Edens v. South Carolina Farm Bureau Mutual Insurance

308 S.E.2d 670, 279 S.C. 377, 40 A.L.R. 4th 862, 1983 S.C. LEXIS 363

• Court: Supreme Court of South Carolina
• Decided: October 19, 1983
• Docket: 21929
• Status: Published

Opinions

Gregory, Justice:

Appellant J. M. Edens, Jr. brought this action to recover proceeds allegedly due under a homeowner’s insurance policy issued by respondent South Carolina Farm Bureau Mutual Insurance Company. A j ury returned a verdict for respondent. Appellant appeals, alleging the trial court erred in refusing to direct a verdict in appellant’s favor or grant a judgment n.o.v. We agree and reverse and remand for entry of judgment in favor of appellant.

Appellant had in force for approximately twenty (20) years a policy by respondent. Appellant’s home, valued at Seventy Thousand ($70,000) Dollars, and its contents, valued at Thirty Five Thousand ($35,000) Dollars, were completely destroyed by fire. Respondent denied liability alleging it cancelled the policy two months prior to the fire.

Appellant contends the cancellation was ineffective because he never received the notice. We agree.

The notice of cancellation in this case was allegedly sent by regular mail, rather than certified or registered, and no return receipt was requested. Appellant denied receiving the notice. The policy did not specify the method for giving notice other than to state that cancellation by respondent could be effected “by giving to the insured a five days’ written notice of cancellation.”

Where language used in an insurance contract is ambiguous, or where it is capable of two reasonable interpretations, that construction which is most favorable to the insured will be adopted. See cases collected in 11A West’s South Carolina Digest, Insurance Key No. 146.7(1). The provision for cancellation “by giving to the insured a five days’ written notice of cancellation” was clearly ambiguous as to the method of giving notice. This ambiguity should be resolved in favor of the insured and construed to mean some method of notice other than perfunctorily dropping a letter in the regular mail.

Where a cancellation clause provides that the insurer may cancel by mailing the notice to the insured’s address or where it contains substantially similar language, the mere mailing is sufficient to effect cancellation. Moore v. Palmetto Bank, 238 S. C. 341, 120 S. E. (2d) 231 (1961). Respondent’s reliance on Moore to defeat recovery under this policy is misplaced.¹ No authority has been cited which holds the terms “mailing written notice” and “giving written notice” are necessarily synonymous or substantially similar.

The term “giving written notice” means that the insured shall personally receive the notice in such manner that the insured becomes aware of having received it. “The provision involves a physical delivery to the insured of a document of which he becomes personally aware. This cannot be accomplished by depositing a document in the mail which he may or may not receive.” Selken v. Northland Insurance Company, 249 Iowa 1046, 90 N. W. (2d) 29 (1958).

Moreover, courts universally have held that where a policy provides for cancellation by giving notice to the insured of a specified number of days, actual receipt of cancellation by the insured is a precondition to cancellation. Annot., 64 A. L. R. (2d) 982 (1959). The policy we are dealing with calls for the giving of notice; thus, actual receipt is a condition precedent to a cancellation of the policy by the insurer.

Cancellation of an insurance policy is an affirmative defense which must be proved by a preponderance of the evidence. We are of the opinion respondent failed, as a matter of law, to offer proof of any probative value that appellant received the alleged notice of cancellation. Therefore, we hold the trial judge erred in failing to direct a verdict for appellant.

Because our disposition of this issue, we need not address appellant’s remaining exceptions.

Accordingly, we reverse and remand for entry of judgment in favor of appellant.

Reversed and remanded.

Lewis, C. J., and Ness, j., concur. Littlejohn and Harwell, JJ., dissent.

1 The cancellation clause of the insurance policy in Moore read:

This policy may be canceled by the company by mailing to the insured named in Item 1 of the declarations at the address shown in this policy written notice stating when not less than ten days thereafter such shall be effective. The mailing of notice as aforesaid shall be svfficient proof of notice. (Emphasis added) 238 S. C. at 344, 120 S. E. (2d) 231.