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AMERICAN MUT. LIAB. INS. CO. v. BOLLINGER CORP.

October 23, 1975

AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a corporation, Plaintiff,
v.
BOLLINGER CORPORATION, a corporation, Defendant



The opinion of the court was delivered by: MARSH

 MARSH, District Judge.

 In this diversity action, the plaintiff, American Mutual Liability Insurance Company (American), sues the defendant, Bollinger Corporation (Bollinger), for unpaid premiums on two issued insurance policies covering certain risks of Bollinger and its four closely connected corporations. The amount prayed for in the complaint is $20,562.60 which was amended to $20,486.60. Plaintiff also amended to claim premiums allegedly due on two policies of insurance instead of three.

 The four other corporations covered by the policies were Vulcan Tank Company (Vulcan) and Portersville Equipment Company (Portersville), both wholly owned subsidiaries of Bollinger at the time coverage became effective; Kincaid Industries (Kincaid), which owned 86% of Bollinger's stock, and Superior Wall Products Company (Superior), a wholly owned subsidiary of Kincaid.

 Morton J. Greene was President and Chairman of the Board of Kincaid and owned 58% of its stock (PX12); he also was Vice President and Chairman of the Board of Bollinger, Vice President of Superior Wall, Portersville and Vulcan. Thomas R. Allen was President of Bollinger, Portersville and Vulcan and Vice President of Kincaid. Eugene Lysick was Treasurer of Bollinger, Portersville and Vulcan.

 Prior to July, 1971, the aforesaid corporations had various liability insurance policies with several insurance companies. After a review it was decided by Bollinger to place Workmen's Compensation and multi-peril liability insurance with a multiple coverage carrier, such as plaintiff (PX28), with increased premium discounts and increased dividend allowances, thereby saving in excess of $2,000 a year. (Tr. pp. 55-56, 257). It was not only advantageous economically but also administratively for Bollinger and its two wholly owned subsidiaries to consolidate their Workmen's Compensation policies, multi-peril policies and automobile liability policies with one common expiration date, (Tr. p. 419). In addition, plaintiff was the lowest bidder, (Tr. pp. 298-299).

 All policies with plaintiff had expired or were cancelled on July 2, 1973. Bollinger obtained coverage elsewhere. (PX4, Tr. pp. 289-290, 495).

 The defendant, Bollinger, denies that it is liable to plaintiff for any unpaid premiums. The defendant also invokes the Pennsylvania Statute of Frauds, 33 P.S. ยง 3 as a defense; and contends that any prior agreement on its part to pay the premiums of Kincaid and Superior would be a breach of a fiduciary duty, resulting in corporate waste or an illegal constructive dividend because 14% of its stock was publicly owned.

 Bollinger claims $31,402.40 *fn1" for "excess premiums" allegedly paid to plaintiff. As we understand Bollinger's contention, the obligation of each corporation named in the policies was several, and Bollinger contends that following the sale of Vulcan to Thomas L. Helton in late 1973, plaintiff agreed to credit Bollinger with all the premiums it had paid on behalf of Vulcan and to look solely to Vulcan for payment of the amount thereof. (PX3, PX4, PX5, PX7). Since Vulcan did not pay, Bollinger seeks by way of the counterclaim to recover the amount of the Vulcan premiums it had paid to plaintiff in addition to alleged overpayments. (DXH, Tr. pp. 477-479). *fn2" We find no such agreement; the alleged overpayments were not proved; and plaintiff's denial of the counterclaim will be sustained.

 It is our opinion that the plaintiff is entitled to judgment against Bollinger for unpaid premiums in the amount of $15,229.60 and that judgment should be entered in favor of plaintiff and against the defendant on the counterclaim.

 We set forth the following additional findings of fact.

 1. Plaintiff, American, is a corporate citizen of Massachusetts with its principal place of business in that State. Defendant, Bollinger, is a corporate citizen of Pennsylvania with its principal place of business in Pennsylvania. The matter in controversy exceeds the jurisdictional amount.

 2. On July 2, 1971, plaintiff issued and defendant accepted a Workmen's Compensation insurance policy. *fn3" This policy originally named as insured:

 
"Bollinger Corporation-Porters (sic)
 
Equipment Company,
 
Vulcan Tank Corporation,
 
Address 1001 Duss ...

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