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Sedlacek v. Dryden Mutual Insurance
Citations: 266 A.D.2d 768; 698 N.Y.S.2d 793; 40 U.C.C. Rep. Serv. 2d (West) 246; 1999 N.Y. App. Div. LEXIS 12145
Court: Appellate Division of the Supreme Court of the State of New York; November 23, 1999; New York; State Appellate Court
An appeal was made from a Supreme Court order that granted the defendant’s motion for summary judgment, dismissing the plaintiff's complaint. The plaintiff sold a four-family apartment building to his daughter, Mary Beth Hamilton, under an oral agreement, but remained the titled owner without a deed being executed. Hamilton was responsible for insuring the property and purchased a fire insurance policy from the defendant, listing the plaintiff as mortgagee. On November 27, 1996, the defendant notified Hamilton of the cancellation of the policy due to nonpayment, effective December 14, 1996. After Hamilton sent a check for the overdue premium on December 16, 1996, the defendant reinstated the policy on December 17, 1996. However, the check was dishonored on December 23, leading the defendant to issue another cancellation notice on the same day, which the plaintiff received before a fire damaged the building on December 27, 1996. The plaintiff sought $35,000 in damages from the defendant after his claim was denied. The court ruled that a dishonored check constitutes conditional payment, discharging the obligation to reinstate the insurance policy. The plaintiff argued he should have been able to rely on the reinstatement notice as a mortgagee, but the court found that since he received the cancellation notice before the fire, he could not reasonably rely on the reinstatement notice. The Supreme Court affirmed the lower court's decision, with costs awarded to the defendant.