The opinion of the Florida Supreme Court in answer to the following
question, certified to it in this case by an appeal court "as
being of great public importance," can serve as a sound guide
for cancellation of property insurance with respect to a mortgagee:
"May a mortgagee who receives actual notice of the cancellation
of a policy of insurance on the mortgaged property be estopped
from relying on the statutory and contractual provisions requiring
written notice?"
The high court said: "We hold that actual notice of insurance
cancellation via telephone is insufficient to cancel the mortgagee's
interest when a standard mortgage clause contained in the contract
of insurance unambiguously requires written notice to the mortgagee.
We should not read oral cancellation privileges where none exist."
The need for strict adherence to the requirement was explained
by the court in Standard Fire Insurance Company v. United States,
407 F.2d 1295 (5th Cir. 1969), as follows:
"In today's world of large financial institutions and government
agencies, intelligent choices can be made by the entity to be
charged with notice only when such notice is channeled to its
responsible authorities. Written notice makes for documentary
certainty as to time and content. Thus it is reasonable to charge
mortgagees with having procedures by which they can properly funnel
and act upon written notice. In contrast, the danger is great
that oral notice would be given to minions of unascertained status
in government agencies and corporate institutions, and would pass
no further."
Editor's Note: The Florida Supreme Court instructed
the appeal court "to remand the cause to the trial court
for proceedings consistent with this opinion." A substantial
fire loss to commercial property had occurred after no action
had been taken by the mortgagee following telephone notice to
an employee that the fire insurance was being canceled.
(FIDELITY AND DEPOSIT COMPANY OF MARYLAND ET AL., Petitioners
v. FIRST STATE INSURANCE COMPANY, Respondent. Supreme Court of
Florida. No. 84,791. June 20, 1996. CCH 1996 Fire and Casualty
Cases, Paragraph 5725.)