MPL Beta 1

Bruce Perens bruce at
Wed Dec 8 04:55:32 UTC 2010

I am having a hard time believing that the stuff you reproduce below is 
of the slightest value to our discussion.

On 12/07/2010 04:16 PM, Alexander Terekhov wrote:
> On Tue, Dec 7, 2010 at 8:32 PM, Bruce Perens<bruce at>  wrote:
>> A short glance over the finding yields the fact that there was much in
>> addition to a license, specifically an explicit permission letter addressed
>> to the customer and giving permission for the particular application of the
>> copyrighted material.
> Automatic ipso factum termination of contracts without proper notice
> (without affirmative steps by the allegedly injured party) is invalid
> not only in the context of copyright licensing contracts.
> Consider the following case regarding automatic termination:
> In 1997, respondent Courtney (Husband) owned two cars, a Chevrolet
> Camaro and Saturn, both insured with petitioner (Insurer). Both
> policies had underinsured motorist coverage (UIM). (2)
> In September 1997, Husband's wife, Susan Courtney (Wife), was in an
> accident in the Camaro and the vehicle was a total loss. Insurer paid
> for the vehicle under Husband's collision coverage. On October 4,
> 1997, Wife purchased a Chevrolet pickup truck as a replacement vehicle
> and insured it with Unisun Insurance Company. The Unisun policy had no
> UIM coverage.
> On October 27, 1997, Husband was in an accident in the Saturn and was
> seriously injured. He filed a claim with Insurer attempting to stack
> the UIM coverage from the two policies issued by Insurer covering the
> Camaro and the Saturn.
> Insurer brought this declaratory judgment action to determine whether
> the UIM coverage on both policies could be stacked or whether only the
> Saturn UIM coverage applied. Although the Camaro policy was not
> actually cancelled for non-payment of premiums until January 23, 1998,
> Insurer claimed it terminated on October 4, 1997, when Wife insured
> the replacement vehicle with Unisun. Insurer relied on an automatic
> termination clause in the policy which provides:
> If you obtain other insurance on your covered auto, (3) any similar
> insurance provided by this policy will terminate as to that auto on
> the effective date of the other insurance.
> The trial court found the Camaro policy was not terminated for three
> reasons: 1) Wife had no authority to terminate the Camaro policy by
> buying insurance for the replacement vehicle without Husband's
> consent; 2) the automatic termination clause was not triggered because
> the insurance purchased for the replacement vehicle did not qualify as
> "similar insurance;" and 3) termination under the automatic
> termination clause did not comport with S.C. Code Ann. §
> 38-77-120(b)(2) (2002) which requires an overt act of the insured's
> intent to cancel the policy.
> The Court of Appeals affirmed on the ground the insurance purchased on
> the replacement vehicle was not "similar insurance" and so the
> automatic termination clause was not triggered. It declined to address
> the alternative rulings of the trial court although Insurer appealed
> these rulings as well.
> Is an automatic termination clause valid under South Carolina law?
> The Court of Appeals affirmed the trial court's finding that the
> Unisun policy purchased by Wife did not qualify as "similar insurance"
> because the Unisun policy did not include UIM coverage and it had
> different liability limits than the policy with Insurer.
> While we agree with the Court of Appeals's construction of the policy,
> we find an automatic termination clause allowing unilateral
> cancellation by an insurer is invalid under our statutory scheme. (4)
> Section 38-77-120(b)(2), which was cited by the trial court in support
> of its decision, provides:
> § 38-77-120. Requirements for notice of cancellation of or refusal to
> renew policy.
> (a) No cancellation or refusal to renew by an insurer of a policy of
> automobile insurance is effective unless the insurer delivers or mails
> to the named insured at the address shown in the policy a written
> notice of the cancellation or refusal to renew.
> . . . .
> (b) Subsection (a) of this section does not apply if the:
> . . . .
> (2) named insured has demonstrated by some overt action to the insurer
> or its agent that he expressly intends that the policy be canceled or
> that it not be renewed.
> Here, as found by the trial court, Insurer gave no notice of
> cancellation as required under subsection (a) to validate its
> cancellation based on the automatic termination clause.
> . . . .
> Cancellation based solely on an automatic termination clause without
> notice to the insured violates § 38-77-120.
> . . . .
> In conclusion, we agree with the Court of Appeals's construction of
> the automatic termination clause but conclude such a clause is not
> valid in any event."
> regards,
> alexander.

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