Opinion
39893.
DECIDED JANUARY 28, 1963.
Action on insurance policy. Dodge Superior Court. Before Judge Whaley.
Hal M. Smith, for plaintiff in error.
A. Russell Ross, contra.
Where an insured executes an installment note to an insurance agent on the expressed consideration for the agent advancing the entire premium payment on an automobile liability policy to the insurer, which note provides that the written statement of the holder of the note as to default in payment, without any notice to the insured, "shall be sufficient authority for the insurer to so cancel any such policies," the holder of the note is clothed with the apparent authority to cancel the policy and a written statement by the holder to the insurer that the insured is in default is effective to cancel the policy even though the note was in fact not in default.
DECIDED JANUARY 28, 1963.
The plaintiff (defendant in error) sued the defendant (plaintiff in error), hereinafter called the insurer, for $10,000, the amount of a consent verdict and judgment obtained by the plaintiff in a wrongful death action against the defendant's insured under an automobile liability policy. The petition alleged that the insured made a promissory note, payable in monthly installments, due on the 18th day of each month, to the Parks Insurance Agency operated by William S. Parks and its assigns, on the expressed consideration that Parks, who was the agent of the insurer in issuing the policy, advance the entire premium payment to the insurer. Parks, without informing the insured, assigned the note to the Del Mar Company. Among other things the note provided: ". . . You are irrevocably authorized without any notice to the undersigned (1) to cause or negotiate with the insurer for cancellation of any or all such policies (irrespective of whether or not cancellation by the undersigned as a matter of right is provided for therein) from or after at your election the occurrence of any default [in payment of monthly installments on the note] . . ., or the time of the cancellation of any such policies as to which you have thereafter made or requested reinstatement upon the faith of a check or draft tendered by or on behalf of the undersigned which is dishonored. Your written statement as to any of these matters shall be sufficient authority for the insurer to so cancel any such policies. All rights conferred upon you hereby shall inure to the benefit of your personal representatives, successors and assigns." The policy provided: "This policy may be canceled by the Insured . . . by surrender thereof to the Company or any of its authorized agents or by mailing to the Company written notice stating when thereafter the cancellation shall be effective . . . The time of the surrender or the effective date of cancellation stated in the notice shall become the end of the policy period." Parks collected the insured's monthly installments as agent of the Del Mar Company and received and accepted payments made by the insured on several occasions from twelve days to two and one-half months late. Thereafter, twenty-four days after the due date of the January 1958 installment, the Del Mar Company wrote to the insurer that the insured was in default and "we therefore cancel the . . . policy . . . effective . . . on the date following the date of this letter [February 11, 1958], and request you to pay this Company the return premium." About the middle of February the insured paid to Parks the January and February installments, "paying up said note until March 18, 1958." The accident out of which the suit against the insured arose occurred on March 6, 1958. The petition contended that there was a departure from the exact terms of the note by the custom of accepting late payments, and thereby the Del Mar Company waived the right to insist on strict compliance and was therefore without authority to cancel the policy when it did. The petition also contended that the insurer had ". . . denied liability [on the grounds that the insured had no policy in force] under the policy and refused to defend the action against the insured, when it could have, without prejudice to itself, expressly reserved the right to subsequently deny liability under the policy, and such refusal by defendant insurance company waived the provisions of the policy against a settlement by the insured, which settlement petitioner avers was in good faith and in a reasonable sum."
The trial court overruled the insurer's general demurrer to the petition and it assigns error on that judgment.
The question in this case is whether or not the letter written by the Del Mar Company to the insurer on February 11th canceled the insurance policy. Assuming but not deciding that as a matter of law the insured was not in default because the Del Mar Company, through its agent Parks, had waived the requirement that payments be made on an exact date by customarily accepting late payments, it is nevertheless quite clear that the next to the last sentence in the note clothed its holder, the Del Mar Company, with the apparent authority to cancel the policy at any time the holder made a statement in writing to the insurer that the insured's note was in default. This sentence provides that the written statement of the holder of the note, without any notice to the insured, "shall be sufficient authority for the insurer to so cancel any such policies."
"Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons." ". . . Apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him." American Law Institute, Restatement, Agency 2d, p. 30, § 8, p. 103, § 27. Accord, Patterson v. Southern R. Co., 41 Ga. App. 94 ( 151 S.E. 818); Firemens Fund Ins. Co. v. Davis, 42 Ga. App. 49, 61 ( 155 S.E. 105); Mason v. Rice, 47 Ga. App. 502 ( 170 S.E. 829); Planters Rice Mill Co. v. Merchants Nat. Bank of Savannah, 78 Ga. 574, 585 ( 3 S.E. 327); Burch v. Americus Grocery Co., 125 Ga. 153 ( 53 S.E. 1008); 3 Am. Jur. 2d, 475, § 73. The Del Mar Company's letter to the insurer, which contained a statement that the insured was in default, complied with the cancellation provision of the insurance contract and was effective to cancel the policy on February 12. Genone v. Citizens Ins. Co. of N. J., 207 Ga. 83, 86 ( 60 S.E.2d 125).
The plaintiff contends that the insurer is bound by the act of Parks in allegedly waiving the requirement that payments be made on an exact date. While it is true that Parks was the agent of the insurer in issuing the policy of insurance, the insured, on the expressed consideration that Parks Insurance Agency advance the premium to the insurer, executed the note to the Parks Insurance Agency which was operated by Parks, who later assigned it to the Del Mar Company. With respect to the installment payments due on the note, Parks acted solely as the agent for the Del Mar Company. Regardless of what rights the insured might have against Parks and the Del Mar Company concerning their alleged waiver of the requirement that payments be made on an exact date, such a waiver would in no way affect the right of the insurer to rely on the apparent authority of the holder of the note to cancel the policy.
The trial court erred in overruling the general demurrer.
Judgment reversed. Carlisle, P. J., and Bell, J., concur.