O'DANIEL v. Michigan Mut. Liability Co.

• Decision Date: 26 January 1950
• Docket Number: No. 399.,399.
• Citation: O'DANIEL v. Michigan Mut. Liability Co., 88 F. Supp. 339 (W.D. Ky. 1950)
• Parties: O'DANIEL et al. v. MICHIGAN MUT. LIABILITY CO.
• Court: U.S. District Court — Western District of Kentucky

88 F. Supp. 339

O'DANIEL et al. v.MICHIGAN MUT. LIABILITY CO.

No. 399.

United States District Court W. D. Kentucky, Owensboro Division.

January 26, 1950.

King & Flournoy, Henderson, Ky., for plaintiff.

Pentecost & Dorsey, Henderson, Ky., for third partyplaintiff.

Byron, Sandidge & Holbrook, Owensboro, Ky., for defendant.

SWINFORD, District Judge.

The plaintiff, R. E. O'Daniel, doing business as the R. E. O'Daniel Coal Company, instituted suit in equity in the Henderson Circuit Court to have the court declare his rights under a policy of insurance and adjudge a recovery against the defendant insurance company by the terms of a contract of insurance which he alleges was in effect at the time the alleged liability on his part to third persons arose.The case is here on removal.

The insurance company denies liability under the terms of the policy and answers that the policy referred to by the plaintiff was not in effect at the time of the incident out of which alleged liability arose.

The plaintiff, a retail coal dealer, on January 30, 1948, purchased the policy in issue from the insurance company.The policy was a standard contract of liability insurance for the protection of the insured for any liability to third persons for damage to them or their property growing out of accidents in which the plaintiff's trucks or vehicles were involved while in the course of his business.

On December 29, 1948, a truck included in the coverage was involved in an accident in which third persons were injured.

The annual premium on the policy was $667.15, to be paid in installments as follows: $169.15 on February 1, and $166.00 on May 1, October 1 and November 1, 1948.The undisputed record discloses that the only part of the premium paid was as follows: $100.31 on February 2, and $50.00 on July 19, $50.00 on August 18 and $50.00 on September 27, 1948.Nothing further was paid and on October 14, 1948, he was notified by an agent of the company that he was in arrears at that time (before the November 1 payment was due) in the sum of $347.58.This notice was addressed to him at the address given in the policy, 460 South Green Street, Henderson, Kentucky.No response was made to this notice and the notice was not returned.The November 1 payment was ignored by the insured and on December 8, 1948, a cancellation letter, to which was attached a statement of account, advising him that the policy was cancelled effective at 12:01 A. M. on December 18, 1948, was mailed to him by the insurer.The letter is quoted as follows:

"R. E. O'Daniel Coal Company 460 S. Green Street Henderson, Kentucky "Dear Sir "Re: Automobile PolicyNo. AS825157-M "Cancellation Effective 12-18-48 "Premium Past Due $487.43

"This is to notify you that your automobile insurance is hereby cancelled, effective at 12:01 A. M. Standard Time at the address of the named insured on date shown above because of non-payment of premium.If a Personal Accident Policy has been issued in conjunction with the above captioned policy, then this notice of Cancellation also applies to the Personal Accident Policy.This cancellation shall be without prejudice to any claim originating prior thereto.

"The excess of paid premium above the pro rata for the expired term, if any, will be refunded on demand.

"Should you desire to continue the insurance in force without lapse of coverage, payment in full must be received by us prior to the effective date of cancellation.The receipt and acceptance of a partial payment will not reinstate the policy.

"Yours very truly "D. W. Hickok Credit Manager"

The plaintiff says he never received this letter.After the accident the insured called the agent of the company who had written the insurance and reported the accident.The next day the agent, without knowledge of the letter of cancellation, called on the insured and began investigation in conjunction with the adjuster who accompanied him.

On this occasion the insured voluntarily gave the agent his check for $200.00.This check was returned by the bank on which it was drawn with the notation, "Returned on account of insufficient funds".

Upon learning of the action of his company in sending the cancellation letter the adjuster discontinued the investigation.

There are two questions to be determined in the decision of this case.First, was the letter actually sent by the company and received by the insured in the due course of the mails?The proof is abundant and undisputed that the letter was actually mailed on December 8.Witnesses are offered who testify positively that the letter was written and mailed from the home office of the company.Copies were received in the due course of the mails by those to whom they were sent with one exception.The agent who wrote the insurance and on whom O'Daniel called for an investigation after the accident had not received a copy.He says he was not supposed to have a copy, although the cancellation letter on its face indicates that one was at least prepared for him.This is the one fact that favors the contention of the insured that he was not notified.It is not, however, sufficient to overcome the proof to the contrary and I must conclude that the letter was mailed on December 8, 1948.

I am also of the opinion that it was received by O'Daniel or his business house at the address, 460 South Green Street, Henderson, Kentucky.He and his wife deny that the letter ever reached them.There is, of course, no direct proof to the contrary.However, in the light of the whole circumstances and apparent unbusinesslike methods followed by O'Daniel it is not illogical to conclude that a letter bearing a return address that was mailed and never returned reached its destination.Other letters addressed the same way from the same office had been received.O'Daniel was far behind in his premium payments and there are strong indications from the whole record that he was having difficulties with his finances.It is not drawing too strenuous an inference to conclude that a letter demanding payment of $487.43 would not receive immediate attention, but would be at...