Red Cab Co. v. St. Paul Mercury Indemnity Co.
98 F.2d 189 · Court of Appeals for the Seventh Circuit · 1938
Facts
Defendant's agent issued a 30-day workmen's compensation insurance binder to the plaintiff. Four days later, the agent sent a letter stating the risk was declined and returning a payroll report, but did not explicitly mention canceling the binder. Accidents occurred during the binder period, and the plaintiff sued for coverage.
Procedural history
The plaintiff initiated this action to recover on the insurance contract. A jury trial was waived, and the trial court entered judgment for the plaintiff based on special findings of fact and conclusions of law. The defendant appealed, challenging the trial court's conclusions of law. The case had previously been before this court and the Supreme Court.
Issue
Did the agent's letter, which stated the risk was declined but did not explicitly cancel the binder, constitute a valid cancellation of the workmen's compensation insurance binder under Indiana law?
Holding
No, the agent's letter did not constitute a valid cancellation of the binder. The court affirmed the judgment for the plaintiff, finding the binder remained in effect for the 30-day period.
Rule
Under Indiana law, a workmen's compensation insurance binder is considered a 'policy,' and its termination is not effective as to employees until ten days after written notice is received by the Industrial Board of Indiana. A letter merely declining to issue a permanent policy, without explicit cancellation of the binder or notification to the Industrial Board, is insufficient for cancellation.
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