Thompson & Peck, Inc. v. Harbor Marine Contracting Corp.

• Decision Date: 24 September 1985
• Docket Number: No. 3562,3562
• Citation: Thompson & Peck, Inc. v. Harbor Marine Contracting Corp., 497 A.2d 1049, 5 Conn.App. 366 (Conn. App. 1985)
• Court: Connecticut Court of Appeals
• Parties: THOMPSON & PECK, INC. v. HARBOR MARINE CONTRACTING CORPORATION et al.

Page 1049

497 A.2d 1049

5 Conn.App. 366

THOMPSON & PECK, INC. v.HARBOR MARINE CONTRACTING CORPORATION et al.

No. 3562.

Appellate Court of Connecticut.

Argued June 7, 1985.

Decided Sept. 24, 1985.

John F. Lambert, Cos Cob, for appellants(defendants).

Irving H. Perlmutter, New Haven, with whom, on brief, was Gary P. Sklaver, New Haven, for appellee(plaintiff).

Before DUPONT, C.P.J., and BORDEN and MARY R. HENNESSEY, JJ.

PER CURIAM.

The plaintiff insurance agency instituted an action to recover unpaid insurance premiums alleged to be due from the three defendant corporations.From a judgment rendered by the trial court, Hon. John R. Thim, state trial referee, in favor of the plaintiff, the defendants, Harbor Marine Contracting Corporation, Harbor Marine Towing Company, and Harbor Marine Equipment Corporation, appealed.The appeal raises several claims of error, one of which we find dispositive.

The plaintiff had been writing insurance policies for the defendant corporations since 1978 covering the marine operations engaged in by the "Harbor Marine" group of corporations.The defendants did not always pay their premiums and there was an outstanding balance due to the plaintiff.The defendants requested the plaintiff to procure a new insurance policy covering their marine equipment.To finance the payment of the insurance premium and to bring the defendants' balance current with the plaintiff, the defendantHarbor Marine Contracting Corporation executed a promissory note with the Bank of New Haven (bank), which required the plaintiff to guarantee only that any return premiums remitted due to cancellation of the policy would be sent to the bank.The proceeds of the note were distributed to the plaintiff.The plaintiff reimbursed itself for a balance past due from the defendants and retained the remainder for disbursement to the insurer as premium installments came due.The installments due under the note were not paid and, subsequently, the policy was cancelled.The plaintiff then repaid the bank the full balance due on the note, believing it was a guarantor of the note.The court awarded the plaintiff damages in an amount equal to the unpaid premiums from the date of the issuance of the policy to the date of its cancellation plus interest thereon.

The defendants argue that the court erred in concluding that the proceeds of the promissory note constituted a conditional payment.The plaintiff, under its agreement with the bank, was only required by the bank to remit any return premiums to it if the policy was cancelled due to the failure to pay the note.

We consider dispositive the defendants' claim that the court erred in finding that General Statutes § 42a-3-802(1)(b) was applicable and that the proceeds of the note payable to the bank was a conditional payment to the plaintiff.

The plaintiff received the proceeds of the promissory note which the defendantHarbor Marine Contracting Corporation executed.General Statutes § 42a-3-802 applies where "an instrument is taken for an underlying obligation."The term instrument is defined in General Statutes § 42a-3-102 as a negotiable instrument which is in turn defined by General Statutes § 42a-3-104.The plaintiff did not take an instrument from the defendants...