Heikes v. Montgomery

399 N.W.2d 356, 1987 S.D. LEXIS 209

• Court: South Dakota Supreme Court
• Decided: January 14, 1987
• Docket: 15235
• Status: Published

Opinions

MORGAN, Justice.

Plaintiff Joanne Heikes (Heikes) appeals from a summary judgment granted to defendants Jack Montgomery (Montgomery) and First Agency, Inc. We affirm.

The sole issue, as presented by Heikes, is:

Whether summary judgment was appropriate since there was a fact question as to whether Montgomery had, through his prior course of conduct, a duty to maintain fire insurance coverage for Heikes and whether he breached that duty by failing to extend credit to Heikes for her premium and by requesting that her policy be cancelled?

On January 6, 1984, Heikes’ home burned and was severely damaged. Homeowners insurance procured for Heikes by Montgomery was cancelled on September 29, 1983, due to nonpayment of the premium by Heikes. Heikes brought suit claiming that even though she received notice from Tri-State Insurance Company informing her that her policy was cancelled, Montgomery had a duty to maintain fire insurance coverage and not to cancel the policy without personal notice from Montgomery to Heikes.

It is clear from the record that on several prior occasions Montgomery had, when specifically requested by Heikes, extended credit to Heikes for her insurance premiums and had allowed her to pay the premiums some months after they were due. Heikes always paid the insurance premium to Montgomery’s agency and did not deal directly with the insurance company. A premium that was due on August 28, 1980, was subsequently paid on November 10, 1980. An insurance premium due August 28, 1981, was subsequently paid on January 12, 1982. Another premium due on August 28,1982, was not paid until December 15, 1982. In this case, the premium due on August 28, 1983, was not paid by September 22, 1983, whereafter Montgomery requested Tri-State Insurance to cancel Heikes’ insurance policy. The undisputed facts show that on September 29, 1983, Heikes received a cértified letter, return receipt requested, from the insurance company informing her that her policy was cancelled. The letter informed Heikes that she had twenty days in which to find new coverage. The cancellation, according to the notice, was due to nonpayment of premium. Heikes revealed in deposition testimony that she knew her homeowners insurance was with Tri-State Insurance and that she understood the contents of the cancellation notice. Heikes went to see Montgomery within the twenty-day period but Montgomery was not in the office. She left no message for him to contact her. On January 4, 1986, Heikes went to visit Montgomery to give him an appraisal on some personal property. Once again, Montgomery was not in. The record does not reflect whether Heikes left word for Montgomery to contact her.

While we agree that a past course of conduct established by Montgomery may establish a duty to continue with the prior conduct, this is not so where Heikes was informed that the past course of conduct would no longer be followed. It is undisputed that Heikes received the notice of cancellation from the insurance company. Heikes knew that Tri-State provided the insurance on her house and she understood the contents of the notice. Although Montgomery may have had a duty to extend credit to Heikes because of a past course of conduct, that duty was extinguished by the express notice of cancellation received by Heikes. See Martha Co. v. Nationwide Mut. Ins. Co., 473 F.Supp. 1029 (M.D.Pa.1979). Heikes has not cited a single case, nor can we find any, that would support her theory that Montgomery owed a duty to maintain the insurance or to personally advise Heikes of the cancellation even though such notice was provided by the insurance company.

The case of Matthews v. Schumacher, 660 S.W.2d 357 (Mo.App.1983) involves a somewhat similar situation where the plaintiff failed to pay an auto insurance premium within the ten-day grace period after the due date. Initially, the court recognized that there was no duty to maintain an insurance policy. Id. at 359. Furthermore, the court ruled that there was no duty to advise the insureds that the premium must be paid within ten days in light of the fact that insureds knew of this fact. Id.

We affirm the summary judgment.

WUEST, C.J., HENDERSON, J., and FOSHEIM, Retired Justice, concur. SABERS, J., dissents. MILLER, J., not having been a member of the Court at the time this action was submitted to the Court, did not participate.