Opinion ID: 1643748
Heading Depth: 1
Heading Rank: 3

Heading: whether transamerica had a duty to advise pgs of the termination of the agency relationship between transamerica and agency.

Text: PGS maintains that Transamerica had a duty to inform it of the termination of the relationship between Transamerica and Agency. PGS further maintains that Transamerica's failure to inform it of the termination, coupled with Agency's previous automatic renewals of PGS's insurance, renders Transamerica liable for the loss under the theory of ostensible authority found in SDCL 59-3-3. [2] The crux of PGS's argument is that Agency's failure to automatically renew PGS's insurance, as it had done in the past, may be imputed to Transamerica under SDCL 59-6-3, which provides: A principal is bound by the acts of his agent under ostensible authority, to those persons only who have in good faith, and without negligence, incurred a liability or parted with value upon the faith thereof. Further, SDCL 59-6-9 states: Unless required by or under authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as part of the transaction of such business; and for his willful omission to fulfill the obligation of the principal. Even reading these statutes in the light most favorable to the nonmoving party, as required in summary judgment cases, see Wilson v. Great Northern Railway Co., 83 S.D. 207, 157 N.W.2d 19 (1968), we find PGS's arguments to be without merit. SDCL 58-30-8.1 specifically authorizes an insurance company to terminate an agency agreement upon ninety days' notice and also provides that the company may terminate a policy on its anniversary date if such anniversary date occurs after the expiration of the ninety-day period. Transamerica terminated its agreement with Agency on April 15, 1983. Any policy with an anniversary date after July 15, 1983 (ninety days) could be terminated by Transamerica. PGS's anniversary date was October 1, 1983. Moreover, the April termination of the Transamerica/Agency relationship relieved Agency of the authority to act on Transamerica's behalf, absent the reliance of a third-party on the contract between Transamerica and Agency. See Restatement (Second) of Agency § 265(1) (1958). No such reliance has been shown here. The only reliance evidenced in the record is PGS's reliance that Agency would automatically renew its insurance. That is insufficient to bind Transamerica after the agency relationship was properly terminated. [3]