Court Opinion

ID: 9574643
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:06:39.826043+00
Date Added: 2024-06-11T12:44:26.341234
License: Public Domain

McCOMB, J.
I dissent. In my opinion, there is some doubt that the language of the policy here involved should be interpreted to include an acknowledgment of the receipt of premium. In any event, however, it seems to me that defendant had a right, upon proper notice before a loss, to exercise the cancellation right reserved to it in the policy.
Under section 484 of the Insurance Code,1 if a policy con*812tains an acknowledgment of the receipt of premium, such acknowledgment cannot be contradicted to invalidate the contract ; but this does not mean that either party is prohibited from exercising cancellation rights contained in the policy. To interpret section 484 to mean that a policy containing an acknowledgment of the receipt of premium cannot be can-celled, upon proper notice before a loss, is to read words into the statute that are not there, which, of course, is something this court should not do. (Estate of Simmons, 64 Cal.2d 217, 221 [4] [49 Cal.Rptr. 369, 411 P.2d 97]; Vallerga v. Department of Alcoholic Beverage Control, 53 Cal.2d 313, 318 [2] [347 P.2d 909].)
Under the majority’s interpretation, the clause “so far as to make the policy binding” is expanded to mean “so far as to make the policy binding for the entire period covered by the premium acknowledged to have been received.” In my view, it could not have been the intention of the Legislature to so provide. Bather, it appears to me, from the clear language of the statute, that the Legislature intended to provide that if the receipt of premium is acknowledged in the policy, a binding insurance contract has come into existence even though (1) the policy provides that it shall not be binding until the premium is actually paid, and (2) the premium has not been paid. The section does not in any way indicate that such binding contract of insurance is immune from cancellation, when the right of cancellation has been reserved to the insurer in the policy.
In support of its decision, the majority relies on Palmer v. Continental Ins. Co., 132 Cal. 68 [64 P. 97], and Masson v. New England M. L. Ins. Co., 85 Cal.App. 633 [260 P. 367]. In neither of those cases does it appear that the insurer possessed broad cancellation rights, such as are contained in defendant’s policy, and had taken steps to effect a cancellation of the policy before a loss occurred. In Palmer, no effort was made to cancel the policy until after a loss had occurred. In Masson, notes given by the insured in payment of premiums due were forwarded to the home office of the insured for cancellation, but the insured was killed before the notes were surrendered.
The majority states: “In the words of the court in Britton v. Metropolitan Life Ins. Co., 165 N.O. 149 [80 S.E. 1072, *813Ann.Cas. 1915D 363] . . . quoted in the Masson ease, ‘the acknowledgment in a policy of the receipt of the premium for a definite period is something more than a receipt. It is a solemn admission, which, as long as it stands, estops the insurer from contesting the policy for nonpayment of premium. ’ (85 Cal.App. at p. 641.) ” In my opinion, the words “as long as it stands’’ imply that if the policy has been properly cancelled, the insurer is no longer estopped from contesting it.
In Farnum v. Phoenix Ins. Co., 83 Cal. 246 [23 P. 869, 17 Am.St.Rep. 233], cited by the majority, the policy provided for cancellation by the insurer on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term. This court, after discussing the effect of the forerunner of section 484 of the Insurance Code (former Civ. Code, § 2598), said, at page 256 : “When credit is given by an insurance company, it has no right to cancel the policy for non-payment of premium, except after putting the insured in default. . . .”2 It would appear, therefore, that this court has recognized that although an insurer may not, because of the provisions of section 484 of the Insurance Code, rescind a policy for nonpayment of the premium where receipt thereof has been acknowledged in the policy, it may neverthelesss cancel it for nonpayment of the premium after properly putting the insured in default.
In the present case, defendant did not seek to rescind the policy, but, rather, sought to cancel the unexpired portion for nonpayment of premium. In my view since defendant followed the procedures required by the policy and by the statutes, cancellation was effected as of February 26, 1962, two days prior to the accident in which Mrs. Kingston was involved. Under the circumstances, I would reverse the judgment.
Burke, J., concurred.

Section 484 of the Insurance Code provides: ‘‘ An acknowledgment in a policy of the receipt of premium is conclusive evidence of its payment, *812so far as to make the yolioy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid. ’ ’ (Italics added.)

In Farnum, the insurer sought to give notice of cancellation, but the notice was never received by the insured. Under the rule then in effect, the receipt of notice by the insured was necessary to effect a cancellation, and the attempted cancellation was held to be ineffective.