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Int'l Ins. Co. v. Melrose Pk Nat'l Bk

OPINION FILED JUNE 26, 1986.

INTERNATIONAL INSURANCE COMPANY, PLAINTIFF-APPELLEE,

v.

MELROSE PARK NATIONAL BANK, AS TRUSTEE, ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.

JUSTICE JOHNSON DELIVERED THE OPINION OF THE COURT:

Plaintiff, the International Insurance Company, brought an action in the circuit court of Cook County against defendants, the Melrose Park National Bank, as trustee, under trust number 1909, and Lillian Lechtner, the beneficiary under the trust. Plaintiff sought a declaratory judgment determining the amount that it owed defendants under an insurance policy where plaintiff insured defendants' building, where defendants contracted to sell the building, and where a fire damaged the building before defendants and their buyer consummated their agreement and caused them to abandon their contract. The trial court granted plaintiff's motion for summary judgment. Defendants now appeal, contending the trial court erred in granting summary judgment for plaintiff.

We reverse and remand.

The parties agree on the facts. The record shows that defendants owned a building located at 125-27 Broadway Avenue in Melrose Park. On or about April 19, 1982, plaintiff issued an insurance policy to defendants for loss and damage to the building by fire and other risks. The policy had a ceiling of $180,000 and contained the following provision:

"VIII. VALUATION

The following bases are established for valuation of property:

All property at actual cash value 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, nor in any event for more than the interest of the named insured." (Emphasis added.)

On December 2, 1983, defendants entered into an installment agreement for warranty deed in which they agreed to sell the building to a buyer for $65,000. The contract required the buyer to insure defendants' interest in the property against loss by maintaining insurance in an amount at least equal to the unpaid contract price. The contract set the closing date at February 1, 1984, unless mutually agreed otherwise. However, for reasons outside of the record, defendants and the buyer postponed the closing.

On March 17, 1984, a fire occurred that damaged the building. Because of the fire, defendants and the buyer abandoned their contract; there was no closing.

Defendants subsequently submitted to plaintiff a sworn statement in proof of loss. Defendants claimed the policy limit of $180,000 for their building loss. After investigating defendants' claim, plaintiff determined that the total amount due to defendants under the policy was $66,650.01. Plaintiff tendered that amount to defendants, which they refused to accept as the total due to them under the policy, contending that they were entitled to recover $180,000.

On November 26, 1984, plaintiff brought an action in the trial court seeking a declaratory judgment determining the amount that it owed to defendants under the policy, pursuant to section 2-701 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-701). Plaintiff's complaint contained three counts. Counts I and II each advanced a theory that established $66,650.01 as the proper amount of defendant's recovery under the policy. In count III, plaintiff claimed that even if the amount of defendants' loss were greater than $66,650.01, defendants could not recover to an extent greater than their actual insurable interest in the property at the time of their loss. Plaintiff further claimed that since defendants sold the property pursuant to the installment agreement, their actual interest in the property was the unpaid contract price of $65,000.

Defendants attached a counterclaim to its answer, in which they sought $180,000 for the loss of the building, plus attorney fees, pre-judgment interest, and a penalty.

The record shows that both plaintiff and defendants moved for summary judgment on count III. Defendants asserted only that the contract sale price was not a limit on their recovery under the insurance policy, while plaintiff asserted that it was. Defendants sought a trial on counts I and II of the complaint and on their counterclaim. The trial court held that Illinois law limited defendants' recovery under the policy to their insurable interest in the property and that their interest in the property was the unpaid contract price of $65,000. On May 9, 1985, the trial court granted summary judgment for plaintiff, and on July 29, 1985, the court denied defendants' motion for reconsideration. Defendants appeal.

• 1 A trial court may properly enter summary judgment where the record presents purely questions of law. (People ex rel. Rappaport v. Drazek (1975), 30 Ill. App.3d 310, 313, 332 N.E.2d 532, 535.) In the instant case, all parties agreed on the material facts before the trial court and continue to do so. The only issue before the trial court was the legal effect of the contract between defendants and their buyer on the insurance policy. Thus, the trial court was ...


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