This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Patricia A. Hoyt, et al.,



Scott Norstad, d/b/a Norstad Contracting,



Truck Insurance Exchange,



Filed May 20, 1997


Peterson, Judge

Dakota County District Court

File No. C2938870

Jerome A. Ritter, Ritter & Fenske, Ltd., 461 University Avenue, St. Paul, MN 55103 (for Appellants)

Scott Norstad, Norstad Contracting, 7759 142nd Street West, Apple Valley, MN 55124 (Respondent Pro Se)

Steven L. Theesfeld, Yost & Baill, P.L.L.P., 2350 One Financial Plaza, Suite 2350, 120 South Sixth Street, Minneapolis, MN 55402 (for Respondent Truck Insurance Exchange)

Considered and decided by Crippen, Presiding Judge, Lansing, Judge, and Peterson, Judge.



On appeal from a judgment, Patricia and Michael Hoyt challenge the district court's determination that a notice of cancellation sent by respondent Truck Insurance Exchange to its insured was effective to cancel a liability insurance policy for nonpayment of premium. We affirm.


After appellant Patricia Hoyt was injured by a falling cabinet on November 19, 1991, she and appellant Michael Hoyt sued the cabinet installer, respondent Scott Norstad, d/b/a Norstad Contracting, for negligence. The Hoyts and Norstad stipulated to a settlement agreement. A term of the agreement was that the judgment against Norstad could be collected only from Norstad's liability insurer, respondent Truck Insurance Exchange. Claiming that it had cancelled Norstad's liability insurance coverage as of October 31, 1991, Truck Insurance denied liability for the judgment.

In March 1991, Truck Insurance issued a general commercial liability insurance policy to Norstad. Under a billing arrangement with Prematic Service Corporation, Norstad was required to pay for coverage in advance. Norstad made an initial payment of $72.17 to Prematic for coverage from March 20 until May 20, 1991. He also made the following payments for continued coverage; $37.36 on April 20, 1991; $37.33 on June 2, 1991; $37.33 on June 30, 1991; and $37.33 on August 1, 1991.

Before receiving the August 1 payment, which had been due on July 31 for coverage until September 20, Prematic sent Norstad a notice of cancellation for nonpayment of premium. The notice stated that Norstad owed $74.66 for the previous and current monthly bills; the statement did not include credit for payments received after August 8; it was the only notice Norstad would receive; the cancellation date was August 31, 1991; and coverage would continue if payment in full was received before the cancellation date.

On September 6, 1991, Norstad sent Prematic a check for $37.33. On September 16, 1991, Prematic sent Norstad another cancellation notice on the same form as the previous month's notice with a cancellation date of September 30, 1991. The notice, which did not reflect Norstad's September 6 payment, stated that the total amount due was $74.66. Norstad did not make any more payments to Prematic.

On October 16, 1991, Prematic sent Norstad another cancellation notice, again on the same form it used for the previous notices, with a cancellation date of October 31, 1991. On November 16, 1991, Truck Insurance sent Norstad an out-of-force notice stating that his policy had been cancelled on October 31, 1991, for nonpayment of premium. Truck Insurance also sent a notice of cancellation of mortgagee and/or certificate holder to Associated Contractors Inc., a business that occasionally subcontracted work to Norstad, stating that all coverage extended to Associated Contractors under Norstad's policy would be cancelled effective January 20, 1992.

Norstad testified at trial about his understanding of the cancellation notices:

Q * * * [W]hen you eventually stopped paying your premiums, you understood that at some point in time your coverage was going to stop. That's not disputed, is it?

A As far as I knew, it was October 31st of that year is what I recollect out of it that I had paid in that I could use up to. That's always been -- that's in my deposition, too. That's what I always kind of focused on knowing that -- that date I knew that it would be pretty much up.

* * * *

Q * * * [A]ll I'm trying to find out Mr. Norstad, is the way you operated understanding in your own mind that by making a partial payment you would have paid for coverage ahead some -- to some point in time, is that correct?

A Yeah. I knew that if I made the thirty-seven thirty-three that the insurance company would sometimes -- sometimes they'll give you a notice of, you know, two weeks or a date, but I knew that the thirty-seven would carry me at least a couple weeks and then I could pay them.

Q So you knew that if you made a payment in response to the August 16, 1991 notice, even if it was not the amount shown as the total due, you understood and believed you would have continuing coverage, is that correct?

A Yeah. But not past 9-16-91. I knew I had to pay them something, so I knew there was only so many -- so far that $37.33 would go.

Q But did you have any specific understanding exactly how far it would take you or did you just know it would continue it?

A Just one month. I knew that I couldn't pay thirty-seven thirty-three and not pay them for three months and then go back and say -- I knew that it would take me -- thirty-seven thirty would take me one month from that date.

Q And when you paid -- when you received the September 16, 1991 notice, did you understand that you would still have coverage even though this paper said that it's going to be cancelled if you don't make a payment by September 30th?

A I understood that 9-16, if I paid thirty-seven thirty-three, I would have coverage 'til 10-16, and that I see it as October 31st they gave me two weeks. They must have went back on the seventy-two the first check and prorated what Prematic gets and what I have and then gave you the actual time on October 31st.

Q But, Mr. Norstad, you didn't send a check in in response to the September 16, 1991 Prematic notice, did you? Here. I'll show you the checks.

A The one for 9-6. The last one.

Q Did the September 6, 1991 check * * * go with the August '91 Prematic cancellation notice or did it go with the September cancellation notice?

A 8-1 would have went for August. I don't know. Then nine would have went for September. So 9-6 would have been the last check that was submitted for September and then again -- again it would be prorated as to how far that would go and come into that. The notice of cancellation is just -- to me, is just you owe us some money because we can't cover you unless you are paid up.

Norstad also testified that he understood he could stop his insurance coverage by not paying the monthly premiums and that he expected his insurance policy to be cancelled on October 31, 1991.

The case was tried to the district court. Based on Norstad's testimony and the language used in the cancellation notice, the court determined that Truck Insurance effectively cancelled Norstad's insurance coverage as of October 31, 1991, and judgment was entered accordingly. The Hoyts appeal from the judgment.


"Interpretation of an insurance policy is a question of law subject to de novo review." National Family Ins. v. Bunton, 509 N.W.2d 565, 567 (Minn. App. 1993).

Notice of cancellation of an existing liability policy for failure to pay the premium must be "explicit, unconditional and unequivocal" and must make clear that coverage will cease without further notice. Dairyland Ins. Co. v. Neuman, 338 N.W.2d 37, 41 (Minn. 1983) (citing Cormican v. Anchor Casualty Co., 249 Minn. 196, 203-04, 81 N.W.2d 782, 788 (1957)). The unequivocal message of cancellation must be "tested by the meaning it would reasonably convey to one who receives it." Lievers v. National Ins. Underwriters, 257 Minn. 268, 271, 101 N.W.2d 817, 819 (1960)). The notice must provide that coverage is, or without further notice will be, cancelled as of a certain day.

Pierce v. MSI Ins. Co., 406 N.W.2d 328, 330 (Minn. App. 1987).

The notice of cancellation Prematic sent to Norstad was labeled NOTICE OF CANCELLATION-NON-PAYMENT OF PREMIUM. The notice stated that it was the only notice Norstad would receive and expressly listed the cancellation date as October 31, 1991. The notice further stated that if full payment was not received before the cancellation date, coverage would be cancelled at 12:00 noon on the cancellation date. We conclude that the cancellation notice was explicit, unconditional, and unequivocal and made it clear that Norstad's coverage would cease without further notice. See Pierce, 406 N.W.2d at 330 (holding that similar notice of cancellation was clear and unequivocal).

The Hoyts argue that Truck Insurance's failure to enforce the August and September cancellation notices rendered the October notice equivocal and ineffective. In the case relied on by the Hoyts, Caduff v. Universal Underwriters Ins. Co., 381 N.W.2d 9, 11 (Minn. App. 1986), review denied (Minn. Mar. 27, 1986), the insured attempted to transfer insurance coverage from his 1981 motorcycle to a 1982 motorcycle. About 10 days after requesting the transfer, the insured received a notice of cancellation for nonpayment of premium on the policy covering the 1981 motorcycle but testified that he thought the notice meant his insurance company was cancelling coverage on the 1981 motorcycle and reissuing a new policy for the 1982 motorcycle. Id. at 11. About five days after receiving the cancellation notice, the insured "received a document reflecting that his 1982 Honda was now covered under his policy." Id. at 12. This court concluded that the cancellation notice was ineffective. Id.

Here, Norstad does not claim that the earlier cancellation notices made the October cancellation notice confusing to him; nor does he claim any reliance on the notice sent to Associated Contractors regarding its coverage. On the contrary, Norstad testified that he understood he could stop his insurance coverage by not paying the monthly premiums, that he opted not to make a payment to continue his insurance coverage beyond October 1991, and that he expected his policy to be cancelled on October 31, 1991. Under these circumstances, the multiple cancellation notices did not create an ambiguity in the October notice. See Pierce, 406 N.W.2d at 330-31 (finding cancellation notice effective under similar circumstances).

The Hoyts also argue that the course of dealing between Truck Insurance and Norstad created a belief in Norstad that his policy would not actually be cancelled for failure to make a timely payment, thereby rendering the October cancellation notice ineffective.

[W]here it has been established that it is the custom and practice of the insurer to give notice of the time for payment of a renewal premium and knowledge of such custom is acquired by an insured in dealings with the insurer, the insured has a right to rely on such notice, and, in the absence thereof, the policy may not be terminated or forfeited without giving the insured some notice that such custom has been abandoned.

Seavey v. Erickson, 244 Minn. 232, 243-44, 69 N.W.2d 889, 897 (1955).

Here, Norstad received similar cancellation notices in August, September, and October. When Norstad received the August and September cancellation notices, he knew that he had made partial payments that had not been credited when the cancellation notices were sent. Norstad understood that the partial payments made in early August and in early September each would keep his insurance coverage for about one additional month. Norstad changed any previous course of dealing by failing to make even a partial payment in October either before or after receiving the October 16 cancellation notice.

Norstad testified that he understood the September payment would pay for his insurance coverage into October and that another payment would be required to continue coverage beyond October. The September payment was the last payment Norstad made. When Norstad received the October cancellation notice, he had not made any payments that were not credited when the cancellation notice was sent. Instead of paying for additional coverage, Norstad opted to let his insurance policy lapse. The district court properly determined that Truck Insurance effectively cancelled Norstad's insurance coverage as of October 31, 1991.