Ward v. Federal Kemper Insurance

ADKINS, Judge.

The issue posed to us by appellant, Aaron Ward, is whether appellee, Federal Kemper Insurance Company, properly cancelled an insurance policy for nonpayment of a premium. The question is whether Ward owed the premium at the time of cancellation. The answer to this seemingly-simple question is complicated by a problem in the law of negotiable instruments: in whose hands are the funds represented by a check that the drawer (Federal Kemper) has mailed to the payee (Ward) but that is never paid by the drawee bank because never negotiated by the payee? The facts are undisputed.

On May…