Court Opinion

ID: 9772886
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:32:17.330124+00
Date Added: 2024-06-11T07:31:48.749736
License: Public Domain

John I. Purtle, Justice, dissenting. I disagree with that part of the majority opinion which holds that before cancellation is effective as to an insured, the lienholder must also be notified. It is true that the notice of cancellation provision of Ark. Code Ann. § 23-89-304 (1987) uses the conjunctive “and”; i.e., that no notice of cancellation “shall be effective unless mailed or delivered by the insurer to the named insured and to any bank . . ..” (Emphasis added.) However, a literal reading of these words gives an absurd result. Such a literal reading results in a construction of this statute which is completely contrary to its obvious purpose. It is therefore imperative that the history of this statute be considered. The history of this statute commences with Act 333 of 1969, and was first amended by Act 66 of 1973. As amended in 1973 the statute read as follows: (a) No notice of cancellation of a policy to which Section 2 of Act 333 hereof applies, and no notice of cancellation of a policy which has been in effect less than sixty (60) days at the time notice of cancellation is mailed or delivered, shall be effective unless mailed or delivered by the insurer to the named insured at least twenty (20) days prior to the effective date of cancellation, provided, however, that where cancellation is for nonpayment of premium at least ten (10) days’ notice of cancellation accompanied by the reason therefor shall be given. It takes no imagination at all to realize that lending institutions holding liens on policyholders’ vehicles were left out in the cold if the policyholder allowed a policy to lapse and the insurer failed to notify the lienholder. Needless to say such institutions initiated reform of this statute which manifested itself as Act 528 of 1975. The act amended the existing statute simply by inserting into the law the following words: “and to any bank, or any other lending institution having a lien on the named insured’s automobile.” Obviously the purpose of the amendment was to protect lending institutions because insureds were already protected. However the added provision requiring notice to the lienholder was inartfully drafted. Had a comma simply been inserted before the added words, the true intent would have perhaps been more clear. The application of the first rule of statutory construction (i.e., that a statute, if not ambiguous, is to be construed just as it reads) thus gives the absurd conclusion reached by this court: the amendment which was designed to protect the lienholder’s interest results in a completely unjustifiable windfall to the insured. Act 528 amended the statute to read as follows: (a) No notice of cancellation of a policy to which Section 2 of Act 333 hereof applies, and no notice of cancellation of a policy which has been in effect less than sixty (60) days at the time notice of cancellation is mailed or delivered, shall be effective unless mailed or delivered by the insurer to the named insured and to any bank, or any other lending institution having a lien on the named insured’s automobile, at least twenty (20) days prior to the effective date of cancellation, provided, however, that where cancellation is for nonpayment of premium at least ten (10) days’ notice of cancellation accompanied by the reason therefor shall be given. [Emphasized words were added by Act 528.] The result of the majority opinion is that the insurer must notify both the insured and the lending institution for the notice to either to be effective. Surely that was not the intent of Act 528. I concede that the majority interprets the statute just as it reads. That is the proper and correct thing to do — unless the results of such reading are obviously irrational, which is the case here. Hays, J., joins this dissent.