Court Opinion

ID: 9728423
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:07:25.741594+00
Date Added: 2024-06-11T18:25:48.524621
License: Public Domain

PAULSON, Justice.
Robert L. Anderson [“Anderson”] appeals from a June 15, 1978, judgment of the Pembina County District Court entered pursuant to a jury verdict. The jury found that an insurance contract issued to Anderson by American Standard Insurance Company [“American Standard”] was not in full force during the period from March 17, 1976, through June 17,1976. Anderson also appeals from an order of the district court denying his motion for a judgment notwithstanding the verdict or, in the alternative, for a new trial. We affirm.
On March 17, 1976, Anderson contacted American Family Insurance Group’s agent, James Erickson [“Erickson”], to inquire about obtaining insurance for a 1960 Ford van which he had recently purchased. Be*880cause of Anderson’s age, Erickson suggested a policy of insurance with American Standard, a subsidiary of the American Family Insurance Group which writes high-risk policies. Anderson, apparently with no intention of deceiving Erickson, told Erickson that he was 20 years of age. Erickson proceeded to draw up an application for insurance and computed the premium rate applicable to Anderson. He computed a premium rate of $46.00 in a mistaken belief that Anderson was 20 years of age. In the course of filling out the application, Anderson informed Erickson that his, Anderson’s, birth date was April 30,1958. Erickson did not realize from the birth date supplied that Anderson had not yet attained the age of 20 years.
Erickson issued a binder or temporary contract of insurance to Anderson which bound liability coverage for a period not to exceed thirty days pending issuance of the policy. The binder showed the amount paid as $46.00 and indicated that there was no balance due. At the time Erickson issued the binder he informed Anderson that the main office of American Standard in Madison, Wisconsin, would review the application and would check the accuracy of statements Anderson had made regarding his driving record, and would adjust the premium if those statements proved untrue. Anderson left Erickson’s office with the impression that the company would only change the premium if it found an inaccuracy in the statements he had made on the application regarding his previous driving record.
Ten days after Anderson had sent in his application he received a copy in the mail of his insurance policy from American Standard. The policy indicated that a premium of $52.00 was paid. Included in the envelope containing the policy was a premium notice indicating a balance due of $6.00, and a note from the company that the premium differed from that of his application because his age was 19, and not 20. Agent Erickson has admitted his mistake in submitting the application with a $46.00 premium to American Standard where Anderson’s correct birth date showed that he was 19 and not 20 years of age, as Erickson erroneously believed when he computed the premium rate. Exhibit 14 in the trial court was the note from the company which explained why Anderson’s premium of $52.00 was different than the $46.00 he had submitted with the application. Exhibit 14 is a standard balance-due form used by American Standard, and notations on that form indicated “Rate Class ‘E-7’ ” and “Single Male-19”. Admittedly, these cryptic notations on the balance-due form may have been confusing to Anderson because he had submitted his correct birth date on the application form. The testimony is conflicting regarding the reason for the discrepancy in Anderson’s age at the time the application was filled out, Anderson and Erickson each claiming that the other was responsible.
After approximately two weeks had elapsed, American Standard sent Anderson a second notice that $6.00 was due in order to continue his insurance until June 17, 1976. Anderson testified that he “more or less ignored” the second billing. On April 26, 1976, American Standard sent by certified mail a General Form Endorsement to Anderson which reduced his policy term from June 17, 1976, to June 6, 1976. That endorsement states as follows:
“EXPIRATION DATE CHANGE
“In consideration of the premium actually paid, which is less than the amount required for the current renewal term of this policy, it is agreed that the expiration date for such current term of this policy shall be and hereby is changed to read:
EXPIRATION DATE 6-06-76 $6.00 All coverages hereunder shall cease on the expiration date shown above at the time of the day as stated in the policy, unless the policy is renewed pursuant to its terms.”
Anderson testified that he received this endorsement but that he ignored it.
Under the terms of the policy, American Standard had the option to cancel the policy *881for nonpayment of premium. The company instead chose the less harsh alternative of changing the expiration date of the policy to conform to the amount of the premium actually paid by Anderson.
Anderson went to Erickson’s office on June 5, 1976, and attempted to tender a partial payment to Erickson for the purpose of renewing his policy. Erickson testified that Anderson had a bill for $46.00 from the company with him (his premium of $46.00 reflected the fact that he had now attained the age of 20), but Anderson asked if he could pay for only one month, or about $15.00. Erickson informed Anderson that he was not authorized to accept a partial premium payment but was required to collect the premium for the entire three-month renewal period. Anderson left without paying the premium for renewing his policy-
On June 10, 1976, Anderson’s van was involved in a collision with another vehicle. Diane Herzog, a passenger in the van, was seriously injured in the collision. Anderson called Erickson on June 11, 1976, and was informed that the company would not cover him because his policy had expired prior to the accident. Anderson brought suit against American Standard and judgment was entered in favor of American Standard pursuant to a jury verdict of no coverage.
The pivotal question in this case is whether Anderson’s policy expired on June 6, 1976, or whether his policy was in full force and effect until June 17, 1976.
When we review a jury verdict we review the evidence in the light most favorable to the verdict. City of Hazelton v. Daugherty, 275 N.W.2d 624 (N.D.1979). By so doing, an appellate court demonstrates its respect for the jury in our system of jurisprudence.
Anderson has argued that American Standard is estopped from denying that it received full payment of the premium for the period from March 17,1976, to June 17, 1976, because the policy delivered to Anderson indicated on its face that the premium was paid in full. As support for his argument, Anderson cites § 26-04-02 of the North Dakota Century Code, which provides:
“26-04-02. Receipt for premium in policy — Effect.—An acknowledgment in a policy of the receipt of premium is conclusive evidence of its payment so far as to make the policy binding notwithstanding any stipulation in the policy that it shall not be binding until the premium actually is paid.”
Anderson contends that under § 26-04-02, N.D.C.C., the company was bound by its statement in the policy that the premium has been paid. We believe Anderson is asking us to interpret § 26-04-02, N.D.C.C., in a manner which would stretch its meaning beyond the clear import of its words and frustrate its purpose. In our interpretation, § 26-04-02, N.D.C.C., is designed to protect the policyholder in two situations: (1) where the insurance company argues that the policy coverage never commenced due to nonpayment of premium; or, (2) where the company argues that the policy has terminated for nonpayment of premium but has never given the insured notice that the premium or a balance thereof was due.
Anderson has cited two North Dakota cases which have interpreted § 26-04-02, N.D.C.C., namely, Harrington v. Mutual Life Ins. Co. of New York, 21 N.D. 447, 131 N.W. 246 (1911); and Donahue v. Mutual Life Ins. Co. of New York, 37 N.D. 203, 164 N.W. 50 (1917). Both of those cases are distinguishable in that they were concerned with the question of when the contract of insurance came into existence, not when the contract expired.
Sawyer v. State Farm Fire and Casualty, 69 Cal.2d 801, 447 P.2d 344, 73 Cal.Rptr. 232 (1968), supports Anderson’s position that the statute applies to termination as well as commencement of the policy period. The California statute [Cal.Ins.Code § 484 (West)] was identical to § 26-04-02, N.D. C.C., at the time that Sawyer was decided. In Sawyer the California Supreme Court held that the acknowledgment of the receipt of premium in the policy must be deemed to apply to the stated term of the policy and that the policy could not be canceled for nonpayment of the premium.
*882We cannot agree with Anderson’s position nor can we follow the approach taken by the California Court in Sawyer. We agree with the logic in the dissenting opinion written by Justice McComb in Sawyer, supra 447 P.2d at 351, 73 Cal.Rptr. at 239. We quote extensively the following language from Justice McComb’s dissenting opinion in Sawyer: