Baker v. St. Paul Fire & Marine Insurance Co.

Victoria Baker (Baker) (plaintiff) bought homeowner’s insurance from St. Paul Fire & Marine Insurance Co. (St. Paul) (defendant). The insurance contract was to be effective until November 15, 1985. The insurance contract stated that if the premium was not paid when due, St. Paul would mail a cancellation notice to the insured, and then coverage would be cancelled 20 days after the cancellation-notice mailing date. Baker paid the first three premium payments on time. The final payment was due July 28, 1985. St. Paul had not received the payment by that date. On August 9, 1985, St. Paul mailed a cancellation notice to Baker, and to her mortgage holder and her insurance agent. The notice said that Baker’s policy would be cancelled on September 1, 1985, unless the premium was paid by that date. St. Paul never received the final premium payment. In late September 1985, a fire caused severe damage to Baker’s home. St. Paul declined coverage on the ground that Baker’s insurance policy had lapsed for lack of payment. Baker sued St. Paul for coverage. St. Paul sought summary judgment, which the trial court denied. At trial, Baker testified that on July 15, 1985, she placed the premium payment in a stamped envelope and then placed the envelope in the mail chute in her office building (the Livestock Exchange Building). Baker further testified that the mail chute led to the building’s mailroom. Baker also testified that she usually mailed her payments in preaddressed envelopes she had received from St. Paul. Regarding the cancellation notice, Baker acknowledged that her insurance agent and her mortgage holder received the notice, but Baker could not recall whether she received the cancellation notice. When Baker’s case-in-chief was complete, both parties filed directed-verdict motions. The trial court denied both motions. St. Paul offered into evidence a copy of the postmarked cancellation notice addressed to Baker, and a U.S. Postal Service receipt showing that the cancellation notice was mailed. The jury awarded insurance coverage to Baker, and the trial court entered judgment on the verdict plus attorney’s fees for Baker. St. Paul appealed.