Court Opinion

ID: 9548624
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:06:10.490197+00
Date Added: 2024-06-11T15:19:12.093702
License: Public Domain

Schroeder, J.,
dissenting: Basically we are dealing with a simple bilateral contract which, in my opinion, never materialized because there was no meeting of the minds.
The court says the endorsement, standing alone, was not ambiguous. This I concede, but we are concerned with another document as well, which the court seems to ignore.
Both the insurance company and the insured were acting through duly authorized agents, Gucker for the defendant insurance company, and Bernica for the insured.
Of the three documents involved in this action the insurance policy, which contained cancellation provisions, is not of primary concern. The cancellation provisions of the policy were not invoked. On the facts here it must be conceded whether the coverage of the Van Burén property under the policy was deleted is the subject of independent contract.
The two documents upon which the insurance company relies to establish a bilateral contract for the deletion of the Van Burén property are the endorsement which was to be attached to the policy and the letter of transmittal. The endorsement was contained on a form entitled what is denominated “Uniform Standard.” It recited among other things: “In consideration of return premium of $20.00. It is understood and agreed that item # 1 is deleted from this policy.” It also bore the entry “Effective Date of Endorsement 2-23-66.” The letter transmitting the endorsement was entitled “Redi-Memo” on stationery bearing the insurance company’s name indicating it was from Gucker’s office. It was dated “2-23-66.” This document has been referred to as the letter of transmittal wherein Gucker told Bernica how to sign the endorsement. It reads:
“Please sign and return all copies where the X is indicated. Please be sure and sign Shunga Plaza, Inc., by you. Please find enclosed a stamped self addressed envelope and return promptly.
“A check for the return premium will be sent to you when we receive confirmation from company.” (Emphasis added.)
*798The endorsement and the letter enclosing it were the only communications of any kind in evidence between the insured and the insurance company regarding deletion of the Van Burén property from the provisions of the policy. There were no other negotiations.
The undisputed testimony shows that Bemica expected something more—some further notice—before the policy was cancelled as to the Van Burén property. His impression from the endorsement and the letter transmitting it was that the insurance company intended to cancel the policy, but he was not concerned because he had not received the follow-up concerning deletion of the Van Burén property from the policy. He testified:
“I did not consider this document in itself as a cancellation of this policy, and in not receiving anything—any further notice in regards to cancellation, I was not concerned at this time that the policy was cancelled.”
There is no question but that the Van Burén property, which is the subject of this litigation, was destroyed by tornado before the insured received notice of “confirmation from company” by receipt of a check from the insurance company in payment of the $20 return of premium. The court by confining its consideration of the parties’ dealings to the endorsement holds that a clear unambiguous bilateral contract was effected, thereby ignoring language in the letter of transmittal which stated “A check for the return premium will be sent to you when we receive confirmation from company.”
Was the insured entitled to rely upon this provision in the letter of transmittal when it received the form endorsement from Gucker?
It is well settled in this jurisdiction where two or more instruments are executed by the same parties contemporaneously, or even at different times in the course of the same transaction, and concern the same subject matter, they will be read and construed together so far as determining the respective rights and interests of the parties, although they do not in terms refer to each other. (West v. Prairie State Bank, 200 Kan. 263, 267, 436 P. 2d 402; and Topeka Savings Association v. Beck, 199 Kan. 272, 428 P. 2d 779.)
Here both instruments were prepared and executed by Gucker and mailed at the same time to Bemica dealing with the same subject matter. They must be construed together.
Surely one interpretation of the two instruments, construing them together, is that the endorsement deleting the Van Burén property, which Bemica signed and returned to Gucker, would not be binding upon the insurance company until it approved *799Gucker’s action by confirming the deletion; that the insured was to be notified of the confirmation by the insurance company by sending a check to the insured in the sum of $20 for the return premium.
The Supreme Court is not bound by the trial court’s interpretation of these documents. Where the validity of an instrument in writing has been properly established in the trial court and accepted in evidence, this court on review will make a determination for itself as to the interpretation to be placed upon such written instrument. (Hill v. Hill, 185 Kan. 389, 345 P. 2d 1015; and Keeler Co. v. Atchison, T. & S. F. Rly. Co., 187 Kan. 125, 354 P. 2d 368.) Here the validity of the two instruments in question was properly established in the trial court and accepted in evidence. Therefore, the Supreme Court on review may make a determination for itself as to the interpretation to be placed on the two instruments.
If there was a meeting of the minds between Gucker and Bernica, it was that confirmation by the insurance company was necessary to effect the deletion of the Van Burén property from the policy and that Bernica would be notified of such confirmation.
Coupled with the rule that ambiguities must be construed against the insurance company, it is clear the insurance company failed to sustain its burden of proof to show there was a meeting of the minds to consummate a binding bilateral agreement wherein one promise was consideration for the other.
The burden of proof that an insurance policy has been cancelled lies upon the insurer alleging it, no matter what method of cancellation is relied upon. (Plotner v. National Fire Ins. Co., 118 Kan. 234, 239, 234 Pac. 959; Riddle v. Rankin, 146 Kan. 316, 69 P. 2d 722; and Clark v. Employers Mut. Casualty Co., 90 F. 2d 667 [8th Cir. 1937].)
To constitute a meeting of the minds there must be a fair understanding between the parties which normally accompanies mutual consent. (Riddle v. Rankin, supra.) The evidence must show reasonable definiteness that the minds of the parties met upon the subject matter and agreed upon its terms. (Mooney v. Merriam, 77 Kan. 305, 94 Pac. 263; and Smith v. Harford Fire Ins. Co., 120 Kan. 53, 242 Pac. 455.)
It has also been held that to constitute a cancellation by mutual agreement it should be clear the insured knew and understood that *800his policy was being cancelled. (Plotner v. National Fire Ins. Co., supra.)
The reason behind the rule which requires that there be a meeting of the minds when the cancellation of an insurance contract is involved is the importance of insurance itself. It is important that' the insured know for certain when insurance will be terminated so that he may provide for other insurance. In recognition of this principle the court has cast the burden on the insurance company to make sure there is a clear understanding between the insured and the insurance company. It is implemented by the rule of strict construction against the insurance company (Coffey v. Girard Ins. Co., 182 Kan. 599, 602, 322 P. 2d 345), and the rule requiring actual receipt of notice of cancellation as a condition precedent to cancellation. (Merrill v. Farmers’ Alliance Ins. Co., 155 Kan. 31, 122 P. 2d 776.)
Holding in favor of the insurance company would tend to encourage insurance agents to play both ends against the middle. For example, assume an agent received notice from his company that the company wanted to cancel its policy of insurance. If agents were permitted to send the cancellation to the insured asking him to sign and return the cancellation, with a statement that the unearned premium would be returned upon confirmation from the company, the agent may be safe in sending the release on to the company and holding the return premium. If no damages were sustained the agent could retain the return premium and tell the insured that cancellation had never been confirmed. A simple entry on the agent’s records that a check had been written and sent would protect the agent if damages were sustained. (See Service v. Pyramid Life Ins. Co., 201 Kan. 196, 440 P. 2d 944; and Merrill v. Farmers’ Alliance Ins. Co., supra.)
There is nothing magic about the recital in the endorsement to delete the Van Burén property that it was to be effective February 23, 1966, because there was never a meeting of the minds, hence no binding contract. If confirmation by the insurance company had actually been communicated to its agent Gucker, who in turn communicated this fact to Bernica by sending a check for the return premium prior to the insured’s sustaining a loss under the policy, the contract would be complete and relate back to the effective date indicated in the endorsement. Until such time as the insured *801received notice of confirmation by the company the property would be covered by the policy of insurance.
Here the endorsement and the letter enclosing it show nothing more than an attempt to cancel the policy. The insurance company failed to sustain the burden to show there was mutual agreement between the parties.
It is respectfully submitted the policy of insurance was effective as to the Van Burén property on the date of the loss by tornado on June 8, 1966, and the lower court should be reversed. The insurance company was in a position to accept the endorsement deleting the Van Burén property by notifying the insured of its confirmation. Until such notice the policy remained in force. Here confirmation by the company was never communicated to the insured.
Fatzer and Fontron, JJ., join in the foregoing dissent.