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GARCY CORPORATION v. HOME INSURANCE COMPANY

January 26, 1973

GARCY CORPORATION, PLAINTIFF,
v.
THE HOME INSURANCE COMPANY ET AL., DEFENDANTS.



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

MEMORANDUM AND ORDER

This cause comes on upon the cross motions of plaintiff and defendants for summary judgment. The parties have filed briefs and affidavits in support of their respective positions.

This is an action by an owner (GARCY) of a complex of buildings against six insurance companies each of whom issued an insurance policy in the amount of $50,000.00. The policies in question covered the loss of the buildings by fire.

On July 6, 1970 a fire occurred at the insured location resulting in the complete loss of the buildings. Garcy is claiming the full amount of the policies, $300,000.00, in this suit. It is a series of events which occurred prior to the fire which give rise to the issues of this case.

On May 5, 1970 Garcy and a wrecking company, 3 Oaks Wrecking and Lumber Co., entered into a contract that the complex of buildings was to be demolished and the land leveled. The contract provided that all salvage from the wrecked buildings would belong to the wrecking company.

By a letter dated June 25, 1970 an agent of the plaintiff notified the plaintiff's insurance broker of the commencement of the demolition and the plaintiff's desire to cancel the fire insurance effective immediately. The defendants claim that this letter was directed not only to the plaintiff's broker but also to the defendants' agent. At any rate prior to the actual delivery of the insurance policies the plaintiff, on the advice of counsel, attempted to revoke this notice of cancellation and instructed his broker to take no steps to effectuate the cancellation.

On July 6, 1970 while the wrecking operation was going on in the building complex, a fire broke out which completely destroyed the complex including the largest building thereon, a seven story building. It is contended by the plaintiff and not denied by the defendant, that the wrecking operations on this building had not commenced. Although the complaint is phrased in terms which would seem to encompass a claim for damage to the entire complex, plaintiff has in the present motions for summary judgment limited its claim to damage to the seven story building.

The defendants raise three points in their argument for summary judgment, any one of which they claim, should impel the entry of a summary judgment in their favor. Concisely the defendants' arguments are (1) the policies were cancelled by the plaintiff prior to the fire; (2) the wrecking contract and the work done thereunder constituted an increased hazard which suspended the policies; (3) after the commencement of the wrecking operation none of the buildings had any value to the insured and the insured no longer possessed any insurable interest therein. Each of these arguments will be considered separately.

CANCELLATION

The defendants support their position on this issue with a letter dated June 25, 1970 from Larry Kurtzon of Garcy Corporation addressed as follows:

  Mr. E.K. Eichengreen
  Rollins Burdick Hunter Co.
  231 South LaSalle Street
  Chicago, Illinois 60604

The defendants contend that the letter constituted not only notice to the plaintiff's agent, Mr. Eichengreen, but also to the defendants' agent, Rollins Burdick Hunter Co. Aside from the letter itself the only evidence that the defendants offer that the defendants' agent was notified is a statement in an affidavit by Dorothy McNeill, Mr. Eichengreen's secretary, that "Mr. E.K. Eichengreen and Rollins Burdick Hunter Co. were notified by a letter dated June 25, 1970". The plaintiff does not dispute the defendants' authorities which hold that a request for cancellation communicated by an insured to an insurer is fully effective absent delivery of the policies and that such cancellation cannot be unilaterally revoked by the insured prior to the delivery of the policies. De La Perriere v. American Home Assurance Ins. Co., 106 Ga. App. 516, 127 S.E.2d 478 (1962); Waller v. Door County Mut. Ins. Co., 256 Wis. 323, 41 N.W.2d 211 (1950). The plaintiff relies on cases which hold that a cancellation of insurance is not effective until notice is actually received by the insurer or its agent. Ross Togs Inc. v. Fidelity-Phenix Ins. Co., 36 A.D.2d 706, 319 N.Y.S.2d 1 (1971); Louisiana Public Utilities Co. v. Atlas Assurance Co., 238 App. Div. 474, 264 N.Y.S. 603 (1933). The plaintiff contends that the letter of Mr. Kurtzon was directed to the plaintiff's agent and did not have the effect of notifying the defendants' agent.

This court is of the opinion that the defendants' motion for summary judgment on the issue of cancellation should be denied for a number of reasons. First the defendants do not contend and offer no affidavits to show that any agent of the insurers was ever notified of the contents of the Kurtzon letter prior to the date of the fire or took any steps to effectuate the cancellation of the policies. Mrs. McNeill's affidavit which is relied on by the defendants appears to be no more than a conclusion drawn from the manner in which the letter was addressed. The plaintiff on the other hand has submitted affidavits by Mrs. McNeill and Mr. Eichengreen that state that they never forwarded a copy of the letter to the insurers prior to the fire. The defendants are therefore relying solely on the form of the letter to support their position on this issue without any affirmative evidence that the letter or its contents were made known to the defendants prior to the fire. This is obviously insufficient evidence on which to base a summary judgment. Second the form of the letter itself, so heavily relied upon by the defendants, does not appear to be an attempt to notify the agent of the defendants. The agent of the plaintiff maintained an office in a group of offices leased by the agent of the defendants. The fact that the heading of the letter contained the words "Rollins Burdick Hunter Co." on the second line was probably a convenient way of addressing a letter just as in other circumstances one might insert a room number in an address. It is not contended that Mr. Eichengreen was an agent of the defendants, therefore a letter directed to and received by him can in no way be held to be notice to the defendants' agent. The salutation of the letter reads "Dear Ed" and makes no reference to the defendants' agent. The letter asks for a quotation on another insurance policy which is the type of inquiry which would be made to a broker and not directly to the defendants' agent. Finally the letter asks that the cancellation be "taken care of", as if it is left to ...


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