premium voids a policy. Hyten v. Cape Mutual Ins. Co., 663 S.W.2d 430, 431 (Mo.App.1983); Shelter Mutual Ins. Co. v. Flint, 837 S.W.2d 524, 531 (Mo.App.1992). This ends the inquiry in cases like Hyten and Shelter, where the policy does not require a specific notice of cancellation (in addition to a notice of payment due). Here, the insurance companies amended the policy to require a specific notice of cancellation.
The provision here requires nonpayment, notice, and the passage of 10 days— in that order — before cancellation takes effect. Nonpayment occurred on October 3,1998. Notice of cancellation was sent on October 14. By the terms of the policy, October 24 is the earliest date that cancellation can take effect. The policy was in effect when Heather Blair was injured on October 21,1998.
An order granting summary judgment is reviewed de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The movant must establish a right to judgment as a matter of law, and the absence of any genuine issue of material fact. Id. at 378. The insurance companies are not entitled to judgment as a matter of law. The judgment of the circuit court is reversed, and the cause remanded.
WHITE, C.J., WOLFF, LAURA DENVIR STITH, PRICE and TEITELMAN, JJ., concur.
LIMBAUGH, J., dissents in separate opinion filed.