Court Opinion

ID: 9445695
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:36:41.886229+00
Date Added: 2024-06-11T17:30:22.980307
License: Public Domain

CAMERON, Circuit Judge
(dissenting).
In the written application which constituted a part of the policy sought to-be cancelled, the son, George Gabehart, was named as one who would use and' operate the car which was the subject of the insurance. The company agreed’ to defend any suit filed and pay any judgment rendered against him. It received an extra premium for that protection. It has kept that premium and has not tendered it back in its action to-cancel the policy.1
As far as George was concerned, the company’s liability was not affected by the transfer and any provisions the policy may contain relating thereto have no materiality. The company owed him the same protection before the transfer as-after. The risk of the company in relationship with George was not increased or varied by the transfer.2
*155None of the cases cited by the insurance company involved facts closely resembling those in the case before us.3 The naming of George in the application and the payment of an extra premium bring in a factor not heretofore dealt with and show, in my opinion, a ■clear purpose to protect him from liability under the facts before us. To blaze a trail by releasing the company from its policy obligation to protect George by applying a portion of its fine print under the facts set forth in the majority opinion is, I think, to exalt the “letter which killeth” and to disregard the “spirit which giveth life.” 4 As to him, therefore, I think it is clear that the judgment of the lower court should be affirmed.
I think, moreover, that the judgment should be affirmed as to the father, J. A. Gabehart, the named insured, for failure of appellant to tender the unearned premium, a condition precedent to maintenance of an action for cancellation. I therefore dissent.

. The insurance company has, in fact, retained the entire premium collected by it. Under the universal principle that a party cannot “eat his cake and have it too”, one seeking cancellation must restore what he has received from the other as a condition precedent. “The very idea of rescinding a contract implies that what has been parted with shall be- restored on both sides.” 12 Am.Jur., Contracts, § 451, p. 1031. And cf. 9 Am.Jur., Cancellation of Instruments, pp. 384, et seq.

. In a case from the California Court of Appeals dealing with the liability of an insurance carrier after transfer, Sly v. American Indemnity Co., 1932, 127 Cal. App. 202, 15 P.2d 522, the rule is stated in apt language:
“The essential and important factor of this [i.e. the company’s] reasoning rests *155in the contention that change of interest increases the risk * * *
“In an action by such person [tho one injured] against the insurer, violation by the assured of some condition in tho policy is a valid defense only when it appears that by reason of such violation the insurer was substantially prejudiced * * * But it is expressly stated in the policy of insurance that insurance provided by the liability peril clause is so extended as to be available to any person lawfully operating the insured automobile provided such operation is with the permission of the assnred named in the policy * * * It is therefore apnarent that no increase in risk to appellant occurred by reason of the attempted transfer of interest in tho automobile by its insured.”

. Those decisions are largely based, in fact, upon terms contained in the insurance contracts voiding the policies there involved in event of transfer of ownership. Neither the majority opinion nor appellant’s brief refers to any such provision in the policy before us and apparently there is none. Tlie nearest approach to such a provision is tucked away under a misleading caption:
“VIII. Policy Period, Territory, Purpose of Use. This policy applies only to accidents which occur and to direct and accidental losses to the automobile which are sustained during the policy period, while the automobile is within tho United States of America, its territories or possession, Canada or Newfoundland, or is being transported between ports thereof, and is owned, maintained and used for the purposes stated as applicable thereto in the declaration.” [Emphasis supplied.]
There is no intimation that George was using the car at the time of the accident for any purpose other than as shown in tho declarations which was for “pleasure and business.”

. The quoted words announce good law as well as good gospel: “In fact it is the substance of an agreement rather than its form—the spirit rather than the letter—which must control its interpretation.” 12 Am.Jur., Contracts, § 242, p. 776.