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Show FRIDAY. JULY 16, 1971 THE DAILY RECORD Ftig Fivq In The Supreme Court Of The State Of Utah J. Barnett and Evelyn I. Barnett, his wife. Plaintiffs and Respondents, On el In modern times automobile accidents occur daily. It may well be in the public interest that automobile insurance policies should not lapse due to forgetfulness on the part of the insured, or inconsistent action of insurers and that a duty be imposed upon the insurers to give notice of expiration before terminating the current policies. But, unless expressly written in the insurance contract, such duty may only be imposed by the No. 12264 State Automobile FILED Sc July 8, 1971 Casualty Underwriters, a corporation, et al, , Defendants and Appellant. L. M. CummiugB, legislature. Clerk ELLETT. Justice: State Automobile A Casualty Underwriters appeals from a judgment based on a jury verdict wherein it was held liable for a loss by fire. The policy of insurance was issued and signed by Diversified Insurance Ag$ncy for and on behalf of Guaranteed Surety Insurance Company. The policy was subsequently assumed by the appellant. i The policy by its terms was effective from October 1, 1964, to October 1, 1967. A fire destroyed the insured property on October 19, 1967, and this action was brought to recover on the policy. In answer, to an ihterrogatory, the plaintiffs explained why the. policy was in full force and effect at the time of the fire: Where a soliciting agent promises a customer that he will notify, him before the contract of insurance expires, or where, as in this case, he permits a custom and usage to arise which requires him to give the insured notice of the expiration date, he is acting as the agent of the insured and not the insurer, since such an agent may place the next term of insurance with another company if he cares to do so. The contract in the matter before us was clear and unambiguous and complied with the statutory requirements. It plainly stated that the policy would expire on October 1, 1967. By its terms it did expire on that date, and the appellant was not liable under the Assumed contract to pay for a loss that occurred thereafter. trial court erred in instructing the jury in substance that it return a verdict against the appellant if it should find by a preponThe should derance of the evidence: By custom and practice during the past twenty years, the policy would automatically be renewed and we would be billed 1. either prior to the expiration date or subsequent to the expiration date. Since this arrangement had been made and carried on by the agent for the insurance company, then the insurance company is bound by it. 2. 3. i The court permitted a .witness to testify that it was a custom of soliciting agents to notify clients thirty days prior to the expiration of their insurance policies; that the insurance in the area was, with only two exceptions, solicited by independent agents who could place the insurance with any. company they chose, and if they ceased to'work with an insurer, the policy- holders of that company were 'the clients of the agents; that the two exceptions were State Farm Insurance- Company and Allstate Insurance Company; 4. 5. The judgment is reversed with directions to enter an order granting appellant's requested instruction for a directed verdict. Costs are awarded to the appellant. The policy in question here was originally placed by a soliciting another company and on February 28, 1966, was asJUimed by the with agent J WE CONCUR: shall E. R. appellant herein. Utah has a statute No which provides: insurer or its agent, nor any solicitor or broker make any contract of insurance or agreement as to such contract, other than is plainly expressed in the policy issued thereon. Any such understanding or agreement not so expressed shall be invalid. 31-19-- U. C. A. 1953 18, F. Henri Henriod, Justice (Replacement Vol. 4). I permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. . . . No U. C. A. 1953 (Replacement Vol. 4), Furthermore, Section an of insurance contract unless it is in writing. prevents any modification 31-19-- 26, In Counts II and III of their second amended complaint, the plaintiffs charged the soliciting agent and his assigns with negligence in failing to notify pursuant to custom. Those two causes of action are not before us here. We are dealing only with the claim that the fire loss is covered by the policy written by another and thereafter assumed by the appellant. A statement of the law is found in 43 Am. Jur. 2d, Insurance, Sec. 204, p. 261, as follows: ...has the absence of express make authority, an insurance a contract for apparent authority agent an indefinite to for ance to run from year period in the year future. ... In no insur- to .In regards to the effect of usages and customs on a contract, the law is stated in 55 Am. Jur., Usages and Customs, Sec. 35, p. 296, as follows: . . . The office of a trade custom or usage is to explain what otherwise would be inexplicable in the meaning and in- -' tention of the parties, on the theory that they knew of its existence and contracted with reference to it, and it is not admissible where there is no ambiguity in the contract and it contains no technical terms or expressions peculiar to any avocation or locality 1 usesdsic in the contract. Callister, Jr. , Chief Justice R. L. Tuckett, Justice The pbQicy in question had a provision as follows: 1. Sec. (a) represented by Diversified Insurance Agency, or (b) had failed to give plaintiffs notice of the termination of agency of Diversified Insurance Agency; That on or before October 1, 1967, the appellant or its agent failed to renew the policy in accordance with the custom or to give notice that it did not intend to do so; and That plaintiffs reasonably relied upon such custom and as a result thereof suffered damage. - that it was the custom of those two companies to notify their insureds prior to expiration date; and that he haT never heard of the appellant prior to the present action and knew nothing about its methods of doing 'business. That prior to October 1, 1967, there existed a custom whereby agents, would renew insurance upon expiration of the terms; That Diversified Insurance Agency knew of the custom; That appellant was on October 1, 1967, ... Couch on Insurance, 2d Ed. , 757, Sec. 15:61, states: If the contract is stated in clear, positive, and unambiguous terms, usage or custom cannot be permitted to vary or contradict the terms used. ... In the case of Thomas v. Guarantee Title & T. Co., 81 Ohio State 432, effect of 91 N. E. 183, 26 L. R. A. N. S. ) 1210 (1910), the question was was It there involved. an of abstracter the on custom liability usage and none a where a or contract not create held that usage or custom could liability of-th- e otherwise existed, but could only be hsed to explain or aid in the interpretation of a contract or liability existing independently of it.' t The Supreme Court of Hawaii had before it the question of the duty of an insurer to give notice of expiration of an insurance policy in the case of Kapahua v, Hawaiian Insurance and Guaranty Company, 447 P. 2d 669 (1968). At page 671 the court said: 2. Dohlin v. Dwelling House Mut. Ins. Co. of Lincoln, 238 N.W. 921 (Neb. 1931); Parker v. Knights Templars, etc., 97 N.W. 281 (Neb.). CROCKETT, Justice: (Dissenting) , It is appreciated that this case is not without difficulty. Nevertheless, believe that there was a sufficient foundation in the evidence to justify submitting the matter to the jury on the basis of the instruction, which is fairly and properly set forth in the next to the last paragraph of the main opinion. It will be seen therefrom that the trial court carefully set forth the prerequisites to finding responsibility upon the defendant. Inasmuch as both parties have had a full and fair opportunity to present their evidence and their con- - ' tentions, and the jury has so found the facts, and the trial court has also given his approval, I think the matter should not now be approached from a different-poin- t of view and the whole case ripped asunder by reversal of the judgment. 1 In that connection it seems appropriate to again state a doctrine of review about which we do not disagree in the statement, but about which we do frequently disagree in application: that it is the duty of the reviewing 1. 244 Minn. 232, 69 N. W.2d 889, 52 A. L. R. 2d 1144. court to assume that the jury Relieved those aspects of the evidence and drew whatever reasonable inference's they could fairly deduce therefrom in the light favorable to support thlir verdict; ahd more specifically applicable her$: that the court should not pars over lightly nor ignore any aspect of the evidence important to the.verdict reached by the jury. The plaintiffs had, for approximately 18 years, carried fire insurance on their home through policies obtained from an insurance man. Noble Kimball. During all of this time the custom and practice had been that just prior to the expiration of a policy, Mr. Kimball would notify the plaintiffs, either by mail or in person; and would keep the insurance in effect by renewal, and bill the plaintiffs and they would pay the premium. A few months before the policy in issue here was written, Mr. Kimball advised the plaintiffs that he was retiring and introduced them to Richard Salisbury, an employee of defendant Diversified Insurance Agency, who would be taking over his business. Mr. Salisbury assured them that the insurance would be handled exactly as it had been in the past. He obtained the policy in question for the plaintiffs. It covered from October 1, 1964, to October 1, 1967. On October 19, 1967, the fire occurred which damaged plaintiffs' home. The plaintiffs had received no notice concerning the expiration of the policy, and received no word about it until four days after they phoned Diversified to notify them of th$ fir loss. The law relating to contracts is a vast field of many rules wherein one may be selected as seeming to apply to either side of practically any conto the fa.cts. troversy. Such rules are of course all right Jf properly applied and applied as But the matter of importance is to se that the rule selected between controlling is so specifically applicable to the facts that it does Justice deter- the parties; and this is the consideration which transcends all others in 'Continued on page six |