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HAMMONTON INVESTMENT AND MORTGAGE COMPANY v. EMPIRE MUTUAL FIRE INSURANCE COMPANY PENNSYLVANIA (ET AL. (12/29/56)

December 29, 1956

HAMMONTON INVESTMENT AND MORTGAGE COMPANY
v.
EMPIRE MUTUAL FIRE INSURANCE COMPANY OF PENNSYLVANIA (ET AL., APPELLANT).



Appeal, No. 282, Jan. T., 1956, from judgment of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1954, No. 2652, in case of Hammonton Investment and Mortgage Company v. Empire Mutual Five Insurance Company of Pennsylvania et al. Judgment affirmed; reargument refused January 17, 1957. Case stated in assumpsit. Before GRIFFITHS, J. Adjudication filed finding for plaintiff against defendant and for defendant against additional defendant; exceptions to adjudication dismissed and judgment entered for plaintiff against defendant and for defendant against additional defendant. Additional defendant appealed.

COUNSEL

I. Finkelstein, for appellant.

Arlin M. Adams, with him James M. Richardson, and Schnader, Harrison, Segal & Lewis, for appellee.

Before Stern, C.j., Jones, Bell, Chidsey, Musmanno and Arnold, JJ.

Author: Chidsey

[ 387 Pa. Page 383]

OPINION BY MR. JUSTICE CHIDSEY

This is an appeal from a final judgment entered by the court en banc which dismissed exceptions to the adjudication and findings of the trial judge, sitting without a jury.

Plaintiff is an automobile finance company. Defendant, Empire Mutual Fire Insurance Company of Pennsylvania, is a Pennsylvania casualty insurance company which issued a master insurance policy to plaintiff covering losses resulting from physical damage to automobiles financed by plaintiff. This policy was written on behalf of the insurance company by the additional defendant, Dealers Underwriters, Inc., of Pennsylvania, hereinafter called the broker, an insurance brokerage company. The insurance company did not reserve any right to pass on or reject any individual risks written by the broker pursuant to the master policy.

After the master policy had been in effect for approximately a year, the insurance company cancelled it as permitted by the terms of the policy. The plaintiff finance company instituted this suit in assumpsit against the insurance company claiming that as a result of the cancellation, three became due and owing to plaintiff the sum of $9,986.88 representing unearned

[ 387 Pa. Page 384]

    premiums plus interest thereon. The insurance company admitted liability to plaintiff in the amount claimed, but brought in the broker as an additional defendant averring that the broker was indebted to it in approximately the same amount and it was stipulated at the trial that any judgment obtained by the insurance company against the broker could be set off against the amount due by the insurance company to the plaintiff, therefore making the issue for determination the rights of the two defendants inter se.

The insurance company's claim against the broker is based on two items arising under a written agreement entered into between them governing the payment of commissions. First, the company claims $3,051.56 plus interest, representing commissions previously paid the broker by the company on premiums unearned at the time the master policy was cancelled. The broker admits liability for this amount but denies liability for the interest thereon. Second, the insurance company claims $6,596.11 plus interest, representing a return of commissions computed under clause 3-(b) of the agreement. The broker contends that under clause 3-(b), it is liable for only $1,978.21 and also disputes liability for interest on the amount due on this item. The written agreement between the parties provides: "3. An advance on commission of 30% of the gross premium will be allowed by the Company. However, (a) You [the broker] agree to repay pro rata in cases of cancellation, either by the Company or the assured. (b) You [the broker] agree to ...


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