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03/23/78 BERTHA CARTER v. EMPIRE MUTUAL INSURANCE

March 23, 1978

BERTHA CARTER
v.
EMPIRE MUTUAL INSURANCE COMPANY AND OTHERS *FN1



Worcester. Civil action commenced in the Superior Court on January 31, 1975. The case was heard by Meagher, J.

Hale, C.j., Keville, Goodman, Armstrong, & Brown, JJ. This case was initially heard by a panel composed of Keville, Goodman and Armstrong, JJ., and was thereafter submitted on the record and briefs to Hale, C.j., and Brown, J., who took part in this decision in accordance with the provisions of Rule 1:18 of this court. Brown, J., Concurring. Armstrong, J., with whom Hale, C.j., joins, Concurring in part and Dissenting in part.

SYLLABUS BY THE COURT

Insurance, Agent, Motor vehicle liability insurance, Cancellation. Agency, What constitutes. Unlawful Interference. Damages, Storage fees, Towing charge. Truth-in-Lending Act.

The opinion of the court was delivered by: Goodman

The purported cancellation of a policy of automobile insurance was without effect, where an insurance agent had improperly diverted a sum from the insured's initial payment under a premium financing arrangement which, if applied to the premium, would have been sufficient to forestall the insured's default, several months later, on an installment note for the balance of the premium [117-120]; nor could a finance company to which the note was negotiated properly exercise the insured's power of attorney to effect cancellation of the policy in the event of default, in view of the Judge's uncontested finding that the insurance agent had acted as the finance company's agent for the purpose of collecting the initial payment [121-122]. Armstrong, J., with whom Hale, C.J., joined, Concurring in part and Dissenting in part.

Claims against an insurance agent and a finance company for damages arising from the actions of each in causing an insurance company wrongfully to repudiate the plaintiff's policy of insurance were properly joined with the plaintiff's claim on her policy against the insurance company; all three defendants were liable for the benefits under the insurance policy of which they wrongfully deprived the plaintiff. [123] Armstrong, J., with whom Hale, C.J., joined, Dissenting in part.

A finding of damages for the towing and storage of an automobile, which was not based on the evidence, could not stand; nor, on the record, could the finding be sustained on an assumption, which the court did not make, that these services were of such an ordinary nature that the Judge could find their value on the basis of his general knowledge and experience. [124-125]

Failure of an insurance agent to insert the "date of first payment," the "deferred payment price," and the date the "finance charge will begin to accrue" in the spaces provided therefor on an insurance premium financing agreement before its signature by the plaintiff constituted violations of G. L. c. 140C, the Truth-in-Lending Act, entitling the plaintiff to statutory damages, notwithstanding contemporaneous oral disclosure and subsequent entry of the missing information in writing [125-129]; where the record did not reveal a timely demand for relief the plaintiff could not recover treble damages under G. L. c. 93A, § 9 (3) [129-130]. Armstrong, J., with whom Hale, C.J., joined, Concurring in part and Dissenting in part.

These cross appeals arise out of the purchase by the plaintiff of a motor vehicle liability insurance policy issued by Empire Mutual Insurance Company (Empire) for the year 1974; the policy included coverage for damage to the plaintiff's automobile. The plaintiff paid part of the total premium in cash and financed the balance through a premium finance agreement (G. L. c. 255C, § 1, definition 4) with Main Street Insurance Agency, Inc. (Main), Empire's agent. The agreement, dated January 3, 1974, included a promissory note signed by the plaintiff payable to Main in monthly installments; Main assigned the agreement to Colony Finance Corp. (Colony). In her complaint the plaintiff alleged that the premium finance agreement did not meet the disclosure requirements of G. L. c. 140C and G. L. c. 255C and sought to have the three defendants subjected to the penalty prescribed by G. L. c. 140C, § 10(b). The plaintiff also claimed that a notice of cancellation of her policy sent by Colony to Empire was ineffective to permit Empire to cancel the policy and that she was therefore entitled to recover from the defendants her losses arising from an automobile accident in which she was involved on June 29, 1974, five days after the notice of cancellation purported to become effective.

The Judge filed findings of fact and an order for judgment pursuant to Mass.R.Civ.P. 52(a), 365 Mass. 816 (1974), and on the same day entered a judgment declaring that the cancellation of the plaintiff's policy was void and that the policy was in full force and effect on the date of the accident. The judgment further provided that the plaintiff recover from the defendants jointly and severally her losses arising from the automobile accident. The Judge's findings of fact were silent on the question whether the premium finance agreement met the disclosure requirements of G. L. c. 140C and G. L. c. 255C, and the judgment was likewise silent as to the penalty prescribed by G. L. c. 140C, § 10(b). The plaintiff filed a motion under Mass.R.Civ.P. 52(b), 365 Mass. 817 (1974), that the Judge find that the premium finance agreement did not meet the disclosure requirements of G. L. c. 255C and as a result also violated G. L. c. 140C and G. L. c. 93A *fn2 and that the judgment be amended accordingly so as to award the plaintiff the minimum $100 penalty (and attorney's fees and costs) prescribed by G. L. c. 140C, § 10(b), together with a trebling pursuant to G. L. c. 93A, § 9(3), of the damages already awarded the plaintiff for her losses in the accident. The motion also sought interest on all the damages. The motion was denied. Within the time provided by Mass.R.A.P. 4, 365 Mass. 846 (1974), for appeal from the judgment, all parties filed notices of appeal. *fn3

The Defendants' Appeals

1. The validity of the cancellation. We summarize certain facts which are not in question. The premium for the 1974 motor vehicle liability insurance policy which the plaintiff purchased through Main was $294.80. On December 31, 1973, the plaintiff paid Main $50, and on January 3, 1974, she paid Main an additional $58.80. On the latter date the plaintiff signed a note which provided that she pay Main $247.52. Although the plaintiff had paid Main a total of $108.80, the face of the note indicated that Main had received a cash down payment of $73.80 on the premium and that the $247.52 amount of the note represented a $221 unpaid balance on the premium, a $1 credit for life insurance, and a $25.52 finance charge. *fn4 By the terms of the note the plaintiff was to pay the $247.52 in eight monthly payments of $30.94. The note contained a power of attorney allowing its holder to "perform all acts necessary or appropriate to effect cancellation" of the plaintiff's insurance policy.

Main assigned the note to Colony, and Colony transmitted $294.80 to Main which then sent the $294.80 to Empire in payment of the premium. Main transmitted to Colony $73.80 of the $108.80 which the plaintiff had paid Main on December 31 and January 3, and applied the remaining $35 from the plaintiff's $108.80 payment to the purchase of an automobile club membership in the plaintiff's name.

The plaintiff mailed payments of $30 to Colony on February 28, March 21, and April 25. Colony received these payments on March 4, March 25, and April 29, respectively. By June 3 Colony had received no further payments from the plaintiff, and, the plaintiff being in arrears, Colony sent her, by registered mail, notice that it was canceling her policy effective June 24, 1974, because of "default of payment on premium finance contract." This notice was returned to Colony unopened, and the plaintiff claims never to have received it. On June 11 Colony received from the plaintiff a money order for $30 dated May 21. On the same day Colony sent the plaintiff a letter stating that it was in receipt of her payment and adding, "However, in order to reinstate your insurance, which will be cancelled effective June 24, we must receive $42.86 which includes late charges and a $2.00 reinstatement fee, before June 20. No personal ...


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