
    George T. Hancock, Jr., Plaintiff-Appellant, v. The Hartford Fire Insurance Company, Defendant-Appellant.
    (Supreme Court, Appellate Term, First Department,
    June, 1913.)
    Insurance — automobile — action on policy — conversation over telephone as. to cancellation — erroneous exclusion of evidence tending to support defense of waiver.
    The provisions of an insurance policy as to its cancellation are for the benefit of the insured and he may waive them.
    
      Where, in an action on a policy insuring plaintiff’s automobile against loss by theft, which provides that it may be canceled “ at any time upon request of the insured, the company retaining or collecting the customary short rates for the time it has been in force, or it may be cancelled by the company by delivering or mailing to the insured at his last known address ten days’ written notice of such cancellation, and, if the premium has been paid, by tendering in cash, postal order or cheek the pro rata unearned premium thereon,” the sole question of fact is whether plaintiff previous to the theft of his machine had surrendered the policy for cancellation and whether it was thereupon duly canceled, and defendant who had neither given the ten days’ notice of cancellation nor tendered the pro rala unearned premium claimed that plaintiff had waived such requirement by an unconditional surrender of the policy, and in support of such defense gave testimony tending to show that the plaintiff had made two previous claims under the policy of insurance; that, before it paid the second claim, one of the defendant’s employees telephoned to the plaintiff that the company would pay the claim only, upon the surrender of the policy for cancellation; thereupon the plaintiff did bring in the policy for cancellation, and was informed that, after the pro rata unearned premium was calculated, it would be credited to the account of the broker who procured the policy, and the plaintiff absolutely denies that there was any conversation by telephone or otherwise in regard to the cancellation of the policy, and claims that he left the policy with the defendant only for the purpose of adjusting the previous loss, the exclusion of the testimony of a second employee of defendant in corroboration of his version of the telephone conversation, who claims to have overheard what the first employee spoke into the telephone at the time of the alleged conversation with plaintiff, is reversible error, as the issue was not whether the parties did have some telephone conversation at that time but whether at such conversation defendant’s employee said anything about canceling the policy, and a judgment in plaintiff’s favor will he reversed and a new trial ordered.
    Cboss appeals by the plaintiff and by the defendant from a judgment of the Municipal Court of the city of New York, borough of Manhattan, first district, rendered in favor of the plaintiff.
    
      James F. Mack, for plaintiff-appellant.
    Frederick T. Case, for defendant-appellant.
   Lehman, J.

The plaintiff has entered into a contract with the defendant, whereby the defendant insured his automobile against loss by fire, theft or other causes. It is not disputed that this automobile was stolen, and the sole question of fact in the case is, whether the plaintiff previous to the theft had surrendered the policy for cancellation, and whether the policy was thereupon duly cancelled by the defendant.

The policy of insurance contains the usual clause providing that this policy may be cancelled at any time upon request of the insured, the company retaining or collecting the customary short rates for the time it has been in force, or it may be cancelled by the company by delivering or mailing to the insured at his last known address ten days’ written notice of such cancellation, and, if the premium has been paid, by tendering in cash, postal order or check the pro rata unearned premium thereon. ’ ’

It is undisputed that the defendant has neither given the ten days’ notice of cancellation nor tendered the pro rata unearned premium, but the defendant claims that the plaintiff has waived its requirements by an unconditional surrender.

To prove this defense, the defendant produced testimony to show that the plaintiff had made two previous claims under the policy of insurance; that, before it paid the second claim, one of the defendant’s employees telephoned to the plaintiff that the company would pay the claim only upon the surrender of the policy for cancellation; thereupon the plaintiff did bring in the policy for cancellation, and was informed that, after the pro rata unearned premium was calculated, it would be credited to the account of the broker who procured the policy. The plaintiff absolutely denies that there was any conversation by telephone or otherwise in regard to the cancellation of the policy, and claims that he left the policy with the defendant only for the purpose of adjusting the previous loss. To corroborate the defendant’s version of the telephone conversation, the defendant offered the testimony of a second employee, who claims to have overheard what the first employee spoke into the telephone at the time of the alleged conversation with the plaintiff. This testimony was excluded apparently because the second employee could not state of his own knowledge who was at the other end of the telephone wire. It seems to me that the exclusion of this testimony is erroneous. Of course, ordinarily, no telephone conversation can be admitted unless the person with whom the conversation is held is identified. A conversation with an unidentified person is obviously immaterial. The testimony, however, of the first employee as to the telephone conversation was admitted, and we must, therefore, assume that the trial justice has held that this employee sufficiently identified the plaintiff to make this conversation admissible. The testimony of an auditor who heard only the one side of the conversation could obviously not be considered corroboration upon the issue of whether the plaintiff took part in the conversation; but the important issue in this case was, not whether the parties did have some telephone conversation at that time, but as to whether at that conversation the defendant’s employee said anything about cancelling the policy, and upon this issue the testimony as to what the second employee overheard would be entirely material, and I can see no logical reason for its exclusion. See McCarthy v. Peach, 186 Mass. 67, and Miles v. Andrews, 153 Ill. 262. It is urged, however, that, even if error was committed on this point, the error is immaterial because the trial justice did not feel impelled to decide this issue, but decided the case solely on the following grounds: I find as a fact that the defendant did not return to the plaintiff the unearned premium on the policy, which return was a condition of the right of the defendant to cancel the policy. Assuming that the defendant credited the amount of the unearned premium to the account of the agent who originally procured the insurance for plaintiff, as a matter of law, such agent is without authority to receive the return of such unearned premium; and I find as a fact that plaintiff did not authorize or consent to the crediting of such unearned premium to the agent’s account.”

So far as the findings of fact by the trial justice are concerned, I think there is evidence to sustain them, but I cannot agree that these facts determine the real issue in this case. The requirements of the policy as to the cancellation by the insurance company are inserted for the benefit of the assured, and may be waived by him. In the case of Buckley v. Citizens Insurance Co., 188 N. Y. 399, the insured had surrendered a policy of insurance containing a similar clause for cancellation. As in this case the company had failed to pay the unearned premium. The court then said: “ The one object of the cancellation clause is to place the policy in the custody of the insurance company absolutely and unconditionally. If the insured permits this to be done by his voluntary act, when the company gives notice of cancellation without receiving from it the unearned premium he assents to the cancellation, but can sue for the amount due him. ’ ’ '

The plaintiff seeks to distinguish this case on the ground that in that case there was a written notice of cancellation, which is wanting in the ease before us. I cannot find, however, that this difference presents a logical distinction. The real point is, whether the plaintiff, having knowledge of the intention of the company to cancel the policy, voluntarily surrendered it unconditionally for this purpose. This question is squarely presented by the evidence in this case, and has not been determined. The judgment must, therefore, be reversed and a new trial ordered.

The plaintiff also appeals from the judgment on the ground that the damages are the value placed by the parties upon the insured article. In view of the fact that the judgment is reversed, we need not decide this point, and I feel that it would be improper to express any opinion on this point, because plaintiff in his brief relies largely upon an alleged clause twenty-five, which I fail to find in the policy introduced by him in evidence.

Plaintiff’s appeal should, therefore, be dismissed without costs, and on the defendant’s appeal judgment should be reversed and a new trial ordered, with costs to defendant to abide the event.

Bijur and Whitaker, JJ., concur.

Plaintiff’s appeal dismissed and on defendant’s appeal judgment reversed and new trial ordered, with costs to defendant to abide event.  