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LAWTON B. LOGAN AND HELEN F. LOGAN v. CHRIS GANS (05/09/80)

filed: May 9, 1980.

LAWTON B. LOGAN AND HELEN F. LOGAN, HIS WIFE, APPELLANTS,
v.
CHRIS GANS, K & G SPEED ASSOCIATES, INC. AND COMMONWEALTH LAND TITLE INSURANCE COMPANY



No. 1057 October Term, 1979 Appeal from the Order of the Court of Common Pleas of Delaware County, dated May 1, 1979 as of No. 78-01264.

COUNSEL

Michael J. Pepe, Jr., Philadelphia, for appellants.

Fred B. Fromhold, Ardmore, for Commonwealth Land Title Insurance Company, appellee.

Hester, Montgomery and Cirillo, JJ.*fn*

Author: Montgomery

[ 277 Pa. Super. Page 283]

This action in assumpsit was brought originally against Chris Gans and K & G Speed Associates, Inc., to recover for an alleged balance of the purchase price for land which the plaintiffs orally agreed to sell to the defendants. At the settlement of the transaction at the office of Commonwealth Land Title Insurance Company, the purchasers were $5,000.00 short of the purchase price, but the deal was completed nevertheless, and the deed*fn1 delivered on the purchaser's promise to pay the $5,000.00 balance in monthly

[ 277 Pa. Super. Page 284]

    installments of $400.00. After making one payment, defendants defaulted and this suit was brought to recover the balance of $4,600.00, plus interest.

An answer containing new matter and a counterclaim was filed by defendants, Christopher T. Gans and K & G Speed Associates, Inc., based on an allegation that the plaintiffs did not have title to 2,014 square feet of the land described in the aforesaid deed and claimed damages for breach of the warranty contained in the deed.

Plaintiffs filed an answer to the new matter and counterclaim, and in addition, as counterclaim defendants filed a complaint under Pa.R.C.P. 2252 against the Commonwealth Land Title Insurance Company claiming they were third party beneficiaries of the contract of title insurance which that company had issued to Chris Gans and Robert Keough, Jr. for the property conveyed to them by plaintiffs. Commonwealth then filed preliminary objections to the complaint in the nature of a demurrer contending that the complaint failed to state a cause of action against it. The lower court sustained the exceptions because (1) The contract being one of indemnity and not of guaranty, there could be no recovery in the absence of any proof of loss;*fn2 and (2) The plaintiffs were not third party beneficiaries of the policy of title insurance issued by Commonwealth. We agree with the second reason and will affirm the order.

"To be a third party beneficiary entitled to recover on a contract it is not enough that it be intended by one of the parties to the contract and the third person that the latter should be a beneficiary, but both parties to the contract must so intend and must indicate that intention in the contract; in other words, a promisor cannot be held liable to an alleged beneficiary of a contract unless the latter was within his contemplation at the time the contract was entered into and such liability was intentionally assumed by him in his undertaking; the obligation to the third party must be created, and must affirmatively appear, in

[ 277 Pa. Super. Page 285]

    the contract itself." [Emphasis in Original]. Spires v. Hanover Fire Insurance Company, 364 Pa. 52, ...


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