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decided: May 9, 1969.


Appeals from judgment of Court of Common Pleas of Allegheny County, April T., 1964, No. 3298, in case of Esther Van Cure et al. v. Hartford Fire Insurance Company et al.


A. Morris Ginsburg, for appellant.

H. L. Abrams, for intervening appellant.

Thomas Lewis Jones, with him White, Jones and Gregg, for appellee.

Bell, C. J., Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen. Mr. Justice Eagen concurs in the result. Mr. Justice Musmanno took no part in the consideration or decision of this case. Concurring Opinion by Mr. Chief Justice Bell. Dissenting Opinion by Mr. Justice Roberts.

Author: Cohen

[ 435 Pa. Page 165]

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. Cost 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

[ 435 Pa. Page 166]

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.*fn1 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 appear 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."*fn2 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.*fn3 It is quite obvious, however, that the interests of lienors, bailees, lessees and innumerable other interest

[ 435 Pa. Page 167]

    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.*fn4

The second theory which enjoys greater support from text writers, is termed the "factual expectation" 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."*fn5 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 ...

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