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

D issued an automobile liability policy to P. P paid the premium in full. The policy was to expire on November 17, 1981. On August 4, P changed the vehicle insured under the policy. D sent him a check payable in the amount of $ 12.00. This represented a refund of overpaid premium. P received the check but never negotiated it. D discovered that the proper refund should have been $4.50, rather than $ 12.00. D billed P for the difference of $7.50. P never paid the $7.50. D mailed a notice of cancellation effective October 11. On November 15 P was involved in an accident while driving the insured vehicle. D declined to provide coverage. P sued D seeking a declaratory judgment as to coverage. The judge concluded that 'at the time the bill was sent . . . in the amount of $ 7.50, that amount was not due D.' He thought that 'until the negotiable instrument is negotiated and paid by the drawee back [bank] D has suffered no debit.' Despite this, the judge ruled for D. P appealed.

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