This is an appeal by Robert H. Dunn and Cheri Dunn (the
insureds) from the granting of summary judgment in
favor of the defendants/appellees, hereinafter referred to as the
After careful review, we affirm.
The facts of this case indicate that the insureds approached
the insurance company's agent seeking to purchase insurance
covering a 1988 pickup. In order to obtain coverage, the insureds
were required to complete an application, and this application
was completed and signed by Cheri Dunn. In the application, Cheri
Dunn represented that no driver of the vehicle had ever had his
or her driver's license revoked or suspended. She also indicated
that Robert Dunn would drive the vehicle approximately ten
percent of the time. After the application was completed, it was
turned over to the insurance agent along with a check for $124.
In response to the receipt of the application and the check for
the premium, the insurance agent issued a "binder" showing that
coverage was in effect.
When the application reached the insurance company's main
offices, a search of the state motor vehicle records was
undertaken and compared to the facts of the application. This
search revealed that the insureds had not been truthful in
supplying the information on the application. The motor vehicle
department records revealed that Robert Dunn's driver's license
had been suspended several times and had been cancelled once
At this point, it becomes important to note with particularity
the dates on which subsequent events took place. On May 17, 1989,
after it had discovered Robert's true driving record, the
insurance company mailed a notice to the insureds. This notice
was sent by certified mail to the address shown on the
application and advised the insureds that no policy had ever been
in effect as a result of their misrepresentations. The insurance
company also enclosed in that notice a check for the "full return
premium." The insureds testified they did not receive this
notice, stating that they had moved from the address listed on
their application. The insurance company again sent notices to
the same address on May 24 and June 3, 1989. Neither notice was
received by the insureds.
On May 19, 1989, the agent sent a letter to the insureds. This
letter was sent by regular mail and was received by the insureds.
In the letter, the agent advised the insureds that their policy
with the insurance company would become void in the near future.
The agent offered to find other coverage for the insureds and
advised that, if she had not heard from them by May 26, 1989, she
would assume that coverage had been obtained elsewhere.
On May 28, 1989, the insureds wrecked their pickup in a
one-vehicle accident, causing damage to that pickup in the amount
of $9,600. There were no other vehicles or parties involved, and
the insureds themselves are the sole "loss payees" under the
We note that the insureds had received actual notice from their
insurance agent that their policy was about to be cancelled
several days prior to the accident involving their pickup. After
their accident, the insureds demanded payment of their damages
under the policy. The insurance company denied payment on the
grounds that it had rescinded the policy ab initio due to the
misrepresentations made by the insureds on the application. The
insureds then filed this action, seeking to recover damages for
breach of contract.
The insureds argue that the provisions of K.S.A. 1989 Supp.
40-3118(b) apply and that, despite their misrepresentations, the
policy or "binder" could only be cancelled in strict accordance
with that statute. That statute reads in relevant part:
"(b) Except as otherwise provided in K.S.A. 40-276,
40-276a and 40-277, and amendments thereto, and
except for termination of insurance resulting from
nonpayment of premium or upon the request for
cancellation by the insured, no motor vehicle
liability insurance policy, or any renewal thereof,
shall be terminated by cancellation or failure to
renew by the insurer until at least 30 days after
mailing a notice of termination, by certified or
registered mail or United States post office
certificate of mailing, to the named insured at the
latest address filed with the insurer by or on behalf
of the insured. Time of the effective date and hour
of termination stated in the notice shall become the
end of the policy period." (Emphasis added.)
It is apparent that, if the above-quoted statute applies to
this factual situation, rescission ab initio would not be
permitted, and the insurance company would be required to have
given the insureds at least 30 days notice of termination.
The question presented for our resolution is one of first
impression in this state. We must determine whether K.S.A. 1989
Supp. 40-3118(b) is controlling ...