Opinion ID: 1607506
Heading Depth: 1
Heading Rank: 3

Heading: summary judgment for insurer

Text: Broker claims the trial court made two errors in its decision to grant summary judgment: (1) it improperly construed the word insured in the policy to include Financier, Insured's attorney-in-fact, and (2) the word insured was ambiguous, thus necessitating the need for parol evidence on usage and customs. We will examine each theory in that order. First, Broker argues that because Financier was not specifically named in the policy as the insured, there was no cancellation of the policy by Insured. This overly literal reading of the contract ignores long held authority that cancellation of a policy by an insured can be effected through the insured's agents. 43 Am. Jur.2d Insurance § 410 (1982); 6A A.J. Appelman, Insurance Law & Practice § 4224 (1972). This rule has been applied for years in cases involving premium finance agreements. For example, in Angelo v. Traviglia, 7 Ohio Op.2d 383, 155 N.E.2d 717 (1957), the insured purchased an automobile insurance policy through an agent who retained the policy and gave the insured thirty days to pay the premium. When the insured failed to pay the full premium within that time, the agent returned the policy to the insurer marked cancelled. Similar to Paragraph X of Insurer policy, this policy provided that it could be cancelled by the named insured by surrendering the policy. 155 N.E.2d at 720. The court held: This surrender in the opinion of this Court may be made by the named insured, in person, or by his duly authorized agent. Generally, cancellation ... by the insured is not an act so personal in its nature that it cannot be delegated in the absence of statutory prohibition of such delegation. Id. In reaching this conclusion, the court relied on Chamberlain v. Employers' Liability Assurance Corp., 289 Mass. 412, 194 N.E. 310 (1935). In Chamberlain, the insured financed the payment of the premium for an automobile insurance policy through a premium financing agency. As here, the financing agreement irrevocably appointed the financing agency as the insured's attorney-in-fact and when the insured defaulted on payments the financing agency cancelled the policy. The Massachusetts Supreme Court held: The policy was not cancelled by the insurer. Consequently, provisions applicable to such cancellations do not apply. The policy was cancelled, if at all, by the insured acting by his agent, the [premium finance company]. Id. at 312 (citations omitted). See also Davis v. Roddie, 113 N.J.Super. 457, 460, 274 A.2d 297, 300 (1963) (where policy can be cancelled by the named insured and is cancelled by premium finance agency upon default in premium payments, the cancellation was by [the insured] through his authorized agent); Daniels v. Nationwide Mut. Ins. Co., 258 N.C. 660, 129 S.E.2d 314 (1963) (where policy is cancelled by premium finance company acting under a power of attorney the cancellation, if any, was by insured). Tate v. Hamilton Insurance Co., 466 So.2d 1205, 1206 (Fla.Dist.Ct. App.1985) (Where the [premium] finance company is named as attorney-in-fact for the insured, a cancellation by the finance company is equivalent to a cancellation by the insured himself, at least from the insurer's perspective.). In each of these cases, although the policy called for cancellation by the named insured, it was recognized that cancellation by the insured's agent is cancellation by the insured. Thus, giving Insurer's policy language its plain and ordinary meaning, the policy contemplated cancellation by the insured or the insurer or their agents. Grandpre v. Northwestern Nat'l Life Ins. Co., 261 N.W.2d 804, 807 (S.D.1977) (the insurance contract's language must be construed according to its plain and ordinary meaning. It does not permit the court to make a forced construction or a new contract for the parties); see Strong v. State Farm Mut. Ins. Co., 76 S.D. 367, 78 N.W.2d 828 (1956); Thompson v. State Auto. Ins. Ass'n., 70 S.D. 412, 18 N.W.2d 286 (1945). Though Broker conceded that Financier cancelled the policy because Insured refused to pay the premium, it alleges that Insured was not truly in default under the premium finance agreement, because it had not received the coverage it had desired. This unsubstantiated argument flies in the face of the following: the premium finance agreement was entered into nearly two weeks after Insured, through Broker, was advised of the policy limits and premium; that the agreement was signed after Volz discussed the policy limits and premium with Insured; and finally, by entering into the finance agreement, Insured accepted the policy limits and premium and the insurance was in force from June until August. Broker's bare allegation of Financier's lack of authority is no more than a conclusory allegation that cannot withstand summary judgment. Dirks, supra ; see Home Fed. Sav. & Loan v. First Nat'l Bank, 405 N.W.2d 655 (S.D.1987). Finally, Broker claims that the word insured is ambiguous because, in paragraph XII of the policy, insured does not include entities which are given powers of attorney or who enter premium finance agreements. From this premise, Broker argues that this ambiguity permits parol evidence to prove custom and usage as to the amount of refund on a cancelled policy. We disagree. This court has long held that custom and practice is immaterial when a contract explicitly deals with the matter claimed to be the subject of custom and practice. For example, in Swiden Appliance & Furniture Inc. v. National Bank of South Dakota, 357 N.W.2d 271 (S.D. 1984), this court held that obligations created under course of dealing and usage of trade are subordinate to any terms of an express agreement with which the parties' conduct or a trade usage disagree and that express terms of the contracts control in the face of inconsistency with any alleged custom and practice. Id. at 274, 275 (citing SDCL 57A-1-205(4) and United States v. E.W. Savage & Son, Inc., 343 F.Supp. 123 (D.S.D.1972), aff'd 475 F.2d 305 (8th Cir.1973)). See also Bickett v. Borah, 77 S.D. 140, 87 N.W.2d 552 (1958) (custom and usage on farm owner's entitlement to crop share could not vary express cash rent provision of lease). This court has also held that evidence offered to show the alleged custom and practice was irrelevant and immaterial. Swiden, 357 N.W.2d at 275. See also S & S Trucking v. Whitewood Motors, Inc., 346 N.W.2d 297, 299-300 (S.D.1984) (testimony to show industry custom and usage is inadmissible when it conflicts with the express terms of a contract). In this case, the terms of the insurance policy are clear. Both the Cover Note and Endorsement 5 expressly state that if the insured cancels the policy, the return premium will be calculated on a short-rate basis. Here, Financier was the attorney-in-fact for the Insured and had express authorization to cancel the policy on behalf of Insured, something Broker admits. Under Broker's own version of the facts, Financier cancelled the policy, not Insurer. A party to an appeal cannot claim the benefit of a better version of the facts more favorable to his contentions than he has given in his own testimony. See, e.g., Drier v. Perfection, Inc., 259 N.W.2d 496, 508 (S.D.1977). The fact remains that Broker's claim that calculating the return premium on a short-rate basis is contrary to industry custom and practice cannot vary the explicit language of the contract. Therefore, we do not find that the trial court erred in granting summary judgment in favor of Insurer.