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WORLD TIRES v. AMERICAN INSURANCE COMPANY (02/09/87)

filed: February 9, 1987.

WORLD OF TIRES, INC., AND PERMA TREAD CORPORATION
v.
AMERICAN INSURANCE COMPANY, A FIREMAN'S FUND INSURANCE COMPANY. APPEAL OF PERMA TREAD CORPORATION



Appeal from the Judgment entered in the Court of Common Pleas of Crawford County, Civil Division, No. A.D. 1981-1137

COUNSEL

Paul D. Shafer, Jr., Meadville, for appellant.

Louis C. Long, Pittsburgh, for appellee.

Wickersham, Rowley and Tamilia, JJ. Rowley, J., files a dissenting statement.

Author: Tamilia

[ 360 Pa. Super. Page 516]

In October of 1980, appellant/Perma Tread sold the physical assets of its tire copying plant to World of Tires and to secure the transaction, Perma Tread held a note and chattel mortgage on the equipment. Prior to the sale, in June of 1980, Perma Tread had obtained insurance on the plant from appellee/American Insurance Company (hereinafter American) to be effective for three years beginning June 30, 1980. On November 17, 1980, an endorsement was issued to the policy changing the named insured to World of Tires with an effective date of October 16, 1980. A subsequent endorsement issued January 13, 1981 provided for an increase in personal property coverage of $50,000 raising the limits to $250,000 effective December 23, 1980. A further endorsement dated January 23, 1981 listed Perma Tread as an additional insured, effective December 23, 1980.

On December 26, 1980, a fire destroyed the plant. A proof-of-loss statement dated April 11, 1981 was submitted by World of Tires and on the Release and Authorization section of this form, Russell Klasen, the secretary/treasurer of Perma Tread, signed on behalf of Perma Tread.

An investigation was conducted by appellee/American and when the parties where unable to reach a settlement, World of Tires filed a writ of summons against American on December 23, 1981. The writ was reissued in April of 1982 and a complaint filed May 14, 1982. In its answer and new matter filed May 27, 1982, American raised the issue of concealment and fraud, alleging that all of the items claimed by World of Tires to be on the premises and

[ 360 Pa. Super. Page 517]

    destroyed by fire were in fact not present or destroyed in the fire.

On July 7, 1983, appellant/Perma Tread filed a petition along with Russell Klasen and Victor Leap, the principal officers of the corporation, seeking to intervene, in which they claimed Perma Tread to be a named loss mortgagee on the policy of insurance issued by appellee, and seeking recovery of the insurance proceeds. In the petition, they also set forth a term of the union mortgage clause of the policy, to the effect that the policy "shall not be invalidated by any act or neglect of the mortgagor . . . ."

American opposed this petition by way of answer and new matter in which it denied that Perma Tread was a named loss mortgagee and asserted that their status was that of an additional insured and, therefore, the mortgagee clause did not apply. In addition, application of the mortgagee clause was denied on the basis that the clause is applicable to buildings only. Under new matter it was alleged first that the individuals have no standing because they were not named as insureds in the policy and second, the limitation of suits clause barred any action since it was not commenced within one year after inception of the loss.

The court granted the petition to intervene as to Perma Tread and denied the petition of the individuals. In the memorandum accompanying the Order, the court held that the contractual limitation issue was not ripe for determination.

On August 18, 1983, Perma Tread filed a complaint claiming that it was a mortgagee under the contract of insurance and entitled to the proceeds. In its answer and new matter, American denied that Perma Tread was a mortgagee, alleged that no proof of loss was filed by Perma Tread as required by the contract and raised the contractual limitations period as a defense.

Motions and cross-motions for summary judgment were filed and the court, by Order entered June 26, 1984, granted World of Tires' motion ...


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