JAMESON, District Judge.
Plaintiff and third-party defendant seek a declaratory judgment determining that an automobile liability policy of insurance written by defendant was a binding contract between plaintiff and
defendant and in effect on October 11, 1957. On that date there was an accident involving the automobile described in the policy.
In September, 1956 plaintiff purchased a used ear from First National Bank of Wibaux and in connection with this purchase obtained a policy of liability insurance from the defendant, Great Northern Insurance Company,, through its agent, Wibaux Insurance Agency.
This policy was effective for the period September 5, 1956 to September 5, 1957.
On or about August 29, 1957, Ellis Jones, manager of 'Wibaux Insurance Agency, mailed to plaintiff a renewal policy in Great Northern, together with a statement for the annual premium in the amount of $92.15. This policy recited an effective period of September 5, 1957 to September 5, 1958. Otherwise it was identical with the previous policy. This renewal policy was unsolicited by plaintiff. He testified that he did not want the policy as he could obtain the same or better coverage at less premium from the third-party defendant, National Farmers Union Property & Casualty Company.
On September 24, 1957, plaintiff did in fact obtain a policy from National Farmers Union, effective for the period September 24, 1957 to April 21, 1958. It afforded the same coverage as the renewal policy of Great Northern and its provisions otherwise were substantially the same.
On or about October 1, 1957, the Wibaux Insurance Agency sent plaintiff a second statement for the premium. On or about October 3, plaintiff wrote the Wibaux Insurance Agency, enclosing a check for $10, payable to First National Bank of Wibaux, upon which was the notation “Ins. Red. Ford.” The note transmitting this check was lost or destroyed. Plaintiff and his wife testified that it read substantially as follows: “I am sending you $10.00 to extend on the policy and whenever that $10.00 is used up cancel the policy.” According to Jones, the note said in effect: “Please cancel the policy on the 1955 Ford. We have obtained insurance elsewhere. I am enclosing $10.00 to cover expense to you in cancelling the policy.”
On October 4, 1957, Jones wrote plaintiff as follows:
“I received your $10.00 check and the attached note to the effect that you did not want to keep the above referenced policy.
“The enclosed envelope is for your use in returning the policy, since it is necessary that the policy be returned to the company before cancellation can be completed. Your cooperation in returning the policy will expedite the cancellation proceedings.
“I want to thank you for the privilege of being able to provide insurance on your car for one year, and regret that I am not able to continue serving you. * * * ”
On the back of this letter Mrs. Kudrna wrote the following note to Jones: “When I was cleaning house I must of picked the policy up with other papers and destroyed it. I didn’t read it I thought it was an old policy as we were cleaning out some of the old run out policy. Hoping this doesn’t inconvenience you too much.”
On October 4, 1957, Jones also wrote to Great Northern: “Please cancel the enclosed policy flat, and issue a credit for the full amount of the premium. The insured has notified this agency that he has insured his ear with another company, consequently the above policy will not be required. I will attempt to obtain the original copy of the policy from the insured and return it to your office for your records.” This letter was received by Great Northern on October 7, and the policy was subsequently marked by the Company as cancelled flat. A policy register kept by the agent shows a cancellation of the policy on October 4, 1957.
As noted above the accident in question occurred on October 11. Plaintiff notified National Farmers Union of the accident, but did not at any time notify Great Northern. When asked why he had not notified Great Northern, plaintiff replied, “I felt the $10.00 had expired by this time.”
On October 12, the Wibaux Insurance Agency paid its bill to Great Northern for the month of September, including a charge for plaintiff’s insurance policy, less the agent’s commission. On or prior to October 16, Jones learned of the accident and informed Great Northern of it on that date by telephone. At that time Great Northern informed Jones that the policy had been cancelled flat pursuant to the agent’s request.
The agent’s account with Great Northern for the month of November contained a credit of the premium on plaintiff’s policy in the amount of $92.15. No notice was ever sent to plaintiff by defendant or its agent that the policy had been cancelled flat, or otherwise. On December 7 the agent sent plaintiff a check for $10, which plaintiff refused to accept and which was not cashed.
The foregoing is a fair resumé of the pertinent testimony. There was no dispute except with reference to the contents of the note sent by plaintiff to Jones on or about October 3, 1957, and as to whether any letters were exchanged between plaintiff and Jones between plaintiff’s receipt of the renewal policy and the note of October 3. It was the. recollection of plaintiff and his wife that they had written Jones sometime in September requesting a cancellation of the policy and that Jones had informed plaintiff the policy would have to be surrendered to be cancelled.
Jones denied receiv
ing any letter from plaintiff or answering it.
It is my conclusion that the Jones’ version on both points finds more support in the other evidence by reason of the following: (1) Jones’ letters to Great Northern dated October 4, 1957 and October 16, 1957, and the entry in the policy register on October 4; (2) Mrs. Kudrna’s note to Jones in reply to Jones’ letter of October 4; (3) plaintiff’s purchase of the new policy on September 24 prior to receipt of the second premium notice from Jones; (4) plaintiff’s own repeated testimony that he did not intend to insure with Great Northern and his testimony that he felt “obligated to Jones. It seemed like he was carrying me all this time.” In any event, the discrepancy in testimony between plaintiff and his wife and Jones would not affect the result.
The plaintiff and the third-party defendant contend that: (1) a valid contract of insurance was entered into between plaintiff and defendant; (2) the policy was not cancelled according to its terms; and (3) the defendant is estopped to deny the validity of the policy by reason of (a) acceptance of the premium and its retention; (b) refusal to cancel the policy upon the plaintiff’s request except upon redelivery of the policy; and (c) acceptance of the $10 on the premium at a time when the policy would have expired under the short rate premium table.
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JAMESON, District Judge.
Plaintiff and third-party defendant seek a declaratory judgment determining that an automobile liability policy of insurance written by defendant was a binding contract between plaintiff and
defendant and in effect on October 11, 1957. On that date there was an accident involving the automobile described in the policy.
In September, 1956 plaintiff purchased a used ear from First National Bank of Wibaux and in connection with this purchase obtained a policy of liability insurance from the defendant, Great Northern Insurance Company,, through its agent, Wibaux Insurance Agency.
This policy was effective for the period September 5, 1956 to September 5, 1957.
On or about August 29, 1957, Ellis Jones, manager of 'Wibaux Insurance Agency, mailed to plaintiff a renewal policy in Great Northern, together with a statement for the annual premium in the amount of $92.15. This policy recited an effective period of September 5, 1957 to September 5, 1958. Otherwise it was identical with the previous policy. This renewal policy was unsolicited by plaintiff. He testified that he did not want the policy as he could obtain the same or better coverage at less premium from the third-party defendant, National Farmers Union Property & Casualty Company.
On September 24, 1957, plaintiff did in fact obtain a policy from National Farmers Union, effective for the period September 24, 1957 to April 21, 1958. It afforded the same coverage as the renewal policy of Great Northern and its provisions otherwise were substantially the same.
On or about October 1, 1957, the Wibaux Insurance Agency sent plaintiff a second statement for the premium. On or about October 3, plaintiff wrote the Wibaux Insurance Agency, enclosing a check for $10, payable to First National Bank of Wibaux, upon which was the notation “Ins. Red. Ford.” The note transmitting this check was lost or destroyed. Plaintiff and his wife testified that it read substantially as follows: “I am sending you $10.00 to extend on the policy and whenever that $10.00 is used up cancel the policy.” According to Jones, the note said in effect: “Please cancel the policy on the 1955 Ford. We have obtained insurance elsewhere. I am enclosing $10.00 to cover expense to you in cancelling the policy.”
On October 4, 1957, Jones wrote plaintiff as follows:
“I received your $10.00 check and the attached note to the effect that you did not want to keep the above referenced policy.
“The enclosed envelope is for your use in returning the policy, since it is necessary that the policy be returned to the company before cancellation can be completed. Your cooperation in returning the policy will expedite the cancellation proceedings.
“I want to thank you for the privilege of being able to provide insurance on your car for one year, and regret that I am not able to continue serving you. * * * ”
On the back of this letter Mrs. Kudrna wrote the following note to Jones: “When I was cleaning house I must of picked the policy up with other papers and destroyed it. I didn’t read it I thought it was an old policy as we were cleaning out some of the old run out policy. Hoping this doesn’t inconvenience you too much.”
On October 4, 1957, Jones also wrote to Great Northern: “Please cancel the enclosed policy flat, and issue a credit for the full amount of the premium. The insured has notified this agency that he has insured his ear with another company, consequently the above policy will not be required. I will attempt to obtain the original copy of the policy from the insured and return it to your office for your records.” This letter was received by Great Northern on October 7, and the policy was subsequently marked by the Company as cancelled flat. A policy register kept by the agent shows a cancellation of the policy on October 4, 1957.
As noted above the accident in question occurred on October 11. Plaintiff notified National Farmers Union of the accident, but did not at any time notify Great Northern. When asked why he had not notified Great Northern, plaintiff replied, “I felt the $10.00 had expired by this time.”
On October 12, the Wibaux Insurance Agency paid its bill to Great Northern for the month of September, including a charge for plaintiff’s insurance policy, less the agent’s commission. On or prior to October 16, Jones learned of the accident and informed Great Northern of it on that date by telephone. At that time Great Northern informed Jones that the policy had been cancelled flat pursuant to the agent’s request.
The agent’s account with Great Northern for the month of November contained a credit of the premium on plaintiff’s policy in the amount of $92.15. No notice was ever sent to plaintiff by defendant or its agent that the policy had been cancelled flat, or otherwise. On December 7 the agent sent plaintiff a check for $10, which plaintiff refused to accept and which was not cashed.
The foregoing is a fair resumé of the pertinent testimony. There was no dispute except with reference to the contents of the note sent by plaintiff to Jones on or about October 3, 1957, and as to whether any letters were exchanged between plaintiff and Jones between plaintiff’s receipt of the renewal policy and the note of October 3. It was the. recollection of plaintiff and his wife that they had written Jones sometime in September requesting a cancellation of the policy and that Jones had informed plaintiff the policy would have to be surrendered to be cancelled.
Jones denied receiv
ing any letter from plaintiff or answering it.
It is my conclusion that the Jones’ version on both points finds more support in the other evidence by reason of the following: (1) Jones’ letters to Great Northern dated October 4, 1957 and October 16, 1957, and the entry in the policy register on October 4; (2) Mrs. Kudrna’s note to Jones in reply to Jones’ letter of October 4; (3) plaintiff’s purchase of the new policy on September 24 prior to receipt of the second premium notice from Jones; (4) plaintiff’s own repeated testimony that he did not intend to insure with Great Northern and his testimony that he felt “obligated to Jones. It seemed like he was carrying me all this time.” In any event, the discrepancy in testimony between plaintiff and his wife and Jones would not affect the result.
The plaintiff and the third-party defendant contend that: (1) a valid contract of insurance was entered into between plaintiff and defendant; (2) the policy was not cancelled according to its terms; and (3) the defendant is estopped to deny the validity of the policy by reason of (a) acceptance of the premium and its retention; (b) refusal to cancel the policy upon the plaintiff’s request except upon redelivery of the policy; and (c) acceptance of the $10 on the premium at a time when the policy would have expired under the short rate premium table.
It is the contention of the defendant that: (1) there was no contract of insurance in effect between plaintiff and defendant for the reason that the plaintiff never' accepted the policy; (2) at most plaintiff made a counter-proposal for insurance for a period of less than one year; (3) if there was any contract, the premium would be computed at the short rate, and the payment of $10 would not have effected coverage beyond Sept. 16, 1957; and (4) plaintiff requested defendant’s agent to cancel the policy and the policy accordingly was cancelled by the insured under the terms of the contract prior to the accident. All of the parties have submitted able and comprehensive briefs.
Was there an acceptance of the insurance contract by plaintiff? “It is elementary that, in order to effect a contract, there must be an offer by one party and an unconditional acceptance of it, according to its terms, by the other.” Beale v. Lingquist, 1932, 92 Mont. 480, 488, 15 P.2d 927, 930.
An insurance policy is a contract. Weyh v. California Insurance Co., 1931, 89 Mont. 298, 296 P. 1030; Turner, Dennis & Lowry Lumber Co. v. St. Paul F. & M. Ins. Co., D.C.Mont.1923, 290 F. 541. At this point we are concerned solely with the question of whether plaintiff and defendant entered into a contract.
Normally, in insurance eases, the offer is made by application by the insured and acceptance is manifested by delivery of the policy by the insurer. The unsolicited delivery of a renewal policy prior to the expiration of the original policy, as in this case, is not an acceptance, but an offer, and no contract of renewal is created unless acceptance by the insured is expressly made or necessarily inferred.
Here the plaintiff did
nothing to manifest his intent to accept the policy. Rather on September 24 he took out a policy of insurance with National Farmers Union, identical with that offered by Great Northern. There is no suggestion that he intended to have two policies in effect. On the contrary, it is clear that the policy issued by National Farmers Union was to replace the coverage offered by Great Northern.
Plaintiff and third-party defendant concede that plaintiff may not “at the beginning” have intended to take out the renewal policy and that after procuring the National Farmers Union policy he indicated that he did not desire to “keep” the Great Northern policy. They argue, however, that he later decided to accept the “continuing offer” of Great Northern and ask for cancellation according to the terms of the policy. I am unable to find any objective evidence of any such intent on the part of the plaintiff. Even under plaintiff’s own version of the contents of the note transmitting the $10 check, there was not an unqualified acceptance of the insuranee contract. At most plaintiff agreed to take a policy for as long as $10' would pay the premium.
This would be a new proposal requiring acceptance by the defendant. Section 13-321, R.C. M.1947, supra. The plaintiff testified repeatedly that he had not asked for, and did not want, the renewal policy but, as he expressed it, he felt “obligated to Jones” because it “seemed like he was carrying me all this time.” It is clear from Jones’ letters to plaintiff and Great Northern that Jones interpreted the note as a rejection of the policy offered to plaintiff by Great Northern. Mrs. Kudrna’s note in reply to Jones’ letter is further corroboration of plaintiff’s rejection of the policy.
The mere fact that Jones and defendant assumed until October 4 that the policy had been accepted and was in effect, and that plaintiff assumed that he was obligated for a portion of the premium by reason of his retention of the policy and failure to notify Jones that he did not desire it would not change the rule of law that there cannot be a contract without mutual assent.
Nor
does the use of the terms “cancel” and “cancellation” by plaintiff and Jones effectuate a contract in the absence of an unqualified acceptance of the policy.
Plaintiff contends that in any event defendant is estopped to deny that plaintiff accepted the policy, thereby bringing a contract into existence: (1) by reason of acceptance by the agent of the $10.00 and its retention some 57 days after the accident had occurred; and (2) by the agent’s refusal to cancel the policy upon the plaintiff’s request except upon redelivery of the policy. Many cases have been cited on the question of estoppel or waiver. Most, if not all, involved a condition precedent to the effectiveness of the policy or a forfeiture provision placed in the policy by the insurer for its own benefit. Finding waiver or estoppel by inconsistent conduct under these circumstances is entirely different from finding waiver or estoppel to deny that the contract had ever been accepted by the other party.
It is very questionable whether a contract may be created in the first instance by estoppel. See Gandelman v. Mercantile Ins. Co. of America, 9 Cir., 1951, 187 F.2d 654 and Farmers Insurance Exchange v. Allstate Insurance Co., D.C.E.D.Mich.1956, 143 F.Supp. 213, 215, and cases there cited. But, whether or not a contract may be created by waiver or estoppel, the elements necessary to constitute an estoppel are not here present. In Hustad v. Reed, 1958, 133 Mont. 211, 321 P.2d 1083, 1090, the Supreme Court of Montana held that there were six essential elements for an equitable estoppel, two of which are: * * (5) The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it. (6) He must in fact act upon it in such a manner as to change his position for the worse; in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party being permitted to repudiate his conduct and to assert rights inconsistent with it.’ ” See also Gandelman v. Mercantile Ins. Co. of America, supra. I am unable to find any evidence that the plaintiff has relied upon any representations of the Great Northern, or its agent, and acted thereon to his detriment, and accordingly conclude that the elements of estoppel have not been established.
If my conclusion that the plaintiff did not accept the renewal policy is justified, a consideration of the question of cancellation is unnecessary. Assuming arguendo, however, that there was an acceptance of the renewal policy, did plaintiff’s note of October 3 and tender of the $10 check constitute a cancellation?
The policy provides that it may be can-celled by an insured “by surrender thereof to the company or any of its authorized agents, or by mailing to the company written nptice stating when thereafter the cancellation shall be effective.” If the insured cancels, the premium is computed in accordance “with the customary short-rate table and procedure.”
With
respect to plaintiff’s efforts to cancel the policy, counsel argue: (1) that his written notice to the agent to cancel the policy was ineffective because it did not comply with the cancellation provision that if the insured should seek to cancel by written notice, as distinguished from surrender of the policy, this notice must be sent to the company; (2) that he did not state a date thereafter when the cancellation should become effective; and (3) that the letter of the agent to the plaintiff on October 4 shows that the agent was insisting that the cancellation provisions of the policy be strictly complied with; i. e., that the policy be surrendered to him or written notice be given the company, and that the agent refused to accept the notice given to him as effecting a cancellation.
The provisions for notice to the “company”
and that the notice shall state when “thereafter” the cancellation shall be effective are for the benefit of the insurer and may be waived by the insurer.
Moreover, “the purpose of the provision in the policy requiring that the notice from the insured shall state ‘when
thereafter
such cancelation shall be effective,’ is * * * merely to forestall a retroactive notice.” State Farm Mut. Automobile Ins. Co. v. Pederson, 1947, 185 Va. 941, 41 S.E.2d 64, 68.
Plaintiff contends that “defendant’s agent insisted upon surrender prior to giving recognition to cancelation and such surrender was made a condition precedent in the agent’s last communication to the plaintiff.” In my opinion Jones’ letter of October 4 to plaintiff cannot be so construed. It is true he stated that it was necessary that the policy be returned to
complete the cancellation
and that plaintiff’s cooperation would expedite the cancellation proceedings. On the other hand he acknowledges receipt of plaintiff’s note to the effect that plaintiff did not “want to keep * * * the policy” and expressed regret that he was “not able to continue to serve” plaintiff.
Certainly he did not refuse to accept the cancellation notice or inform plaintiff that it did not conform to the policy provisions. I do not believe that the letter may fairly be construed as an insistence that the policy be returned prior to cancellation; nor does Mrs. Kudrna’s reply to Jones indicate that she understood the agent’s letter to be any rejection of the cancellation notice or an insistence that the policy be returned before cancellation.
Moreover, as set forth above, where a policy is cancelled by insured, the premium is computed according to the “short rate table and schedule”. Under plain
tiff’s testimony, his note transmitting the $10 cheek requested Jones to “extend on the policy and whenever that $10.00 is used up, cancel the policy.” Computing the premium on the basis of the short rate table, the policy would have expired before the accident and, in fact, prior to plaintiff’s letter of October 3.
Judgment will be entered for defendant.