Wiley Grubbs v. Credit General Insurance Company

Wiley GRUBBS v. CREDIT GENERAL INSURANCE
COMPANY

96-889                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered March 3, 1997


1.   Insurance -- cancellation notice -- purpose of. -- The purpose of a
     cancellation notice is to give the insured the opportunity to
     obtain insurance elsewhere before he or she is subjected to no
     protection.

2.   Time -- calculation of limitations -- method employed. -- In calculating
     time limitations, the supreme court has observed that
     uniformity in its decisions is important; both Ark. Code Ann.
      16-55-119 and Ark. R. Civ. P. 6(a) provide that the first
     date and the last date should not both be counted when
     computing a period of time between two fixed dates; the
     supreme court has followed this method of calculation in
     fixing a limitation period for the time of filing pleadings as
     well as for certain notices.

3.   Insurance -- cancellation notice -- ten days' prior notice construed to
     mean ten full days of notice. -- When construing a cancellation
     clause in an insurance policy requiring ten days' prior
     notice, the supreme court has interpreted that to mean
     something different, namely ten full days of notice.

4.   Insurance -- cancellation notice -- plain language fixed by statute or
     policy must be strictly followed -- notice was ineffective. -- The plain
     language of cancellation provisions fixed by either statute or
     the insurance policy must be strictly followed; applying that
     standard, the supreme court held that, after eliminating the
     date of mailing the cancellation notice, November 24, 1992,
     the effective date of cancellation, December 3, 1992, did not
     give the insured ten days' notice; indeed, because the notice
     of cancellation was effective at 12:01 a.m. on December 3,
     1992, the insured, as a practical matter, received only eight
     days' notice; hence, the notice was ineffective.

5.   Statutes -- plain and unambiguous language given ordinary meaning. -- When
     the language of a statute is plain and unambiguous, it is
     given its ordinary meaning.

6.   Insurance -- cancellation notice -- invalid effective date of cancellation
     voided cancellation -- coverage remained in effect. -- Where the case
     turned on a statutory mandate that an effective date of
     cancellation be fixed, an invalid effective date of
     cancellation voided the cancellation, and the insurance
     coverage remained in effect; the order of summary judgment was
     reversed, and the case was remanded for further proceedings.

     Appeal from Faulkner Circuit Court; David Reynolds, Judge;
reversed and remanded.
     Callis L. Childs and Richard W. Weinthal, for appellant.
     Wright, Lindsey & Jennings, by:  Kathryn A. Pryor and Kristi
M. Moody, for appellee.

     Robert L. Brown, Justice.
     On December 7, 1992, appellant Wiley Grubbs was involved in an
automobile accident with William Hall in Faulkner County.  Grubbs
sued Hall as a result of the accident and obtained a judgment
against him in the amount of $27,500.  Grubbs then filed suit
against appellee Credit General Insurance Company, Hall's liability
carrier, to enforce the judgment.  Credit General denied the
material allegations raised by Grubbs in his complaint and
affirmatively pled failure to state facts upon which relief could
be granted.
     Discovery ensued, and in response to discovery, Credit General
denied that Hall was covered on the date of the accident. 
According to Credit General, Hall's policy coverage was from
September 25, 1992, to March 25, 1993, but Hall failed to pay his
monthly premium.  On November 23, 1992, Credit General mailed a
notice of cancellation to Hall for failure to pay the premium. 
Grubbs contended that the actual date of mailing was November 24,
1992.  The cancellation notice stated that the coverage would lapse
as of 12:01 a.m. on December 3, 1992.  A notice of lapsed insurance
was next mailed to Hall showing that the coverage was cancelled on
December 2, 1992, although Credit General later admitted that the
effective date of cancellation was December 3, 1992.  On December
5, 1992, Hall's mother mailed a check to Credit General for the
premium payment, reinstatement fee, and late charge in the amount
of $115.45, and Hall's insurance was reinstated on December 10,
1992.  On December 14, 1992, Hall's mother sent a second premium
check to Credit General in the amount of $105.45.
     Credit General moved for summary judgment premised on the fact
that Hall's liability coverage had been cancelled prior to the
accident and that the cancellation notice complied with both the
terms of the policy and the governing statute.  Grubbs responded to
Credit General's motion with a pleading entitled "Plaintiff's
Motion for Declaratory Judgment, By Summary Judgment, and Response
to Defendant's Motion for Summary Judgment" and asserted that
Credit General failed to comply with the ten-day cancellation
notice required by the policy and the controlling statute.
     At the hearing on the motions, Credit General conceded that
its notice of cancellation was mailed on November 24, 1992, and the
trial court found that that was the date of the mailing.  Despite
this finding, the trial court concluded that proper notice of the
cancellation was sent ten days prior to the effective cancellation
date.  The trial court further found that because a premium payment
was not made by December 3, 1992, coverage was cancelled as of that
date and that as a result, no insurance coverage was in effect when
the accident occurred on December 7, 1992.
     The primary issue on appeal is whether Credit General's
cancellation notice was in compliance with the pertinent Arkansas
statute which reads:
     No notice of cancellation to any named insured shall be
     effective unless mailed or delivered at least twenty (20)
     days prior to the effective date of cancellation,
     provided that, where cancellation is for nonpayment of
     premium, at least ten (10) days' notice of cancellation
     accompanied by the reason therefore shall be given.
Ark. Code Ann.  23-89-304(a)(2) (Repl. 1992).  Similarly, Hall's
insurance policy with Credit General provided for cancellation for
failure to pay premiums by giving "at least ten days notice."  The
purpose of the notice is to give the insured the opportunity to
obtain insurance elsewhere before he or she is subjected to no
protection.  Merrimack Mut. Fire Ins. Co. v. Scott, 219 Ark. 159,
240 S.W.2d 666 (1951).
     Grubbs argues that the statute was not followed because less
than ten full days expired between November 24, 1992, and December
3, 1992, which was the stated effective date of the cancellation. 
He relies in his calculations on Ark. Code Ann.  16-55-119 (1987),
which reads: "Where a certain number of days are required to
intervene between two (2) acts, the day of one (1) only of the acts
may be counted."  See also Ark. R. Civ. P. 6(a).  Credit General,
nonetheless, counts November 24, 1992, as the first day of the
notice and contends that the policy was cancelled on December 3,
1992, which was exactly ten days after the notice was mailed, just
as the trial court found.  In doing so, the carrier contends that
the trial court's interpretation was consistent with the specific
language of  23-89-304 because it requires ten days notice "prior
to" cancellation.
     In calculating time limitations, this court has observed that
uniformity in our decisions is important.  See Hodge v. Wal-Mart
Stores, Inc., 297 Ark. 1, 759 S.W.2d 203 (1988).  In this regard,
we note that both  16-55-119 and Ark. R. Civ. P. 6(a) provide that
the first date and the last date should not both be counted when
computing a period of time between two fixed dates.  We have
followed this method of calculation in fixing a limitation period
for the time of filing pleadings as well as for certain notices. 
See, e.g., Hodge v. Wal-Mart Stores, Inc., supra (time for refiling
complaint under one-year savings statute); Gregory v. Walker, 239
Ark. 415, 389 S.W.2d 892 (1965) (time for notice to tenant to
vacate).
     When construing a cancellation clause in an insurance policy
requiring ten days' prior notice, we have interpreted that to mean
something different, namely ten full days of notice.  See
Northwestern Nat'l. Cas. Co. v. Thomas, 248 Ark. 989, 455 S.W.2d 87
(1970).  In Thomas, we expressly described what constituted ten
days' notice by an insurer prior to the cancellation date:
          The determinative provision in the cancellation
     clause in the policy reads: "This policy may be cancelled
     by the company by mailing to the insured *** written
     notice stating when not less than ten days thereafter
     such cancellation shall be effective."  When we interpret
     that clause, particularly in a light most favorable to
     the insured, the sensible conclusion is that he had ten
     days after the mailing of the notice within which to pay
     for the endorsement of November 5.  In other words his
     policy remained in force for an additional ten calendar
     days.  The notice is said to have been mailed on November
     26.  That date is not to be counted in computing the ten-
     day grace period allowed by the contract. ...
     Excluding November 26 and counting ten full days
     following, the notice could not affect appellee's policy
     before midnight, December 6.
248 Ark. at 991, 455 S.W.2d   at 88-89.
     This court and the Court of Appeals have held that the plain
language of the cancellation provisions fixed by either statute or
the insurance policy must be strictly followed.  See, e.g., State
Farm Fire and Cas. Co. v. Stockton, 295 Ark. 560, 750 S.W.2d 945
(1988) (statute); Riverside Ins. Co. v. Parker, 237 Ark. 594, 375 S.W.2d 225 (1964) (policy); Merrimack Mut. Fire Ins. Co. v. Scott,
supra (policy); Hart v. MFA Ins. Co., 268 Ark. 857, 597 S.W.2d 105
(Ark. App. 1980) (policy).  We apply that standard to the instant
case and hold that after eliminating the date of mailing the
cancellation notice, which was November 24, 1992, the effective
date of cancellation -- December 3, 1992 -- did not give Hall ten
days' notice.  Indeed, because the notice of cancellation was
effective at 12:01 a.m. on December 3, 1992, Hall, as a practical
matter, received only eight days notice.  Hence, the notice was
ineffective.
     An ancillary question remains to be answered, and that is
whether the ineffectiveness of the notice was cured by the passage
of time.  Credit General contends that even if statutory notice was
deficient as of December 3, 1992, it certainly met the ten-day
requirement prior to the accident on December 7, 1992.
     The strongest authority for holding Credit General's notice
completely ineffective comes from the language of the statute
itself.  It provides that no cancellation notice for nonpayment of
premiums shall be effective unless given ten days prior to the
effective date of cancellation.  Ark. Code Ann.  23-89-304(a)(2)
(Repl. 1992).  The language of the statute is plain and
unambiguous, and when that is the case, we give the language its
ordinary meaning.  Omega Tube & Conduit Corp. v. Maples, 312 Ark.
489, 850 S.W.2d 317 (1993).
     As already confirmed in this opinion, when cancellation of
insurance is the issue, we require full compliance with the plain
language of the governing statute.  See, e.g., State Farm Fire and
Cas. Co. v. Stockton, supra.  In Stockton, the issue was whether
the insurer must notify both the insured and the lienholder when
cancelling an automobile liability insurance policy.  The insured
received notice dated September 10, 1985, that her policy would be
cancelled on September 24, 1985, but the lienholder was never sent
notice.  Payment was not made, and a collision occurred on
September 25, 1985.  We held that even though the insured was
notified of the cancellation, the notice was ineffective because
the insurer failed to give notice to the lienholder, as required by
Ark. Code Ann.  23-89-304 (1987).  We interpreted the straight-
forward language in the statute and held that the notice of
cancellation was not effective unless delivered to the insured and
the lienholder.
     Cases from other jurisdictions buttress the holding in State
Farm Fire and Cas. Co. v. Stockton, supra, that a notice of
cancellation must comply with the plain language of the statute. 
See, e.g., Munoz v. New Jersey Auto. Full Ins. Underwriting Ass'n,
145 N.J. 377, 678 A.2d 1051 (1996); Moore v. Scottsdale Ins. Co.,
264 Ga. 808, 450 S.E.2d 198 (1994); Maine Bonding & Cas. Co. v.
Knowlton, 598 A.2d 749 (Me. 1991); Pearson v. Nationwide Mut. Ins.
Co., 325 N.C. 246, 382 S.E.2d 745 (1989); Barile v. Kavanaugh, 67 N.Y.2d 392, 494 N.E.2d 82 (1986).  Moreover, where the effective
date of cancellation is not specified in the notice required by
statute, even though that date might be subject to calculation, the
high courts of Maine and North Carolina have held that the notice
is ineffective.  See Maine Bonding & Cas. Co. v. Knowlton, supra;
Pearson v. Nationwide Mut. Ins. Co., supra.
     This latter circumstance approximates what we have in the case
before us.  The effective date of cancellation was erroneous and
the notice, as a consequence, was invalid.  The proper date of
cancellation may well have been subject to calculation after the
fact.  But that lends confusion to the process and places the
courts in the posture of fixing effective dates of cancellation
when, under the statute, that should be the task of the insurance
companies.  In addition, as has already been underscored in this
opinion, strict compliance with the cancellation statute is what is
mandated -- not substantial compliance -- and the error in setting
a premature cancellation date flies in the face of that basic
requirement.
     In short, this is not a case where policy language merely
requires notice for a certain number of days before cancellation. 
See, e.g., Commercial Union Fire Ins. Co. v. King, 108 Ark. 130,
156 S.W. 445 (1913).  This case turns on the statutory mandate that
an effective date of cancellation be fixed.  An invalid effective
date of cancellation voided the cancellation, and the coverage
remained in effect.
     The order of summary judgment is reversed, and the case is
remanded for further proceedings. 
     Newbern, J., dissents.



=================================================================
           David Newbern, Associate Justice, dissents.
     The majority opinion says the cancellation notice was
ineffective because it stated the wrong date upon which
cancellation would become effective.  I find no authority for that
statement.  Arkansas Code Ann.  23-89-304(a)(2) (Repl. 1992) does
not require the insurer to furnish an "effective date" in its
notice of cancellation for failure to pay premium.  It merely
provides that cancellation shall be effective ten days after
notice.  According to the statute and to the policy, the notice
became effective December 4, 1992.  That was prior to the attempt
to reinstate the policy and certainly prior to the accident from
which the claim arose.
     I respectfully dissent.