Court Opinion

ID: 8882656
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:59:33.33185+00
Date Added: 2024-06-11T17:06:44.471935
License: Public Domain

GODBOLD, Circuit Judge
(dissenting):
I respectfully dissent on the issue of cancellation of the policy.
The crux of the majority’s conclusion is that “Neil Vaughn, as local recording agent * * * was invested with the power to retract any attempted cancellation, and the record clearly shows that Vaughn did retract any such attempt by informing the Campbells to disregard any cancellation notice from American.” (Emphasis added.)
In the situation where the insurer has given written notice of cancellation as required by policy provisions, and thereafter an agent, having notice of what the company has done, leads the insured to believe that the cancellation is ineffectual, the authorities are divided on whether the company is bound by the agent’s action. See a review of the cases at 3 A.L.R.3d 1135. The question appears to be a new one in Texas. I do not differ with the conclusion that on such facts Texas would hold that, using the majority’s language, the agent had “retracted” the written notice. The difficulty is that whether, after the notice of cancellation was sent to and received by Mrs. Campbell, Vaughn retracted it is a disputed issue of material fact which made it impossible to decide the case on summary judgment.
*735The conversation quoted at length in the majority opinion occurred in late December, 1965 or early January, 1966. The company gave written notice of cancellation in February, 1966, and Mrs. Campbell acknowledges receiving it between February 15 and March 1. The accident occurred in April.
In his deposition, immediately following the above-quoted testimony, Vaughn testified further:
“A. Well, we [he and Mrs. Campbell] had no conversations in between our talking sometime in December up until the date of the accident.”
And a few lines further:
“Q. Do you recall ever mentioning to you at any later time that she had received something from the company or had not received or do you remember anything about that?
“A. She never called me.
“Q. You did talk with her, though, from time to time about either her policies or someone else’s policies or you did have later conversation with her, did you not?
“A. You mean prior to the accident?
“Q. Yes.
“A. I don’t recall any specific instance where we—
“Q. To refresh your memory, do you remember her calling you about someone who worked out where she was who was wondering if he could get insurance if he was the owner of a car?
“A. Well, I don’t remember that specifically. Sure don’t.
“Q. Would it be true to say, then, you may have had conversation or you may not? You just don’t recall specifically?
“A. That’s right. I just don’t recall.”
Mrs. Campbell’s testimony was as follows:
“Q. * * * So that after the receipt of the notice of cancellation, you did not call Neil Vaughn?
“A. At a later — at sometime after the notice of cancellation came. And I cannot tell you what time other than it was previous to this accident and not just the day before. I called him on another matter not even relating to our business, and during the course of that conversation, I said to him, ‘That notice came, and we ignored it as you had instructed,’ or some such similar words.”
This testimony of Vaughn and Mrs. Campbell presented a jury issue of whether Vaughn talked to Mrs. Campbell at all after she received the cancellation notice. It presented a second issue of whether if he did talk to her the statement by her, “That notice came and we ignored it as you had instructed,” was a retraction by Vaughn. In addition, differing versions by Vaughn and Mrs. Campbell of what was said in the late December-early January conversation, and of the facts existent at that time, raised a sharp credibility issue, and Mrs. Campbell’s own description of that conversation is subject to the construction that it was the only one she ever had with Vaughn about the whole matter. (This is discussed further below.)
As I understand it the majority do not reach the question of whether Vaughn’s statements in the December-January conversation, to disregard anything that might come from the company in the mail in the future, would prevent the company from a later effectual exercise of its power to cancel by written notice, so as to make the policy noncancellable. To reach this question would present a host of problems. At the threshold, it would present additional material factual disputes which could not be resolved on summary judgment. Mrs. Campbell says Vaughn told her in the December-January conversation that he had just received that morning a cancellation notice, that it had been mailed in error, that she would receive a copy and should ignore it. Vaughn testified flatly that he never received a copy of the cancellation notice, was not referring in the December-January conversation to a cancellation notice *736because he did not anticipate there would be one, and did not know anything was wrong about the Campbell policy until after the accident. To say that these conflicts, not only between the testimony of Vaughn and of Mrs. Campbell but between Mrs. Campbell’s own versions as well, raise disputed issues of material facts, is an understatement.
To reach the question of whether an agent has power to cut off the right of the company to cancel at a future time would open a barrel of legal snakes as well. Is such an act, if done by the local agent, a type of act usually done by a local recording agent so as to be within the Texas local recording agent statute ?1 Did Campbell prove “that he had relied on the apparent authority [of Vaughn] in good faith, in the exercise of reasonable prudence, and that he had thus been induced to change his position to his detriment” ?2 Was the written notice of cancellation given by the company effectual as a repudiation or disclaimer by the insurer of a prior unauthorized act of its agent done before detrimental change of position by the insured, so as to cut off the company’s being estopped by silence ? 3
Turning back to what I understand has been decided, the material facts of what is said to be Vaughn’s retraction of the cancellation notice were genuinely in dispute. I dissent from the denial to the insurer of a jury trial on that issue.

. Aetna Ins. Co. v. Durbin, 417 S.W.2d 485 (Tex.Civ.App.1967), held that it was not shown that the local agent had actual or apparent authority to waive a requirement of written proof of loss. Shaller v. Commercial Standard Insurance Co., 158 Tex. 143, 309 S.W.2d 59 (1958), in referring to the local recording agent statute, speaks of “authority co-extensive with that of the company insofar as writing insurance is concerned.” 309 S.W.2d at 63. (Emphasis added.)

. Tex.Jur.2d Agency § 46 at 487 (1959). See also Bankers Protective Life Ins. Co. v. Addison, 237 S.W.2d 694 (Tex.Civ.App.1951); Continental Oil Co. v. Baxter, 59 S.W.2d 463, 466 (Tex.Civ.App.1933).
As to the necessity of proving reliance, in Wagner v. Westchester Fire Insurance Company, 92 Tex. 549, 50 S.W. 569 at 572 (1899), decided before the statute, the court found there was reliance. In New York Fire Insurance Company v. Reed, 138 S.W.2d 138 at 142 (Tex.Civ. App.1939), decided after the statute, the court found that the insured had relied. The statute was enacted to protect “an unsuspecting public.” Id.
Mental operations such as good faith, prudence and reliance may not appropriately be decided on summary judgment but must be resolved' by trial. Riley-Stabler Construction Co. v. Westinghouse Electric Corp., 396 F.2d 274 (5th Cir. 1968) (“good faith”); Azalea Meats, Inc., v. Muscat, 386 F.2d 5 (5th Cir. 1967) (“due diligence”); Alabama Great Southern R.R. v. Louisville & N. R.R., 224 F.2d 1 (5th Cir. 1955) (mental operations necessary for wilful and wanton conduct).

. Morrison v. Insurance Co. of North America, 69 Tex. 353, 6 S.W. 605 (1887) recognizes this right to disaffirm as to insurance contracts. Ford Motor Co. v. Maddox Motor Co., 3 S.W.2d 911 (Tex.Civ.App.1928) recognizes it as to contracts in general.
As the majority point out, the local recording agent statute did not change the prior case law. In fact, Morrison is the headwaters case.
The cases relied upon by the majority concern only the effect of acts done by local agents where there has been no subsequent attempt by the company to dis-affirm or repudiate. Wagner v. Westchester Fire Ins. Co., supra, Shaller v. Commercial Standard Ins. Co., supra, United States Fidelity & Guaranty Co. v. Taylor, 11 S.W.2d 340 (Tex.Civ.App.1928, Writ Ref.). See also Home Ins. Co. of New York v. Roberts, 129 Tex. 178, 100 S.W.2d 91 (Tex.Com.App.1937), New York Fire Ins. Co. v. Reed, supra.