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filed: October 17, 1989.


Appeal from the Order Entered August 23, 1988 in the Court of Common Pleas of Lancaster County, Civil Division, at No. 3449 of 1985.


William A.K. Titelman, Harrisburg, for appellant.

Linus E. Fenicle, Harrisburg, for appellee.

Montemuro, Tamilia and Montgomery, JJ. Tamilia, J., files a dissenting opinion.

Author: Montgomery

[ 388 Pa. Super. Page 181]

This action was instituted by the Plaintiff-Appellee, the American Association of Meat Processors, against the Defendant-Appellant, Casualty Reciprocal Exchange, seeking the payment of a minimum of ten percent of the yearly premiums paid by participants in a program of workers' compensation insurance issued by the Appellant insurer, pursuant to the sponsorship of the Appellee Association. The Association claimed it was entitled to such a recovery based upon an alleged agreement between the parties. The insurer maintained that there was no agreement requiring it to make such a payment to the Association. The dispute involved a period described by the parties and the trial court as the April 1, 1983 -- March 31, 1984 insurance year.

The dispute proceeded to a non-jury trial. The trial court determined that an oral agreement existed for the Appellant to pay the Association an annual dividend or savings, equal to a minimum of ten percent of the premiums derived by the Appellant from the program. Accordingly, the trial court issued an Opinion and Order, awarding the Association an amount equal to ten percent of the premiums paid by Association members to the insurer, during the period in question, for the workers' compensation coverage endorsed by the Association.

The insurer filed post-trial motions requesting the entry of judgment n.o.v., or alternatively, a new trial. The Association also filed a post-trial motion, urging that it should have been awarded prejudgment interest. The court en banc issued a final Order which denied the motion of the insurer for judgment n.o.v. or a new trial, but granted the request of the Association for interest. After judgment was entered in the trial court, the instant appeal was filed by the Appellant. Three basic claims of error are properly presented for review.

The first contention of the Appellant is that the trial court improperly determined that an agreement existed which required the Appellant to pay the Appellee ten percent

[ 388 Pa. Super. Page 182]

    of the annual premiums from the policies purchased by members of the Association in the sponsored workers' compensation insurance program. It is claimed that prior annual payments which had been made were merely voluntary, and established no right in the Association to receive a similar payment during the 1983-1984 insurance year, in exchange for the Association's endorsement of the program in issue.

From our review of the entire record, we are convinced that the trial court had substantial evidence to support its determination that an oral agreement existed between the parties which required the insurer to make the payment which was sought in this action by the Association. In determining whether or not an alleged oral agreement existed, a court should look to all of the surrounding circumstances, and the course of dealings between the parties, to ascertain the intent of the parties. Westinghouse Electric Co. v. Murphy, Inc., 425 Pa. 166, 228 A.2d 656 (1967). The evidence of record in this case shows that in March, 1967, the Association was solicited by the insurer to establish a group workers' compensation insurance program for members of the Association. From 1968 through 1984 the Association endorsed the Appellant's workers' compensation program and a number of its members purchased policies for such coverage during each such year. Consistently each year, a payment was made by the insurer to the Association, equal to no less than ten percent of the total premium paid. In addition, evidence was presented of correspondence the insurer sent to the Association, making reference to a "ten percent minimum regardless of loss ratio" and a "practice to pay a minimum of (10%)". During the span from 1968 ...

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