Court Opinion

ID: 9663443
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:39:20.838146+00
Date Added: 2024-06-11T12:39:50.537851
License: Public Domain

SABERS, Justice
(dissenting).
I dissent for these reasons:
1. TRANSAMERICA, AS PRINCIPAL, IS RESPONSIBLE FOR ITS AGENT’S, DAKOTA INSURANCE AGENCY, NEGLIGENCE OR OMISSION TO ITS INSURED, PETERSON GRAIN SYSTEMS.
The majority opinion sets out the key statute but fails to abide by it.
59-6-9. Responsibility of principal for agent’s negligence or omission. 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.
This statute means exactly what it says. In simple language it says that the principal is responsible for its agent’s negligence or omission. There is no question in this case but that the principal’s agent Dakota Insurance Agency was negligent for failing to notify the insured, Peterson. Further, there is no question that Transamerica is the principal and Dakota Insurance Agency is its agent. Thé general rule is that the revocation of the agent’s authority is not effective between a principal and a third person until that person receives notice of the termination. Zukaitis v. Aetna Casualty and Surety Co., 195 Neb. 59, 236 N.W.2d 819 (1975); 3 Am.Jur.2d Agency §§ 50, 52 (1986). A third person does not have notice of the termination unless he knows, should know, has reason to know, or has been given notification. Restatement (Second) Agency § 135 (1958). The record does not reveal any such notice to Peterson. Therefore, Dakota Insurance *75Agency remained Transamerica’s agent as to Peterson.
This is a simple case. The facts are simple. The law is simple. We are not dealing here with any theory of ostensible authority as implied in the majority opinion by its reference to SDCL 59-3-3. Pure and simple, we are dealing with SDCL 59-6-9 which provides that Transamerica, as principal, is liable for agent's negligence or omission.
2. TRANSAMERICA HAD A DUTY TO NOTIFY ITS OWN INSURED, PETERSON, OF NONRENEWAL WHERE NONRENEWAL WITH TRANSAMERICA WAS PREVENTED BY TRANSAMERICA’S CANCELLATION OF ITS AGENCY CONTRACT WITH DAKOTA INSURANCE AGENCY.
Although it should not be necessary to reach this question, Transamerica’s contract, as insurer, is with its own insured, Peterson. As such insurer, Transamerica had a duty to notify its insured of nonre-newal when that nonrenewal resulted from Transamerica’s cancellation of its agent, Dakota Insurance Agency. Transamerica confirmed this when it notified its agent Dakota Insurance Agency to give confirmation to it of notification to its insured. As indicated above, Dakota Insurance Agency failed and Transamerica is liable not only for its agent’s negligence but for its own negligence. Therefore, summary judgment was wholly improper under the circumstances of this case. Groseth Int’l, Inc. v. Tenneco, Inc., 410 N.W.2d 159 (S.D.1987).
The majority attempts to overly simplify this issue by stating that the issue is “Whether Transamerica had a duty to notify PGS of its intent not to renew PGS’s insurance or to procure replacement insurance.” The opinion then cites several authorities to resolve this issue. However, these cases deal with situations where there is a policy for a definite term and the term expires or the premium becomes due. Under such circumstances an insurer is not under an obligation to notify the insured. In contrast, this case involves the insured’s inability to renew his insurance with the insurer because the insurer cancelled its agency contract with whom insured dealt. Under these circumstances an insurer has a duty to notify its own insured of the cancellation. Transamerica recognized and assumed this duty with instructions to the agency as follows:
Please make arrangements to place this coverage in another market on expiration date 10-1-83 since your agency is no longer representing our company.
Please also provide us with written confirmation of the replacement.
The majority’s reliance, as indicated above, on the fact that Transamerica terminated the agency relationship is wholly misplaced. The majority states:
Had the claim occurred while the policy was in force, but not reported until after the expiration of the policy and termination of the agency agreement, the result may have been different, (emphasis added).
Obviously, had the claim occurred while the policy was in force there would be no question as to coverage.*
The majority opinion downplays the confirmation of Transamerica’s duty to its insured by stating:
Transamerica simply asked for confirmation of Agency’s placement of PGS’s coverage with another carrier. It was mere*76ly a reminder to Agency to fulfill Agency's obligation to Agency’s customer.
Why should Transamerica concern itself with Agency’s obligations unless it recognized it also owed an obligation to its insured, Peterson.
Transamerica argues that the “true cause of Peterson’s loss was his failure to obtain insurance after his policy expired.” The true cause of Peterson’s loss was the failure of Transamerica to notify its insured, Peterson, after Transamerica’s agent, Dakota Insurance Agency, had failed to comply with Transamerica’s earlier written instructions and procure replacement insurance for the insured. Trans-ameriea never received the written confirmation it sought from its agent, and therefore, Transamerica knew or should have known that its insured, Peterson, would have no idea that its insurance coverage would not continue or be automatically renewed as before. “Negligence can be premised equally upon an omission to act as upon the commission of an act.” Koeniguer v. Eckrich, 422 N.W.2d 600, 602 (S.D.1988). This failure to act by Transamerica is the very basis of the negligence action alleged by Peterson. Zukaitis, held an insurer liable to the insured where the insured had no notice that the agency relationship had been terminated, and continued to act and rely upon the knowledge he had of such agency relationship.

 The majority also mistakenly relies on an amendment to SDCL 58-1-14 to support the argument that Transamerica was under no legal duty to notify PGS of its intent not to renew PGS’ policy prior to its passage. SDCL 58-1-14 states in part:
Notice of refusal to renew an insurance policy ... is not effective unless mailed or delivered by the insurer to the named insured at least thirty days before the effective renewal date. The policy provisions control if the policy provides for a notice of refusal to renew that exceeds thirty days....
This statute does not support the majority’s position. In fact, it detracts from it. The statute affirms a duty on the part of the insurance company to give notice of refusal to renew. It goes even further and makes ineffective any notice mailed or delivered by the insurer to the named insured less than thirty days before the effective renewal date. Neither the statute, nor the amendment, detracts from Transamerica’s duty to notify the insured of nonrenewal where that nonrenewal resulted from Transamerica’s cancellation of its agent Dakota Insurance Agency.