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Weathers v. Hartford Insurance Group

Decided: July 26, 1978.

MARTHA WEATHERS, PLAINTIFF-APPELLANT,
v.
HARTFORD INSURANCE GROUP ET AL., DEFENDANTS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 153 N.J. Super. 563 (1977).

For reversal and remandment -- Chief Justice Hughes, Justices Sullivan, Pashman, Clifford, Schreiber and Handler and Judge Conford. For affirmance -- None. The opinion of the court was delivered by Pashman, J.

Pashman

Plaintiff Martha Weathers purchased a standard New Jersey automobile insurance policy from defendant Hartford Insurance Group, the insurance carrier to whom her coverage had been assigned by the New Jersey Automobile Insurance Plan ("the Plan") in 1972. This coverage was obtained for her by defendant Don Still Agency, Inc., an independent insurance broker ("the broker"), through whom she submitted her application to the Plan. Her policy was renewed for a second one-year period from October 30, 1973 to October 30, 1974 with an annual premium of $261.00 Plaintiff elected to pay the renewal premium in three installments -- 40% payable on the renewal date, 30% payable ninety days thereafter, and the final 30% payable in another ninety days, on April 30, 1974.

Plaintiff subsequently failed to pay her final premium installment of $78.30 in a timely manner. Previously, when the payment for the second installment had not been made by the required date, Hartford had sent plaintiff a notice advising her that her policy would be cancelled for nonpayment of premium effective February 25, 1974. Plaintiff made the delinquent payment to the broker on February 13, 1974. Hartford thereafter sent the insured a notice informing her that her policy had been reinstated without lapse in coverage. Hartford contends that it mailed plaintiff a similar notice of cancellation on May 10, 1974 advising her that her policy would be cancelled effective at 12:01 a.m. on May 22, 1974. Plaintiff denied receipt of any such notice. Hartford relies on a certificate of mailing bearing plaintiff's name and address, a stamp, and a postmark for

May 10, 1974, together with evidence of its standard procedures, as proof that plaintiff was so notified. Plaintiff failed to pay the premium by the date specified in the notice. On May 23, 1974 she delivered a cash payment of the installment amount to the broker, who accepted the money without any mention of a cancellation problem and gave her a receipt therefor. The following day plaintiff was involved in an automobile accident in which she sustained personal injuries. She informed the broker of the accident that same day.

After receiving plaintiff's delinquent payment, the broker had immediately issued his own check for the amount of the premium installment and forwarded it to Hartford that same day. However, Hartford refused to accept the broker's check because it was dated subsequent to the May 22, 1974 date Hartford had chosen as the effective date of cancellation for plaintiff's policy. The policy was not reinstated and coverage for plaintiff's accident was declined. Hartford refunded to plaintiff the premium monies ($59.40) she had already paid which were unearned (calculated on a pro rata basis, see N.J.A.C. 11:3-1.19) as of the date coverage under the policy terminated. Plaintiff refused to accept the premium refund from Hartford and later instituted this action in the Chancery Division seeking a judgment declaring that coverage existed under the policy for her accident and requiring Hartford to provide her with Personal Injury Protection benefits mandated by N.J.S.A. 39:6A-4.*fn1

At the trial below, the only witnesses were Weathers and the Hartford official who supervised all New Jersey assigned risk policies. Plaintiff testified concerning her non-receipt of any of the notices relating to the potential cancellation of her policy. The Hartford official described the company's customary billing, cancellation and mailing procedures for its

installment payment policies and, reading from plaintiff's file, stated that her policy had been handled in conformity with those procedures. A major focus of his testimony, which is summarized in detail in the opinion of the Appellate Division, 153 N.J. Super. 563, 565-566 (App. Div. 1977), was the significance of Hartford's certificate of mailing in establishing that the required notification of cancellation had been given. The trial judge was apparently satisfied with Hartford's proof that it had mailed the notice of cancellation, but nevertheless credited plaintiff's testimony that she never received such a notice and accordingly held that the purported cancellation of her policy was ineffective. He held in the alternative that plaintiff's payment of the final installment premium to the broker on May 23, 1974 and his acceptance thereof was binding on Hartford pursuant to N.J.S.A. 17:22-6.2a and kept the policy in force. Hartford was ordered to provide coverage to plaintiff and to pay her costs and counsel fees.

On Hartford's appeal from that judgment, a unanimous Appellate Division reversed, holding that the policy had been effectively cancelled on May 22, 1974. The court held that Hartford's certificate of mailing for its cancellation notice was, in combination with the evidence of its cancellation procedures, adequate proof of mailing for purposes of N.J.S.A. 17:29C-10. The court noted that for notice to be effective, the statute requires only proof that the notice was mailed to, not received by, the insured. Thus, plaintiff's claim of non-receipt of the notice of cancellation was legally irrelevant to the validity of the cancellation. The court also ruled that N.J.S.A. 17:22-6.2a was not applicable where a policy had been effectively cancelled prior to a broker's receipt of a premium installment payment from an insured. Thus, it held that the broker's acceptance of plaintiff's payment on May 23, 1974 was of no legal significance with respect to Hartford's liability under the policy. We granted plaintiff's petition for certification, 75 N.J. 603 (1978), and now reverse the Appellate Division's holding that Hartford

had proven as a matter of law that plaintiff's policy had been validly cancelled.

I

Pursuant to N.J.S.A. 17:29C-7, an insurer may issue a notice of cancellation of an automobile insurance policy because of the insured's "nonpayment of premium," defined in N.J.S.A. 17:29C-6(F) as the

To be effective, a notice of cancellation specifying non-payment of premium as the reason therefor must be mailed or delivered by the insurer to the named insured at least ten days prior to the effective date of cancellation. N.J.S.A. 17:29C-8. The statute relevant for present purposes provides that

Proof of mailing of notice of cancellation * * * to the named insured at the address shown in the policy, shall ...


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