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November 12, 1957


The opinion of the court was delivered by: Oxner, Justice.

   November 12, 1957.
This is a suit on a policy insuring respondent's dwelling against fire for a term of one year beginning February 10, 1955. The agent writing the policy, A.B. White, was joined as a co-defendant. The house was destroyed by fire on January 27, 1956. The defense was that the policy was cancelled on August 5, 1955, and the unearned premium remitted to and accepted by the insured. The trial resulted in a verdict for respondent against the insurer alone for the sum of $2,500.00, the face amount of the policy. From the judgment entered thereon, the Insurance Company has appealed.

The first question we shall determine is whether the Court below erred in refusing a motion by appellant for a directed verdict upon the ground that the policy was cancelled by the Company long prior to the loss, under the following provision:

"This policy may be cancelled at any time by this company by giving to the insured a five days' written notice of cancellation with or without tender of the excess of paid premium above the prorata premium for the expired time, which excess, if not tendered, shall be refunded on demand."

On August 4, 1955, the Insurance Company issued and mailed to respondent a check for $12.69, upon the left hand corner of which was the following notation:

"By endorsement this check is accepted in full payment of the following account

"Date Amount

"Return Premium

"Lititz Mutual

"Policy 551316 Cancelled

"August 5, 1955"

The foregoing notation correctly stated the number of the policy covering respondent's dwelling. The check was duly received by him but was not cashed until December 5, 1955. His explanation of the acceptance of this check was as follows:

Respondent carried with appellant a fire insurance policy on his store which was also written by White, appellant's local agent. Enclosed in the envelope containing the check was a notice from appellant that it was cancelling Policy No. 551318, which was the policy on the store. This notice of cancellation was introduced in evidence. Respondent was not familiar with insurance. He called White who shortly thereafter came out to his store and after looking at the policies, the notice of cancellation and the check, told respondent "this is on the store and they haven't sent you enough money back" and that "the house is all right; you ain't got nothing to worry about." He further stated: "You just keep that check for awhile because they haven't sent you enough money back and until they do if your store would get burned, they would have to pay you." Respondent held the check until the early part of December when he again saw White and inquired about the matter. White then told him that the insurance on the store had definitely been cancelled and that he, respondent, "just as well go ahead and cash the check and try to get somebody else to write you on the store". Respondent thereupon cashed the check. He never had any further conversation with White about his insurance until after the fire. Respondent was positive that he never received any notice of cancellation of the policy on his house, and there is no evidence that the Company ever requested him to deliver up this policy.

White, as a witness for appellant, gave quite a different version. He testified that during the latter part of July respondent stopped him on the highway and told him that the policy on his house had been cancelled and inquired why the Company did so, to which he replied that he didn't know and there was nothing he could do about it. White said that several days later he called at respondent's store and compared the policy number on the check with that on the house policy and told respondent that his house insurance was cancelled. He also claimed that respondent then had in his possession a notice of cancellation of the house policy. White denied ever telling respondent that the cancellation was on the store and not on the house. He further denied having any conversation with respondent in December.

In determining whether the motion for directed verdict should have been granted, we must accept as true respondent's version of the transaction. From his testimony it appears that the Company has never sent him notice of cancellation of the house policy; that being uncertain after receiving in the same envelope the check and notice of cancellation of the store policy as to which insurance the Company intended to cancel, he called the local agent who, after examining the policy, the check and the notice of cancellation, told him positively that the house policy was not affected; and that he did not cash the check until ...

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