Cauley v. General American Life Insurance

It is generally understood that the nonpayment of a premium when due, or within the period of grace thereafter, in the absence of some extension or waiver, automatically avoids a policy of insurance. Rees v. Ins. Co., 216 N. C., 428, 5 S. E. (2d), 154; Allen v. Ins. Co., 215 N. C., 70, 1 S. E. (2d), 94. This was the theory upon which the case was tried, and it is the basis of the nonsuit. Williamson v. Ins. Co., 212 N. C., 377, 193 S. E., 273. It is also understood that the giving of a worthless check is not payment. Hayworth v. Ins. Co., 190 N. C., 757, 130 S. E., 612. Nor is the case of Ferrell v. Ins. Co., 210 N. C., 831, 187 S. E., 575; S. c., 208 N. C., 420, 181 S. E., 327; S. c., 207 N. C., 51, 175 S. E., 692, authority for a contrary holding.

Here, however, there is no concession that a worthless check was given in payment of the premium due 1 August, 1939. It is the contention of the plaintiff that this check was wrongfully dishonored by the bank, and there is evidence to support the contention. This makes it a case for the jury. Smith v. Ins. Co., 216 N. C., 152, 4 S. E. (2d), 321.

The conditional receipt issued by the Association shows that the check was received subject to “final cash returns.” The insured customarily paid his premiums by check, and it is conceded that the check in question would have kept the insurance in force but for its dishonor on 12 September. If it should be found the bank was in error in returning the check and accordingly the “final cash returns” are still rightfully available to the Association, the judgment of nonsuit would seem to be at variance with the rights of the plaintiff. Otherwise the defendant may again prevail. Hayworth v. Ins. Co., supra.

’Reversed.