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ASHLAND SAVINGS & LOAN ASS'N v. AETNA INSURANCE CO.

January 29, 1971

ASHLAND SAVINGS & LOAN ASSOCIATION, PLAINTIFF,
v.
AETNA INSURANCE COMPANY AND INSURANCE COMPANY OF NORTH AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Marovitz, District Judge.

MEMORANDUM OPINION

Motions for Summary Judgment and Judgment on the Pleadings

This is a contract action alleging, alternatively, a breach of each defendant's contract of insurance with plaintiff. Jurisdiction is based on diversity of citizenship since plaintiff Ashland Savings & Loan Association (Ashland) is an Illinois corporation and defendants Aetna Insurance Company (Aetna) and Insurance Company of North America (INA) are corporations of Connecticut and Pennsylvania, respectively.

As amended and supplemented, the Complaint essentially alleges that INA insured Ashland against loss and damage by fire to a certain building and that Aetna insured Ashland against loss and damage resulting from the insured's failure to effectively cover the building with insurance. The Complaint further alleges that plaintiff suffered loss and damage as a result of a fire in the building and that one of the defendants is liable for damages.

Aetna has moved for summary judgment asserting that an applicable fire insurance of INA was in force at the time of the alleged loss. INA has also moved for summary judgment, asserting that its policy with plaintiff had expired before the alleged loss was incurred. Ashland has moved for a judgment on the pleadings, asserting that it is entitled to judgment as to liability against whichever company is found to have insured plaintiff's building at the time of the alleged incident.

The factual circumstances are not complex. During all relevant times, Ashland owned and operated an apartment building at 5054-58 N. Winthrop Ave., Chicago, Illinois. On or about October 21, 1966, Ashland and INA entered into an insurance contract, numbered AOP 6-07-80, which, among other things, provided protection against fire loss. Among the provisions in the contract were the following (at pp. 1, 5):

  "This Policy covers from October 21, 1966 to until
  canceled noon, Standard Time, at Insured's Address."

CANCELLATION of Policy

  "This policy shall be canceled anytime at the request
  of the insured, in which case this company shall,
  upon demand and surrender of this policy, refund the
  excess of paid premium above the customary short
  rates for the expired time. This policy may be
  canceled at any time by this company by giving to the
  insured a five-day's written notice

  of cancellation with or without a tender of excess of
  paid premium above the pro rata premium for the
  expired time, which excess, if not tendered, shall be
  refunded on demand. Notice of cancellation shall
  state that said excess premium (if not tendered) will
  be refunded on demand."

On October 2, 1969, INA sent Ashland a notice of cancellation to be effective October 21, 1969. Subsequent to this notice, no premium was charged to or paid by Ashland.

Plaintiff had also entered into a contract of insurance with Aetna, effective February 1, 1967. This special multiperil policy, numbered MP 14 51 24, insured plaintiff against all direct loss and damage under an "Errors and Omissions Form," which, among other things, provided (at p. 3):

SECTION II

  "A. COVERAGE-MORTGAGEE INTEREST: * * * this company
  agrees to indemnify the insured for loss to the
  insured's mortgagee interest * * * in real property
  and in personal property mortgaged in connection
  therewith, when such loss occurs through error or
  accidental omission on the part of the insured (or
  those representing the insured) in the operation of
  the Insured's customary procedure in requiring,
  procuring and maintaining valid policies or other
  evidences of insurance against the perils described
  below, * * *
    (2) on such property during and after foreclosure
    by the Insured or when sold under a conditional
    sales agreement or other instrument ...

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