Ralph L. Macdonald Et Al. v. Carpenter & Pelton

[31 A.D.2d 952 Page 952] The decision of the trial court was rendered upon consideration of the first two causes of action in plaintiffs' complaint,
breach of contract and negligence, respectively. Upon the making of the contract of sale, on September 25, 1962, at which
time $7,100 was paid by plaintiffs against the $71,000 purchase price, plaintiff MacDonald was informed that the existing
insurance coverage was not very substantial. On the same day, coplaintiff Di Giacinto telephoned defendant, who already carried
the sellers' $38,500 fire insurance on the property. He told G. Howard Taylor, an officer (secretary) of defendant, that the
contract of sale had been entered into and that plaintiffs wanted to place additional insurance of $50,000 in their own names.
Taylor told Di Giacinto that he would "take care of" it and that plaintiffs were "covered". Di Giacinto also asked Taylor
whether a deposit had to be paid for the insurance, but Taylor recalled to Di Giacinto that they knew each other and that
because of that a deposit was not necessary. Actually, defendant never placed the requested insurance or informed plaintiffs
of that fact. On September 28, 1962, the buildings on the property were destroyed by fire. The sellers were paid their $38,500
insurance coverage. In February, 1963, plaintiffs closed title under the contract for an abated price of $32,500, the difference
between the sellers' insurance proceeds and the contract price. Defendant did not deny it was a general insurance agent, but
contends it did not agree to place insurance with any company it represented; and defendant did not show what efforts it had
made to place the insurance prior to the date of the fire. The trial court, after reviewing the evidence, stated: "If a general
insurance agent agrees with a prospective insured to secure insurance, but fails to do so and, further, neglects to accord
reasonable notice that such insurance had not been obtained, the agent becomes personally liable. At bar, the defendant failed
to notify the plaintiffs prior to the occurrence of the fire loss that the insurance had not been placed on their behalf."
After discussing the issue of insurable interest, the court concluded: "Upon the representation that the insurance had been
placed, the plaintiffs could rely thereon; nor could their rights be defeated by the argument that the carrier might subsequently
have refused to accept the risk. (Joseph, Inc. v. Alberti, Carleton &