Christ Gospel Temple v. Liberty Mutual Insurance Co.

417 A.2d 660 (1979)

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Nature of the Case

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Facts

The congregation of Westminster Presbyterian Church (Westminster) owned and occupied a church building. In May 1968, Westminster purchased a fire insurance policy on this building from D. The policy was written for an initial term of three years, and in May 1971, was renewed for an additional three years. The last premium was paid by Westminster to cover the period from May 1972 through May 1973. In August 1972, Westminster merged with Presbyterian. Presbyterian acquired the former Westminster property. On December 19, 1972, Presbyterian conveyed that property for $9,000 to P. Presbyterian also made a written assignment to P of Westminster's insurance policy with D, for a separate consideration of $750. In its deed to P, Presbyterian retained an option, for a period of ten years, to repurchase the property for the original sale price if the premises ever ceased to be used for Christian services. D was not notified of the merger of Westminster and Presbyterian nor the sale by Presbyterian of the property to P. Also, D was not notified of the purported assignment of the fire insurance policy on the property from Presbyterian to P. The insurance contract’s assignment clause read, “Assignment of this policy shall not be valid except with the written consent of this Company (D).” On February 9, 1973, an agent of D, as a result of a visit to the church, learned of the merger and the later sale of the property and reported these facts to D. Ten days later, on February 19, 1973, fire substantially damaged the church structure. D denied coverage and P filed suit against D for the fire loss. P the attorney who had represented P at the time it purchased the premises was named as a defendant in that the attorney-defendant had failed to properly secure fire insurance coverage as he had promised his client he would. The attorney-defendant joined Presbyterian as an additional defendant, on the theory that Presbyterian incurred liability to P for not effecting a valid assignment of the policy. Presbyterian then filed a cross-claim against D, asserting that if P was not covered under the policy, then Presbyterian could recover for the loss since it claimed a continuing insurable interest in the property. The claim of P against D was dismissed. The trial of Presbyterian against D was declared a mistrial, on the basis that the settlement of the claim of P against the defendant-attorney, and the termination of its claim against D, had made it improper for the jury to now deal with the cross-claim of Presbyterian against D. Motions for Summary Judgment were filed by both Presbyterian and D. Both Motions were denied. A verdict was returned in favor of D. Both P and Presbyterian have appealed.