Opinion
July 11, 1967
Appeals by MVAIC from orders and judgments of the Supreme Court, Rensselaer County, entered on March 8, 1967 in proceedings pursuant to section 610 Ins. of the Insurance Law which direct the appellant to pay the sum of $10,781 to each of the petitioners. On November 23, 1963, the petitioners, Elizabeth Sweers and Lily Mae Sweers, were crossing Fifth Avenue in the City of Troy when they were struck and injured by an automobile owned by Sam E. Malloy, and operated by Archie L. Wooten. Personal injury actions were commenced in Rensselaer County Supreme Court on behalf of both of the petitioners with service of the summons upon both the owner and operator of the vehicle. The attorney for Royal Globe Insurance Company returned the summonses to George Barkley, the individual — whether agent or broker — through whom the policy was written, with a letter advising that the policy of insurance issued by Royal Indemnity Company (apparently a subsidiary of Royal Globe Insurance Companies) was terminated on November 18, 1963, and that there was no coverage for Mr. Malloy on November 23, 1963. Notice was thereafter given to MVAIC which appeared and defended the actions on behalf of the defendants. The trial resulted in a jury verdict in favor of the plaintiffs, the petitioners herein. Sam E. Malloy had obtained the automobile liability insurance in question through Barkley, as hereinbefore indicated, in the month of June, 1963, and was issued Policy No. RDR 15 22 02 by the Royal Indemnity Company under the assigned risk plan upon his entering into a premium finance agreement wherein Barkley was named as payee. By the terms of the agreement, Barkley undertook to pay the insurance premium on behalf of the assured, Malloy. The premium finance agreement was then assigned by Barkley to Prepaid Premiums, Inc. Malloy made the installment payments to Prepaid for July, August and September, but failed to pay the installment due October 25, 1963. A cancellation notice was sent to Malloy by Prepaid on November 4, 1963, terminating the policy as of November 18, 1963. Shortly before November 18, 1963 a notice of termination was sent by Prepaid to the Royal Indemnity Company. The appellant contends that the attempted cancellation by Prepaid Premiums, Inc., was ineffectual because the financing agreement did not extend such authority to Prepaid. The financing agreement provided, that upon failure of the Assured to pay any installment due, "the Payee may deliver said policies to the insurance companies issuing the same for cancellation, and collect and receive all unearned premiums and dividends due under the said policies. The Assured hereby constitutes and appoints the Payee, his true and lawful attorney-in-fact, irrevocably, in his name and stead and on his behalf, to cancel such insurance policy or policies, any or all, as the case may be, and to do all the things necessary to that end, and to collect any and all returned premiums or premiums on such policy or policies, and apply the same to the satisfaction, discharge and payment of such sum or sums as may be due from him to the Payee under the terms of this note, and the said insurance carrier or carriers are hereto authorized and directed, upon demand of the Payee, to cancel such policy or policies and to pay directly to the Payee the return premium or premiums * * *. It is further agreed that upon any transfer of this note, the said Payee may deliver the said collateral, or any part thereof, to the transferee who shall thereupon become vested with all the powers and rights hereinabove given to the said Payee in respect to said note and collateral." The assignment of the finance agreement provides in part as follows: "the undersigned hereby sell, assign and transfer unto Prepaid Premiums, Inc., his or their right, title and interest in and to the within note and the insurance policy therein transferred". The agreement unquestionably granted Barkley, the payee, authority to cancel the policy for nonpayment of premium installments. The agreement also grants the same rights and powers to the transferee. Appellant argues that the policy, the collateral mentioned in the agreement, was not actually delivered to the transferee and that such delivery was a condition precedent to Prepaid becoming vested with the power to cancel the policy. This argument is without merit. The assignment transfers title and effectively delivers the policy to Prepaid. The physical location or possession of the policy between the parties is of no moment. The fact that the policy remained with Barkley, whether by agreement, custom, or the ordinary course of dealing between the parties, would not operate to deprive the transferee of the rights and benefits conferred to it by the agreement. As above noted, the permissive delivery of the policy to a transferee of the note conferred upon the transferee the payee's rights "in respect to said note and collateral" (emphasis supplied) and it is conceivable that the transferee's lack of possession of the policy and consequent inability to promptly deliver it to the company for purposes of refund might delay the refund process, and to that extent would affect the rights existing as between the transferee and the insurer; but there is no indication that the quoted provision otherwise related to or affected any cancellation or other rights as between the assured, the payee and the payee's assignee; and neither is there any indication, in the language employed or in any extrinsic fact or circumstance, that as between these parties, the scope of the ordinary common-law assignment was intended to be restricted. (See 3 N.Y. Jur., Assignments, § 5, p. 259.) The appellant's argument that the attempted cancellation was ineffectual, since the policy was issued pursuant to the assigned risk plan, and cancellation of such a policy can only be effected by compliance with section 313 Veh. Traf. of the Vehicle and Traffic Law is equally without merit. That section has reference only to termination of a contract of insurance by an insurance carrier. This argument would warrant consideration if the cancellation were attempted by the insurance carrier but, in the instant case, the cancellation was, in effect, the act of the insured. ( Stone v. Travelers Ins. Co., 40 Misc.2d 164.) The procedures followed to cancel the policy herein were in accord with section 576 Banking of the Banking Law, which governs the right to cancel an insurance contract listed in a premium finance agreement. Nowhere in section 576 is there found a requirement that the policy must be delivered to the carrier to effectuate a cancellation. There is also no such requirement in the finance agreement or in the provisions of the insurance contract. The appellant's argument that there could be no cancellation without delivery of the policy to the carrier is, therefore, without merit. The policy, having been properly cancelled pursuant to statute prior to the accident on November 23, 1963, the orders and judgments appealed from, must be affirmed. Orders and judgments affirmed, with one bill of costs to respondents. Gibson, P.J., Herlihy, Reynolds, Aulisi and Staley, Jr., JJ., concur in memorandum by Staley, Jr., J.