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Creaghe v. Iowa Home Mut. Cas. Co - 323 F.2d 981 (10th Cir. 1963)

Rule:

The return of premiums is not necessarily a condition precedent to cancellation.

Facts:

Plaintiff St. George Creaghe had an unsatisfied judgment against Muril J. Osborn, defendant's insured, which Creaghe had obtained in a damage action arising from a collision between the plaintiff's car and Osborn's truck. Creaghe alleged that Defendant Iowa Home Mutual Company (Insurer) had been the insurer of Osborn's truck at the time of the accident, and sought to collect this judgment from it. Insurer admitted that at one time it had issued a liability policy to Osborn, but asserted that Osborn had cancelled the policy shortly before the accident. Osborn was not a party to thie suit. The evidence was presented that Osborn had orally informed the Insurer's agent that he wanted to cancel the policy, but the premiums Osborn had paid were not returned until almost seven months later. Motions for directed verdict were made by both parties. The judge reserved his ruling and submitted interrogatories to the jury. These were answered favorably for plaintiff Creaghe, but the federal district court found that there was no material fact for the jury and gave the Insurer a directed verdict. Plaintiff sought review from the United States Court of Appeals for the Tenth Circuit.

Issue:

Was the cancellation of an automobile insurance policy conditioned upon the return of the premiums?

Answer:

No.

Conclusion:

The appellate court affirmed and held that the testimony plus the other proof on the point provided evidence of a cancellation ,which was equivalent to the actual surrender of the policy then already in the agent's possession.  The testimony of the agent and his employee is not contradicted, nor was it inconsistent with other facts in the record.  The court ruled that the record established that an effective policy cancellation took place prior to the accident and the delay in the return of the premiums, which occurred so as to spare the debtor, Osborn, additional premiums, was immaterial because the delay benefitted Osborn who never complained of it or the amount refunded.

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