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First Nat. Bank v. Boston Ins. Co.

APRIL 9, 1958.

FIRST NATIONAL BANK OF HIGHLAND PARK, A NATIONAL BANKING CORPORATION, INDIVIDUALLY AND AS TRUSTEE UNDER TERMS OF TRUST AGREEMENT DATED THE 20TH DAY OF JULY, 1951, AND KNOWN AS TRUST NO. 575, APPELLEE,

v.

BOSTON INSURANCE COMPANY, A MASSACHUSETTS CORPORATION, FRANKLIN NATIONAL INSURANCE COMPANY, A NEW YORK CORPORATION, PHOENIX INSURANCE COMPANY, A CONNECTICUT CORPORATION, AND ROCHESTER AMERICAN INSURANCE COMPANY, A NEW YORK CORPORATION, APPELLANTS.



Appeal from the Superior Court of Cook county; the Hon. ALAN E. ASHCRAFT, Judge, presiding. Judgment affirmed.

JUSTICE FRIEND DELIVERED THE OPINION OF THE COURT.

The First National Bank of Highland Park, as trustee, held title to property in Lake Forest, Illinois, consisting of two acres of ground improved with a three-story stuccoed frame residence. In March 1952, the four defendant companies issued fire-insurance policies on the building in the aggregate sum of $46,750. The policies, which were identical in their terms and provisions, insured plaintiff "to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss . . ." The policies required the insured to render proof of loss "within sixty days after the loss, unless such time is extended in writing by this company," with the amount to be payable sixty days thereafter.

Subsequently, in May 1952, plaintiff entered into a written contract with Robert and Eleanor Hollingsworth, whereby it agreed to sell the property for $19,000. Pursuant to the contract, $1,000 was paid down as earnest money; $2,000 was paid June 15, 1952; the balance of $16,000 was to become due November 15, 1952. The contract, a standard printed form, with rider attached, provided that the insurance premiums were to be prorated as of the date of delivery of deed, and that the insurance policies were to be assigned to the buyer. It further provided that "If, prior to delivery of deed hereunder, the improvements on said premises shall be destroyed or materially damaged by fire or other casualty, this contract shall, at the option of buyer, become null and void." The purchasers had not taken physical possession of the property, but it had been agreed that they could decorate the premises for occupancy as a dwelling.

On September 25, 1952 the building was totally destroyed by fire. Defendants were notified, their adjuster inspected the premises, and the companies were furnished with an estimate of replacement costs on October 14, 1952. Conferences were held between the parties, first on October 14, 1952, then on December 4, 1952, at which time the estimate of plaintiff's insurable interest was discussed. However, proofs of loss, which were dated December 11, 1952, were not filed until approximately that date, although defendants had requested them shortly after the October fourteenth conference, when the estimate had been furnished them. A copy of the Hollingsworth contract had been supplied to defendants on November 3, 1952.

The report of Western Adjustment and Inspection Company, an insurance adjuster, dated September 30, 1952, to the defendant insurance companies, contained the following:

"RISK

"Risk consists of a three-story, frame mansion with a veneer of exceptionally thick stucco. The home had 25 or 30 rooms and from neighbors, we learned it was in unusually good condition for its age. Property was utilized solely as a one family residence.

"INSURED

"Title to property currently is held in trust. Mr. Hollingsworth apparently had no legal interest at the time of loss.

"_____________________________________________________

"ADJUSTMENT

"Detailed replacement figures are to be obtained to serve as basis of loss. There is no question but what actual loss will well exceed total insurance afforded. Accordingly, we suggest you set your reserve at full amount of your contract."

Evidence adduced upon the hearing disclosed that defendants had employed the Western Adjustment Company to investigate and adjust the loss. Within one day after the fire its manager visited the premises and declared it to be a total loss; he thereupon requested Melville Lackie, the insurance broker, to obtain an estimate of the damage. Lackie, in turn, asked Griffis Brothers, general contractors in Lake Forest, to make up an estimate of the replacement loss, which was done and delivered to the adjustment company on October 14, 1952. This estimate showed that at the time of the fire the replacement cost would total $238,157.

In answer to plaintiff's Notice to Admit Facts, defendants admitted that the actual cash value of the property at the time of loss exceeded the total insurance; they further admitted that negotiations for adjustment of the loss had been undertaken; they conceded that proofs were filed, but not within sixty days after loss, as required by the policies. They took the position that by reason of the existing contract for the sale of the property for $19,000, pursuant to which $3,000 had admittedly been paid by the purchaser, plaintiff's insurable interest did not exceed $16,000, the unpaid balance due under the contract. Trial by the court without a jury resulted in findings adverse to defendants on these issues; judgment was entered June 4, 1957 finding that the issues were in ...


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