American States Ins. Co. v. Southern Guar. Ins. Co.

AMERICAN STATES INSURANCE COMPANY v. SOUTHERN
GUARANTY INSURANCE COMPANY

CA 95-138                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division I
                 Opinion delivered April 3, 1996


1.   Judgment -- summary judgment discussed -- review on appeal. --
     The party moving for summary judgment must show that there is
     no genuine issue as to any material fact and that the moving
     party is entitled to judgment as a matter of law; all proof
     submitted must be considered in the light most favorable to
     the non-moving party, and any doubts or inferences must be
     resolved against the moving party; on appeal, the court
     determines if summary judgment was proper based on whether the
     evidence presented by the movant leaves a material question of
     fact unanswered, and summary judgment is not proper where
     evidence, although in no material dispute as to actuality,
     reveals an aspect from which inconsistent hypotheses might
     reasonably be drawn and reasonable persons might differ.

2.   Appeal & error -- summary judgment -- standard of review. --
     Where the operative facts of the case are undisputed, the
     appellate court simply determines on appeal whether the
     appellee was entitled to summary judgment as a matter of law. 

3.   Insurance -- notice of cancellation -- written notice not
     required -- request must be unequivocal and absolute. -- The
     appellate court concluded that, under Arkansas case law, an
     insured is not required to provide written notice of
     cancellation of an insurance policy but is instead required to
     follow the general rule that a request for cancellation of a
     policy must be unequivocal and absolute.

4.   Insurance -- notice of cancellation -- insurance company must
     receive actual notice -- nothing uncertain about notice in
     case at bar. -- A due request for, or notice of, cancellation
     made to the insurance company or its authorized agent may be
     sufficient to effect a cancellation of an insurance policy;
     notice or request usually is necessary to effect a termination
     of the policy, and a communication concerning cancellation
     must be delivered to the company or its authorized agent; the
     insurance company must receive actual notice of the
     cancellation; generally, a policy may be canceled by the
     insured or his proper representative only; where an agent or
     broker has authority, either express or implied, to cancel a
     policy, a termination upon his request is valid; the appellate
     court found that there was nothing uncertain about the notice
     set out in the case at bar, noting that appellee could not
     have failed to understand that the insured had exercised his
     right to cancel his policy and had canceled it; the
     requirement of providing actual notice of cancellation was
     therefore satisfied.

5.   Appeal & error -- issue not raised at trial level -- not
     addressed on appeal. -- Where appellant argued that the
     cancellation was deficient because it was not in strict
     compliance with the policy provision on cancellation, the
     issue was not preserved for appellate review because appellant
     did not raise it at the trial level; the appellate court will
     not address an issue on appeal that was not raised below.


     Appeal from Jefferson Circuit Court; H.A. Taylor, Judge;
affirmed.
     Baxter, Wallace, Jensen & McCallister, by:  Ray Baxter, for
appellant.
     Barber, McCaskill, Amsler, Jones & Hale, P.A., by:  Micheal L.
Alexander and Chris Gomlicker, for appellee.

     Judith Rogers, Judge.*ADVREPCA3*                   DIVISION I




                                       CA 95-138
                                        
                                                     April 3, 1996    
                           


AMERICAN STATES INSURANCE    
COMPANY                              AN APPEAL FROM JEFFERSON COUNTY   
                 APPELLANT           CIRCUIT COURT
                                     NO. CIV-93-230-2              
                                                                       
VS.                      
                                     HONORABLE H.A. TAYLOR,  
SOUTHERN GUARANTY INSURANCE          CIRCUIT JUDGE
COMPANY             
                 APPELLEE

                                     AFFIRMED




                         Judith Rogers, Judge.


     This is an appeal from a subrogation action brought by
American States Insurance Company (American States) against
Southern Guaranty Insurance Company (Southern Guaranty), the
appellee.  American States argues on appeal that the trial court
erred in entering summary judgment in favor of Southern Guaranty. 
We find no error and affirm the trial court.
     We discussed summary judgment in Wozniak v. Colonial Insurance
Co., 46 Ark. App. 331, 885 S.W.2d 902 (1994), as follows:
     
          The party moving for summary judgment must show that
     there is no genuine issue as to any material fact and the
     moving party is entitled to judgment as a matter of law. 
     Keller v. Safeco Ins. Co., 317 Ark. 308, 877 S.W.2d 90
     (1994).  All proof submitted must be considered in the
     light most favorable to the non-moving party, and any
     doubts or inferences must be resolved against the moving
     party.  Id.  On appeal, the court determines if summary
     judgment was proper based on whether the evidence
     presented by the movant leaves a material question of
     fact unanswered, id. at 311-12, and summary judgment is
     not proper where evidence, although in no material
     dispute as to actuality, reveals an aspect from which
     inconsistent hypotheses might reasonably be drawn and
     reasonable men might differ.  Baxley v. Colonial Insur-
     ance Co., 31 Ark. App. 235, 240, 792 S.W.2d 355 (1990).
46 Ark. App. at 332.
     The facts in this case are uncontroverted.  In May 1992, the
Hoffman-Henry Insurance Corporation of Pine Bluff acted as agent
for both parties.  On May 11, Pierre Welter obtained automobile
insurance through the agency with Southern Guaranty.  Welter
returned on May 22 to obtain homeowner's coverage.  After Southern
Guaranty refused to write the coverage, the agency, by its employee
Sandra Smith, called American States to obtain the homeowner's
coverage.  American States agreed to provide the insurance if
Welter would also place his automobile insurance and life insurance
with American States.  Smith then informed Southern Guaranty that
Welter's automobile insurance was being canceled so that he could
place the insurance with American States and obtain homeowner's
insurance.  On May 23, Smith issued an oral binder for the
automobile coverage with American States.  Welter's wife was at
fault in an automobile accident that occurred on May 27.  American
States paid damages of $9,414.28 and then filed a complaint against
Southern Guaranty, asserting that Welter's automobile policy with
Southern Guaranty was still in effect on May 27.  Southern Guaranty
specifically denied that the automobile insurance issued by it was
in force and effect on that date.  Southern Guaranty then moved for
summary judgment, attaching the affidavit of Sandra Smith.  The
trial court granted summary judgment, finding that Southern
Guaranty's policy had been canceled and was not in force and effect
on May 27.
     Where the operative facts of the case are undisputed, as here,
this court simply determines on appeal whether the appellee was
entitled to summary judgment as a matter of law.  Hertlein v. St.
Paul Fire & Marine Ins. Co., 323 Ark. 283, 284, 914 S.W.2d 303
(1996); Doe v. Central Arkansas Transit, 50 Ark. App. 132, 136, 900 S.W.2d 582 (1995).
     On appeal, American States argues that because there was no
overt act by Welter to cancel the Southern Guaranty policy, there
was not an effective cancellation of the policy.  In support of
this argument, American States relies on the supreme court's
holding in Yant v. Bowker, 248 Ark. 826, 454 S.W.2d 84 (1970).  In
that case, an insurance company sought to collect an unpaid
insurance premium.  The insured responded that the policy had been
canceled pursuant to his statement to the insurance agent that he
did not have the money for the insurance and that "he might as well
go ahead and cancel it."  248 Ark. at 828.  In finding that the
insured failed to prove cancellation of the policy, the supreme
court stated:
          In the case of Commercial Union Fire Ins. Co. v.
     King, 108 Ark. 130, 156 S.W. 445, the insurance company
     was defending a claim for loss due to fire on the ground
     that the insurance company had cancelled the policy
     before the fire. In that case the court said:

          "The notice must be given to the insured, and it
          should state not merely the intent to cancel, if
          some condition be not complied with, but it must be
          an actual notice of cancellation within the meaning
          of the policy and so unequivocal in its form, that
          the insured may not be left in doubt that his
          insurance will expire on the time limited by the
          terms of the notice, and that the company will not
          be liable for any loss after the expiration of that
          time." (Emphasis supplied).

     No less notice should be required when the insured is the
     party attempting to cancel the policy. The appellant has
     the burden of proving the affirmative defense of cancel-
     lation of the policy in order to avoid payment of the
     premium, and the trial court found that the appellant
     failed in carrying that burden in the case at bar.  The
     conversation of the appellant with the appellee, as
     testified by the appellant, indicates at most, a mere
     intention on the part of the appellant to cancel the
     policy.  Certainly this is true in the absence of any
     showing by the appellant of any overt actions that he
     took in order to effectuate the cancellation of the
     policy.

          In Cooley's Briefs on Insurance, vol. 5, p. 4647,
     the following rule is stated:

          "... even in case of a cancellation of the contract
          by the insured, the mere intention to cancel will
          not be sufficient without some overt act giving the
          company notice that the contract is at an end."

248 Ark. at 829.
     American States interprets the court's ruling as requiring
written notice before an insured can effectively cancel an
insurance policy.  We do not agree with this interpretation. 
Although the supreme court did not specify what kind of overt act
was required to cancel the policy, we believe that the court was
not saying that an insured is required to provide written notice
but is required to follow the general rule found in 6A Appleman,
Insurance Law and Practice  4226 (Rev. ed. 1972):  "A request for
cancellation of a policy must be unequivocal and absolute."  See
also 45 C.J.S. Insurance  513 (1993); 17 Couch on Insurance 2d
 67:144 (Rev. ed. 1983).
     In the case at bar, American States presented the record of an
interview with Sandra Smith in which she stated that on May 22, she
explained the circumstances to Southern Guaranty; informed Southern
Guaranty that Welter's automobile policy, which the agency had not
received at that time, was being canceled effective May 23; and
informed Southern Guaranty that when the policy was received, she
would mark it "cancel effective May 23, 1992," and return it. 
Smith's affidavit provided in part:
          8. Southern Guaranty did not have any policy of
     insurance in effect covering Mr. and Mrs. Welter at the
     time of the accident on May 27, 1992.  Southern Guaranty
     had previously been verbally advised that their policy
     issued on May 11, 1992, was canceled "flat" at the
     request of Mr. Welter on May 22, 1992.  The reason for
     the change was because Mr. Welter needed to obtain
     automobile and life insurance policies from American
     States before American States would cover his company-
     owned home as well.  Southern Guaranty was verbally
     advised of the cancellation because, although we had
     previously ordered a policy issuing coverage to Mr. and
     Mrs. Welter, we had not received the policy in our office
     at the time of the "flat" cancellation.

          9. A "flat" cancellation means that there was no
     earned premium.  In other words, if an insured wishes to
     cancel a policy within the first thirty (30) days of
     coverage, as long as the insured has incurred no losses
     within that thirty day period, no premium is charged to
     the insured and he is given a full refund of any premiums
     he has paid.

          10. There was no applicable grace period regarding
     the "flat" cancellation of Southern Guaranty's automobile
     policy.  The policy was retroactively canceled back to
     May 11, 1992 (the initial date of coverage) and the
     entire premium was returned in full to Mr. Welter.

     American States urges that Welter failed to take any overt
action and "simply acquiesced to the advice of the agent that he
should cancel his Southern Guaranty policy in favor of the policy
with American States."  Here, Smith conveyed Welter's notice of
cancellation by telephone to Southern Guaranty in clear terms and
specified the exact date of cancellation.
          A due request for, or notice of, cancellation made
     to the insurance company or its authorized agent may be
     sufficient to effect a cancellation of an insurance
     policy.  Notice or request usually is necessary to effect
     a termination of the policy, and a communication concern-
     ing cancellation must be delivered to the company or its
     authorized agent.  The insurance company must receive
     actual notice of the cancellation.

45 C.J.S. Insurance  513 (1993).  "Generally, a policy may be
canceled by the insured or his proper representative only.  Where
an agent or broker has authority, either express or implied, to
cancel a policy, a termination upon his request is valid."  6A
Appleman, Insurance Law and Practice  4224 (Rev. ed. 1972).  We
find that there was nothing uncertain about the notice set out in
the case at bar.  Southern Guaranty could not fail to understand
that Welter had exercised his right to cancel the policy and had
canceled it.  The requirement of providing actual notice of
cancellation set out in Yant v. Bowker, supra, the case relied on
by American States, therefore was satisfied.
     American States also argues that the cancellation was
deficient because it was not in strict compliance with the policy
provision on cancellation.  This issue, however, was not preserved
for appellate review.  American States did not raise the issue at
the trial level in the complaint, response to motion for summary
judgment and countermotion for summary judgment, or brief in
support of the motion.  We have often stated that we will not
address an issue on appeal that was not raised below.  Keesee v.
Keesee, 48 Ark. App. 113, 117, 891 S.W.2d 70 (1995); Arkansas State
Highway Comm'n v. Lee Wilson & Co., 43 Ark. App. 22, 27, 858 S.W.2d 137 (1993).  
     Affirmed.
     Pittman and Cooper, JJ., agree.