Title: Foundation Reserve Insurance Co. v. Kennedy
Citation: 444 P.2d 293, 79 N.M. 382
Docket Number: 8524
State: new-mexico
Issuer: new-mexico Supreme Court
Date: August 12, 1968

444 P.2d 293 (1968) 79 N.M. 382 FOUNDATION RESERVE INSURANCE CO., Plaintiff-Appellant, v. John R. KENNEDY, d/b/a Lybrook Inn, and James F. Hum, d/b/a Jim Hum Insurance, Defendants-Appellees. No. 8524. Supreme Court of New Mexico. August 12, 1968. *294 Tansey, Rosebrough &amp; Roberts, Richard L. Gerding, Farmington, for appellant. Bigbee &amp; Bryd, Jere C. Corlett, Santa Fe, for appellees. MOISE, Justice. Plaintiff-appellant sought a declaration concerning its liability on a thirty-day binder issued by its agent to defendant-appellee to insure a building of defendant against fire loss. The building was destroyed by fire more than fifteen days after issuance of the binder but within the thirty days stated in it as the time during which it would be effective. Plaintiff does not question the authority of the agent who issued the binder in its name, but asserts that after the passage of fifteen days it was void because prohibited by § 58-8-10(c), N.M.S.A. 1953, which provides inter alia: It is plaintiff's position that the statute is mandatory and not permissive, and it cites and relies on three cases from other jurisdictions which it asserts furnish support for the claim that the binder was void and of no effect beyond the fifteen days provided in the statute. These cases are Eastern Shore of Virginia Fire Ins. Co. v. Kellam, 159 Va. 93, 165 S.E. 637 (1932); National Liberty Ins. Co. of America v. Jones, 165 Va. 606, 183 S.E. 443 (1936), and Decor-El, Inc. v. Bertsch, 13 N.J. Super. 166, 80 A.2d 333 (1951). While these cases furnish some support for plaintiff, we do not deem it necessary that we undertake to explain or distinguish them. In our view, the proper interpretation of the statute and its correct application have been clearly outlined in our decisions in Douglass v. Mutual Ben. Health &amp; Accident Ass'n, 42 N.M. 190, 76 P.2d 453 (1938), and more recently in Buck v. Mountain States Investment Corporation, 76 N.M. 261, 414 P.2d 491 (1966). Douglass involved a question of whether a health and accident insurance policy was effective at the time represented by the agent of the company, or was void because violative of statute. The legislative purpose and intent in passing legislation dealing with insurance companies and policies were considered at length. Numerous authorities were cited and analyzed. The court concluded that statutory prohibitions did not make void insurance agreements made in violation of them where by the terms of the statute it was not so provided. Rather, it was stated that the object of the statute is to "protect the insured, not the insurer." In Buck, supra, wherein reformation of an insurance binder to conform to representations made by the insurer's agent was upheld, this court had the following to say *295 concerning Douglass, supra, and the proper application of pertinent rules of law: Similarly here, although § 58-8-10(c), supra, limits the making of binders, whether oral or written, to not more than fifteen days, it does not state that if they are made for a longer period they are void. Neither do we believe that the legislature would have intended such a result when it is recognized that thereby a statutory plan intended to protect the public would work to its disadvantage and loss. It is our clear responsibility and duty to interpret the statute so as to avoid injustice, hardship and absurdity, or make its application unreasonable. State ex rel. State Highway Commission v. Board of County Com'rs of Dona Ana County, 72 N.M. 86, 380 P.2d 830 (1963); Montoya v. McManus, 68 N.M. 381, 362 P.2d 771 (1961). We entertain no doubt that the legislature did not intend that an insurance company could successfully take refuge in a statute prohibiting certain conduct by it and thereby deprive of benefits one who in good faith thought his property insured. The trial court correctly ruled that the plaintiff was bound by the insurance which it agreed to furnish. The judgment is affirmed. It is so ordered. NOBLE and CARMODY, JJ., concur.