depend upon the company's acceptance of the risk; and this notwithstanding various provisions in the policy restricting the powers of agents to alter its term, and requiring all additional terms and conditions to be indorsed thereon in writing, since such provisions apply only when the contract has been completed by an absolute delivery.75 Thus, in a case in Iowa, the plaintiff applied to an agent of the defendant company for a policy of fire insurance. The agent doubted his authority to insure the particular property, but executed a policy therefor, and with the consent of the plaintiff placed it, after receiving the premium, in the hands of a third person to hold until he could communicate with his principal and ascertain whether the risk would be accepted. The defendant refused to accept the risk. The property was destroyed by fire before the notice of its refusal had been received. The court held that there was no delivery of the policy save upon the condition that the insurance company accepted the risk, and that, as it did not accept it, the policy never became operative. In another case, an employer applied to a guaranty company for insurance of the fidelity of an employé, and a contract was executed and delivered by the company, stating that it "hereby guaranties the fidelity" of the employé, and that all liability on the instrument should cease on the issuance of the regular bond, or in fifteen days if no such bond was issued. The words "subject to result of investigation" were written across the face of the contract. It was held that this addition did not convert the instrument into a mere proposal for a contract, but merely gave the company the right to cancel it, so as to prevent future liability after notice of such cancellation."7

76

§ 481. Notice for Cancellation.-When an insurance policy contains a provision authorizing its cancellation at the instance of the insurer, but on condition of his giving the assured a certain number of days' notice of his intention

75 Hartford Fire Ins. Co. v. Wilson, 187 U. S. 467, 23 Sup. Ct. 189, 47 L. Ed. 261.

16 Brown v. American Cent. Ins. Co., 70 Iowa, 390, 30 N. W. 647. 77 Hall v. United States Fidelity & Guaranty Co., 77 Minn. 24, 79 N. W. 590.

H

to cancel, the condition is imperative, and there can be no effective cancellation unless it is strictly complied with." But this provision is for the benefit of the assured and may be waived by him, either in respect to the length of time the notice must run before the policy terminates, or in respect to the giving of any notice at all." Thus, if the proper notice has been given and the assured, without waiting for the expiration of the prescribed number of days, immediately procures the issuance of another policy on the same property to take the place of the existing policy, it is an acquiescence in the immediate cancellation of the old policy.80 So there may be an effective agreement for the cancellation of the policy without the giving of any formal notice,1 as where the insured, having asked for a lower rate and being told that the company would not consent, wrote back that there was "nothing to do but cancel the policy," which was held to evidence an agreement for cancellation without notice.82

If neither the policy itself nor any local statute requires a notice for cancellation to be in writing, a merely verbal notice will be sufficient, provided it is positive and distinct

78 Farmers' Mut. Ins. Ass'n v. Tankersley (Ala. App.) 69 South. 410; Home Ins. Co. v. Chattahoochee Lumber Co., 126 Ga. 334, 55 S. E. 11; Fowler Cycle Works v. Western Ins. Co., 111 Ill. App. 631; New Amsterdam Casualty Co. v. New Palestine Bank (Ind. App.) 107 N. E. 554; Mutual Life Ins. Co. v. Finkelstin, 58 Ind. App. 27, 107 N. E. 557; Rosen v. German Alliance Ins. Co., 106 Me. 229, 76 Atl. 688; Green v. Star Fire Ins. Co., 190 Mass. 586, 77 N. E. 649; Mallory v. Ohio Farmers' Ins. Co., 90 Mich. 112, 51 N. W. 188; Bradshaw Bros. & Co. v. Fire Ins. Co. of County of Philadelphia, 89 Minn. 334, 94 N. W. 866; Mauk v. Commercial Union Assur. Co., 7 Pa. Super. Ct. 633; Homestead Fire Ins. Co. v. Ison, 110 Va. 18, 65 S. E. 463.

79 Phoenix Ins. Co. v. State, 76 Ark. 180, 88 S. W. 917, 6 Ann. Cas. 440; Weston v. State Mut. Life Assur. Soc., 234 Ill. 492, 84 N. E. 1073; Shawnee Fire Ins. Co. v. Bayha, 8 Kan. App. 169, 55 Pac. 474; Rosen v. German Alliance Ins. Co., 106 Me. 229, 76 Atl. 688; Mallory v. Ohio Farmers' Ins. Co., 90 Mich. 112, 51 N. W. 188; Bradshaw Bros. & Co. v. Fire Ins. Co. of County of Philadelphia, 89 Minn. 334, 94 N. W. 866; Kelley v. Etna Ins. Co. (W. Va.) 84 S. E. 502.

so Finley v. Western Empire Ins. Co., 69 Wash. 673, 125 Pac. 1012; Warren v. Franklin Fire Ins. Co., 161 Iowa, 440, 143 N. W. 554. 81 Frese v. Mutual Life Ins. Co., 11 Cal. App. 387, 105 Pac. 265. 82 Northern Assur. Co. v. J. J. Newman Lumber Co., 105 Miss. 688, 63 South. 209.

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and correctly fixes the time for the termination of the policy. But if the policy or the statute requires written notice, a verbal request by the agent for the surrender and cancellation of the policy is of no effect. In either case, however, there must be actual and personal notice to the insured; constructive notice or notice by publication will not answer. The notice may be sent by mail, but such notice, given in a registered letter, was held insufficient. to avoid the policy where the letter was returned by the insurer's request within a less time than that provided for by the postal regulations. The notice need not be in any particular form, provided it is distinct and unequivocal. It should of course show that it is given by the insurance company, and that it is not a mere unauthorized request on the part of the agent. But it is sufficient though signed only in the name of the agent, in the same way that the policy was signed, if accompanied by a letter advising the insured that the cancellation is demanded by the company. A mistake in the notice in designating the date when it will take effect does not invalidate it as a notice of cancellation as of the date when the period of notice. actually expires.88 But where such a notice, sent to the mortgagee to whom the policy was payable, was not dated at the city in which the insured property was situated, and the name of the assured in the notice was blurred in the copy so that it could not be deciphered, and there was nothing to show for whom the person signing it was acting, nor any evidence of prior dealings between the mortgagee

87

83 Davidson v. German Ins. Co., 74 N. J. Law, 487, 65 Atl. 996, 13 L. R. A. (N. S.) 884, 12 Ann. Cas. 1065.

84 Bard v. Fireman's Ins. Co., 108 Me. 506, 81 Atl. 870.

85 Hartford Fire Ins. Co. v. Tewes, 132 Ill. App. 321; Frink v. National Mut. Fire Ins. Co., 90 S. C. 544, 74 S. E. 33, Ann. Cas. 1913D, 221.

86 American Automobile Ins. Co. v. Watts, 12 Ala. App. 518, 67 South. 758.

87 Ralston v. Royal Ins. Co., 79 Wash, 557, 140 Pac. 552; American Glove Co. v. Pennsylvania Fire Ins. Co., 15 Cal. App. 77, 113 Pac. 688.

88 Ralston v. Royal Ins. Co., 79 Wash. 557, 140 Pac. 552; American Glove Co. v. Pennsylvania Fire Ins. Co., 15 Cal. App. 77, 113 Pac. 688.

and such person, it was held that the notice was insufficient. 89 As to the contents of the notice, it must be so unequivocal that the insured may not be left in any doubt about the fact that his insurance will expire at the time limited by the notice, and that the company will not be liable for loss after that time. The notice must not merely state a desire or proposal to cancel the policy, or a conditional intention to cancel it at some future time, but must state positively that the policy will be canceled and the liability of the insurer expire at the end of the specified number of days. But a notice stating that if the premium is not paid by a certain hour, the policy "will stand canceled for nonpayment of premium without further notice," is a notice of cancellation, and not a mere expression of intention to cancel at a future time."

91

The prescribed number of days before the cancellation will become effective begin to run from the actual receipt of the notice by the assured, and not from the time the notice is mailed."2 Hence, for example, if the policy requires five days' notice, and a notice of cancellation is mailed on the 15th of the month, stating that the policy will cease to be effective on the 20th, but the insured receives the notice on the 17th, the requirement as to notice is not complied with. But when the notice has been duly given and is not withdrawn, its taking effect cannot be prevented by delay on the part of the insured or by his unsuccessful negotiations to have the policy stand. It is important to observe that the liability of the insurer continues until the expiration of the prescribed number of days, and is not terminated by the giv

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89 State Ins. Co. v. Hale, 1 Neb. (Unof.) 191, 95 N. W. 473.

90 Ralston v. Royal Ins. Co., 79 Wash, 557, 140 Pac. 552; Payne v. Insurance Co. of North America, 170 Mo. App. 85, 156 S. W. 52; Commercial Union Fire Ins. Co. v. King, 108 Ark. 130, 156 S. W. 445; American Glove Co. v. Pennsylvania Fire Ins. Co., 15 Cal. App. 77, 113 Pac. 688.

91 Ralston v. Royal Ins. Co., 79 Wash. 557, 140 Pac. 552.

92 Hartford Fire Ins. Co. v. Tewes, 132 Ill. App. 321; Potomac Ins. Co. v. Atwood, 118 Ill. App. 349.

93 German Union Fire Ins. Co. v. Fred G. Clarke Co., 116 Md. 622, 82 Atl. 974, 39 L. R. A. (N. S.) 829, Ann. Cas. 1913D, 488.

94 Schwarzchild & Sulzberger Co. v. Phoenix Ins.. Co. (C. C.) 115 Fed. 653.

ing of the notice. Hence, under a policy of fire insurance, for example, if the insured property is destroyed by fire after a notice of cancellation has been given and even after it has been received by the assured, but before the end of the prescribed number of days, the policy is still in force and the underwriter is liable for the loss. And of course a notice. of cancellation cannot be given after a loss has occurred.

§ 482. Same; To Whom Given.-A notice of cancellation of an insurance policy is not effective unless given to the insured himself or to some one having express or implied authority from him to accept it." In case the insured is a foreign corporation, the notice of cancellation may be given to the agent in charge of its local office and business. But in no case whatever is it sufficient for the insurance company merely to notify its own agent and direct him to cancel the policy; the rights of the insured cannot be affected unless the agent then proceeds to give him a proper and sufficient notice." As to giving notice to an agent of the insured, it is well settled that where an insurance agent or broker is employed to procure a policy of insurance, his authority to represent his principal is terminated as soon as he has executed his commission, and a

95 Jacobs v. Atlas Ins. Co., 148 Ill. App. 325; Lattan v. Royal Ins. Co., 45 N. J. Law, 453; Healy v. Insurance Co. of State of Pennsylvania, 50 App. Div. 327, 63 N. Y. Supp. 1055; Partridge v. Milwaukee Mechanics' Ins. Co., 162 N. Y. 597, 57 N. E. 1119; Joyner V. Scottish Fire Ins. Co., 155 N. C. 255, 71 S. E. 434; Scheel v. German-American Ins. Co., 228 Pa. 44, 76 Atl. 507; Penn Plate Glass Co. v. Spring Garden Ins. Co., 189 Pa. 255, 42 Atl. 138, 69 Am. St. Rep. 810.

96 Clark v. Insurance Co. of North America, 89 Me. 26, 35 Atl. 1008, 35 L. R. A. 276.

97 Kinney v. Rochester German Ins. Co., 141 Ill. App. 543; Fritz v. Pennsylvania Fire Ins. Co., 85 N. J. Law, 171, 88 Atl. 1065, 50 L. R. A. (N. S.) 35.

98 Liverpool & London & Globe Ins. Co. v. Harding, 201 Fed. 515, 119 C. C. A. 611.

* British America Assur. Co. v. Cooper, 26 Colo. 452, 58 Pac. 592; Waterloo Lumber Co. v. Des Moines Ins. Co., 158 Iowa, 563, 138 N. W. 504, 51 L. R. A. (N. S.) 539; Clark v. Insurance Co. of North America, 89 Me. 26, 35 Atl. 1008, 35 L. R. A. 276; Edwards v. Sun Ins. Co., 101 Mo. App. 45, 73 S. W. 886; Yoshimi v. Fidelity Fire Ins. Co., 99 App. Div. 69, 91 N. Y. Supp. 393; Tacoma Lumber & Shingle Co. v. Fireman's Fund Ins. Co., 87 Wash. 79, 151 Pac. 91.