Court Opinion

ID: 3631163
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:10:40.066979+00
Date Added: 2024-06-11T12:47:40.876815
License: Public Domain

The plaintiff has recovered a judgment against the defendant upon a policy of fire insurance, which the latter insists was not in force at the time of the fire, its claim being that the policy was canceled long before the fire occurred by the giving of notice that the defendant would cancel the policy on a day therein specified. Whether this notice of itself operated to cancel the policy is the question presented. The plaintiff insists that, in order to effect the cancellation in addition to the notice, it was necessary for the defendant to return or tender the unearned premiums. On the other hand, the defendant asserts that it was only required to give five days' notice of cancellation to accomplish that result.
This controversy must be settled by the contract between the parties. That part of it which relates to the subject of the cancellation of the contract reads as follows:
"This policy shall be canceled at any time at the request ofthe insured, or by the company, by giving five days' notice of such cancellation. If this policy shall be canceled, as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary short rates, except that when this policy is canceled by this company by giving notice, it shall retain only the pro rata premium."
The standard policy, of which this forms a part, has been prepared under authority of law by men experienced in insurance contracts, and it is, therefore, fair to assume that the agreement may be treated as one prepared by men competent *Page 168 
to use language adequate to convey clearly and distinctly the views of the parties. In such case it is the rule that if the language of a statute or contract, read in the order of its clauses, presents no ambiguity, courts will not attempt, through transposition of clauses or ingenious argument as to the general intent, to qualify by construction its meaning. (Doe v.Considine, 6 Wallace, 458.)
The first sentence provides for the cancellation of a policy. It declares that "it shall be canceled * * * by the company by giving five days' notice of such cancellation." In other words, the underwriter, by its contract, reserved to itself the right to cancel the contract of insurance by a notice of five days. Nothing else is provided to be done. Notice alone shall be sufficient says the contract. The language is unambiguous. It admits of no debate and requires no construction. Words more apt to accomplish the cancellation of a policy by the giving of the five days' notice cannot well be imagined. Having provided for a cancellation of the policy, either by the request of the insured or upon notice given by the company, the next clause of the agreement proceeds to make disposition of the unearned premiums, in the event of the exercise of the option to cancel by either of the parties.
The opening phrase of the clause shows that what follows proceeds upon the assumption that the policy shall have been canceled before occasion arises for acting under its provisions. It reads, "If this policy shall be canceled as hereinbefore provided" — referring necessarily to the company's five days' notice — "the unearned portions of the premiums shall be returned." When? At the time of the giving of the five days' notice of cancellation? Not at all; "on the surrender of the policy" is the occasion fixed by the contract for its return. The scheme of this portion of the contract, then, is to provide,first, for the cancellation of the policy — that is to be accomplished by the simple request of the insured, if he desires to cancel it, or by a five days' notice on the part of the company if it desires to terminate its obligation under the policy. The policy having been put an end to by cancellation, at the insistence *Page 169 
of one party or the other, then the situation of the parties is such that the company has in its possession certain premiums which it has not earned, and which it does not desire to earn, and the other party has in his possession the policy of insurance, no longer, of course, of use to him, and of no particular value to the company, except that when it finally comes into the company's possession it of itself furnishes evidence that the unearned premiums have been paid to the insured. With this situation, then, the agreement undertakes to deal, and it provides that upon the surrender of the policy the unearned premium, whether at short rate or pro rata premium, depending upon which party brought about the cancellation, shall be returned to the insured. Practically, it says to the insured: You return the policy to the place where you got it from and the company will at once turn over the unearned premium to which you are entitled under this contract. This agreement is so clearly expressed that there does not seem to be opportunity for insisting that the language means something quite different from what is suggested to the mind upon the first reading. And still other readings will not prompt the thought that there is possibly any ambiguity.
It is suggested in the opinion of the learned trial judge in the case of Nitsch v. American Central Insurance Company,
subsequently affirmed in this court without an opinion (152 N.Y. 635), that, under such a reading of the contract as on its face it is apparent it should have, "a man might pay $1,000 for insurance to-day, receive a notice from the insurance company to-morrow which would have the effect to cancel-his policy in five days, and at the end of the week have no remedy except an action at law against the company." Such a case could happen undoubtedly, but it is not likely to. Courts cannot assume that insurance companies will act arbitrarily, or that they are so lacking in business prudence as to be willing to acquire a reputation for practicing a wrong of that character upon customers. On the contrary, we must assume that corporations, as well as individuals, intend faithfully to keep their contracts. But were it our duty to indulge *Page 170 
in a totally different presumption, the situation would not be changed, for the court is without authority to make contracts for the parties.
The law-making power of the state, the legislature, has undertaken to provide for the creation of a standard policy of fire insurance for the protection alike of the insured and the insurer, and if the standard policy needs further amendment, relief must be sought from that source.
Prior to the passage of chapter 488 of the Laws of 1886, providing for a uniform contract of fire insurance to be used by fire underwriters within the state, there were two cases in this court, namely: Van Valkenburgh v. Lenox Fire Ins. Co. (51 N.Y. 465) and Griffey v. New York Central Insurance Co. (100 N.Y. 417), holding that the cancellation clause was not operative unless the company should tender or return to the insured the amount of the unearned premium. The cancellation clause in those contracts differs very materially from the one in question. It read as follows:
"This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the policy has been in force. The insurance may also be terminated at any time at the option of the company on giving notice to that effect, and refunding a ratable proportion of the premium for the unexpired time of this policy."
Now, clearly, that agreement did provide, as the courts held, that two things were required to terminate the policy — first,
the giving of the notice, and, second, the refunding of the unearned premium.
Now, after these decisions were made, the cancellation clause of the present policy was prepared, and it does not seem to be an intemperate use of the imagination to draw the inference that it was prepared in view of the decisions to which I have referred, and to meet them by establishing a contract which should make cancellation by the company less difficult. It is certainly difficult to see how they could have used language more appropriate to accomplish that result. *Page 171 
Counsel for the respondent insists that this question is no longer an open one in this court, but was put at rest by the affirmance in the Nitsch Case (supra).
It is true that at Special Term judgment went in favor of the plaintiff upon the ground, as appears from the opinion of the learned trial judge, that in order to effect a cancellation of the policy it was necessary to give the five days' notice, and in addition to return or tender the unearned premiums to the insured. But there was another ground upon which the affirmance of the judgment was required at the General Term and in this court, namely, that after the insured had received the five days' notice of cancellation from the general agent of the insurance company, which was a foreign corporation, he addressed to the corporation at its home office a letter of inquiry about it, and received such a reply as constituted a waiver of the notice which had been just sent out by the general agent, and thus it happened that the judgment of the Circuit rested upon a sure foundation and required affirmance.
The order should be reversed and a new trial granted, with costs to abide the event.
BARTLETT, J., reads for affirmance; HAIGHT, MARTIN and VANN, JJ., concur; PARKER, Ch. J., reads for reversal; O'BRIEN, J., concurs; GRAY, J., absent.
Order affirmed and judgment absolute ordered for plaintiff on stipulation, with costs.