Van Cure v. Hartford Fire Ins. Co.
| Decision Date | 09 May 1969 |
| Citation | 435 Pa. 163,253 A.2d 663 |
| Parties | Esther VAN CURE et al., Appellant, v. HARTFORD FIRE INSURANCE COMPANY et al. Appeal of URBAN REDEVELOPMENT AUTHORITY OF PITTSBURGH. |
| Court | Pennsylvania Supreme Court |
H. L. Abrams, Richard W. Kelly, Pittsburgh, for intervening appellant Urban Redevelopment.
A Morris Ginsburg, Pittsburgh, for Esther Van Cure.
Thomas Lewis Jones, White, Jones & Gregg Pittsburgh, for appellees, Hartford Fire Ins. Co. and United States Fidelity and Guarantee Co.
Before BELL, C.J., and JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
This is an assumpsit action in which appellees, two insurance companies denied coverage to appellant because at the time of the loss appellant no longer had an insurable interest. The facts as stipulated by the parties are as follows:
On March 10, 1961 the appellee, Hartford Fire Insurance Company, issued to Mrs. Van Cure (appellant) a three year policy covering the building and garage involved in this action. On January 11, 1963, the United States Fidelity and Guarantee Company did likewise. For the purposes of this opinion we shall consider the two insurer-appellees as one.
The Urban Redevelopment Authority of Pittsburgh (Authority) passed a resolution on September 7, 1962, indicating its intention to condemn the fee simple of the property here involved; and it tendered a $37,000 bond which was refused. The court of common pleas, upon petition, approved a bond in this amount on December 10, 1962, and granted the Authority permission to enter the premises and take possession. The Authority, however, permitted Mrs. Van Cure to remain in possession in order to reduce detention damages.
A fire destroyed the premises on August 6, 1963, while Mrs. Van Cure was still in possession. Costs of repair was stipulated at $20,792.91. Proof of loss was tendered September 30, 1963; and the claim was rejected by appellees on November 27, 1963.
An award was made by the viewers in the condemnation proceedings; and upon the Authority's appeal, a jury verdict of $70,200 was awarded on September 2, 1964. This was paid to appellant on May 27, 1965. The date of condemnation in that action was stipulated as December 10, 1962. In the instant action the complaint was filed on March 17, 1964; the Authority was permitted to intervene March 18, 1965; the opinion was entered January 1, 1967; and final judgment was entered November 15, 1967. An appeal was taken to this Court in which appellant Van Cure contends, contrary to the finding of the Court of Common Pleas of Allegheny County, that she did have an insurable interest.
The requirement of an insurable interest is founded upon the public policy against wagering and goes back to Pritchet v. Insurance Company of North America, 3 Yeates 458 (1803), and to pre-revolutionary British Statutory law. [1] It was early held that the policyholder must have an interest that will be damaged before he will be permitted to recover for the loss against which he was insured. While there appears to be two major theories as to what constitutes an insurable interest, there is no clear cut statement in the cases as to which governs in Pennsylvania.
The first theory may be called the 'legally enforceable interest' theory. This is an outgrowth of the statement made by Lord Eldon in an English case 'that expectation, though founded on the highest probability, was not interest.' [2] It was reasoned that a policy on an expectancy was in the nature of gambling. The proof that an interest was not an expectancy had to be of such a solid nature as to be enforceable in the courts of law or equity. Any other interest might merely exist at the whim of the grantor. In most instances this test has been based upon the possession of title only. [3] It is quite obvious, however, that the interests of lienors, bailees, leasees and innumerable other interest holders also qualify under this definition, and it seems that this theory has found its way into Pennsylvania cases primarily by virtue of some misheadnoting and misciting. [4]
The second theory which enjoys greater support from text writers, is termed the 'factual expection' theory. It states that 'anyone who has an expectation of economic benefit from the preservation of property or an expectation of loss from its destruction, regardless of his relation to the property, has an insurable interest.' [5] This is a broad approach which covers not only all legal interests but other interests as well. It is more closely allied to the concept of indemnity, for often a man with no legally enforceable interest may suffer more from the destruction of property than a man who holds title.
Although the outer reaches of this theory have not been examined, [6] it does find support in the language of Pennsylvania cases. For example, as early as Farmers and Mechanics' Mutual Ins. Co. v. Meckes, 10 Wkly.N.C. 306, 311 (1881), this Court said:
In that case, however, there was a clear contract right in the insured who was a vendee of the destroyed property. Thus, even though the language would support adoption of the theory, the case involved an interest enforceable in the courts.
There have been several cases in Pennsylvania dealing with destruction of property after condemnation, yet the governing theory and the law remain in doubt. In Heidisch v. Globe and Republic Ins. Co., 368 Pa. 602, 84 A.2d 566, 29 A.L.R.2d 884 (1951), the condemnees had not yet been paid for their property when the destruction occurred. The County Code at that time, Act of May 2, 1929, P.L. 1278, § 537, required payment prior to the vesting of title. Since the consent verdict had not been entered or judgment paid prior to the fire, condemnees retained title and hence had an insurable interest in the destroyed property. The emphasis on location of legal title in the opinion of Chief Justice Drew makes this a clear case of the application of the legally enforceable interest theory and those who in Dursie wished to hold otherwise were forced to find that either title had passed or that a theory that focused on title was inadequate. [7]
Dursie v. American Union Ins. Co. of N.Y., 207 Pa.Super. 240, 218 A.2d 87 (1966), was similar in its facts. The condemning resolution was passed and bond filed prior to the fire. The opinion of Judge Watkins for three judges in support of affirming the lower court's decision in favor of the condemnee pointed to a conflict of authority as to passing of title on condemnation and then said 'the decision as to whether legal title, equitable title or both passed at the time of the resolution or the filing of the bond is not necessary to the decision as to whether or not this plaintiff has an insurable interest in the property.' [8] He further set out the definition of insurable interest in accordance with the factual expectation theory. However, when it came to the application of the theory, he discussed 'certain property rights' and hence confused the theories. It is, however, evident that he wished to adopt the factual expectation theory.
The opinion for reversal by Judge Montgomery dealt only with the location of title and held that the filing of bond passed title and the condemnee therefore had no insurable interest. The two opinions in this case, being the product of an evenly divided court, do not establish precedent.
In a similar factual situation, the United States District Court for the Western District of Pennsylvania, in Western Pennsylvania National Bank v. American Insurance Company of Newark, New Jersey, 282 F.Supp. 632 (1968), adopted the 'factual expectation' test and held that an insurable interest existed despite its conclusion that title, legal and equitable, had passed. In doing do, it cited the same 'interests' remaining in the condemnee which appellant presses upon us.
We find no insurable interest in appellant under either theory. There is little authority in recent case law to support appellant's contention under the 'legally enforceable interest' theory that she possessed title at the time of fire. Our Court has held that title passes at the time of the condemning resolution for some purposes and, at the very latest, at the time of approval of bond for others. Dacar Chemical Products Company v. Allegheny County Redevelopment Authority, 425 Pa. 343, 228 A.2d 778 (1967); Braddock Borough v. Bartoletta, 409 Pa. 281, 186 A.2d 243 (1962), affirming per curiam on the opinion in 28 Pa.Dist. & Co.R.2d 529 (1961); Lakewood Memorial Gardens, Inc. Appeal, 381 Pa. 46, 112 A.2d 135 (1955). Appellant did not have title any later than December 10, 1962.
Although this condemnation was not under the Eminent Domain Code of 1964, the County Code procedure was similar in all relevant aspects; and similar considerations apply. It has been said that the Eminent Domain Code contemplates the condemnee's interest to be in payment only and that once a bond is filed he is to look to the bond for security rather than to his property. [9] Therefore, appellant had no interest in the property after December 10, 1962.
As for any other legal interest in appellant, the only plausible argument made is that her right of possession was interrupted by the fire. However, this right was not enforceable since she remained at the will of the Authority who could have her removed at any time. The Authority allowed her to remain in possession only because it suited its financial interests by...
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