This section contains the nature of the case and procedural background.

General Credit (P) loaned money to Service Trucking to buy two automobiles. P took a security interest in the cars and required Service to insure P's interest in the cars. Service obtained insurance on the cars through Imperial (D). D's policy included the following conditions 'In case the ...owner shall neglect to pay any premium due... the lienholder shall, on demand, pay the same.' Both of the automobiles covered by the insurance policies were damaged. P submitted claims and was informed by D that the borrowers were delinquent on their premiums and this amount constituted a setoff on P's recovery due under the policy. P sued for the collision damage and D sought to offset the unpaid premiums. D alleged that its clause created a covenant to pay the past-due premiums. P claimed that the clause merely created a condition that it pay on demand. The court gave the verdict to P and D appealed.

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