Harrelson v. State Farm Mutual Automobile Ins. Co.

158 S.E.2d 812 (1968)

272 N.C. 603

William Gray HARRELSON, By His Next Friend, Clyde C. Randolph, Jr. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY. John W. HARRELSON v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 459.

Supreme Court of North Carolina.

February 2, 1968.

*816 Deal, Hutchins & Minor by Richard Tyndall, Edwin T. Pullen III and Roy L. Deal, Winston-Salem, for defendant appellant.

Spry, Hamrick & Doughton, by Bobby L. Newton and Edmund I. Adams, Winston-Salem, for plaintiff appellees.

LAKE, Justice.

The sole question upon this appeal is whether the policy of liability insurance issued by the defendant to Turner upon his Ford automobile was cancelled prior to the accident in which the minor plaintiff was injured.

While it is not expressly so found as a fact by the trial judge, it is established by the evidence of both parties, and not in dispute, that the policy was issued as an assigned risk policy and that Turner's driver's license had not been suspended. Consequently, at the time of issuance, this policy was what is known as a non-certified assigned *817 risk policy, issued pursuant to and subject to the provisions of the Financial Responsibility Act of 1957. G.S. § 20-309 et seq.

The court below concluded that (1) the defendant did not cancel the policy prior to the accident, and (2) the defendant did not have the right to cancel such policy. If either of these conclusions is supported by the court's findings of fact, which findings, in turn, are supported by the evidence, the judgment for the plaintiff must be affirmed.

There is no evidence whatever in the record of any handbook or rules or regulations issued or promulgated by the Commissioner of Insurance or by the Commissioner of Motor Vehicles. The record shows that the plaintiff attempted to examine their witness Floyd with reference to some handbook, but the defendant's objection to such testimony was sustained by the court and there is nothing to indicate that any handbook or rule or regulation of either Commissioner was introduced or offered in evidence. There being no evidence to support the trial court's finding of fact with reference to a rule of the Commissioner of Insurance, the defendant's exception to this finding, and to the finding that the defendant failed to comply with such rule, must be sustained and these findings must be disregarded. See: Little v. Stevens, 267 N.C. 328, 148 S.E.2d 201; Wachovia Bank & Trust Co. v. Miller, 243 N.C. 1, 89 S.E.2d 765.

Obviously, the statement in the trial court's finding of fact that the notice of cancellation issued by the defendant was directed to and received by the Commissioner of Insurance was a mere lapsus linguae. Clearly, the court intended to find that such notice was directed to and received by the Commissioner of Motor Vehicles, all of the evidence so indicating and there being no contrary contention or suggestion. It is equally apparent that in the findings that the defendant issued the notice of cancellation on 7 July and that the defendant mailed such notice to Turner, the court intended to find that such mailing occurred on 7 July 1964, all of the evidence so indicating and there being no contention or suggestion of a mailing of the notice on a different date. We so construe these findings of fact. Upon appeal we may look to the evidence in the record to interpret the findings of fact made by the trial judge. See Wynne v. Allen, 245 N.C. 421, 426, 96 S.E.2d 422.

The findings of fact by the trial court, except as above noted, are supported by evidence in the record. These findings are, therefore, conclusive. Jamestown Mutual Insurance Co. v. Insurance Co., 266 N.C. 430, 146 S.E.2d 410; Stewart v. Rogers, 260 N.C. 475, 133 S.E.2d 155; Goldsboro v. R. R., 246 N.C. 101, 97 S.E.2d 486; Wynne v. Allen, supra. The trial court's conclusions drawn from these findings of fact are, however, subject to review. We turn first to the trial court's conclusion that the defendant had no right to cancel the policy.

Although there was no finding of fact concerning it, it is undisputed that the policy in question contained, with reference to the company's right to cancel, the provision quoted above in the statement of facts. Obviously, this clause in the contract does not purport to limit the company's right to cancel to any particular factual situation. The clause, on its face, gives the company the right to cancel for any reason satisfactory to it by following the procedure prescribed in the clause. An insurance policy is a contract between the parties thereto and its provisions will govern their rights thereunder unless those provisions are in conflict with the law of the State. Allstate Insurance Co. v. Shelby Mutual Insurance Co., 269 N.C. 341, 152 S.E.2d 436; Muncie v. Insurance Co., 253 N.C. 74, 116 S.E.2d 474. On the other hand, a statutory requirement or limitation, which is applicable to a policy of insurance, is to be read into the policy as if written therein and controls *818 a contrary provision actually written into the policy. Crisp v. State Farm Mutual Auto Insurance Co., 256 N.C. 408, 124 S.E.2d 149; Swain v. Nationwide Mutual Insurance Co., 253 N.C. 120, 116 S.E.2d 482; Howell v. Indemnity Co., 237 N.C. 227, 74 S.E.2d 610.

The policy in question having been issued pursuant to the Assigned Risk Plan and for the purpose of fulfilling the requirement of the Financial Responsibility Act of 1957, the provisions of that act, relative to the cancellation of such policies, must be read into this policy and construed liberally so as to effectuate the purpose of the act. Jones v. State Farm Mutual Insurance Co., 270 N.C. 454, 155 S.E.2d 118; Allstate Insurance Co. v. Hale, 270 N.C. 195, 154 S.E.2d 79. The purpose of that act is to assure the protection of liability insurance, or other type of established financial responsibility, up to the minimum amount specified in the act, to persons injured by the negligent operation of a motor vehicle upon the highways of this State. Jones v. State Farm Mutual Insurance Co., supra; Allstate Insurance Co. v. Hale, supra; Swain v. Nationwide Mutual Insurance Co., supra. To that end, the act makes it mandatory that the owner of a registered motor vehicle maintain proof of financial responsibility throughout such registration of the vehicle. G.S. § 20-309. This may be done by the owner's obtaining, and maintaining in effect, a policy of automobile liability insurance. G.S. § 20-314; G.S. § 20-279.19. To enable an owner so to comply with this requirement of the act, even though he is unable to procure such insurance in the usual way, the act provides that the provisions of the Financial Responsibility Act of 1953, with reference to the Assigned Risk Plan, "shall apply to filing and maintaining proof of financial responsibility required by" the Act of 1957. G.S. § 20-314.

Insurance supplied by a policy issued under the Assigned Risk Plan is compulsory both as to the insured owner and as to the insurance carrier. Allstate Insurance Co. v. Hale, supra. The right of the carrier to cancel such a policy is subject to the provisions of the 1957 Act, as so implemented by the provisions of the 1953 Act incorporated by reference therein. The two acts are to be construed together so as to harmonize their provisions and to effectuate the purpose of the Legislature. Faizan v. Grain Dealers Mutual Insurance Co., 254 N.C. 47, 118 S.E.2d 303. Their provisions, liberally construed to effectuate the legislative policy, control any provision written into the policy which otherwise would give the company a greater right to cancel than is provided by the statute.

The 1957 Act, in G.S. § 20-309(e) and in G.S. § 20-310(a), prescribes the procedure pursuant to which a policy issued for the purpose of complying with the requirements of that act may be cancelled by the insurance carrier having the right to cancel. In order to cancel such policy, the carrier must comply with these procedural requirements of the statute or the attempt at cancellation fails. Allstate Insurance Co. v. Hale, supra. Of course the requirements of the policy, itself, must also be fulfilled for an effective cancellation.

The 1957 Act in G.S. § 20-310(b) limits the right of the insurance carrier to cancel a policy which has been in effect for 60 days, as the Turner policy here in question had been, to certain factual situations. These are, in substance: (1) Failure of the insured to pay the premium or any part thereof; (2) violation by the insured of a valid provision of the policy; (3) suspension or revocation of the driver's license of the insured for more than 30 days; or (4) his conviction or forfeiture of bail for certain offenses. It is expressly provided in G.S. § 20-310(b) that the provisions thereof shall not apply to policies issued under the Assigned Risk Plan. Obviously, however, it was not the purpose of the Legislature to give to the company a more extensive right of cancellation of an assigned risk policy than of other policies.

*819 G.S. § 20-279.34, incorporated by reference into the Dealers Financial Responsibility Act of 1957 by G.S. § 20-314 (See Faizan v. Grain Dealers Insurance Co., supra), provides that the carrier to whom a risk is assigned under the plan "shall upon payment of a proper premium issue a policy" and authorizes the Commissioner of Insurance "to approve the cancellation of a motor vehicle liability policy by an insurance carrier." This section then provides: "[T]he power of the Commissioner of Insurance to approve the revocation or cancellation of insurance under the provisions of this article shall be exercised only in the event of nonpayment of premium or when the Department of Motor Vehicles suspends the license of the insured under the authority granted to it under the Motor Vehicles Act." Interpreting this statute liberally, in order to accomplish the legislative purpose of maintenance of financial responsibility throughout the period of registration of the vehicle, we construe it to mean that, notwithstanding provisions in the policy, an insurance carrier may cancel an assigned risk policy, issued to fulfil the requirements of either the Act of 1953 or the Act of 1957, only when it is shown both that (1) there has been a nonpayment of premium or a suspension of the driver's license of the insured, and (2) the Commissioner of Insurance has approved the cancellation, which he may apparently do by the issuance of general rules and regulations with reference thereto.

Since G.S. § 20-279.34 is incorporated by reference into the Financial Responsibility Act of 1957, it is unnecessary for us to determine upon this appeal whether the Turner policy, originally issued as a "non-certified assigned risk policy" to meet the requirements of the 1957 Act, became, in legal effect, a "certified assigned risk policy," subject to all the provisions of the 1953 Act, when the defendant certified this policy to the Department of Motor Vehicles, by filing Form SR-22, as proof of financial responsibility of Mrs. Turner, whose driver's license had been suspended. In either event, the company's right to cancel is contingent upon a "nonpayment of premium" by Turner, his driver's license not having been suspended or revoked.

The trial court found as a fact, and it is not disputed, that when the policy was originally issued, Turner paid the premium thereon in full. When the certificate (Form SR-22) was filed with the Department by the defendant at Turner's request on behalf of Mrs. Turner, the defendant was entitled to demand and receive an additional $4.00, which it did demand but did not receive. Construing "nonpayment of premium," as used in G.S. § 20-279.34, and is incorportaed by reference into the Financial Responsibility Act of 1957, so as to accomplish the purpose of the Legislature, we hold that this charge, while lawfully and rightfully due the defendant, was not a premium on the policy, but was a charge for the issuance by the defendant of a separate and distinct document whereby it incurred a different obligation. It follows that whatever right the nonpayment of this charge may have given the defendant to cancel the SR-22 certificate, such nonpayment of this charge did not give the defendant the right to cancel the policy. We, therefore, approve this conclusion by the trial court.

Since the company had no right to cancel the policy, its attempt to do so, even if it followed the prescribed procedure for cancellation, was of no effect. Thus, it is unnecessary for us to determine the correctness of the trial court's conclusion that it did not follow the prescribed procedure for cancellation. In Faizan v. Grain Dealers Mutual Insurance Co., supra, we said that G.S. § 20-279.22, prescribing a procedure for cancellation of a certified liability policy, does not apply to the cancellation of a policy issued pursuant to the 1957 Financial Responsibility Act; that is, to a "non-certified assigned risk policy," such as Turner's policy was at the time of its issuance. For the reasons above mentioned, *820 it is not necessary for us now to determine whether the Turner policy became, in legal effect, a "certified" policy subject to all the requirements of the 1953 Act when the SR-22 certificate was issued by the defendant. Thus, it is not necessary for us now to determine whether, by reason of the issuance of the SR-22 certificate, G.S. § 20-279.22 applies to the attempt at cancellation in this case. Obviously, the procedure there prescribed was not followed in this instance.

It was irregular for the trial court to state its conclusions in the form of issues submitted to itself. Sherill v. Boyce, 265 N.C. 560, 144 S.E.2d 596; Anderson v. Cashion, 265 N.C. 555, 144 S.E.2d 583; Daniels v. Nationwide Insurance Co., 258 N.C. 660, 129 S.E.2d 314. The defendant excepted to this, but this irregularity is harmless error in this instance, it being clear from the judgment what the court found as facts and what conclusions of law it drew thereon, these being separated in the judgment.

Affirmed.