Ralph Tyler et al., Appellants, v. State Farm Mutual Automobile Insurance Company, Appellee, 244 F.2d 84 (5th Cir. 1957)

After a full trial and findings of fact which are invulnerable to attack as "clearly erroneous," Fed.Rules Civ.Proc. rule 52(a), 28 U.S.C.A., the District Court held that the original six-months' policy was effective on November 6, 1953, and on the eve of its expiration, May 6, 1954, was renewed for another six months expiring November 6, 1954, three weeks before the automobile accident involved here. He rejected, as do we, the idea¹  that the assured's having given a check subsequently dishonored for insufficient funds for the original premium either put it in a state of limbo or displaced it altogether until, after letter notice December 23, 1953 that the policy would be continued in force without interruption if the premium were paid by January 5, 1954, the premium was actually paid four days later on January 9, 1954.

The policy did require payment of the premium. But this was the insurer's contract, and it was free to, and did, waive compliance with this provision first by extending the time for payment to January 5, and next, under the letter notice that if later paid, the policy would be reinstated as of the date of actual remittance, by impliedly extending it the few more days to January 9 when it was actually paid. The insurer's contract was issued and outstanding. It had a right to cancel for non-payment of premiums. But until cancelled, and even after cancellation as to occurrences prior to the effective date of any supposed cancellation, it had a real exposure to the public under it. When the assured finally paid, the insurer was entitled to treat a portion of the premium as payment for the cost of the insurance up to that date, and if, between January 5 and January 9, there was an hiatus, a point not now determined and expressly left open for future decision, the "reinstatement" was of the original policy for its original term ending May 6, 1954. Compare, under Florida law, Mutual Benefit Health & Accident Ass'n v. Kennedy, 5 Cir., 140 F.2d 24.

It would be unconscionable to hold that an assured, by giving a worthless check and delaying further through an extended period of grace, can have protection free of cost for the interim so far as the public is concerned and, by finally but belatedly paying what he originally agreed by pay, has procured a new policy effective for the full, original six months' period as of the date of the delayed payment. But this is what the assured and the third party damage suit claimants sought. In declining it, the Judge was clearly right. Mutual Life Ins. Co., of New York v. Lovejoy, 203 Ala. 452, 83 So. 591.

Affirmed.