Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Goldstein v. Scott

OPINION FILED AUGUST 26, 1982.

WILLIAM GOLDSTEIN, PLAINTIFF-APPELLEE,

v.

DAVE SCOTT ET AL., DEFENDANTS-APPELLANTS. — (SUBURBAN TRUST & SAVINGS BANK, TRUSTEE, ET AL., DEFENDANTS.)



Appeal from the Circuit Court of Cook County; the Hon. Robert G. Mackey, Judge, presiding.

JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:

Plaintiff sued for damages when the porches of a building fell on the garage he was renting and damaged the merchandise inside. The judge directed a verdict for plaintiff as to defendants-appellants' liability and sent only the issue of damages to the jury which awarded $40,000. The defendants-appellants (appellants) have appealed contending in their initial brief that the court erred (1) in piercing the corporate veil of the corporation which was the beneficial owner of the property and holding appellants liable; (2) in holding appellants liable as a matter of law for the damage to the property; (3) in denying appellants' motion for a mistrial after plaintiff twice referred to insurance adjusters on the property before the accident; (4) in refusing to permit a single page of plaintiff's tax return, which page failed to reveal a casualty loss, to be admitted in evidence.

We find no error and affirm.

The property in question is located on the south side of West Armitage. On the front of the lot is a three-story brick apartment house; on the back of the apartment house were attached wooden porches. In back of the apartment house was a garage which plaintiff rented to store merchandise for his furniture store on Milwaukee Avenue.

Initially the property was owned by George Mayer. It was foreclosed. A subsequent owner gave it to Calvary Tabernacle Assembly of God (Calvary), one of the defendants-appellants. Dave Scott (Scott), the other defendant-appellant, was the pastor of the church. Calvary set up a separate corporation, Life Center No. 3 (Life Center), to be the beneficial owner of the property; Scott was the president of the corporation. Title to the property was held by Suburban Trust & Savings Bank under a land trust. On April 3, 1975, after a large snowfall, the wooden porches collapsed onto the roof of the garage; it in turn collapsed damaging the merchandise inside. Plaintiff filed suit against Calvary, Scott and certain other defendants on July 31, 1975. Thereafter the property was sold, Life Center was dissolved and its assets transferred to Calvary.

As already noted, after the evidence was heard, the trial court directed a verdict of liability against Calvary and Scott and the jury awarded $40,000 in damages.

I

The primary issue in this case is whether the trial court erred in piercing the corporate veil, i.e., finding that as a matter of law Life Center was simply the alter ego of Calvary.

The property in question was given to the church in 1974 so it could set up a center of ministry in the inner city. Life Center Ministry was formed for the purpose of the ministry on advice of counsel. Suburban Trust & Savings Bank held the title in a land trust of which Life Center was the beneficiary. The bank's files indicated, however, that inquiries were to be made, not to Life Center, but to Scott at Calvary and notice of building code violations were sent to Scott.

David Scott, Wally Nard, and Jerold Proctor were the directors of Life Center; they were also directors of Calvary. The liability insurance, later reformed to include property insurance, was not taken in the name of Life Center. Rather an endorsement covering the Armitage property was added by Preferred Risk Mutual Insurance Company to a policy already insuring Calvary Tabernacle Church and Chicago Christian Academy. Life Center was not named in the policy. The property was sold after the loss and after the present lawsuit was filed. The proceeds of the sale were not retained by Life Center. Rather, Life Center was dissolved and the assets transferred to Calvary.

Sometime after this Calvary filed suit in Federal Court against Preferred Risk Mutual Insurance Company to recover for the damage to the property sustained on April 3, 1975, including the damage to the garage. Calvary sought to have the policy, which purportedly only afforded liability coverage to Calvary for the Armitage property, reformed to also provide liability coverage. *fn1

In connection with that lawsuit, Scott filed an affidavit in Federal Court on September 16, 1977. In it he swore under oath that:

1. Life Center No. 3 and Calvary had been interlocking in their purposes and objectives.

2. The two corporations were served and functioned through interlocking boards of directors consisting of the same persons.

3. The interests of Calvary and Life Center in the premises were for practical purposes considered identical by both corporations and their directorates, "as witness reference to subsequent sale thereof."

The affidavit also quoted from a deposition of Scott in which he said the church was paid $60,000 for the sale of the property and to a deposition of Proctor in which he said there was really no distinction between Calvary and Life Center from a practical point of view. On December 20, 1979, the Federal district court held:

"It seems clear to me that the plaintiff Calvary Tabernacle Church has an insurable interest in this property on Armitage Avenue.

The uncontradicted evidence is that the corporation which was the beneficial owner of the property is simply an alter ego of the church, organized for purposes of carrying out church business; and there's [sic] a virtual identity of purpose, personnel, and financial interest, and therefore I believe that the plaintiff is a proper party to sue under this contract of insurance and it does have an interest under the policy."

It reformed the policy to provide property coverage instead of just liability coverage.

• 1 The confusion and commingling of Calvary and Life Center has continued to the present. Appellants in their reply brief denied that Calvary procured the dissolution of Life Center and acquired its assets without providing funds to satisfy its obligation to the plaintiff since, according to appellants, Life Center was insured by the Preferred's liability policy, a copy of which was set forth in appellee's brief. That policy, however, as already noted, names only Calvary and Christian Center as insureds and not Life Center. It is axiomatic that a liability policy insures only those persons named in the policy (see, for example, 7A Appleman, Insurance Law and Practice sec. 4491.01 (1979), and additional insureds qualifying under some clause extending coverage. No such clause is shown here.

It is not necessary or even proper for this court to determine whether, as a matter of law, the corporate veil should have been pierced since relitigation of that issue would be improper. Calvary is barred by Calvary's actions in the Federal Court, Scott's affidavit, and the judgment of the Federal District Court that Life Center was simply an alter ego of the church (Finley v. Kesling (1982), 105 Ill. App.3d 1, 433 N.E.2d 1112), and the district court's finding was a material finding essential to its ultimate judgment that Calvary could recover on the insurance policy.

• 2, 3 Calvary was the sole plaintiff in the action brought against preferred. It was an insured under the policy. But it could only recover if it had an insurable interest in the property, both when the insurance was obtained and at the time of the loss. (Reznick v. Home Insurance Co. (1977), 45 Ill. App.3d 1058, 360 N.E.2d 461; Patterson v. Durand Farmers Mutual Fire Insurance Co. (1940), 303 Ill. App. 128, 24 N.E.2d 740; 4 Appleman, Insurance Law and Practice secs. 2121, 2122 (1969).) Calvary in its complaint alleged such insurable interest when it alleged that it had acquired title to the property. Scott's affidavit was used by Calvary to establish this insurable interest by establishing that the beneficial owner, Life Center, was merely Calvary's alter ego and there was no practical difference between the two corporations. The district court, convinced by this, so found. That finding is binding on this court, even though Goldstein was not a party to the Federal Court action. (Illinois State Chamber of Commerce v. Pollution Control Board (1979), 78 Ill.2d 1, 398 N.E.2d 9.) Furthermore, Calvary having sought the finding that it was Life Center's alter ego, having so testified in detail under oath, and having obtained the finding it so vigorously sought, is judicially estopped from denying in this action that it is Life Center's alter ego. (Finley v. Kesling (1982), 105 Ill. App.3d 1, 433 N.E.2d 1112.) As we stated in Finley a party cannot play "fast and loose" with the court below or blow "hot and cold" during the course of litigation. When a party assumes a certain position in a legal proceeding and succeeds in maintaining that position, he may not thereafter assume a contrary position. Garden City Sand Co. v. Christley (1919), 289 Ill. 617, 124 N.E. 729; Finley.

• 4 Appellants in their reply brief contended that Calvary had simply recovered what Life Center would otherwise have been able to recover, Calvary having succeeded to Life Center's right to the proceeds when Life Center was dissolved. This contention is totally without merit. First of all, while it is true that the right to recover on a property insurance policy may be assigned after the loss (Brown v. State Farm Fire & Casualty Corp. (1975), 33 Ill. App.3d 889, 338 N.E.2d 427), Calvary did not sue on an assignment and never alleged or argued the existence of an assignment; rather it relied on its own interest in the property. Far more important, however, is the fact that Life Center was never insured by the policy and had no right to recover on the policy even though it had suffered a property loss. Property insurance does not insure property but the interest of the insured named in the policy. (Miyata v. Peerless Insurance Co. (1981), 95 Ill. App.3d 584, 520 N.E.2d 493; Patterson v. Durand Farmers Mutual Fire Insurance Co. (1940), 303 Ill. App. 128, 24 N.E.2d 740; Bryant v. Transamerica Insurance Co. (Ky. 1978), 572 S.W.2d 614; 4 Appleman, Insurance Law and Practice sec. 2105 (1969).) Thus the naming of the property in Calvary's policy did not cause Life Center to be insured. As the policy specifically provided, it only insured the interest of the insured Calvary. It did not in addition cover the interest of the unnamed Life Center. (Miyata v. Peerless Insurance Co. (1981), 95 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.