Spare v. Home Mut. Ins. Co.

• Citation: 15 F. 707
• Parties: SPARE v. HOME MUT. INS. CO.
• Decision Date: 28 March 1883
• Court: U.S. District Court — District of Oregon

15 F. 707

SPARE v. HOME MUT. INS. CO.

United States Circuit Court, D. Oregon.

March 28, 1883

U Scott Beebe, for plaintiff.

Cyrus Dolph, for defendant.

DEADY J.

The plaintiff, a citizen of Oregon, brings this action against the defendant, a corporation formed under the laws of California and doing business in Oregon, to recover the sum of $900 with interest since March 1, 1882, on a policy of insurance for that amount against loss by fire. The case was heard upon a demurrer to the complaint. The question argued was, had the plaintiff an insurable interest in the property destroyed?

From the amended complaint it appears that on July 26, 1881, Aaron and Ben Lurch were partners under the name of 'Lurch Brothers,' and as such, owned a lot in Cottage Grove Lane county, Oregon, of the value of $100, together with a warehouse thereon of the value of $1,300; that on December 1 1878, the plaintiff obtained a judgment against said firm, in the circuit court of the state for said county, for the sum of $4,500, which judgment was duly docketed before said July 26th, and thereafter was a lien thereon; that on said last-mentioned date the defendant, in consideration of the premium of $18.90, paid to it by plaintiff, insured him against loss or damage by fire, to said warehouse, for one year, in the sum of $900; and that on February 14, 1882, said warehouse was totally destroyed by fire, whereby the plaintiff was damaged $1,300. The complaint also states that on March 1, 1882, the proof of loss was furnished and the same adjusted at $900, and that the defendant at all the times mentioned well knew that the property was owned by Lurch Brothers, and the nature of the plaintiff's interest therein.

A contract for insurance against fire with a person not having an insurable interest in the property, or subject of the insurance, is a mere wager, and considered void on grounds of public policy. For where the only interest that the assured has in the property is its destruction by fire, the transaction is a direct incentive to fraud and arson. A lawful contract of insurance against fire is, therefore, a contract of indemnity-- an engagement to make good to the assured a pecuniary loss sustained by him on account of injury to the property in question. Therefore it is said that the assured must have an interest in the property injured, for otherwise he can suffer no loss thereby. Wood, Fire Ins. Sec. 248; Rohrbach v. Germania Fire Ins. Co. 62 N.Y. 52; Grevemeyer v. S. Mut. F. Ins. Co. 62 Pa.St. 340; McDonald v. Adm'r of Black, 20 Ohio, 191; Carter v. Humboldt Fire Ins. Co. 12 Iowa, 287; Godin v. London Assurance Co. 1 Burr. 490; Hancox v. Fishing Ins. Co. 3 Sumn. 134. But what is such an interest in the property is not altogether clear upon the authorities.

In Hancox v. Fishing Ins. Co., supra, 140, Mr. Justice STORY says 'that an insurable interest is sui generis, and peculiar in its texture and operation; ' and that 'it sometimes exists where there is not any present property or jus in re, or jus ad rem. ' In Rohrbach v. Germania Fire Ins. Co., supra, 54, FOLGER, J., said this interest need not amount to a legal or equitable title to the property, but that 'if there be a right in or against the property, which some court will enforce upon the property,-- a right so closely connected with it, and so much dependent for value upon the continued existence of it alone, as that a loss of the property will cause pecuniary damage to the holder of the right against it,-- he has an insurable interest.'

Accordingly it has been held that a person having a specific lien upon property as a security for a debt, such as a mechanic or mortgagee, has an insurable interest therein; and that, although he may also have the personal obligation of his debtor for the payment of the same. Carter v. Humboldt Fire Ins. Co., supra. And in Herkimer v. Rice, 27 N.Y. 163, it was held that the creditors of an insolvent estate had an insurable interest therein, upon the ground that the same was pledged by the law to the payment of the debts of the deceased. See, also, comments on Chief Justice DENIO'S opinion in this case by FOLGER, J., in Rohrbach v. Germania Fire Ins. Co., supra, 57. But no case has been found in which it was held that a judgment creditor, by reason simply of his lien on the judgment debtor's property, has an insurable interest therein. In Grevemeyer v. S. Mut. Fire Ins. Co., supra, it was distinctly held that he had not. The decision is placed on the ground that 'a judgment is a general and not a specified lien. If there be personal property of the debtor it is to be satisfied out of that. If there be not, then it is a lien on all his real estate without discrimination, and hence the plaintiff is not interested in the property as property, but only in the lien. ' It does not appear from the report of the case whether the debtor had other property out of which the judgment might have been satisfied or not.

In considering this question it ought not to be overlooked that insurance against loss, to the party insured, by fire, is a transaction intended and calculated to preserve and promote the financial security and stability of the community, and therefore ought to be regarded with favor, and upheld by the courts. On the other hand, a wagering policy by which the assured is to receive the insurance upon the destruction of the property, although he lost nothing thereby, the courts will not enforce. But, in my judgment, whoever is in danger of loss by fire ought to be allowed to insure against it....