German-American Title & Trust Co. v. Citizens' Trust & Surety Co.

Opinion by Mr. Justice Fell, The defendant agreed to insure the plaintiff against actual loss which might result to it, as a purchaser of ground rents upon unimproved land, by reason of the non-completion of buildings to be erected thereon by P. P. Elkinton. No policy was issued, but the settlement certificate was treated by both parties as a complete agreement. By the terms of this certificate a policy for $30,000, insuring the plaintiff against actual loss by reason of the non-completion of forty-two buildings prior to January 1, 1894, in accordance with an agreement between Elkinton and the assured, dated January 17, 1893, was to be issued when the transaction was settled and the deeds recorded. The agreement of January 17,1893, referred to, provided for the sale of the ground rents, the construction of the buildings, the manner of payment, and for a re-sale of the ground rents to Elkinton at his option upon certain terms. This agreement was signed by Elkinton only, but it was accepted and acted upon by the plaintiff, and the provisions binding the plaintiff were fully carried out. The plaintiff advanced $116,000, the buildings were not completed, and the plaintiff’s actual loss was largely in excess of the amount of the insurance. In September, 1893, Elkinton, without the assent or knowledge of the plaintiff, assigned his contract to Goodchild, and soon afterward the work on the buildings stopped. Subse [255] quently Elkinton claimed that the assignment had been procured from him by fraud. He filed a bill in equity, and obtained a special injunction, which was afterward dissolved. The bill however was proceeded with, and the controversy was not closed for several months thereafter. A balance due by the plaintiffs was claimed by Elkinton, by Goodchild and by the defendant. Negotiations for tbe adjustment of the difficulties wliich had arisen and for the completion of the work were pending for some time, but were finally abandoned, and the ultimate loss to the plaintiff was 14.8,000. Two of the defendant’s contentions at tho trial (1) that the agreement dated January 18,1898, was not executed until after May 20, the date of the settlement certificate, and (2) that the plaintiff, after the assignment by Elkinton, unjustifiably refused to pay to Goodchild or to the defendant, depended on the facts proved, and they were decided by the jury adversely to the defendant. We see no ground for a just criticism of the manner in which the questions of fact were submitted, or of the statement of the law applicable thereto. It remains to consider whether the failure of tbe plaintiff to sign tbe agreement entered into witb Elkinton precluded it from recovering on tbe contract of insurance witb tbe defendant, and whether tbe proper rule for measuring the damages was given the jury. It was contended by the defendant that, as the agreement of January 17, 1898, related to the purchase and sale of real estate, and was not signed by the plaintiff and not ratified by writing, it was invalid, and could not have been enforced by Elkinton, or by bis surety in case of subrogation to his rights, and that the defendant’s contract of insurance, which was based upon this agreement, was not binding upon it. What Elkinton agreed with the plaintiff to do was to convey to it the ground rents, to build on the ground so as to secure tbe rents, and to furnish the bond of a trust company guaranteeing the completion of the buildings in accordance with plans to be approved by the plaintiff. In pursuance of this agreement he procured the defendant’s contract to insure the completion of the buildings, made tbe conveyances and received tbe purchase money. 1 f a policy had been issued it would not have taken effect until the conveyance was made. The insurance related to what re [256] mained to be done after the conveyance, the completion of the buildings, and to that part only, of Elkin ten’s agreement. It was not an insurance that he would convey, but that after conveying he would build. It did not cover any obligation on the part of the plaintiff, but the obligation of Elkinton only, as fixed by a then existing agreement between him and the plaintiff. We find no error in the statement of the rule for the measure of damages. The jury were limited to the actual loss in the value of the ground rents, not exceeding the amount of the insurance, and were instructed that that loss would be represented by the difference in the market value of the ground rents if the buildings had been completed as provided by the agreement, and their value with the buildings in the incompleted state in which they were left. We know of no better rule than this in such a case, and of none more just to the defendant. A sale of ground rents issuing out of land on which were uncompleted buildings would furnish a very unsatisfactory and inconclusive test of their value. A sale would be one means of fixing a value with the buildings unfinished, but the ground rents if not well secured, even with completed buildings, would have been worth less than par. The plaintiff was under no duty to take the chance of a greater loss by exposing its property to sale with the buildings unfinished. The judgment is affirmed.