No. 438 April Term, 1979, Appeal from the Judgment in the Court of Common Pleas of Erie County, Civil Division, No. 3654A of 1974, in Assumpsit.
John W. English, Sr., Erie, for appellant.
John M. McLaughlin, Erie, for appellees.
Price, Cavanaugh and Watkins, JJ.
[ 282 Pa. Super. Page 209]
This case arises from a casualty loss sustained by appellant on December 9, 1973, when a building it owned was partially destroyed by fire. At the time of the fire, appellant maintained an insurance policy with appellee Centennial Insurance Company (hereinafter Centennial) which provided coverage of $180,000 for building loss, $40,000 for loss of contents, and $60,000 for business interruption loss. After attempts to reach a total settlement of its claim proved unsuccessful, appellant filed a suit against Centennial contending that the insurance company was contractually liable for the following casualty losses: $148,865.27*fn1 for building loss; $70,000 for loss of contents; and $60,000 for business interruption loss. Prior to the date the complaint was filed, Centennial paid into the court of common pleas an amount of $181,220, which was designated as a payment of $141,220 for building loss and $40,000 for loss of contents. Centennial's liability on this amount was not contested. The issues in dispute before the court of common pleas were whether: (1) an oral binder existed providing for an additional $30,000 on the contents of the building;*fn2 (2) appellant sustained a loss
[ 282 Pa. Super. Page 210]
of $60,000 from business interruption; and (3) interest on appellant's claims should be assessed from the date of the fire. A non-jury trial was held before the Honorable Lindley R. McClelland, and it was found that Centennial, through its agent, appellee MacEwen, entered into an oral binder with appellant to provide an additional $20,000 coverage for the contents of the insured building. The court, therefore, awarded appellant an additional $20,000 above the amount previously paid into court by Centennial, with interest on the $20,000 assessed at a rate of six percent per annum calculated from the date of the fire. Additionally, the court found that appellant failed to establish any business interruption loss or even prove that it could have survived financially absent the fire, and the court refused to assess interest on the $181,220 amount appellee paid into the court in 1974. Appellant filed exceptions to the trial court's findings and decision, and the court of common pleas, en banc, denied those exceptions.
On appeal, appellant contends that the trial court erred in finding that it had failed to establish a business interruption loss and in refusing to assess interest on the $181,220 amount from the date of the fire until the date Centennial paid it into the court of common pleas. Although we affirm the judgment of the court of common pleas, we do agree with appellant that interest should have been assessed on the amount Centennial paid into the court, and we therefore modify the judgment by adding interest at the rate of six per cent per annum on the amount of $181,220 for the period of October 21, 1974, through December 16, 1974.
Generally, business interruption insurance is intended to return to the insured the amount of profit it would have earned had the event insured against not intervened. See 44 C.J.S. Insurance § 48; Annot. 83 A.L.R.2d 885; Eastern Associated Coal Corp. v. Aetna Casualty & Surety Co., 475 F.Supp. 586 (W.D.Pa.1979); Supermarkets Operating Co. v. Arkwright Mutual Insurance Co., 257 F.Supp. 273
[ 282 Pa. Super. Page 211]
(E.D.Pa.1966). In assessing liability for a business interruption loss, the previous experience of the business before the fire as well as its probable future experience thereafter must be considered, and as a prerequisite to recovery, the claimant must show an actual monetary loss. See generally, Couch on Insurance 2d §§ 79:365, 79:520 (2d ed. 1959).
We note, initially, that it is axiomatic in the law of this Commonwealth that the findings of fact of a trial judge, sitting without a jury, sustained by the court en banc, have the force and effect of a jury's verdict, and, if based on sufficient evidence, will not be disturbed on appeal. See, e. g., Penneys v. Pennsylvania Railroad Co., 408 Pa. 276, 183 A.2d 544 (1962). Viewing the evidence in the light most favorable to Centennial, the record in the instant case indicates that appellant's business was doomed to failure absent an immediate infusion of additional financial backing. The motel and restaurant business appellant operated on the insured premises sustained operating losses in its first two years of operation and it was projected that it would sustain a net operating loss during the business year in which the fire occurred. Accounting records introduced into evidence revealed that appellant's ratio of assets to liabilities was 1:4 at the end of fiscal year 1972 and approximately 1:5 at the end of fiscal year 1973. Expert testimony indicated that in a viable business enterprise, the ratio of assets to liabilities generally would be 2:1 and that the progressively deficient ratio displayed by appellant could only lead to financial ruin absent additional financing. Furthermore, officers of Marine Bank, the bank with which appellant maintained its payroll account, attested to appellant's financial plight. Two days prior to the fire, Marine Bank sent a letter to appellant to notify it that ...