Court Opinion

ID: 7838363
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:43:49.870887+00
Date Added: 2024-06-11T15:56:12.488927
License: Public Domain

J. SKELLY WRIGHT, Circuit Judge
(dissenting):
I concur in No. 74-1988, but I must dissent in No. 74 — 1992, Tutt’s suit against the insurance company, IN A.
It is true that the insurance contract was not itself admitted into evidence at the first trial of this case, and it is true that the contract contains a clause purporting to give INA an absolute right of cancellation, contingent only on ten-day notice. But a right of cancellation, especially when contained in a contract of adhesion whose terms are in no meaningful sense open to negotiation between the parties, is not as absolute as the majority would make it sound.1 Terms in an insurance contract, *310including cancellation clauses, may not be invoked in such a way as to contravene public policy. See, e. g., L’Orange v. Medical Protective Co., 394 F.2d 57 (6th Cir. 1968); Annot., Liability Insurer’s Unconditional Bight to Cancel Policy as Affected by Considerations of Public Policy, 40 A.L.R.3d 1439 (1971); Comment, Insurance — Cancellation — Improper Motive Invalidates Insurer’s Cancellation, 54 Iowa L.Rev. 649 (1969).
The question here is whether INA, which had received the entire premium due for the full contract period, exercised its cancellation power within these bounds. At the second trial plaintiff Tutt offered evidence which tended to show that the power was wrongfully exercised and the cancellation therefore a legal nullity. This central issue turns on factual questions involving the nature of the agency relationship between Johnson and the Bernard Agency, and the Agency Agreement2 between Bernard and INA.3 We set forth those factual questions at length in our prior decision, wherein we reversed a directed verdict for INA and sent the case back for the jury to pass on the factual issues. The jury was instructed in accordance with this court’s directions. It found for Tutt, and there was sufficient evidence to support the verdict. The District Court should not again have taken the case from the jury.
I would reverse the judgment and remand the case with directions to enter judgment upon the verdict.

. Since 1971 the right of cancellation has clearly been subject to important limitations under a District of Columbia regulation “Prohibiting Arbitrary Cancellation of Insurance Policies in the District of Columbia.” It specifies certain actions by the insured which constitute the *310only allowable grounds for cancellation. The insurer, with certain exceptions, must give 30 days notice of cancellation and must set forth the reason for cancellation. The insured has a right of appeal to the superintendent of insurance. 17 D.C. Register 614 (1971).

. That Agency Agreement, which was not in evidence at the first trial, gives added support to Tutt’s position that INA had severed itself from concern for collection of debts owed to the Agency. It provides in Paragraph 6(c): “If Agent advances premium on behalf of his client, full responsibility therefor is then and there assumed by Agent.” Tr. 97, Plaintiffs Exhibit 5.

. See Holbrook v. Institutional Ins. Co. of America, 369 F.2d 236 (7th Cir. 1966). In that case the agency asked the insurance company to cancel “for nonpay.” The court held that the company must have known that the agency was acting as something other than the agent of the company since the company had received the full premium. The company must have known, moreover, that the agency was acting beyond the scope of its authority as agent of the insured because of the nature of the request. Cancellation was therefore improper and the plaintiff was entitled to recover against the company.