with the premium on the second policy and his fees, and giving him credit for the return premium on the canceled policy, and they settle their accounts on that basis, this conduct on the part of the insured may be taken as a waiver of his right to have the refunded premium tendered directly to him, or as authorizing the agent or broker to receive it for him.126 And the rule is the same where the agent who procures the insurance pays the premium with his own money, under an agreement that he shall hold the policy as security, and the policy is canceled by the insurer before he has been repaid, and he collects the return premium and gives the insured credit for the amount. 127 Sometimes policies are so expressed as to require the return of the unearned premium on cancellation only when the premium has been "actually paid." But this provision is met when the premium has been paid in money to the insurance company by the agent who wrote or procured the insurance, though he himself has taken the assured's note for the amount or given him credit for it.128 And a renewal of an insurance policy may be canceled without the return of any premium where none was paid for the renewal.129 But tender of a return of unearned premiums under a fire policy, after a loss, cannot be relied on under a provision entitling the insurer to cancel the policy on written notice and return of the unearned premium.130 The proportion of the premium which is to be returned on the cancellation of the policy is usually specified in the policy itself. But in the absence of any stipulation or contract on the subject, the premium is to be divided pro rata, that is to say, that portion of the premium is to be returned which bears the same ratio to the whole amount of the premium which the un

126 Hillock v. Traders' Ins. Co., 54 Mich. 531, 20 N. W. 571; Peterson v. Herber, 75 Minn. 133, 77 N. W. 418; Ackerson v. Svea Assur. Co., 75 Minn. 135, 77 N. W. 419.

127 Miller v. Home Ins. Co., 71 N. J. Law, 175, 58 Atl. 98.

128 Buckley v. Citizens' Ins. Co., 112 App. Div. 451, 98 N. Y. Supp. 622; Phoenix Assur. Co. v. Munger Improved Cotton Machine Mfg. Co., 92 Tex. 297, 49 S. W. 222; Leader Realty Co. v. Markham, 163 Mo. App. 314, 143 S. W. 1104.

129 Gruen v. Standard Life & Accident Ins. Co., 169 Mo. App. 161, 152 S. W. 407.

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

BLACK RESC.-74

expired remainder of the term specified in the policy bears to the whole of the term.1 131

§ 484. Delivery of Policy for Cancellation.--Where an insurance company has taken all the steps necessary to a valid exercise of its reserved right to cancel a policy, the policy is functus officio and the company is entitled to demand its surrender. But even though it remains outstanding, it ceases to impose any enforceable liability on the company. Thus, where a fire policy provided that it might be canceled by the company on five days' notice and the return of the unearned portion of the premium, and notice of cancellation was duly given by the company and accepted by the insured, and he agreed that the unearned portion of the premium, instead of being paid directly to him, should be applied on other policies to be issued by the insurance agents, it was held that the liability of the company was at an end, although the policy, which was sent for, was not actually surrendered until eleven days later and after a loss by fire.182 But the act of the company's agent in canceling the policy on his books, without notify ing the assured, will not effect a cancellation in such sense as to release the company from liability upon the surrender of the policy, and acceptance of a substituted policy, after a loss has occurred.133 But where the company's agent is positively directed by the company to cancel and take up a policy, he has no power to couple its surrender with a condition, as, that he shall get for the insured a policy in another company, and its delivery to him for cancellation on that condition is none the less an absolute surrender for cancellation.1

184

131 Hanford v. Toledo Fire & Marine Ins. Co., 71 Wash. 240, 128 Pac. 235.

132 Citizens' Ins. Co. v. Henderson Elevator Co., 27 Ky. Law Rep. 151, 84 S. W. 580.

133 Yoshimi v. Fidelity Fire Ins. Co., 99 App. Div. 69, 91 N. Y. Supp. 393.

134 Miller v. Fireman's Ins. Co., 54 W. Va. 344, 46 S. E. 181. And see Faulkner v. Manchester Fire Assur. Co., 171 Mass. 349, 50 N. E. 529.

§ 485. Acts Constituting Cancellation. The withdrawal of a policy of insurance by the company before it has gone into effect is not a "cancellation" of it within the requirement of the policy as to giving notice of canceliation.135 Moreover, all provisions and requirements as to the manner in which a cancellation shall be effected, or the terms upon which it may be had, may be waived by the parties, and an effective cancellation brought about by their agreement, provided there is a distinct understanding and an unqualified acceptance on both sides,130 or at least such conduct on the one side as plainly shows an acquiescence in a cancellation desired and proposed on the other.137 And circumstances may arise which will impose an estoppel on one of the parties to deny that the policy has been canceled. But a contention by the assured that the policy has not been renewed, and that therefore he does not owe the premium, does not have the effect of canceling it.138

But if the cancellation is attempted to be made under and in accordance with a right reserved in the policy, all the terms and conditions prescribed must be exactly complied with,139 and there must be an actual cancellation, or the taking of all the steps necessary to effect it, and not a mere unexecuted intention on the part of the insurer to cancel.140 The first and most important of these steps is the giving of notice of cancellation to the insured. Where this is provided for in the policy, no cancellation can be

135 Walrath v. Hanover Fire Ins. Co., 139 App. Div. 407, 124 N. Y. Supp. 54.

136 Ohio Farmers' Ins. Co. v. Hunter, 38 Ind. App. 11, 77 N. E. 951; Home Ins. Co. v. Chattahoochee Lumber Co., 126 Ga. 334, 55 S. E. 11; Warfield-Pratt-Howell Co. v. Williamson, 233 Ill. 487, 84 N. E. 706.

187 German Mut. Fire Ins. Co. v. Weikel, 153 Ky. 288, 155 S. W. 373.

138 Tucker v. Dairy Mut. Ins. Co., 116 Iowa, 37, 89 N. W. 37. 139 Commercial Union Fire Ins. Co. v. King, 108 Ark. 130, 156 S. W. 445. But see Mendenhall v. Farmers' Ins. Co. (Ind.) 110 N. E. 60.

140 Chrisman & Sawyer Banking Co. v. Hartford Fire Ins. Co., 75 Mo. App. 310.

141

effected without proper notice or a proper waiver of it.141 And the notice must be given to the insured or to some one authorized to receive it for him. Notice from the company to its agent is not the notice intended by the policy; and the receipt by the agent of a telegram directing him to cancel a certain policy has no effect on the rights of the person insured thereby, affirmative action on the part of the agent being necessary, in the way of giving notice, tendering a return of the premium, or whatever else is requir ed.142 The notice must be distinct and unequivocal.113 A notice which states that "we shall cancel the policy" is not of this character and does not effect a cancellation.144 And where the company wrote to the assured, informing him that unless he would consent to reduce the amount of the policy it would be considered canceled, it was held that the letter was not effective as a cancellation of the policy.145 Further, the notice should not ordinarily be coupled with any condition. But where the premium has not been paid, it is not objectionable to notify the insured that if the premium is not paid by a certain time the policy will stand canceled without further notice; and where this is done, and no payment is made, and the company directs its agent to cancel the policy on his books, there is a cancellation in fact.146 While, as already stated, the actual surrender of the policy is not necessary to complete a cancellation of it if the requisite notice has been given and the other required steps taken, yet if the notice has been omitted or informally given, the defect will be waived, and a cancellation completed by the voluntary surrender of the policy by the assured on request, or by his promise to sur

141 Etna Ins. Co. v. Renno, 93 Miss. 594, 46 South. 947; American Glove Co. v. Pennsylvania Fire Ins. Co., 15 Cal. App. 77, 113 Pac. 688.

142 Firemen's Fund Ins. Co. v. Hellner, 159 Ala. 447, 49 South. 297, 17 Ann. Cas. 793.

143 Payne v. Insurance Co. of North America, 170 Mo. App. 85, 156 S. W. 52.

144 McNellis v. Etna Ins. Co., 176 Ill. App. 575.

145 Van Tassel v. Greenwich Ins. Co., 151 N. Y. 130, 45 N. E. 365. 146 Ralston v. Royal Ins. Co., 79 Wash. 557, 140 Pac. 552. But see Lyman v. State Mut. Fire Ins. Co., 14 Allen (Mass.) 329.

render it for cancellation,147 but not, it appears, where he refuses to surrender the policy on demand, though a return of the premium is tendered,148 and not where the agent of the insurer obtains possession of the policy from a mere custodian of it or from a person having manual possession of it but not representing the owner in any such way as to be entitled to deliver up the policy.149 Further, if the policy is surrendered, it must be surrendered for the purpose of being canceled and for no other purpose. Thus, the fact that the policy is returned to the company or its agent for the purpose of correcting errors in it or changing the name of the insured or otherwise altering its terms does not effect or authorize a cancellation of it,150 nor does the act of the insured in placing it in the hands of the agent under a promise of the latter that it shall not be canceled until another policy of equal value shall be substituted for it.151 And generally, the fact that the agent procures a new policy in a different company for the assured, covering the same property in the same amount, does not terminate the liability of the company under the old policy, unless it is shown that the insured consented to the cancellation of it and to the substitution of the new policy.152 But where, a loss having occurred, he makes a claim under the substituted policy and collects money thereon, this shows his

147 Citizens' Ins. Co. v. Henderson Elevator Co., 29 Ky. Law Rep. 976, 96 S. W. 601; Wygal v. Georgia Home Ins. Co., 148 Ky. 674, 147 S. W. 394; Miller v. Fireman's Ins. Co., 54 W. Va. 344, 46 S. E. 181. 148 John R. Davis Lumber Co. v. Hartford Fire Ins. Co., 95 Wis. 226, 70 N. W. 84, 37 L. R. A. 131.

149 Taylor v. Glens Falls Ins. Co., 44 Fla. 273, 32 South. 887; Edwards v. Sun Ins. Co., 101 Mo. App. 45, 73 S. W. 886. The father and mother of a minor, as guardians by nature, are not entitled to consent to the cancellation of a policy in his favor, before any forfeiture for nonpayment of premiums. Burke v. Prudential Ins. Co., 221 Mass. 253, 108 N. E. 1069.

150 Krause v. Equitable Life Assur. Soc., 105 Mich. 329, 63 N. W. 440; Baldwin v. Pennsylvania Fire Ins. Co., 206 Pa. 248, 55 Atl. 970. 151 Edwards v. Sun Ins. Co., 101 Mo. App. 45, 73 S. W. 886; Hickey v. Hartford Fire Ins. Co., 15 App. Div. 224, 44 N. Y. Supp.

191.

152 Scheel v. German-American Ins. Co., 228 Pa. 44, 76 Atl. 507; Hicks v. Grimley, 213 N. Y. 447, 107 N. E. 1037; Lampasas Hotel & Park Co. v. Home Ins. Co., 17 Tex. Civ. App. 615, 43 S. W. 1081.