Christ Gospel Temple v. Liberty Mutual Insurance Co.

In 1968, Westminster Presbyterian Church (Westminster) owned a church building and bought fire insurance coverage on the building from Liberty Mutual Insurance Co. (Liberty Mutual) (defendant). The insurance contract included an assignment clause that read, “Assignment of this policy shall not be valid except with the written consent of this Company [Liberty Mutual].” Four years later, in 1972, Westminster merged with the Presbyterian Church of Harrisburg (Presbyterian). As part of the merger, Presbyterian became the owner of the insured church building. No one informed Liberty Mutual of the merger or of the change in building ownership. Later the same year, Presbyterian sold the church building to Christ Gospel Temple (Christ Gospel) (plaintiff). As part of the sale, Presbyterian retained a 10-year option to repurchase the church building if the building was no longer used for Christian church services. Separately, Christ Gospel paid Presbyterian $750 for a written assignment of the fire insurance policy. At the time of the assignment, no one informed Liberty Mutual of the assignment. A couple of months later, on February 9, 1973, one of Liberty Mutual’s agents visited the church building and learned of the merger between Westminster and Presbyterian and of Presbyterian’s sale of the building to Christ Gospel. The agent then informed Liberty Mutual of the merger and the sale. Less than two weeks later, on February 19, 1973, the church building burned. Christ Gospel submitted a claim for fire insurance coverage to Liberty Mutual. Liberty Mutual denied coverage. Christ Gospel then sued Liberty Mutual and Presbyterian. In turn, Presbyterian filed a crossclaim against Liberty Mutual, alleging that if the insurance contract did not cover Christ Gospel, then the contract covered Presbyterian and Presbyterian was entitled to insurance proceeds. The trial court dismissed Christ Gospel’s claim and Presbyterian’s crossclaim. Christ Gospel and Presbyterian each appealed.