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BELIRON CONSTRUCTION CO. v. POTOMAC INSURANCE COMPANY (09/23/74)

decided: September 23, 1974.

BELIRON CONSTRUCTION CO.
v.
POTOMAC INSURANCE COMPANY, APPELLANT



Appeal from judgment of Court of Common Pleas, Trial Division, of Philadelphia, Oct. T., 1967, No. 609, in case of Beliron Construction Co. v. Potomac Insurance Company.

COUNSEL

Edwin B. Barnett, with him Strong, Barnett, Hayes & Quinn, for appellant.

M. Stuart Goldin, with him Isenberg, Goldin & Blumberg, for appellee.

Watkins, P. J., Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Opinion by Cercone, J. Price, J., dissents.

Author: Cercone

[ 230 Pa. Super. Page 380]

This appeal arises from the plaintiff's judgment, after a jury trial, on its assumpsit claim below. The plaintiff, Beliron Construction Co. (Beliron), maintained that through its agent, Mr. Griffiths, it had orally entered into a special multiple-peril (SMP) insurance policy with the defendant, Potomac Insurance Co. (Potomac); and, that the policy provided for a $50,000 payment as the result of the fire that leveled Beliron's newly purchased fabricating plant on June 4, 1967. Potomac argues, inter alia, that the evidence of such an

[ 230 Pa. Super. Page 381]

    agreement was insufficient to support the verdict, and that the lower court erred in denying Potomac's motions for a directed verdict or a judgment non obstante veredicto. The complex facts of the case may be condensed as follows:

On May 12, 1967, Belmont Iron Works, a conglomerate controlled by Mr. Raymond Perelman, entered into an agreement to purchase the assets of a small company called Kennedy Fabricating and Machine Co. (Kennedy) which at that time was insolvent. (Belmont later assigned its interest to its subsidiary, Beliron.) The agreement provided that Beliron would acquire all the assets and assume all the liabilities of the seller and pay it $30,000. Part of the liabilities of the company were arrearages related to insurance policies which Kennedy had established with Potomac through Potomac's agent George Brown.

When Kennedy entered into the insurance agreements in December, 1966, because of its tenuous financial position, it also entered into a financing agreement with First Pennsylvania Bank. According to the financing agreement, the bank would pay the full year's premium on the insurance policies in advance, and Kennedy would repay the bank in ten monthly installments of $188.70, such payments to be due on the thirtieth day of each month commencing in January and concluding in October, 1967. At the time of the purchase and sale contract with Beliron, Kennedy had made none of those required payments. The bank had frequently threatened to exercise its right to cancel the policy and receive in refund the unearned premiums from the insurance company. However, the bank did not do so chiefly because of the efforts of Brown, agent of Potomac who apparently had guaranteed Kennedy's obligation under the financing contract and, therefore, could ultimately be responsible for the bank's losses due to Kennedy's default.

[ 230 Pa. Super. Page 382]

Brown knew of the impending sale of the Kennedy plant and hoped not only that Beliron would make good the Kennedy arrearages, but continue the policy and its concomitant financing agreement with First National. On May 18, 1967, Brown met with William Griffiths, a vice president of Belmont in charge of the Kennedy acquisition, and discussed the future insurance of the plant. It is from this conversation that the alleged oral insurance agreement purportedly arose. During this conversation Brown informed Griffiths of Kennedy's total debt with regard to Kennedy's various insurance policies, including: $943.50 in unpaid installments from January 30 through May 30, 1967; $487.68 owed to Brown for a 1966 Workmen's Compensation audit he had performed; and $4.00 for an automobile insurance audit for Kennedy's personal car. The total due, including the May 30th payment, was $1,435.36.

On May 23, 1967, Beliron, successor to Belmont, mailed a check for that amount to Brown, who received it on May 26th. Brown then forwarded the bank's portion of that payment, retained what was owed to him and ordered that the Kennedy policy be cancelled. The Kennedy-Beliron closing, originally scheduled for ...


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