[54 Del. 126] Everett F. Warrington, Georgetown, for plaintiff.
Prickett & Prickett, Wilmington, for defendant.
This is a revised opinion filed as the result of a reargument on a motion for summary judgment.
Plaintiff-insured brought this action to recover benefits which he alleges are due to him under the terms of a comprehensive automobile insurance policy. (By 'comprehensive', I mean general in scope, including liability, collision, medical and various other types of coverage. Defendant-insurer has moved for summary judgment upon the premise that the policy was not in force on the day of the accident.
For the purpose of this motion, the following essential facts are undisputed. On May 17, 1955, the plaintiff purchased the policy in question from the defendant. The policy period was declared to be from May 17, 1955 to May 29, 1955, 'and for such succeeding periods of six months each thereafter as the required renewal premium is paid by the insured on or before the expiration of the current policy period and accepted by the company.' Thus, there were two 'due dates' in each calendar year--the 29th of May and the 29th of November.
The assessed premiums were paid by plaintiff and accepted by defendant for the policy periods up to and including May 29, 1959. Throughout this period, the defendant followed the practice of sending plaintiff two distinct reminder notices relative to each due date. The first notice sent was a semi-annual premium notice which was intended
to arrive in advance of the pending due date. It set forth the due date and the amount of premium assessed and advised the [54 Del. 127] plaintiff that 'payment by due date continues this policy in force for six months.' We will call this the 'blue notice'. The second notice, called the 'red notice', was an expiration notice, which also set forth the due date and amount assessed, but further advised the plaintiff that although his policy had expired 'payment within ten days of due date would renew [the] policy and provide continuous coverage'. Neither of these notices was required by the policy term, nor did the policy provide for the ten day grace period and continuous coverage as offered by the red notice.
It would appear that for many, if not all, of the due dates from November 1955 through November 1958 the plaintiff mailed his premium check sufficiently late so as to preclude its arrival at the defendant's offices prior to the due date then in question. On several occasions, it was mailed as late as seven or eight days after the due date. However, the defendant always accepted the tender, and it may be assumed that continuous coverage was provided from May 17, 1955, up to and including May 29, 1959.
Sometime prior to November 29, 1958, the plaintiff changed his address within his home town of Seaford. The premium notices for that due date were sent to his old address and later delivered to him in person by the tenant who succeeded him at the old address. In paying the premium for said due date, plaintiff notified the defendant of his new address by properly filling in a form provided for that purpose on the premium notice itself.
Despite this notification of change of address, the blue notice for the premium due 29 May 1959 was still sent to plaintiff's old address and, as a result of this admitted negligence, it was not delivered by the mailman to the new address until the 7th or 8th of June, 1959. Thus, it was delivered nine or ten days after the due date.
[54 Del. 128] On June 10th, plaintiff deposited in a U.S. Mail box in his home town of Seaford, a properly addressed and stamped envelope which contained his premium check in the amount of $31.40, and the abovesaid tardy blue notice. One June 14th, plaintiff wrecked his automobile while on a visit to Pennsylvania. On June 16th, at 6:30 A. M., the aforementioned envelope was postmarked out of Seaford. On June 17th, it was received by defendant at its Virginia Offices.
At this point, yet another of defendant's administrative practices comes into the picture, once again a practice not covered by the policy terms. Simply stated, this practice provided for those cases where premium payments were received by mail at defendant's office in the period from ten to forty days after the due date, in which case the policy would be reinstated effective the postmark date on the envelope. From the due date to the date of reinstatement, such a policy would presumably be recorded in the defendant's records as being a lapsed policy. Pursuant to this practice, defendant reinstated plaintiff's policy effective the postmark date of June 16th. Plaintiff's check of June 10th was cashed by defendant and on June 29th, defendant drew a refund check, to the order of plaintiff, in the amount of $3.14, for the eighteen days during which the policy is alleged to have been ineffective. On July 6th, this refund check was sent by registered mail to the plaintiff at his new address, along with a letter, dated also on July 6th, wherein defendant gave notice of its disclaimer of coverage, predicated upon the alleged lapse.
There is nothing in the record to indicate when plaintiff first notified defendant of the accident.
The defendant is a mutual company known as the State Farm Mutual Automobile Insurance Company. Plaintiff became a member of the company when he first
took out his policy in May 1955. The policy provides under the heading 'Mutual Conditions' that:
[54 Del. 129] 'The membership fees set out in this policy, which are in addition to the premiums, are not returnable but entitle the named insured to insure one automobile for the coverages for which said fees were paid so long as this company continues to write such coverages and the insured remains a desirable risk.
'While this policy is in force, the named insured is entitled to vote at all meetings of members and to share in the earnings and savings of the company in accordance with the dividends declared by the Board of Directors on this and like policies.'
The record reveals that the precise assessment for nine successive due dates from May 1955 to May 1959 sequentially ranged over the following figures: $38.81, $35.40, $35.40, $35.90, $33.50, $34.70, $34.70, $34.70, $31.40. Such are the facts.
The question is whether the record, as above summarized, shows such a prima facie lack of coverage on June 14, 1959, as will justify a summary judgment for defendant. For the following reasons, I hold that it does not, and, therefore, summary judgment must be denied.
To my mind, the primary point of departure in analyzing this case is on examination of the question of notice. Therefore, I begin by asking: Was defendant required to give plaintiff notice of the impending due date of 29 May 1959 and of the amount of premium assessed for the six months' period beginning that date?
My first opinion was in large part predicated upon a concept which I denominated 'the notice-mutuality concept'. I started with the proposition that defendant was a mutual insurance company and might be described as:
'* * * a cooperative enterprise wherein the members constitute both insurer and insured, where the members all [54 Del. 130] contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and wherein the profits are divided among themselves in proportion to their interest.' 
I then noted that the premiums for which plaintiff was assessed throughout his course of dealing with defendant varied for the various six months' periods from a high of $38.81 to a low of $31.40, and I concluded that such fluctuations reflected a process by which defendant calculated its semi-annual requirements and pro-rated the expense among its members.  As the company's monetary requirements varied with its increase or decrease in gross liability payments, so, too, would the individual member's assessments vary. Such variations could only be calculated by defendant's statisticians. Plaintiff had no valid device by which he could anticipate the ultimate amount he could be required to pay in any particular six months' period.
Up to this point, defendant's counsel took no issue with my original opinion. However, he made strenuous objections to my subsequent analysis, for it was then that I proceeded to apply a ...