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RIVERS v. DELAWARE VALLEY MUTUAL CASUALTY CO. (11/16/61)

November 16, 1961

RIVERS
v.
DELAWARE VALLEY MUTUAL CASUALTY CO., APPELLANT.



Appeal, No. 324, Oct. T., 1961, from judgment of Municipal Court of Philadelphia County, Dec. T., 1960, No. 4590-E, in case of Howard Rivers v. Delaware Valley Mutual Casualty Co. Judgment affirmed.

COUNSEL

Sheldon Tabb, for appellant.

Maurice Freedman, with him Robert H. Arronson, and Herbert H. Hadra, for appellee.

Before Ervin, Wright, Woodside, Watkins, and Flood, JJ. (rhodes, P.j., and Montgomery, J., absent).

Author: Flood

[ 196 Pa. Super. Page 476]

OPINION BY FLOOD, J.

This is an appeal from a judgment entered upon the pleadings in an action against a liability insurance company. The complaint avers that the defendant had written an automobile casualty insurance policy for Edward McCullough which was in full force and effect on July 16, 1960, when McCullough, while driving the insured vehicle, had a collision with the plaintiff's car. The plaintiff made a claim against McCullough, which the defendant company and the plaintiff agreed to settle. On September 9, 1960, the defendant forwarded to the plaintiff a release in the amount of $270 and,

[ 196 Pa. Super. Page 477]

    in an accompanying letter, advised the plaintiff that upon return of the release properly executed it would forward to him a check for this amount. The plaintiff on or about September 10, 1960, executed and returned the release but the defendant failed to pay the $270, for which suit was brought.

The defendant's answer averred that McCullough had warranted that he had had no automobile collisions during the three preceding years and that on July 8, 1960 an automobile liability binder was issued to him in reliance upon this warranty. The defendant received reports from McCullough that he was involved in automobile accidents on July 15, 1960 and August 5, 1960, and an extensive investigation was undertaken as to the truth of the warranties made by McCullough. It was discovered on or about November 3, 1960, that McCullough had been involved in a motor vehicle accident on March 19, 1959, and in number of other accidents prior thereto, and that his warranty was false and made for the purpose of deceiving the defendant. Upon receipt of this information, the defendant took immediate steps to rescind the binder. The defendant admitted that it had agreed to settle plaintiff's claim against McCullough, that it had sent the letter agreeing to pay the plaintiff $270 upon receipt of a release executed by the plaintiff, and that such a release was returned to it, but it denied liability on the ground that no valid liability binder had been issued to McCullough because of his fraudulent representation and warranty and that there was no consideration for the compromise agreement.

The court below held that there was a bilateral contract based upon mutual promises and when the plaintiff returned the signed release to the defendant it constituted full performance on his part and, as far as he was concerned, became a fully executed covenant, enabling him to sue and recover from the defendant.

[ 196 Pa. Super. Page 478]

If plaintiff were suing as a third-party beneficiary on the insurance contract his rights would rise no higher than those of McCullough, the insured. Williams v. Paxson Coal Co., 346 Pa. 468, 31 A.2d 69 (1943). In such suit the defendant could interpose the ...


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