VYN v. St. Paul Mercury Indemnity Company and Royal Indemnity Company, Cross-defendants and Respondents.*

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District Court of Appeal, First District, Division 1, California.

Stephen C. VYN, doing business as The Vyn Moving and Storage, Plaintiff and Respondent, v. NORTHWEST CASUALTY COMPANY, a corporation, and Norwich Union Fire Insurance Society, Limited, a corporation, Defendants. Norwich Union Fire Insurance Society, etc., Defendant, Cross-complainant and Appellant. St. Paul Mercury Indemnity Company and Royal Indemnity Company, Cross-defendants and Respondents.*

No. 16595.

Decided: February 16, 1956

Foley, Branson & Limpert, San Mateo, for appellant. Edward A. Friend, San Francisco, for respondents.

Plaintiff was operating as a highway carrier under permit issued by the state Public Utilities Commission. On June 5, 1951, one of his trucks was involved in an accident, as a result of which two persons were killed and law suits filed against plaintiff which were settled for the sum of $6,600.

The main question upon this appeal is whether or not there was in force at the time of the accident a contract of insurance between plaintiff and defendant Norwich Union Fire Insurance Society, Limited, covering plaintiff with respect to public liability claims. The trial court found that there was and gave judgment against Norwich in plaintiff's favor in the sum of $6,600 and costs. Our examination of the record convinces us that the evidence does not support the finding on this issue.

For the year preceding June 1, 1951, plaintiff had insurance coverage with another company, a policy he had obtained through an insurance agent known as Williams Insurance Center. Before June 1, 1951, plaintiff informed Williams he was placing his insurance with a different agent. Nevertheless, hoping to keep plaintiff's business, Williams ordered a policy from Norwich for the year commencing June 1st. Such a policy was written by Norwich but Williams was unable to deliver it. Although he tried to deliver it, first to plaintiff and then to plaintiff's bank, delivery each time was refused.

Plaintiff obtained, instead, a policy from St. Paul Mercury Indemnity Company. When the accident occurred plaintiff notified St. Paul only. When the law suits were filed and the papers served plaintiff turned the papers over to St. Paul and St. Paul handled the investigation and the defense and negotiated the settlement.

It is patent that there was no contract between plaintiff and Norwich at the time of the accident, June 5th. Norwich had tendered a contract but plaintiff had refused. There had been no meeting of the minds. There had been neither assent nor delivery.1

On June 7th Norwich filed with the Public Utilities Commission a certificate reciting that it had issued a policy of insurance to plaintiff effective on June 1st. On June 16th Norwich filed with the commission a certificate of cancellation of the Norwich policy, by its terms declared to be effective June 26, 1951. This unilateral action upon the part of Norwich could no more create a contract between it and plaintiff than did its writing of the policy (unsolicited by plaintiff and contrary to his instructions to agent Williams) and its ineffectual twice attempted delivery of the policy.2 Significant also is the fact that the filing of this certificate occurred after, not before, the occurrence of the accident.

On April 11, 1952, Williams Insurance Center sent plaintiff a bill for premium for public liability and property damage coverage of the Norwich policy for the period June 1 to June 24, 1951, and plaintiff paid that bill. Plaintiff put in evidence a letter of June 19, 1952, from Norwich to him, in which Norwich disavowed liability toward him, asserting lack of any contractual basis for such liability.3 This failed to create a contract of insurance effective retroactively as of a date prior to the accident.

‘Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.’ Ins.Code, § 22. ‘Except as provided in this article any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against, subject to the provisions of this code.’ Ins.Code, § 250. Other provisions of ‘this article’ prohibit insurance against a lottery or its outcome, § 251, and declare void any policy executed by way of gaming or wagering, § 252. At the time of the payment of the premium the accident and the attendant injuries were no longer ‘contingent or unknown.’ The undisputed evidence shows that plaintiff knew of the accident and reported it to the agent of St. Paul Mercury Company in June of 1951 and that in July of 1951 he received from St. Paul payment for the value of his truck, which was destroyed in the accident. That occurred many months before his payment of a premium on the Norwich policy. Also, the lawsuits which plaintiff later settled were filed and he was served with complaint and summons therein ‘shortly after the accident,’ according to his own testimony.

It necessarily follows that his payment of the premium came too late for Norwich to insure plaintiff in respect to his liability for the accident of June 5, 1951, and the resultant injuries. See Western Indemnity Co. v. Industrial Accident Comm., 182 Cal. 709, 726, 190 P. 27; Crawford v. Transatlantic, etc., Co., 125 Cal. 609, 611, 58 P. 177.

If Williams had acted on behalf of plaintiff in negotiating with Norwich for the issuance of the policy, then possibly the delayed payment of the premium by plaintiff might have been treated as ratification by him, putting the contract into effect retroactively as of June 1, 1951. But the theory of ratification is not applicable here because Williams acted either for himself or on behalf of Norwich, not at all as an agent of plaintiff in conducting those negotiations. The terms ‘adopted and ratified’ are ‘properly applicable only to contracts made by a party acting or assuming to act for another. The latter may then adopt or ratify the act of the former, however unauthorized. To adoption and ratification there must be some relation, actual or assumed, of principal and agent.’ Ellison v. Jackson Water Company, 12 Cal. 542, 551. See also Puget Sound Lumber Co. v. Krug, 89 Cal. 237, 243, 26 P. 902; Watkins v. Clemmer, 129 Cal.App. 567, 570–572, 19 P.2d 303. No such relationship obtained between plaintiff and the agent Williams.

Both of these principles of California law were applied in Gandelman v. Mercantile Ins. Co. of America, D.C.S.D.Cal., 90 F.Supp. 472, 476–477, affirmed by the court of appeals, 9th Circuit, in 187 F.2d 654, 656–657, certiorari by Supreme Court denied in 342 U.S. 896, 72 S.Ct. 228, 96 L.Ed. 671, holding that acceptance of a fire insurance policy and payment of the premium after loss occurred did not operate retroactively to cover the loss. There was no basis for ratification of the agent's acts in procuring the policy because the agent in so doing did not act or purport to act on behalf of the insured.

Under the circumstances of this case, payment and receipt of the premium after the incurrence of liability did not prejudice plaintiff in any way and did not furnish a basis for estopping Norwich from relying upon the fact that plaintiff had no insurance contract with it at the time of the accident. Hargett v. Gulf Ins. Co., 12 Cal.App.2d 449, 457, 55 P.2d 1258.

In view of this conclusion it is unnecessary to decide other questions raised by Norwich upon this appeal.

It happens that two judgments, each upon a separate set of findings of fact and conclusions of law, were rendered by the trial court. One of them, filed August 19, 1954, awarded costs in favor of cross-defendant Royal Indemnity Company against cross-complainants Northwest Casualty Company and the Norwich Company. No occasion to disturb that judgment has been shown. Indeed, Norwich has virtually abandoned that phase of its appeal by not discussing any phase of it.

The other judgment, filed August 12, 1954, was based upon findings that plaintiff at the time of the accident of June 5, 1951, had insurance contracts with Norwich and with Northwest as well as with St. Paul; that the Northwest and St. Paul policies contained clauses which made them excess over all other insurance and that the Norwich policy contained no ‘other insurance’ clause applicable to this case; and, accordingly, Norwich should bear the loss without contribution by Northwest or St. Paul. Under such circumstances, the portion of this judgment which directly affects Norwich appears inseparable from other portions; wherefore, it must be reversed as a whole, not in part.

The judgment filed August 12, 1954, is reversed and the judgment in favor of Royal Indemnity Company, filed August 19, 1954, is affirmed.


1.  “Insurance policies are governed by the same general rules which pertain to all contracts. There must be a meeting of the minds.” Boyer v. United States Fidelity & Guaranty Co., 206 Cal. 273, 276, 274 P. 57, 59. See also K. C. Working Chemical Co. v. Eureka-Security Fire & Marine Ins. Co., 82 Cal.App.2d 120, 130–131, 185 P.2d 832; and other cases collected in 14 Cal.Jur. 416–417, Insurance, § 5. Delivery, actual or constructive, is essential to the taking effect of an insurance policy as in the case of any other written instrument. Hill v. Industrial Accident Comm., 10 Cal.App.2d 178, 183–185, 51 P.2d 1126; 14 Cal.Jur. 425–427, Insurance, § 12.

2.  It is unnecessary to consider and we do not undertake to determine whether the filing of such a certificate might be invoked by a member of the public as a basis of estoppel, precluding Norwich from disavowing insurance coverage of such a person.

3.  Norwich's letter read as follows: ‘We have your letter of June 11, 1952, concerning a Superior Court action in Santa Clara County which apparently has been filed and served against you by the Kuhwarth family. ‘According to our file a policy of insurance was never issued to you by this company. Your insurance carrier, we understand, is the St. Paul Fire and Marine Insurance Company and others. It is our understanding that they are handling the defense of this pending litigation. ‘In view of the fact there was notice given to the Railroad Commission we are collaborating with the St. Paul Fire and Marine Insurance and others who have coverage on your equipment in connection with the defense of these cases. In other words, it is our understanding that your interests are being well protected. ‘This is the first knowledge that we have received of any suit pending against you. To complete our file you might let us know when and where you were served and who the plaintiff was in the action filed. Undoubtedly you have turned the Complaint and Summons over to the St. Paul Insurance Company or one of the others involved. ‘Please let us know when the service was made and to whom you turned over the Complaint and Summons.’

FRED B. WOOD, Justice.

PETERS, P. J., and BRAY, J., concur.